One of my mentors in the automotive business is Jeff Sacks. I met Jeff over 20 years ago at his general manager’s boot camp. During the class, he made a profound statement that has stuck with me, and experience has proven it to be true time after time; “In bad times we create good habits and in good times we create bad habits!”
When a dealership has robust service drive traffic, when gross profits are up by double digits for the fourth month in a row, when there’s a technician in every service bay, when things are going really well—look out! It is so easy to get sloppy, get lazy, cut corners, slack off, in short, stop doing the very things that made you successful in the first place.
It’s so easy to develop bad habits when times are good. That is human nature, and it has happened to the automotive industry over the last several years. New and used car sales have been mixed over the last three years, but generally on the increase. Yet according to NADA data, customer spending on parts and labor has been on the decline. The numbers for the average dealership are as follows: $29.94 billion (2011), $29.23 billion (2012), and $29.15 billion (2013). As you can see, that’s a steady decline each year.
“Don’t grow weary, don’t give up, don’t drift away from the things that made you successful in the first place.”
How can that be? Look back to 2008 and 2009—arguably the worst decline in the industry since World War II. During those years, fixed operations carried the dealerships’ water, fixed operations did the heavy lifting, fixed operations—and this is not an exaggeration—fixed operations frequently saved dealerships.
There was a silver lining to those dark years, as everyone ‘found religion’ when it came to the value of the parts and service operation to the store. The ever-consistent, ever-faithful cash cow (fixed operations), kept churning out the revenue.
And yet, now the parts and service operation is in decline. When things got good in new car sales, many dealerships developed some bad habits in the service department. Or, perhaps it would be more accurate to say they let some good habits slip by the wayside. That’s how it seems at this point.
2014 has been “the year of the recall”, but many dealerships have seen record service drive traffic. For some it has been a great blessing. For others, not so much. But from first-hand observation, it seems that this traffic increase and the additional workload, has caused a breakdown in shop processes and procedures across the nation. To be fair, when the work comes in you’ve got to get it done. But you know as well as I do that in the rush to get things done, details can be missed.
Look at the graphic of bad habits and good habits in to this article. It is sobering to see how quickly we abandon our proven protocols when we get pressed for time…or when we get successful.
The solution isn’t hard to understand: stick to your processes no matter what– no matter what the economy, no matter what the weather, no matter how busy or slow it is, maintain the highest standards at all time! You put those processes in place for a reason. They are good processes that lead to customer retention, shop efficiency, up-selling opportunities, customer satisfaction, and shop profitability.
Don’t grow weary, don’t give up, and don’t drift away from the things that made you successful in the first place. my friend Dave Anderson says “You must become a master of the basics.” I hope that in 2015 you’ll take the good habits you learned in the bad times, and hold on to those good habits in the good times.
For those of you attending the NADA convention in January, I hope you’ll add my workshop to your itinerary. It is filled with habits and ideas that will help you in good times or bad. Here are the details:
As we wrap up another year, I wanted to take a moment to thank you for reading Dealer Magazine and my article each month. On behalf of my wife, Angela, and our family, I want to wish you a Merry Christmas and a blessed New Year!