Wednesday, December 14, 2011

Why your 2012 Business Plan Will Fail and What to Do About It

I have heard all the excuses why Fixed Operations all over the country did not hit there 2011 projections, goals, budgets, etc. The number one excuse was the economy!!! What a perfect airtight alibi for lack of training and a coach! They know all the reasons why they believed they failed! So I decided to call some of these dealers and see how well they answered the phone. (which was not on the list as one of the reasons they  failed!)

This is one item out of many that does not take a lot of evaluation to determine what your customer is experiencing. Just pick the phone up and call your dealership and you will experience the Moment of Truth! Wow!...What an eye opener! I'm told 90% of the time that the economy was the reason, when in fact all they need to do is call their dealership and get the facts.

 I won't go into details however, the economy is not the problem or any other excuse. The truth is they would have never hit a projection, goal, or budget without some sort of daily guidance from an outside professional trainer and coach to assist them in improving every single day.

My mother always told me if you want to be great at something, you need someone to train and coach you who knows how to do it. When my brother and I wanted to learn how to swim, she went to the YMCA at the local pool and hired the Swimming Coach to teach us everyday after school.

She learned how to swim the hard way in a Rock Pit with a rope tied around her waist with my grandfather telling her to swim! When she started to drown he would just pull her back up and repeat Swim! You learned how to swim from fear or else. The one thing my grandfather got right was consistency!

My mom could have taught us how to swim however she wanted us to learn the right way from the start! I also wanted to learn how to play the Clarinet. My Mom searched out the local music store and found a teacher who played the clarinet and the lessons started.

My Mom made me practice everyday for an hour until I mastered each sheet of music my teacher/coach gave me each week to do. I was not allowed to play outside with my friends till I finished. It went on to Tennis Lessons, Saxophone Lessons and the list goes on. My Mom always searched out a Coach for us to learn the right way from the start.

She is an accomplished Figure Skater only because she hired a Skating Coach who trained the U.S. Figure Skating Team. She always told me it's the only way you can get better and better is by having another set of eyes watching what you do then making adjustments to your routine and practicing until perfection.

Who is Training/Coaching your Fixed Operations?

Here is a Simple Self-Evaluation on Two Basic Key Fundamentals to review:
  1. Appointment Process: Show up to your Service Drive when they open for two or more days. If there's two or more customers waiting in line for your service advisor(s) your Appointment Process is Broken and you are headed to Achieve the Same Results you did Last Year or Worse! 
  2. Daily Action Plan: (Caution! If you did not Pass #1 do not attempt this!) Again show up on  your service drive when they open and see how many customers are greeted by name and they have a pre-work order with all there history, recalls needed, and service needs ready to present!
 If you Failed either Test you will be one of the 95% of Dealers who will not  achieve your Projections, Goals, or Budget for 2012! Without these Two Key Fundamentals, forget about any other training you might be thinking about. It's a waste of Time and Money! Get Training from a company who will achieve these goals for you and you will have a Great Year!

As you may have noticed this takes no special equipment/technology to accomplish. Just hard work everyday, and a Performance Trainer/Coach to steer you in the right direction for the next twelve months. No Excuses, No Alibis!

How many Service Managers, Parts Managers, or Owners have had the proper training and coaching on how to Lead and Manage your Fixed Operations for Top Performance?

Guy Salkeld is the President and Head Performance Coach of Automotive Consultants Group Inc. The only Low Risk High Return Training, Coaching, and Consulting company in the world! To learn more go to  Have a question? E-Mail Guy directly at or Call me direct at: 305-331-3373    

Friday, October 21, 2011

The Eight Essentials: Revisited

 These Eight Essential fundamentals are the key to a top performing service department. How do you measure up? or maybe you haven't measured them in a while because your to busy! or you just don't know what they are? You will have the opportunity to understand, measure, and take action on any opportunities you may have. Eight Essentials! Here's the Worksheet:

  1. Work Days Per Month. This is the actual days the service department is open for business. I can tell you from personal experience that this is in most cases not thought out completely. I have never understood why a Dealership would open it's service department a Half Day on Saturdays? This is without a doubt a CSI and Customer Retention killer! and to make matters worse most of them only perform maintenance. Example: Your customer shows up on Saturday and his check engine light is on. The service advisor says we Can't do that on Saturdays we only do Maintenance! The question you need to ask is who put any thought into the Days of Operation based on being in your customers shoes? If your not open all day for regular business with a Full Crew, Don't Open The Doors!
  2. Calendar Utilization. This is probably the most abused and over looked item on the list. The calculation is the Clock Hours worked divided by the Hours the Technicians are required to be there. I can tell you most dealerships are running between 70-80%. Let's do the math. Example: You have 10 Technicians that should work 40 hours per week. That's 400 hours. Now for argument sake let's times that by 10% and we have lost 40 hours. Now let's go one step further and times that by an overall effective rate of $75.00 and you have $3000.00 per week or $12,000.00 a month potential loss in labor sales not to mention parts sales. Do you know the impact 10% has on your service department? Do The Math!   
  3. Hours of Operation. This is self explanatory however I can't seem to understand the thinking that goes into or maybe the Lack of Thinking for opening 4 hours on a Saturday with a limited crew!!! I have seen this time and time again and the same results. The other one is opening at night for a few hours with limited crew and the only possible outcome is a pissed off customer. Let's do some more math and take the 4 hours on Saturday and times it by 10 Technicians. That's 40 hours and let's times that by $75.00 overall effective rate. Again we have an Opportunity to make $3000.00 in Labor Sales and of course the Parts Sales that go with that! What's your Opportunity?
  4. Technicians Available Daily.  Again this is not Rocket Science however if we go pull the days missed for what ever reason it will blow your mind how much time off your Technicians really took. The other thing we have to take into consideration is each Technician is worth on average 10,000.00 dollars in Gross Profit Each Month in Labor only. Let's divide that by the average working days each month of 21.3 and we get $469.00 per day in Gross Profit. How many days do your Technicians take off per month? How much Gross Profit are we leaving on the table? How many Technicians do you need to Retire the Departmental Expenses? Grab your Financial Statement and find the Expenses and divide it by $10,0000.00 and that's the number of Technicians you need everyday in a months time frame.
  5. Technician Productivity. I have found over the years that many people have different definitions on how Technician Productivity is measured. I measure it this way. Let's say a Technician based on his Job Description is required to be at a dealership 8 hours a day and that same Technician Flags 10 hours in that 8 hour (actual clock time) period his production percentage would be calculated like this: 10 hrs divided by 8 hrs = 125% The key here is that the Required Hours to be at the Dealership is a fixed number. If the Technician leaves early it doesn't change his Production Percentage. Example: The same Technician is required to be at the dealership 8 hrs however he leaves early and Actual Clock Time is 5 hrs and Flags 7 hrs. I would take the 7 hrs Flagged and divide it by the Required 8 hrs which = 87.5% for that day. Remember just because a Technician leaves early doesn't mean he is pulling his weight for that Stall. Each Stall needs to produce 8-10 hrs a day to be profitable in most cases. So here's the question: How are you measuring your Production Percentage? If a Technician leaves early do you take his Flag time and divide it by his Actual Clock Time? That by my definition is Efficiency Percentage which tells me the Technician is capable of performing or not. It doesn't tell me he is able to hit my projections for that Stall each day. I call it Stall Efficiency. 
  6. Overall Effective Rate. This is a combined labor rate you are receiving for each of your Labor types. Most DMS will have a report you can pull to find that number. Take a hard look at this number and ask yourself are you achieving the desired labor dollars for each labor type? I would break it down and and look at them individually. The most abused one is the Internal Rate you charge the sales department. It should be the same as your Customer Pay Rate. The Warranty Rate should be reviewed every 6-12 months and follow your manufacturer's guidelines to achieve a Rate increase. The Customer Pay Door Rate should be reviewed the same time  as your Warranty Rate every 6-12 months. I call all the dealers in the area and ask them what the door rate is and adjust it accordingly  to stay competitive in the market area. I would mark your calendar or you will forget!
  7. Overall Gross Profit Percentage. This is what you get to keep as a percentage of your Labor Sale. It should be between 70-75% Only two things effective this number your Cost of Sale and what you sell your Customer, Warranty, and Internal Labor for. The Cost of Sale is what you pay your Technicians for each Labor Hour produced. The cost of sale is usually the more difficult number to adjust and fix however there are a number of ways to do it. The number one thing that comes to mind is what the Technician is Flagging on the R.O. for each operation. Your DMS should be able to pull an OP-Code history detail which shows you what your Effective Rate average is for each. The Labor Sale is usually the one that's being abused by our Service Advisor, or Sales Department based on not Inspecting What We Expect  everyday. What's your Percentage? What are you going to do to change it?
  8. Monthly Expenses. This is anything to do with the operation of your service department however nothing to do with the Cost of Sale which is what you pay to the Technicians for each Labor Hour Produced. You should be aware of each of your expenses and correct any out of line items, however always Fix your Customer Pay Sales Per R.O. and C.P. R.O. Count before attacking your expenses. The old saying is still true you can't save yourself into a profit! You should send out a letter every year asking for new bids on all your supplies, rugs, parts washers, brake clean, uniforms and so on. No more than one year contracts and make sure no price increases during that one year period. I would sit down and ask my controller to show you every check they write and compare it to your agreements quarterly if possible.

As always we can help you stop the "Profit Leaks" and exceed your expectations through Training, Coaching, or Consulting your fixed operations. ACG is a "Results Based" company and we don't get paid until you do!

Guy Salkeld is the President and Head Performance Coach of Automotive Consultants Group Inc. The only Results Based High Return Training, Coaching, and Consulting company in the world! To learn more go to  Have a question? E-Mail Guy directly at or Call me direct at: 305-331-3373    

Tuesday, September 20, 2011

What's my Effective Rate?

I facilitate a Virtual Performance Group each month for Dynatron Software and our last months topic was on Effective Rate. We took a look at a group of dealers on a spread sheet and they were ranked based on there Customer Pay Effective Rate.

The Top was at $122, the Average at $95, and the bottom was $69. The dealer group is of the same manufacture however the discrepancy between Top and Bottom is huge. Here's what we found:

  • Top Dealer was at 2.6 HPRO @ 85.1% GP
  • The Average Dealer was at 2.7HPRO @ 79% GP
  • The Bottom Dealer a whopping 4.7HPRO @ 73.8% GP
Now most Dealers I know would rush back to the service department looking for the service manager and say why are we not on the top of this list? I guess at first look and not knowing what to look for he's right however he would be making a big mistake without further review.

Here's 10 items you should look at before making any changes:

  1. What is my Cost of Sale? 
  2. What am I paying my Technicians in Hours for these jobs?
  3. Is my Door Rate competitive within my market area?
  4. Is my Door Rate going to achieve my Gross Profit % Goal?
  5. What am I selling my Maintenance work at per hour?
  6. What am I selling my Repair work at per hour?
  7. Do I need a Grid Pricing structure? Does it need to be adjusted?
  8. Does the Service Advisor's Pay Plan reward what I want repeated?
  9. Is my dispatching structure fair and productive?
  10. What are my Op-Codes charging out?

 The good news is most DMS will have a report to show you your Cost Of Sale, Overall Effective Rate, Individual Effective Rates for Customer Pay, Warranty, and Internal. I use a Try-On Calculator to determine how much I need to adjust my Customer Pay Effective Rate so I keep my Gross Profit % in line.

Here's an example of the Try-On worksheet:

Customer Pay Labor Sales: $287,987.00 / Total Labor Sales: $389,033.00 = 74%

Warranty Labor Sales: $57,546.00 / Total Labor Sales: 389,033.00            = 15%

Internal Labor Sales: $44,369.00 / Total Labor Sales: $389,033.00             = 11%

Now apply the percentage to each labor type:

Customer Pay Effective Rate: 68.76 X Customer Pay Percentage: 74%        = 50.88

Warranty Effective Rate: 80.00 X Warranty Percentage: 15%                      = 12.00

Internal Effective Rate: 65.00 X Internal Percentage: 11%                            = 7.15

                                                                             Overall Effective Rate:   = 70.03

Let's say my cost of sale is $25.00 and I need an Overall Gross Profit of 70%. Here's what I do to determine how much more my Customer Pay Effective needs to go up.

Cost Of Sale: $25.00 / 30% = $83.33 Overall Effective Rate Needed.

Overall Effective Rate Needed: $83.33 minus Actual Overall Effective: $70.03 = $13.30

So I need to increase my Customer Pay Effective rate by $13.30 or sell my customer labor at $82.06 to achieve my Goal of 70% gross profit. Now there are three other options which include reducing Technician Cost, increase your Internal Rate, or ask for a Warranty Increase however if the Warranty rate is already at $80.00 my first action plan would be to increase Customer Pay by at least this amount.

For more information or a free Demo on Dynatron's Virtual Performance Group or any other software they offer contact Dawn Leclercq at: 866-888-3961-Ext:100 or E-Mail:

Guy Salkeld is the President and Head Performance Coach of Automotive Consultants Group Inc. The only Low Risk High Return Training, Coaching, and Consulting company in the world! To learn more go to  Have a question? E-Mail Guy directly at or Call me direct at: 305-331-3373    

Dynatron Software

Friday, September 16, 2011

Has Your Service Department "Hit The Wall"?

What do I mean by "Hit the Wall"? Well, has your service department produced the same results, month after month, over and over again? Have you come up with all kinds of excuses why you are unable to grow over last year, same month? Here's a few I have heard:
  • It's the economy
  • My customers are just not spending right now
  • My traffic is down
If this is you and you know who you are, I have the secret on how to break through the wall. I went to the doctor to get a check up and he told me I have to lose some weight. So I asked how much and he said at least 20lbs. I went home and wrote down what I'm going to do to lose 20lbs and by when. Now at this point you are probably asking yourself what does going to the doctor and weight loss have to do with my service operation? Everything.... if you want to break down the wall. Nothing if you want to keep doing the same thing over and over again!

So here's my plan:
  1. I will ride a bike 3-days a week for 60 minutes at home or in the hotel if I'm traveling
  2. I will work out for 30 minutes 3 days a week with weight machine or resistance bands
  3. I will stop eating certain foods 
  4. I will lose 20lbs in 3 months
  5. I will record everyday what I did and each week how much weight I have lost
It's a very simple plan as you can see and here's how it went. I got in my car and drove in my neighborhood till I had a 2.5 mile course. I timed myself and roughly I could go 10 miles around this course in under 60 minutes. I didn't have a speedometer at this time.
I lost 10 lbs. in three months and now it has been 5 months months and I'm unable to lose anymore! I was really tired and hot after the 4th lap and just couldn't get myself to push anymore. I couldn't wait to get in the house and cool off and rest. I jump on the scale each morning and the same result everyday for the last 2 months.
Sound familiar? I bet it does! This is called hitting the wall because I'm telling myself (excuses) that I'm unable to do anymore when I know I can. It's been two months and the same results! What happens next is unreal but very true whether in business or losing weight. I sat down and did an evaluation on my action plan.
What could I do without spending more time and a lot of money to lose the 10 lbs more I need that the doctor said I need to lose? Remember he's the expert on my physical condition just like a business consultant or coach would be on the health of your service operation. I felt if I could measure my speed, average speed, distance I went and actual time spent ridding the bike I could get more efficient and productive in the same amount of time.
I went to the bicycle shop and purchased a speedometer for $69.95. I installed the speedometer and went out the next morning and rode like I do (same gear, same course) to see what I was averaging in speed, elapsed time, max speed, distance. It looked like this:
  • Average Speed-12.7 mph
  • Time-58 minutes
  • Max Speed-13.4
  • Miles-9.97 
I took the data and set some goals.
  • Average Speed-13.2 mph
  • Time-58 minutes
  • Max Speed-15
  • Miles-9.97 
The results are in and they are staggering! I found a way to measure my performance everyday and make adjustments the same day. How are you communicating with your service team every morning after reviewing the reports and what adjustments are being made daily?
I lost 12 lbs. more in two weeks and here's the readings from my speedometer today:
  • Average Speed-14.4 mph
  • Time-51 minutes
  • Max Speed-16.5 mph
  • Miles-12.36
Lets take a look a the measurements and do some math:
  • Average Speed is up by 2.6 mph
  • Time spent on the bike went down by 7 minutes
  • Max Speed- up by 3.1 mph
  • Miles rode on the bike went up 2.39 
My efficiency and productivity went up which gave me more time to do something else. These were small gains, however the 12 lb. loss was huge and beat my goal by 2 lbs.When I look at the return on investment I spent which was $69.95 on the speedometer so I could get an accurate measurement and inspect what I expect it looks like this: 
  • $69.95 divided by 12 lbs. =$5.82 per pound to beat my original goal of 10lbs.
  •  I feel great and each day I set a new goal for my average speed at .1 and my max speed at 17 mph.
So what should you be looking at consistently and drilling down to find out what to change? What's your average on these Items? Remember you must change yourself first to change anything!
Here's three Key indicators to look at:
  1. Customer Pay Labor Sales Per R.O. Should be at a minimum of $200.00 per R.O. 
  2. Customer Pay R.O. Count at a minimum of 10% over last year same month
  3. CSI above Region and National every month 
Questions to ask yourself:
  • Whats your speedometer telling you? 
  • What will you do to change it? 
  • Do you have what it takes to go beyond your fears?
  • What excuses have you been telling yourself why you can't?
 If you are not consistently working on new things everyday to achieve your goals you are going to "Hit the Wall" 
Remember Success is a moving target! It takes constant change to achieve!

Guy Salkeld is the President and Head Performance Coach of Automotive Consultants Group Inc. The only Low Risk High Return Training, Coaching, and Consulting company in the world! To learn more go to  Have a question? E-Mail Guy directly at or Call me direct at: 305-331-3373    

Thursday, June 30, 2011

ACG's "Multi-Point Inspection Process"

The Inspection process is one of the most important towards increasing your sales per CPRO. It also gives your customer a tangible item that something was done while they were in for service or repairs.

The first step in the inspection process is to review with your Technicians and Advisors what needs to be inspected. I've seen hundreds of forms and not all of them are worth the paper they are written on. Then agree on the form to be used and make sure it's a Red/ Yellow/ Green type.

The next step in this process is to ask each customer if they would like an inspection and get there OK!(Op-Code). This assists you when you call back to review the findings. Also make sure every customer no matter what the mileage is gets the opportunity to have an inspection done. This in a nutshell is training your customer to expect an inspection every time they visit.

I personally don't believe in paying for an inspection and that comes from my technician background. However we do like to spiff a technician if he finds something and the advisor sells the repair to the customer.

The spiff program we set up works extremely well. It only rewards if we find something wrong and the customer agrees to repairing it. The other part of this process is to pay them cash every day in the morning. It doesn't matter if you use the dice roll or pull boards the key is to pay them every day cash!

The active delivery is a very important part to educating our customers on the condition of there vehicle evey time they visit our dealership. We are training them to want an inspection every time and builds that relationship even stronger based on the time you spend with them.

Make This Year Your Best Year!

Guy Salkeld is the President and Head Performance Coach of Automotive Consultants Group Inc. The only Low Risk High Return Training, Coaching, and Consulting company in the world! To learn more go to  Have a question? E-Mail Guy directly at or Call me direct at: 305-331-3373    

ACG's "Road To The Sale"

How's your selling structure working in your dealership? Do you even have a selling structure for your team to follow? Let me be perfectly clear on what I mean when I say a "Selling Structure."

It's a crystal clear written down process on how to take care of your customers from start to finish every time they visit. It's not a system to sell a customer service or repairs it's a system to allow a customer to purchase based on the relationship we have built with them.

There are a few dealers who have hired a consultant/trainer to teach the service advisors how to sell using word tracks, or gimmicks and they may have moved the needle, however, they can't seem to understand why the CPRO count is dropping but sales have increased????

Remember, if a customer ever feels like they were sold they will not return and tell a lot of people about the experience. If they purchased due to a relationship that was built they will return and tell a few people on what a great place to get your vehicle serviced or repaired.

Here's ACG's "Road to the Sale" Process:

1. Must have an Appointment Process that only accepts three customers per hour, per Service Advisor! This will give them the time needed to spend with each customer to build the relationship!

2. Must have your Daily Action Plan ready for each customer that arrives for there appointment. If your not prepared you will lose the sale. This is a deal breaker when it comes to building a relationship with each customer and being the subject matter expert the customer expects.

3. The Meet and Greet process is the first impression your customer receives upon arrival to the dealership. This process is for Appointments as well as Walk-In's. If your prepared for your customer before they arrive they will feel it and be more open to your advice.

4. I can't say enough about Listening for the "Prime Item" which is the reason the customer is there in the first place. We have two ears and one mouth and if were using our mouth more than our ears, we are not listening to the customer. I've found from experience that assuming becomes a bad habit which leads to service advisors thinking FOR our customers instead of thinking OF them!

5. The Walk-Around Process is the "Glue" to all the other steps in this system. If done correctly, it will allow you to build a Rock Solid Relationship with your customer. Bottom line it's all about TRUST!!!

6. The Service Menu is a must if your going to advise on your customer's service needs. It must be up to date and pricing must reflect your market area. The Service Advisors must know the features and benefits of the menu.

7. The Customer Promise is a review of what is going to be done, what will be inspected, a status call on the progress and a time the vehicle will be completed.

8. Closing the Sale process begins with a review of what the Technician found, an explantion of needed repairs, an estimate if out of warranty and ask for an OK to get started. This last step in the process is a combination of the other seven steps and if followed each and every time you will see the results in your sales per CPRO, CSI, and CPRO count.

Guy Salkeld is the President and Head Performance Coach of Automotive Consultants Group Inc. The only Low Risk High Return Training, Coaching, and Consulting company in the world! To learn more go to  Have a question? E-Mail Guy directly at or Call me direct at: 305-331-3373