Happy New Year! I hope you had a chance to rest and unwind as you celebrated the holidays with your family and friends.
We begin 2012 with some great news from J.D. Power & Associates: contrary to popular perception, vehicle owners say the up-selling of “unnecessary” work by automotive dealerships is rare!
The 2011 U.S. Customer Service Index (CSI) study went on to say that “only 7% of service customers in 2011 indicated that their dealership attempted to sell them service work that they perceived as unnecessary.”
The results of this study come as absolutely no surprise to me or anyone else out there promoting the importance of selling service on the drive. It does, however, serve as a welcomed validation of what I have been teaching for my entire 30-year career in the automotive business.
One of the strangest excuses I’ve ever heard from dealership upper management is the notion that, given the opportunity, their advisors would over-sell on the service drive and rip off the consumers.
This misguided philosophy is usually wrapped in a self-righteous-sounding belief that the customer knows what’s best for their car and will ask for service when they want it. (I believe dealerships have a very educated clientele. However, most vehicle owners don’t know how to properly maintain their cars. That’s why they come to your service department for expert advice that saves them money). Furthermore, under this “no selling” philosophy, the service advisor is relegated to the task of being an order-taker and clerk. They are told not to up-sell anything and (you’re not gonna believe this) they are reprimanded when they try! Unbelievable!
Obviously, I’m writing to a very diverse group. Most of you are reading this and saying: “Hey, I want my advisors to sell all they can, as long as it is truly needed and beneficial to the customer.” For the rest of you, I’ve probably already made you mad, but I’m asking you to stay with me to the end of the article.
Let me be clear: I believe over-selling is wrong. If a technician or advisor recommends un-needed repair or maintenance, then they have crossed the line. Every recommendation must be done with integrity, with the customer’s best interest in mind. For example, if an advisor recommends a radiator flush on a one-year-old car that has 11,000 miles on the odometer, well, that’s wrong.
On the other hand, if a three-year-old vehicle needs new wipers and we don’t recommend it, well, that’s wrong, too. It’s wrong to over-sell and it’s wrong to under-sell, but it’s not wrong to sell.
“Suggesting additional service work can actually benefit both customers and dealerships—customers may prolong the life of their vehicle, while service facilities may gain additional revenue,” said Jon Osborn, research director at J.D. Power and Associates. “However, it is key for dealerships to properly train their staff in the subtleties involved in adequately explaining the necessity and value of additional services without placing undue sales pressure on the customer.”
Osborn nailed it, he’s right on track! Last fall, I’m sure you saw some of the “video stings” conducted by local and national media. In most cases, the service centers were portrayed as being a little shady. From my perspective, it was largely a case of misdiagnosis and miscommunication. I agree with Osborn that training is critically important to the sales process. The issue, then, is not over-selling, but rather under-training.
One of my clients, a domestic dealership in the deep South, had an owner who refused to let his advisors sell service. They were paid an hourly wage with no sales incentive. Maintenance services were only performed when the customer requested it at the time of write-up.
In 2009, the dealership did 686 maintenance services, producing revenue of $78,000. The dealership sold to a new owner in 2010 and the silly “no-selling-on-the-service-drive” policy was lifted and a sales incentive was implemented for the advisors.
Last year, they performed 2,750 maintenance services, resulting in just under $400,000 revenue. That’s a 500% increase in customer-pay revenue from simply freeing the advisors to do their job.
Shop efficiency is 89.04% and they are averaging 2.7 hours per RO and their effective labor rate is hovering around $100. Under the old owner, the techs refused to do multi-point inspections; now, they are eager to do them. Before, it was a waste of time but now, it puts money in their pockets.
Best of all was how the customers responded to this change. They had a CSI of 95 under the old system, and guess what? They maintained a CSI of 95 last year under the new system!
In other words, when techs and advisors are properly trained on how to sell service, the vehicle owners have a favorable response.
Few dealers put this kind of sales-ban on their advisors, but I’ve seen subtle comments made that really quashed performance.
I’ve seen managers overreact to one comment made by one customer one time that threw a wet blanket on a successful sales program.
Let me tell you about the greatest service advisor I’ve ever met (I wrote about this guy a few years ago, but indulge me for a couple of paragraphs). His customers loved him…they baked cookies for him, wrote him thank-you notes, and gave him gift cards to local restaurants. His CSI was great; he always had the highest scores in the dealership. Oh man, was this guy a salesman! As long as he had the tech’s recommendation in writing, he could effectively communicate with the vehicle owner and he could really rack up the labor hours.
Three or four times a year there was an occasional customer who thought he was just a little bit too aggressive. The service manager would have to do a little bit of damage control to the tune of about $2,000 a year…discounts, refunds, write-offs, etc. The service manager said it was worth it and it was the best money he’d ever spent…a small investment and a huge return!
I’d so much prefer to have an advisor that I had to reel in every now and then, rather than have a lethargic loser that always needed a swift kick in the seat of his britches.
Oh! By the way, five years ago, this top advisor was ready for a change of pace and gave me a call. He’s been on my sales staff ever since, and it came as no surprise to me that his customers love him and he is one of my top producers.
As you begin this new year, let me encourage you to create a sales culture on your service drive. Teach your advisors the proper way to sell service, reward them for stellar performance, and then turn them loose to make you money!
My thanks to Syvetril Perryman, J.D. Power & Associates, for giving me permission to quote from their CSI study…and to the 97,300 vehicle owners that responded to their survey. This is the kind of information that helps all of us better service the driving public.