The Light Is Green

Service improvements (Part 2): Key indicators

Here's part two of a conversation I recently had with expert Peter Daniel of ADC-Automotive Dealer Consulting about the importance of the Service Advisor, and key indicators to measure his/her performance.

In the first part of the interview, Peter and I talked about the key indicators for measuring service shop sales, and we went into detail regarding Hours per Repair Order.

Today we'll discuss other indicators that can tell us if the Service Advisor is doing a good job…

ADC, a consultancy with offices in the U.S. and in Puerto Rico, provides consulting and training services to auto manufactures and dealers, focusing mainly on process and profit improvement for service, parts and body shops.

Peter Daniel: There are other factors that could be underlying or behind the scenes...

It can be an indicator that maybe there are process and procedures problems.

For example, maybe there are ten customers that show up at one time at 7:30 in the morning and there’s only one Advisor there. So you can imagine what would happen, the Advisor is more like an order taker than really being a Service Advisor or service consultant, as we like to call them sometimes.

So what would happen in that instance, the dealer would not be staffed correctly at the peak times of their business, so therefore the Service Advisor really can’t be at fault because he really has not been provided the process and procedure support to really do his job and do a correct sales presentation, consulting with the customer on their maintenance needs or their repair needs.

I think another factor when you look at Hours per Repair Order, if they are low, if they are under 2 hours per repair order, could be a lack of selling tools.

I think the two main tools any Advisor in any country needs to have is a printed maintenance schedule according to what the factory requirements are for severe service.

Besides that printed maintenance schedule they should also be using what’s called an inspection form, whether it is a 20 point, or 25 point, or 15 point general visual inspection that would be performed on every vehicle that comes in the shop free of charge for each customer.

And these two tools used by the Advisor, presenting the maintenance menu at time of write up and the technicians performing a visual inspection of these 20 items in the shop, give the customer a chance to buy, and this also informs the customer of the condition of the car, it gives the customer an opportunity to get it repaired while the vehicle is in the shop.

What we find is probably, and I hate to use numbers, but I’m going to say that probably nine out of ten dealers in the world do not have this combination of a correct printed maintenance schedule along with an inspection form.

Al McClymont: 90%, that’s a terribly high number.

Peter Daniel: You know, everybody I think in every position, as well as your company and ours, we all have a benchmark or job expectations, job requirements. So the Service Advisor certainly is the key issue and I think in numbers it is great to say 2 hours per repair order but I think every dealer has to look at the big picture.

(to be continued...)

Related links:

• Podcast of the full interview
• Service improvements (Part 1): Key indicators
• Service improvements (Part 2): Key indicators

Tags: ADC, Autologica, Peter Daniel, Al McClymont, DMS, dealer management systems, Autologica, Service Advisor, after-sales, auto dealer, auto dealers, car dealer, car dealers, motor vehicle dealer, motor vehicle dealers, automotive, auto industry, automotive industry, auto service, best practices

Powered by Qumana

Service improvements: Podcast

Here's our latest podcast where I speak with expert Peter Daniel of ADC-Automotive Dealer Consulting about the importance of the Service Advisor, and look at some key indicators to measure his or her performance.

(ADC, a consultancy with offices in the U.S. and in Puerto Rico, provides consulting and training services to auto manufactures and dealers, focusing mainly on process and profit improvement for service, parts and body shops).

The podcast runs about 15 minutes (available in English for now).

	To listen: click here once.
	To download: right-click and choose Save Target As.

Or go to the Autologica website.

Tags: auto dealer, auto dealers, car dealer, car dealers, motor vehicle dealer, motor vehicle dealers, automotive, auto industry, automotive industry, auto service, best practices, DMS, dealer management systems, auto dealer software, Autologica, Al McClymont, Peter Daniel

Powered by Qumana

Service improvements (Part 1): Key indicators

I recently chatted with expert Peter Daniel of ADC-Automotive Dealer Consulting about the importance of the Service Advisor, and key indicators to measure his/her performance. I'll post the podcast later this week.

ADC, a consultancy with offices in the U.S. and in Puerto Rico, provides consulting and training services to auto manufactures and dealers, focusing mainly on process and profit improvement for service, parts and body shops.

Here's an excerpt from the interview...

Al McClymont: Peter, how can you tell if your Service Advisor is doing a good job?

Peter Daniel: Well, that’s a good question.

There are some benchmarks that we look at on an international basis, that really show how well a shop is doing in their service sales performance, and that includes the Service Advisor as well.

Some of the things that we look at, and I think the key things that we should look at, when looking at service shop sales are

• The Hours per Repair Order for customer pay
• The Effective Labor Rate
• The Parts to Labor Ratio
• The number of repair orders that each Advisor writes
• The number of sold hours by Advisor
• The amount of parts sales

But I think with the time that we have today we can start out with one of the key indicators, a key benchmark measurement that’s called Hours per Repair Order.

Hours per Repair Order… the formula would be you take the number of hours sold on a group of repair orders that are written by the Advisor, and divide that by the number of repair orders.

So let’s say the Advisor sold 200 hours that month and he had 100 repair orders, so you take 200 hours divided by the 100 repair orders, that would give you an average 2 hours per repair order.

In other words, Hours per RO would be 2 hours on average. And that’s our target benchmark on an international level, each Advisor should average 2 hours per repair order.

Anything less than that would show that there’s a performance problem somewhere, whether it’s in the sales performance of the service advisor, but maybe it’s not though.

There are other factors that could be underlying or behind the scenes...

Related links:

• Podcast of the full interview
• Service improvements (Part 1): Key indicators
• Service improvements (Part 2): Key indicators

(to be continued...)

Tags: ADC, Autologica, Peter Daniel, Al McClymont, DMS, dealer management systems, Autologica, Service Advisor, after-sales, auto dealer, auto dealers, car dealer, car dealers, motor vehicle dealer, motor vehicle dealers, automotive, auto industry, automotive industry, auto service, best practices

Powered by Qumana

How Suzuki generates market

As India's middle class continues to grow, the local car market is going the same way at a fast clip of 15 percent a year. Total sales are expected to jump from 1.3 million in 2006 to 2.1 million in 2010.

Maruti Suzuki is the reigning king of the auto industry in India, owning an amazing 55% of the market.

Not content with their absolute dominance of the Indian car market, they've come up with some innovative ideas to grow the market and thus expand their reach.

Here's what Maruti noticed:

• Many first-time buyers don't know how to drive
• Few women in India drive
• Buying decisions are made by the entire family
• Rural areas are mainly unattended by automakers

Here's what Maruti is doing:

Focus on first-time buyers

35 percent of sales are to first-time buyers. For many of these, a car is an enormous acquisition, so Maruti has learned to treat all customers equal, whether they are buying a high or low-end vehicle.

But here's the more interesting strategy: Maruti sponsors 18 driving schools throughout India, and plan to expand to fifty by March 2008.

Focus on women

More than half of trainees at the driver training schools are female. So Maruti has “lady instructors” to make them more comfortable. Jagdish Khattar, managing director of Maruti Suzuki, says:

"If the wife learns to drive, it won't take long for her to persuade the gentleman to buy a car."

Focus on family

Maruti dealerships are equipped to accommodate buyers in large groups, for example with play areas for children.

Attack rural areas

Indian carmakers mainly focus on urban areas as that is where the money is.

But rural India is home to over 800 million people, with a lower cost of living, and where there are many dual-income families with more disposable income.

Maruti has unleashed salespeople to rural India to target various niches... teachers for example. Last year they visited 30,000 schools and sold 10,000 units.

Ongoing service

There are over 6 million Maruti owners throughout India. Maruti serves them through a huge network of 400 dealerships and 2,400 service shops in 1,100 cities.

They hold free tune-up and service camps that are attended by 450,000 owners a year.

And the end result of all of this?

Maruti not only leads all carmakers in India in sales, they are also ranked #1 by JD Power in customer satisfaction with dealer service (for the past seven years).

Learned of this here.

Tags: customer satisfaction, best practices, automotive, auto industry, automotive industry, India, India auto industry, Suzuki, Maruti, Suzuki Maruti

Powered by Qumana

Chrysler gets life

Chrysler continues to grab headlines, this time with a gutsy move intended to underscore their commitment to quality.

They've now announced a lifetime powertrain warranty for all new vehicle sales in the U.S.

Chrysler's previous powertrain warranty was for three years or 36,000 miles (58,000 km).

This is the now the best warranty in the auto industry.

Both GM and Ford currently offer transferable 5-year powertrain limited warranties; GM for 100,000 miles (161,000 kms), Ford for 60,000 miles (97,000 kms).

Hyundai has been the market leader in this sense. Since 1999, they've had a 10-year, 100,000-mile non-transferable powertrain warranty.

Toyota has a five-year, 60,000-mile warranty for Toyotas, and a six year, 70,000-mile warranty for Lexuses.

The new Chrysler warranty is non-transferable, and owners must get a free powertrain inspection every five years from a certified dealer.

Chrysler had tried a 7-year, 70,000-mile warranty two years ago, but that turned to be too onerous. According to Wards, DaimlerChrysler paid out $6.9 billion in worldwide warranty claims in 2005, way ahead of all other manufacturers, including GM ($4.7 billion) and Ford ($4 billion).

According to Wards:

Chrysler officials trace the genesis of the plan back to its dealers, who recently told executives in Auburn Hills the auto maker’s product quality is the best they've seen in years and its warranty should reflect the improvement.

MSNBC reports that the warranty applies to 88 percent of U.S. sales under the Chrysler, Dodge and Jeep brands, and covers the cost of all parts and labor needed to repair covered powertrain components, engine, transmission and drive system, which happen to be the most expensive repairs in a vehicle.

Tags: Chrysler, Cerberus, automotive, auto industry, automotive industry

Powered by Qumana

Pitfalls of outsourcing (Part 2)

A few days ago I posted about why in some cases we think outsourcing  is a short-sighted solution, and the risks for a software company that outsources the development of its software products to the lowest bidder (cost being the only reason I see for a software company to outsource its core competency).

Speaking of "bad" outsourcing, here's a funny cartoon I found at Call Center Cartoons...

Posts in this series:

• Pitfalls of outsourcing: Part 1

• Pitfalls of outsourcing: Part 2

• Pitfalls of outsourcing: Part 3

Tags: outsourcing, DMS, Autologica

Powered by Qumana

Worst customer experience ever (Part 3)

A brief recap of my worst customer experience so far, which occurred over 3 visits to a major auto dealership (I'll add a fourth as a special bonus just for you! :) ...

• Part 1 involved arriving a few minutes before opening time and being summarily dismissed (and dissed) by the Parts counter guy.
• Part 2 was a few days later, whereby I waited half an hour without so much as a nod in my direction. But when I left a salesman ran after me and begged me to come back.

The next day, I went back to the dealership, and luckily the guy who had alertly fetched me in the parking lot saw me right away and directed me to an available sales rep.

I sat down and we discussed what I was looking for, then went into specifics about my trade-in. And that's when he hit me with Car Sales Trick #28, asking me what the value of my trade-in was. Obviously, he was hoping for a low figure, and if conversely I high-balled, he'd just go to his industry-standard book of used-car values that everyone in the known universe knows about. Should I have done my homework? Possibly. Still, it seemed like a cheap trick and so I left.

I'll be buying my next car from their competitor, a smaller but friendlier shop.

Unfortunately, a week later (still hadn't bought my new car) I was forced to go back to the "bad" dealership, just for a planned service visit (no other shops had availability), but they still managed to surprise me with some silliness...

Part of the service was an oil change. When I went to pick up my car saw they had stuck one of those reminder stickers on the inside of my windshield, but the writing was so faint, just scratches in fact, as to be totally illegible. I asked the technician and he apologized, but the plastic stickers were too slick to take ball-point ink.

I had to laugh! What kind of answer was that? This dealership has been in business for over 20 years, I wonder if this problems dates back to Day 1?

Incredibly, they're the #1 or #2 dealer in a couple of makes, and continue to grow, all of which underscores 3 facts:

1. Many countries in emerging markets have a long way to go regarding customer satisfaction.
2. These countries are still very generous, in the sense that the market accepts vendor behavior that would be inadmissible in major markets.
3. There's a great opportunity for forward-thinking dealers to come in and blow this type of old-schooler out of the water.

Tags: automotive, auto industry, automotive industry, auto dealer, auto dealers, car dealer, car dealers, motor vehicle dealer, motor vehicle dealers, customer satisfaction

Powered by Qumana

Worst customer experience ever (Part 2)

Part 1 of my worst customer experience involved arriving a few minutes before opening time at a major auto dealership, and being summarily dismissed (and dissed) by the Parts counter guy.

But, thinking I maybe had overreacted, I went back a few days later, this time making sure to arrive during normal business hours. I got there around 6:30 PM, parked in a paid lot across the street (they don't have client parking), and went in...

... and stood there for exactly 30 minutes without anyone even acknowledging my presence. I timed it. There were several customers ahead of me, and all salespeople were "taken".

I left shaking my head (to myself I hope), paid the parking, and as I was getting into my car saw that a sales guy had run out after me, apologizing and asking me to go back. I said no and left, but decided to go back the next day for a final try...

Tags: auto dealer, auto dealers, car dealer, car dealers, motor vehicle dealer, motor vehicle dealers

Powered by Qumana

Worst customer experience ever (Part 1)

My worst-ever customer experience occurred at an auto dealership. Maybe I'm attuned a little more than normal as we happen to provide software for this industry, but I'll share it with you to see what you think.

No names will be given so as not to offend a potential client. :)

The tale comes in 3 parts as I gave this dealer that many attempts to sell me a car... (would I actually milk 3 posts out of such a trivial and piddling personal incident? You betcha!)

Part 1: Monday morning 8:15 AM

T'was 8:15, just dropped off my 2 boys at school, and since I was looking to change my car, thought I'd stop by the city's largest Brand X dealership a few blocks away. 

I got there and looked through their enormous plate glass window, saw that though they were closed there were some 15 people sitting around a large table, maybe the sales staff doing a beginning-of-day session.

No one took notice of me, no problem, I'll wait, knowing they opened 8:30. I walked over to their Parts shop next door to kill time looking at their amazingly entertaining display. :)

The Parts counter guy saw me and walked towards the door. Great, I'm in, I thought, maybe they have a cappuccino machine while I wait! As he approached, he suddenly flicked out his index finger and pointed at me... strange, eh?

When he reached the glass door he brought his finger to eye-level and tapped on the glass three times right in front of me, then did a 180 and went back to his desk.

Say what?

Oh, I suddenly realized he was showing me the store's Business Hours sign. For a moment I thought he was funning with me, waited a few seconds, but he never looked back at me.

Thanks buddy, I'll be sure to come back soon! I went to the office vowing to never visit that dealership again.

A few days later I was back, maybe I had over-reacted, let's give them a second chance. That'll be Part 2 of my story, coming soon...

Toyota telling suppliers not to sell parts to Hyundai?

Toyota, in line with the prevailing notion that their biggest worry is not overtaking GM in sales but rather that Hyundai overtake them, is thinking of telling its suppliers not to sell parts to Hyundai. If there is resistance, they are looking at becoming larger stakeholders in these companies.

As reported by JinBN and  Edmunds.