Welcome...

M5™ is a performance improvement coaching firm that specializes in advancing fixed operations of auto dealerships around the world. Our website is a great venue for our clients to familiarize themselves with our company’s goals, objectives and philosophy in serving you, our clients.One of our main goals is to provide you with state of the industry ideas and techniques to help you advance your level of performance in fixed operations. Be sure to visit "About M5™". There, you will view our greatest asset; our people! We have a group of professionals who know how to affect positive change in your dealership and they do it with a high level of passion and enthusiasm.

Discounts are Costing You NET PROFIT!
by: Lee Harkins

Controlling discounts is a major task in many stores. I have seen managers who consider it part of doing business and others who refuse to at all. Regardless, every time you do, it costs you net profit! Are discounts out of control in your store? We should have learned from the sales side the people directly connected to the emotional contact point with the customer will buy into the emotion of the moment and give it up right away, or better yet, let me check with my manager and let’s see what we can do. They might as well say yes with that line. The one I love is the senior citizen discounts. What is a senior citizen? Without clearly defined guidelines, it can get crazy – quick!

Continued in our Newsletter (01/18/12)

Do Your Customers Know About Your Collision Center?
by: Bruce Gamble

Does your dealership have a Collision Center? Of course back in the olden days we called them Body Shops. How many of your customers know that your full service facility includes a Collision Center? My experience has shown it was not uncommon to survey customers in the service drive over a few days to find less than 50% knew that we offered body/cosmetic repair.

There is no doubt that the insurance industry provides a very high percentage of your business. Other business categories might include minor body repair for the Used Car Department and reconditioning and/or repair for retail customers.

Continued in our Newsletter (01/11/12)

The End of an Era - Part 1 and Part 2
by: Rick Yanac

The era of Hours per Repair Order as the method of measurement for advisor performance is over! Yes, that’s right, someone finally said it. It’s over. Now, before everyone calls me crazy and stops reading, hear me out for just a minute. If you think about it, I believe this will make sense to you...

First, let’s look at the basics of our business. What is the product we sell in the service department? We sell hours, right? The amount of hours we sell, multiplied by our effective labor rate equals our labor sales. From those sales, we subtract what we pay the technicians that produce the hours which leaves us with our gross profit. Then we pay our expenses and we’re hopefully left with some net profit.

Continued in our Newsletter (12/14/11)

Ditch the Hard Service Sell
by: Lee Harkins

Life in the service department has changed forever. Some say for the better and others believe for the worst; either way, there is no arguing it has changed.

Your technicians and advisors require leadership to lead them to the new ways of interacting and providing service to your customers. The tactical methods employed in your stores must embrace a higher level of customer service to earn the customer's business at every opportunity.

A dealer told me something many years ago: “You can skin the sheep once, but you sheer them many times.” I'm for sheering.

You must clearly define your definition of selling. If not, then advisory staffers are left to determine that for themselves, and it may not parallel your beliefs.

Continued in our Newsletter (12/07/11)

Let’s Talk about Pay Plans!
by: Jim Richter

This is the time of year when everyone is reviewing financial performance for the past year, and the subject of personnel compensation usually crops up early on. Unfortunately we, as an industry, are known for changing pay plans at the drop of a GP percent, resulting in the inevitable change in personnel in the service drive which in turn gives our customers good reason to question the stability of our service or parts staff.

Self Inflicted Wounds

The number one cause of customer defection is the loss of confidence in the people that they deal with on a daily basis. If these folks have a different name and face every time your customers come in to do business there is no opportunity for them to develop a working business relationship with anyone, which pretty soon causes your customers to seek a more stable environment where they can be comfortable. Let’s look at the usual reasons why this turnover happens.

Continued in our Newsletter (11/30/11)

Happy Thanksgiving!!!
by: Lee Harkins

Tomorrow is Thanksgiving and most of you will be at home enjoying time with your family eating a good meal and maybe watching some football. I'd like to take this opportunity to wish all of you a very happy Thanksgiving!

We at M5 are truly blessed for the prosperous year we've had so far and look forward to the future. As I write this I contemplate how thankful we are of all of our customers, business partners, and employees that have allowed M5 to grow and serve our beloved industry. We love what we do and we have a great time doing it, so to us at M5 it's not really work.

Continued in our Newsletter (11/23/11)

Parts...Outside the Box
by: Dan McDonald

Dan McDonald is the Parts Manager at Pohanka Honda of Fredericksburg, VA and is our guest writer this week.

I have always enjoyed what I do; the work is rewarding, constantly challenging, and very seldom boring!

Creating relationships with customers is something I thrive on. I get excited when there is an opportunity to create a new lifelong customer. I can’t count the times I’ve heard that people rate their car dealership experience as “more painful than a trip to the dentist’s office.” It’s a perception that given the chance we can change. There is truly no doubt in my mind when it comes to the level of service, and the value given per dollar spent, dealerships do it best.

Continued in our Newsletter (11/16/11)

The End of an Era - Part 2
by: Rick Yanac

Last week I talked about how Hours per Repair Order as the method of measurement for advisor performance is over. I also gave three points to substantiate my belief.

So, where does all of this leave us? If we don’t concentrate on hours, how can we possibly make any money? The answer is actually quite simple, just not easy. And it requires a total change of thinking on your part. In fact, I would advise that everyone in the dealership, at all levels of management MUST change their thinking. Here’s the thought: Let’s go back to the basic business model we discussed earlier and say you have determined that 3,000 hours is what you need to produce the desired net for your service department. If you were producing 2.0 hours per repair order at one time, you would have needed to drive 1,500 customers that month to produce your 3,000 hours. Now let’s say your hours per repair order drops to 1.0. You now need to drive 3,000 customers to your service drive that month to produce the desired net. So where are you getting the additional 1,500 customers?

Continued in our Newsletter (11/09/11)

The End of an Era - Part 1
by: Rick Yanac

The era of Hours per Repair Order as the method of measurement for advisor performance is over! Yes, that’s right, someone finally said it. It’s over. Now, before everyone calls me crazy and stops reading, hear me out for just a minute. If you think about it, I believe this will make sense to you...

First, let’s look at the basics of our business. What is the product we sell in the service department? We sell hours, right? The amount of hours we sell, multiplied by our effective labor rate equals our labor sales. From those sales, we subtract what we pay the technicians that produce the hours which leaves us with our gross profit. Then we pay our expenses and we’re hopefully left with some net profit.

Continued in our Newsletter (11/02/11)

Why your Parts Operations may be losing money!
by: Jim Richter

Normally this space is devoted to operational issues that help Parts, Fixed Operations, and General Managers be more effective and efficient in the operations of their parts business. This time I want to talk to the Owners and Executive Managers about some very important issues that they can control.

A few years ago I was finishing up the second year of a project with an importer. In year one, we were focused on training their parts and service field personnel on the basics of Retail Fixed Operations Management. In year two we worked on the specifics of parts inventory management and marketing. This was no classroom exercise. I had been traveling with these people to their dealers, performing audits on inventories, assessing the DMS settings for optimum performance, and making recommendations for improvement. I want to share with you the most commonly found, and avoidable conditions which work against the profitable success of these stores.

Continued in our Newsletter (10/26/11)

WAKE UP!!!
by: Charlie Waters

“We open at 7:30 in the morning and take our customers first come, first serve.”

Have you ever heard that? Chances are, you have. We should have retired that phrase 15 years ago but, unfortunately, it still happens!

So, your customer, who needs maintenance performed on their vehicle, has two choices.

1. They can get to your dealership at 6:30 in the morning to avoid having to block traffic in the boulevard in front of your dealership, drop their car off to an advisor who tells them “Barring anything unforeseen, we ought to be able to service your car today.”
2. They can go to the local independent service provider (ISP) at whatever time they desire (7 days a week, in most cases) and get their vehicle serviced while they wait.

Continued in our Newsletter (10/19/11)

Are you “Convenient” to your customers?
by: Bruce Gamble

In today’s environment being available for business when the customer is ready is a HUGE advantage. Once a customer is motivated to “buy” typically the #2 reason they may consider a business as their vendor of choice is “convenience”.

Let’s take a look, according to NADA, what the differences are today vs. 10 years ago.

Continued in our Newsletter (10/12/11)

What’s going on in the Candy Store?
by: Jim Richter

A recent article in USA TODAY highlighted a report from the Federal General Accountability Office (GAO) concerning the state of spare parts under the control of the Army. The following issues were called out:

• $3.6 Billion of excess stock annually from 2004 through 2007 (this is only the Army.)
• $900 Million in scrap as of 2007.
• $3.5 Billion in Emergency Purchases due to insufficient quantities of stocking parts (2007.)
• Computer Models ineffective for the job (their equivalent of a DMS.)

Continued in our Newsletter (10/05/11)

Midas Touch
by: Tom Walsh

As the fairytale goes anything King Midas touched turned to Gold. I don’t know about you, but I have yet to meet anyone that can turn anything into Gold by touch. So, what is the next best thing? Maybe it’s having the ability to recognize an opportunity, adapt to change, and continue to grow your business.

Midas Muffler did just that. Midas Muffler was founded in 1956 on one promise. A product that was “guaranteed for as long as you own your car.” Midas Muffler shops also did something no one else did. They invited the customer into the shop to actually see what their vehicle needed. They also gave the customer a written estimate of the repair work to be done. All of this was to encourage the customers to return to Midas. As time went on Midas saw additional opportunities and in 1960 began installing shock absorbers. When the auto industry started switching to stainless steel mufflers Midas recognized another opportunity and started offering brake services in 1979.

Continued in our Newsletter (09/28/11)

It's a Game of Inches
by: Charlie Waters

As the NFL kicks off the new season, I can’t help but relate the automotive service business to football. Simply said – “It’s a game of inches”. Each roster is made up of the very best players, executing a set of processes, which are essentially the same for each team. If you’re an offensive lineman, then you wait until the ball is snapped and you “block your butt off”. Sure there are techniques and variances in skill levels, but that is the game of inches. Remember, these all were the very best 1 or 2 percent college players.

Rarely do we visit a dealership that everyone in the store believes that they are really broken. And usually they’re not. They just might be missing the techniques needed to take them to a new level. In the NFL that’s where coaching is important. In our business, coaching is important as well. Many of the techniques have never been seen by the service department staff.

Continued in our Newsletter (09/14/11)

How to say “Yes we have it” almost every time.
by: Jim Richter

One of the most frustrating situations for any parts manager is to not have parts that technicians need for a job that is in the shop. Not only do we miss out on the highest potential gross profit sale, but service also stands to lose the labor they have invested in diagnosis, and we’re looking at another Special Order with all of its problems. Why does this happen, and what can we do to reduce the frequency of service Special Orders?

Often times, in our zeal to prevent Obsolescence, we lose track of why we exist. Just like the Used Car Inventory, the Parts Inventory is expected to fulfill a high level of initial demand, in spite of the fact that many of these demands can be unique. How can we do this?

Continued in our Newsletter (08/31/11)

Are You REALLY Retail?
by: Rick Yanac

As I travel the country in one dealership or another, I always try to look at the service and parts facilities from a customer’s point of view. I often talk to service managers and hear them refer to themselves as “working in retail”, but I often think, “Are their facilities really retail?” Over the years I’ve tried to fill my toolbox with some best practices from all of the “retail” establishments that I’ve been in, but until now, I never took the time to put them all in one document. So, since I’m in a “retail” kind of mood, let’s reach into the bag and see what we can find...

The main tip I can offer to anyone reading this article would be to take a minute or two out of your weekend and visit some of your favorite retailers. Don’t spend time in other dealerships. Get out to the Targets, Best Buys and Wal Marts of the world...the real retail giants to get a look at how they merchandise their stores and how their staff is positioned.

Continued in our Newsletter (08/24/11)

Play Ball!
by: Jim Richter

Sometimes it’s easier for people to understand something if you can relate it to a game or activity that is commonly known or played; in this case I like to compare our Customer Service business to the game of Baseball since there are so many similarities. Don’t believe me? Then read on...

Balls and Strikes

In baseball a ‘ball’ is a pitch that misses the strike zone. In our business it is an unsuccessful attempt to get a customer to agree to perform an activity that we will get paid for. For example a Service Advisor attempts to interest a customer in a maintenance service when they come in on an oil change coupon, but doesn’t know enough about it to sell the job. No harm done to the customer, but no gain for us either.

Continued in our Newsletter (08/17/11)

Balance in the Service Department
by: Charlie Waters

For every action, there's a reaction; what goes up, must come down; point and counterpoint; opposites attract. In accounting: For every credit, there must be a debit (pluses must equal minuses). We’ve heard all of these but what does that have to do with service? It’s called balance. These same rules go with productivity: You have supply and you have demand.

You are experiencing excessive carryovers or appointment backlogs - you have high demand and inadequate production hours available or a "Production Supply" problem. You must find a way to increase supply to meet the needs. Unfortunately, this is so often accomplished by degradation of service to our customers. Advisors, or order takers in this case, stop selling because they're already getting their heads handed to them several times a day by customers who missed promise times. This "lack of effort" creates huge morale problems for the technicians, advisor and managers, not to mention, the customers.

Continued in our Newsletter (08/11/11)

Lead or Get Out of the Way!
by: Jack Fitzpatrick

One of the most common mistakes that managers of any department make today is the fact that they confuse their daily management tasks with leading their staff.

Nothing could be further from the truth.

What do we manage on a daily basis?

• Paper work
• Numbers
• Budget
• Inventory
• Supplies

Continued in our Newsletter (08/03/11)

QR Codes and Why You Should Be Interested
by: Tim Harkins

So you've probably seen these small square bar code looking things show up on all your favorite products and in magazines and newspapers. We even have them at the bottom of this very newsletter. They're called Quick Response Codes or QR Codes for short and they're starting to show up everywhere!

A bit of history

QR codes originated in Japan in the 1990's by a subsidary of Toyota in an effort to better track parts in their manufacturing operations. They've been largely used in parts of Asia and Europe and are just now catching on in the US.

Continued in our Newsletter (07/27/11)

Twins Separated at Birth
by: Jim Richter

Once, service and parts were considered as one...

Back when our industry began a little more than a century ago, most dealerships were primarily repair shops or custom coach builders. Service, Parts, and Body Repairs were all together and the businesses were typically called a “Garage.” Retailing of new vehicles was in its infancy and the businesses thrived on repairing carriages, farm equipment, and the new fangled automobiles be they gas, steam, or electric powered. Most parts were unique to the particular vehicle being worked on and it was not unusual for the shop to have a forge and a blacksmith available to make what they needed. It wasn’t until mass production came on the scene that any semblance of standardized parts became available, and it was even later still that those manufacturers’ established distribution systems to get them out to their dealers. This is when the advent of the separate ‘Parts Department’ occurred, somewhere after World War I.

Continued in our Newsletter (07/20/11)

Yes...they spell that F-R-A-U-D...Part deux!
by: Bruce Gamble

In my last article we determined FRAUD was defined as “wrongful or criminal deception intended to result in financial or personal gain”. In this article I will be addressing the parts department.

Similar items must be examined in parts as we did in service. To review those items we highlighted in Part One:

1. Everyone should have his/her own DMS login
2. Review employee screen access
3. Review exceptions reports daily
4. Review work-in-process
5. Recode department keys
6. Restrict building alarm access

Continued in our Newsletter (07/13/11)

Yes...they spell that F-R-A-U-D
by: Bruce Gamble

Yes...they spell that F-R-A-U-D!

Fraud is defined as “wrongful or criminal deception intended to result in financial or personal gain”. Wow, that sounds scary!! There must be checks and balances in place in any business to keep the employees honest. Fraud can take on several different forms within a service or parts department. In this article I will be addressing the service department.

Everyone should have their own DMS login

When I visit dealerships, it still amazes me the number of stores in which the service advisors all use one login to create repair orders. At times, I find some using a previous employee’s login that hasn’t been deleted. This could allow the employee, depending on his pay plan, to manipulate his numbers to his/her advantage.

Continued in our Newsletter (07/06/11)

Practice Makes Perfect!
by: Jack Fitzpatrick

Well maybe not perfect, but it makes life a whole lot easier at times. In today’s economy some of us are lucky enough to have a service and parts department that is producing profits on a regular basis. Great job, but now is not the time to sit back and relax and pull a muscle patting ourselves on the back.

Now is the time to take a good look at your operation and figure out where you might be able to improve. Think of the star athletes, past and present, of the world. People like Derek Jeter, Michael Jordan, Tiger Woods, Wayne Gretzky, Jerry Rice, and the like. The one thing that they all had in common was that they were never satisfied!

Continued in our Newsletter (06/29/11)

Is your service operation truly Customer Retention focused?
by: Charlie Waters

I often hear managers talk about finding a balance between customer retention and profitability, as though they are complete opposites of one another. Customer retention and profitability should be thought of as one and the same. Here’s an example:

Dealership A has a prepared menu that recommends all of the factory requirements plus various flushes and alignments, etc. at 7,500, 15,000 and 30,000 mile intervals.

• The basic 7,500 mile service averages $50 (.7 labor - $35.00 labor - $50.00 effective rate)
• The 15K averages $150 (1.5 labor - $100.00 labor - $66.67 effective rate)
• The 30K averages $450 (4.5 labor - $325.00 labor - $72.22 effective rate)

Continued in our Newsletter (06/22/11)

Happy Birthday Lee!
by: Dave Vaden

This week we take a break from our normal newsletter to wish our President and CEO, and my friend, Lee Harkins, a very happy birthday!

I have known Lee Harkins since 1994 when he hired me as a consultant. Over the years we worked side by side on many projects. During the first few years Lee never had the chance to watch me during a presentation.

We had a very special client that he wanted me to do a presentation for about sixty participants. Lee was in the back of the room and it did not take me long to see he was taking notes and shaking his head in angst. It made me very nervous and needless to say the presentation, at best, was not very good. I took a break and Lee suggested that I take my head out of my (beep) and present like he knew I could. Well the presentation went much better and I survived. We laugh about it now, but that’s what friends do.

Continued in our Newsletter (06/15/11)

You Can’t Expense Your Way to Profits Forever.
by: Jim Richter

The last article ended with, “You can’t expense your way to profits”, but the more I thought about it the more I believe the statement is not right, to a point; that point being, like most business actions that start out to be beneficial when used appropriately, they become a bigger problem when used excessively.

Sports teams often employ what is known as a ‘Prevent Defense’ in the hope of holding off a hard charging opponent near the end of the game. If you’re a sports fan you know that the ‘Prevent Defense’ mode often times becomes the ‘Prevent Win’ mode. Most dealers became successful by being aggressive, marketing and merchandising to gain business share and fighting to keep every foothold gained with customer service. It is totally out of character for them to hunker down and let competitors take business away from them, yet that is exactly what happens as stores cut back on staff, inventories, and support. Instead of protecting what they have worked so hard to accomplish they are gradually giving it back through a painful process of constant reductions in support to their customers.

Continued in our Newsletter (06/08/11)

So, you think you have problems??
by: Jim Richter

I know you’ve been reading about all of the parts issues tied to the tragedy in Japan and that has me thinking about all we’ve been through these last few years and what we should be thankful for here. Sometimes we get so caught up in our own world we lose sight of what others in similar, but still different industries have to cope with.

Choices, Choices, Choices...

I can’t recall how many times I’ve visited with a Parts Manager and heard complaints that the orders were delayed for a day or two, or referred from the normal PDC to another, or even in some cases referred to the factory for a critical order fill. Hey, at least there is a process to get that order done, and that’s not always the case.

Continued in our Newsletter (06/01/11)

The New Guy
by: Robert Stalnaker

Okay... you walk into work on Monday morning, the weather is nice, not too much traffic on the drive, the ASM’s are sitting at their desks drinking coffee, a couple of Techs are just walking in, and you notice that it is fifteen minutes later than they SHOULD be just walking in, so you make a couple of joking comments about their tardiness, then you head to your office. What a surprise! There’s the boss, and your boss’s boss, and some other person sitting at your desk talking, all relaxed and joking over coffee.

This is usually not a good sign, so you get a little nervous. You quickly remember your first day on this job. You had already come in for the interviews, testing, drug screen, more interviews, and then you remember that Monday morning when they had you come to the dealership early so they could show you around. In fact, they had you sit in that same chair, drinking coffee when the “current” manager came into work. They introduced you to the “current” manager, and informed them that NOW they were the “previous” manager, and you were “The New Guy”.

Continued in our Newsletter (05/25/11)

Improvise, Adapt & Overcome!
by: Jack Fitzpatrick

In the tumultuous world of fixed operations, as it stands today, it is challenging to say the least. All we see on the news is how things are looking better, and the markets are rebounding, and slowly but surely the economy is on its way back. I sit there watching the news thinking...”I wish they would send some of those people my way!”

All kidding aside, we know things will eventually improve, regardless of how fast or slow the recovery. But what do we do today to improve our sales on the lane? In the words of Clint Eastwood in the movie “Heartbreak Ridge” (1986) we need to IMPROVISE, ADAPT & OVERCOME!

Continued in our Newsletter (05/18/11)

One of the Best Customer Retention Tools is in Every... Glove Box?
by: Bruce Gamble

When providing on-site training for service advisors we always discuss “tools” they have available to assist in building customer retention and to expand their book of business.

The most obvious tools are items like multi-point vehicle inspections forms, service due reminder decals, and items found during the walk-around process. These and others help build rapport with each customer for that lasting relationship. One of the most important tools is the vehicle maintenance logbook.

The maintenance logbook has been in every owner’s manual packet since...well way before I started in the car business in the ‘60s. It was used by the owner to keep track of what work had been performed on their vehicle. The import owner was educated to follow the manufacturer requirements to a “T” and have the booklet stamped and signed off by dealership personnel. Staff that had recently worked at an import store before coming to a domestic dealership in most cases, educated domestic owners.

Continued in our Newsletter (05/11/11)

Phone Skills - Selling to the Visit
by: Charlie Waters

A couple of years ago I was visiting in a store where an Advisor was expressing his concern over customer's perception that we are "over-priced". He said to me: "We've done so much to combat that perception. I've personally called our competition and price shopped, so I know we are in-line. Yet, I constantly hear customers say that we charge too much."

I asked this advisor to role-play a scenario with me. I pretended to be a customer, on the phone, asking for a price to overhaul my transmission because my neighbor had told me that my slipping transmission needed it. My service advisor friend responded by offering several options ranging from $2200 to $3600. After all, isn't that the way that we let our other advisors train them? Monkey see, monkey do!

Continued in our Newsletter (05/04/11)

Follow Up On Refused Work
by: Lee Harkins

I spoke with a number of people lately who told me their fixed operations have been going great. Congratulations!

But it's not the time to allow any of your staff to start believing everything is so wonderful that we can't get better. We can really grow our business if we keep everyone focused on the mission at hand.

The mission is improved profitability built on a foundation of customer retention.

Many stores have purchased customer-relationship management software to improve their communications with clients. One of the strongest tools incorporated into most of the CRM systems is a reminder/follow-up process for unsold work for something discovered during an inspection of the customer's vehicle.

Continued in our Newsletter (04/27/11)

Profitable Wholesale for the Average Dealership (Part 2)
by: Jim Richter

In thelast issue we discussed the elements required to develop and maintain a profitable Customer Base.

1. Customer Development, which entails identifying, qualifying, and servicing specific customers that we want to continue doing business with over an extended period of time. We talked about the need to train our customers to work within the terms and conditions we have as franchised dealers, while at the same time learning their needs so that we provide a Level of Service that meets those needs most often. Customer maintenance is a two-way street; neither side is always right, nor are they always wrong. Be clear stating your requirements, explain them so that your customer understands, and be fair and consistent in the enforcement of them. Remember that when you set up your terms and conditions they have to be reasonable to live by; if they are not then they will be violated.

Continued in our Newsletter (04/20/11)

Profitable Wholesale for the Average Dealership (Part 1)
by: Jim Richter

I wish I had $1000 for every time a dealership has complained to me that their wholesale business has been stolen by one of the “Big Boys” who has come into the market. The reality is usually that it was ripe for the taking. Any business that takes it’s customers for granted, that practices predatory pricing, or doesn’t take good care of its customer base eventually loses out to someone who has more resources or who can provide the same service for less cost.

It isn’t just about price!

For years the volume wholesale parts business has been driven by price. Everything was governed by discounts and manufacturer compensation to make up for lost gross profits. That game is over for all intents and purposes. The only dealers that can garner additional discounts from vendors these days are those who can afford to purchase by the skid or truck load. This effectively eliminates the average dealer from sharing in these cost reductions. Those dealers who did business based on price alone are now seeing their markets taken over by the high volume chains. They have also learned that dealing on price solely does not create a loyal customer since they will do business with whoever is the least expensive.

Continued in our Newsletter (04/13/11)

"DELIVER” PARTS TO THE SHOP TECHNICIANS?
ARE YOU KIDDING ME?
by: Bruce Gamble

Having been a parts manager in a former life, I would have reacted the same way if my boss had asked me to deliver parts to a technicians’ work area. Those guys never remembered what I had IN stock - only what I DIDN’T HAVE!! Why would I want to cater to those prima donnas? I’ll tell you why.

In the course of visiting a dealership I review department financials. It’s not uncommon to find that the service operation typically generates from 70 to 85 percent of the parts department’s “bill paying” revenue. Many managers don’t see it from this perspective.

Continued in our Newsletter (04/06/11)

Do you “Walk the Walk”?
by: Mark Sappington

I was leading a group of Service Managers in a training session recently. At one point of the training we got on the discussion of performing a vehicle walk-around during service reception. It was interesting to hear the different processes. I also had the opportunity to discuss this topic with the service advisors from the same dealerships in the following sessions. Would you believe that the processes described by the managers were not the same as the processes described by the advisors from the same dealership? Shocking? Not really. I also asked how many of these same managers had a written vehicle walk-around process. You guessed it. Very few, if any, had a written process. I guess it shouldn’t be that big of a surprise that the managers and advisors ideas and descriptions differed so much. What’s your process?

Continued in our Newsletter (03/30/11)

A Tale of Two Shows
by: Jim Richter

Every year I make sure I get to two shows; NADA in February and the Amelia Island Concours d’Elelgance in March. These are entirely different in their objectives, and yet they still play to the same audience; car people just like us. What is surprising is that over the last 3 years, during one of the most difficult periods of our industry, one show has been steadily declining in attendance while the other grows every year.

NADA 2011

I’ve been going to NADA since the 80’s and I can’t remember as much doom and gloom as I saw in 2009 and 2010, but that seemed to be a bad memory in 2011. Dealers were shopping for help in all segments of the business, fixing up facilities (not always voluntarily), and generally looking more upbeat than I’ve seen in a few years. Most told me it was due to improved vehicle sales with the resulting cash flow increase, and the domestic dealers attributed much of that to product; imagine that! Finally, after sitting on the sidelines watching their sales customers drift off to import competitors and service customers to the aftermarket over the last few years they are ready to fight back. Better late than never I guess.

Continued in our Newsletter (03/23/11)

Labor Pricing Policy - SWAG or Science?
by: Charlie Waters

Is your labor rate truly structured to get the results desired? Or is your labor rate a SWAG (Scientific Wild A** Guess)? Unfortunately, most dealerships are the latter.

When selling new vehicles, most sales managers understand that there are product lines that will not permit the gross profit that the dealership desires, while other vehicle lines allow higher gross margins. These product lines are usually referred to as cars and trucks! In order to achieve the desired results, the sales manager must predict the sales mix and manage gross accordingly. The service department is no different. Maintenance is our cars and repair is our trucks. So in order to accomplish a true calculation of your effective labor rate you must understand all of the elements...

Continued in our Newsletter (03/16/11)

Charlie Waters Joins M5™ Management Services, Inc.!

We at M5™ Management Services, Inc. are proud to introduce our newest member to the M5 team, Charlie Waters!

Charlie began his automotive career as a Technician in a Ford dealership in 1973. After 4 years, he became a Service Advisor and after another 4 years was promoted to Service Manager. He served in the Service Manager role for 6 years before being promoted to Parts & Service Director.

Charlie served as Parts & Service Director for a total of 17 years, 12 years at the original dealership which became one of the largest Ford dealerships in Florida. He spent 5 more combined years at two other dealerships.

Continued in our Newsletter (03/16/11)

Let Your Fingers Do the Walking
by: Jack Fitzpatrick

As General/Service Managers etc. we have very busy days. Days that are filled mostly with daunting tasks that keep us busy all day, and let’s face it many times into the night. We cannot even drive home without thinking about what transpired over the day, and already start to think about what’s going to be waiting for us in the morning.

Now how much of this can we control? Who knows. Can we make it better? That’s the question! Naturally we know that this is the car business, and in fixed operations we fix peoples problems. That’s what we do! We service customers, and maintain and repair vehicles that need attention.

Continued in our Newsletter (03/09/11)

Are You REALLY Retail?
by: Rick Yanac

As I travel the country in one dealership or another, I always try to look at the service and parts facilities from a customer’s point of view. I often talk to service managers and hear them refer to themselves as “working in retail”, but I often think, “Are their facilities really retail?” Over the years I’ve tried to fill my toolbox with some best practices from all of the “retail” establishments that I’ve been in, but until now, I never took the time to put them all in one document. So, since I’m in a “retail” kind of mood, let’s reach into the bag and see what we can find...

The main tip I can offer to anyone reading this article would be to take a minute or two out of your weekend and visit some of your favorite retailers. Don’t spend time in other dealerships. Get out to the Targets, Best Buys and Wal Marts of the world...the real retail giants to get a look at how they merchandise their stores and how their staff is positioned.

Continued in our Newsletter (03/02/11)

What We Have Here is a Failure to Communicate!
by: Jack Fitzpatrick

The economy may not be recovering at the speed we all would like to see, but it’s chugging along. For most of us, business is fair to midland, but by no means, good. However; things could change for the positive, almost overnight, if we would just focus on the most important ingredient of our business, the Customers.

In a nut shell, “Customer Satisfaction” is the constant driving force that customers use to determine who will be their vendor of choice. Not only in the car business, but in any purchase decision they make. Think about it. Do you go out of your way to spend money on a product or service where you feel you are not getting treated the way you should? Of course not! Why should you?

Continued in our Newsletter (02/23/11)

Menu Pricing; Art or Science?
by: Jim Richter

I just finished up an initial round of Service Advisor training for a large dealer group and was surprised to see that not only did they not employ properly constructed Factory Based Maintenance Menus, they were not even aware of the benefits to both Service and Parts Operations, not to mention Customer Retention.

Maintenance Menus have been around for a long time, dating back to the days when there was a lot to do to a vehicle every 3,000 to 5,000 miles. Back then we adjusted engine valves and carburetors; replaced spark plugs, points, condensers and wires; and set timing and dwell almost on an annual basis. That was the gravy work that most technicians fought over. The only additives you used were things like motor honey to cut down the oil consumption and Marvel Mystery Oil to loosen up sticky rings and valve seals. Today that’s all gone away thanks to a combination of mandated technology to reduce emissions, and a race by the manufacturers to produce products with minimal maintenance costs. But is this last statement really true?

Continued in our Newsletter (02/16/11)

Would You Treat Your Mother That Way?
by: Bruce Gamble

It still amazes me how some employees treat their customers in service environments. Some talk down to customers as if to say “I know everything and you know nothing”. Some pass customers in the hallway or service reception area as if the customers were not even in the room! Others, when asked where the restrooms are, would point to the door and say “through there”.

To help your staff realize how customers might perceive them have them perform this exercise at their next weekly training meeting (assuming you have regular training meetings). Give them each a sheet of blank paper and ask them to draw a very large cross on the paper. On the top left side of the cross write “THE BEST”. On the right side have them write “THE WORST” as in the example below.

Continued in our Newsletter (02/09/11)

Great Tips on Selling Tires
by: Lee Harkins

We've developed a collection of ideas to help you sell more tires. From our company's wealth of experience, here are tips that may help you.

Establish Sales Objectives

We have objectives for car sales, labor sales and parts sales, why not tire sales?

About one service customer in five needs, or will need, tires in the very near future. These are customers in your service department.

Let's agree for projection purposes this number is correct. The projection chart below is available to you, just drop me an email. Once you have an accurate number, you can establish individual service-advisor numbers or do it for the entire department.

Continued in our Newsletter (02/02/11)

Where Did that Come From? Obsolescence You Didn’t Know Was There
by: Jim Richter

Traditionally obsolescence has been defined as parts that have not had a sale in anywhere from six months onward, the time frame dependent on the source defining the term.

Over the last few years the manufacturers and importer/distributors have reduced the amounts they have been willing to absorb to relieve their dealers of parts that go into obsolete status naturally; typically about 8% to 10% annually assuming that the dealers are all practicing good inventory controls. The reality is they are not, and that most return allowances are now falling below the 5% level which requires dealers to find new sources of relief including brokers and referral programs, all of which can cost over 50% of inventory value.

Continued in our Newsletter (01/26/11)

Ways to Promote Fixed Operations on your Web Site
by: Lee Harkins

Dealership web sites are amazing to me. The technology is moving so quickly, it’s mind boggling. But one thing that’s not changing about dealership web sites is the presence of fixed operations. Generally speaking, we have no presence. I view the dealer web site as their 24/7 television commercial.

The product or brand of your fixed operations that must be communicated to your customers is that you are different from the rest. The web site is an effective tool in challenging this perceived brand the dealership has in the eyes of the consumer.

I have developed a list of 10 items I look for in a dealership web site. I have done an informal review of about 100 dealership web sites, and the results are interesting to, say the least. I believe the point that must be driven home in this review is that you must be perceived to be different. If you have the same old stuff that everyone else has, you are just like all those other dealers. Here is your opportunity to stand out in the crowd.

Continued in our Newsletter (01/19/11)