In the business of car dealerships, there are two people, and only one team who sees the entire story of the business: The GM, The Comptroller, and the Office Administrative Staff. The rest of us get bogged down in the day-to-day of our own respective departments, and don’t honestly stop to see how what we do can impact the rest of the dealership business. There are a few dealerships with the processes in place to ensure all of the department managers interact, but those are few and far between, let alone to consider that the staff of each department may reflect on the position they really hold within the business. Nonetheless, there is a definitive lack of training all around, and that is what has an impact on your customer’s experience.
“Car Salesperson vs. Service Advisor,” originally written by Bill Horgan, is a terrific breakdown of where most dealerships are missing the boat in terms of staff training, and the dollars vs. cents of the issue. He examines the customer experience, and why your dealership is losing in both your service and your sales departments! You can read the article below, or click here to see it’s original posting. The Dealer Quarterback appreciates Bill allowing us to share his brilliant insight!
Car Salesperson vs. Service Advisor
Who needs the better selling skills?
Purchasing a car is not always the best experience. The haggling, the terms, and salespeople can make it a difficult process for any customer. There are so many variables. The price of the car you are purchasing, the trade in price, the length of the loan, the interest rate on the loan, the extended warranty etc. etc. etc.
Getting your car serviced or repaired is not any easier. You have no clue what is needed, and you have to trust someone you most likely have never met before, telling you something you don’t understand, and is not very well versed at explaining it to you. You will end up having to buy a product that you will never see.
The Sales Experience
Picture this. I am interested in purchasing a car. I pick out a model or two, and start the dreaded process of negotiation. I have an idea what I can afford each month, and know what I think my car is worth. I make my deal. It’s a little more than I expected, but it’s the right color, and they offer me about what I expected for my trade. I got an extended warranty, and a rustproofing package, and it was only another $43.00 a month, and I think we can still afford the payments.
I pick it up and I am driving home. Most of the difficulty I had in the negotiating process is now waning away. I am driving “my” new car. The air is filled with the scent that only a new car has, it’s nice and clean, and I am certain that everyone on the road notices me driving “my” new car. My hands are holding “my” steering wheel; I am sitting in “my” seat, as I pull into the driveway to my excited children. As I am yelling at the kids for jumping on the seat, my neighbor walks up, and I proudly display my new purchase.
The Service Experience
Picture this. I bring my car in to the dealership because my infamous “Check Engine Light” is coming on. My car runs fine, but my light is on. I am told I have to pay for diagnostics because, “My technician needs to get paid” or “We have to hook it up to the computer” or “We have to diagnose it” or you get the picture. I authorize the diagnostics, and go to work, with a promise of a call sometime in the future that will certainly cost me more money. At lunch I get frustrated, and call the dealership, only to find out that my service advisor is at lunch. An hour later I call again and am told that the diagnostics should be done soon. At 3:00 p.m. I get a call and am told that my O2 sensor is bad, and it needs to be replaced at a cost of $325.00. “What’s an O2 sensor?” I ask, and get an explanation, but either I don’t understand what he was talking about, or he doesn’t know. I ask another question, “Do I have to have it?” I am told yes no explanation, just yes. “Why is it so expensive?” I inquire. Well that’s just how much they are.” Finally out of frustration I authorize the work. I don’t know why, most likely out of fear of the unknown, because I sure don’t know much more than I did three minutes ago.
I pick up the car, and the bill is $355.00. I complain because I was clearly told that it was $325.00 not two hours ago. “Tax,” the advisor says, “You forgot to add in the tax.” I forgot to add in the tax? I pay my bill, including tax, and go out to my car.
I think I’ll open the hood; I have to see what it is that costs $355.00. It must be made of gold. What would an O2 sensor look like? Nothing looks new. Maybe it’s hidden. Finally I hop in my car and I drive down the road. My eyes keep looking at my dashboard. Is my light staying off? It better after paying $355.00. I get home and tell my wife the car is fixed, she says, “How much?” I tell her $355.00. She says, “For what?” I am not sure I can answer that, so I pull out my receipt. I look down and I see. Condition: “Ck C/S CEL Coming on.” Cause is left blank, and the Correction: “Replace O2 Sensor.” I don’t know what that this is supposed to mean, “Check customer states the check engine light coming on.” & “Replace Oxygen Sensor.”
Is there any value in this entire process? Is there any reason I would want to come back to this facility ever again?
The sales process is not an easy one, but it ends with something tangible. Something you can see, smell, feel, and most importantly be proud of.
The service process is not that easy either. The guy I was dealing with was not the most knowledgeable, the price was quite expensive, the breakdown was a surprise, and for all intents and purposes, the only thing I got was somebody turned off a light for me and charged me $355.00 to do it! I mean think about it, my car ran fine, but I had a light on.
The service process is one thing, “TRUST!” It is a relationship where the only thing the customer buys quite often is someone’s word. If you buy brakes, normally you can’t see them, sensors you can’t see, a water pump you can’t see, fluid exchanges you can’t see, labor you can’t see. While you actually are getting these things, you cannot see them.
Most used car managers have the same reservations because they are buying the same thing, trust, and most service departments do a lousy job of sellingthemselves, and what it is they are doing.
Think about what an Advisor is worth?
- # of Warranty RO’s per Day 4
- # of CPRO’s per Day 8
- Total RO’s per Day (A + B) 12
- Average HPRO 1.5
- Total Hours per Day (C X D) 18
- Effective Labor Rate $85.00
- Total Labor Sales per Day (E X F) $1,530
- Labor Gross Profit % of Sales 75%
- Total Labor Gross Profit (G X H) $1,148
- Parts to Labor Ratio 80%
- Total Parts Sales per Day (J X G) $1,224
- Parts Gross Profit % of Sales 40%
- Total Parts Gross Profit (K X L) $490
- Total Gross Profit per Advisor per Day $1,637
- Total Gross Profit per Advisor per Month $36,016
- Total Gross Profit per Advisor per Year $432,194
COMPARE TO AN AUTOMOBILE SALESPERSON:
- Average Number of Units Sold per Salesperson per Month 11
- Average Gross Profit per Unit $1,500
- Average Gross Profit per Month per Salesperson $16,500
- Average Gross Profit per Year per Salesperson $198,000
A Salesperson must sell 1 VEHICLE PER DAY (24 per month) to match the PROFIT generated by an AVERAGE Advisor
Your typical service advisor is trained on the job, handles more customers in a day than a salesperson in a week, is paid 8 to 10% of the gross, while a salesperson receives 20% to 25%.
Answer the following questions.
- Who needs to be the better salesperson?
- Who has a greater impact on customer satisfaction?
- Who creates the largest gross per month?
No matter how you slice it, the answer keeps coming up the same, the Service Advisor.
Now ask yourself a couple more questions:
- Who receives the most training on salesmanship?
- Who receives the most training on communication skills?
The answer is again simple, it’s the salesperson.
I am not trying to minimize the selling of a car, that is a difficult task, but in the end the customer leaves with something tangible. A service advisor needs to sell him/herself. The product cannot normally be experienced with any of the senses. It is a sale built completely on trust.
When a customer in your dealership buys the services that are presented to them, ask yourself this, “Are they doing it out of fear that their vehicle will break down if they don’t, or are they doing it because they understand the value and the benefits? Were they given the information in a language they can understand?”
People want to trust the person they are doing business with. They come in hoping to meet someone who is knowledgeable and trained. Someone who will make them believe that when they spend their hard earned money on is a worthwhile investment, spent at a reputable business.
One last question:
Do you have those people?
The Dealer Quarterback would love to be a part of helping your dealership to get the best training possible. As of this posting (1/21/2016) we do not train service personnel, but we would be pleased to connect you to Bill Horgan and his company. Reach out to us via the Contact page at www.dealerqb.com, firstname.lastname@example.org or 310-428-3362, and let’s review the full picture together!