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Since When is Selling a Bad Thing?

Get Rid of that Demarcation Line between Sales and Service!

Over the past 20 years, our team at DealerPRO has visited over 2,500 dealerships across the U.S. and Canada to evaluate and enhance their performance and profitability in service and parts operations. We’ve trained thousands of dealers, general managers, and service advisors through workshops and sessions at our Training Center. One consistent issue we encounter is the stark contrast in accountability standards between sales operations and service and parts operations.

I’ve often observed a significant divide within dealerships, which I refer to as the “Demarcation Line.” This line separates the Variable Operations (New, Used, F&I, Special Finance, Internet Sales) from the Fixed Operations (Service, Express Lane, Parts, Collision Center). Crossing from Variable to Fixed Operations, the concepts of “selling” and “accountability” often take on a completely different meaning.

For instance, if a salesperson only sells five cars a month, the typical response from a dealer would be to replace them with someone who can sell more. However, when a service advisor only sells an equivalent amount in service, the response might be more forgiving because “he’s a good guy, everybody likes him, and I don’t want him to oversell our customers.” This contradictory stance puzzles me because it implies a dealer would fire a salesperson for underselling and a service advisor for overselling.

This logic extends further. If a sales manager closes only 10% of sales opportunities, losing thousands in potential profits, they would likely be replaced. But a service director successfully closing 50% of service menu presentations, thereby generating significant additional profits, might face repercussions for overselling. This inconsistency is baffling and counterproductive.

Many dealers express concern about overselling in service, yet they demand maximum efficiency and upselling in sales operations. They expect 100% turnover to F&I, complete menu presentations, and strong sales closing ratios. Conversely, when it comes to service, they often tolerate poor performance that includes no walk-around presentations by advisors, no service menu presentations, and minimal turnover of declined repairs to a manager, resulting in significant profit losses.

Why would any dealer tolerate such a scenario? Performance-based pay plans, ongoing training, and robust advertising support are norms in sales operations, fostering a high-performance culture that is often not mirrored in service operations. If 100% menu presentations are the standard for F&I, why should service be any different?

A recent study we conducted at DealerPRO Training revealed that even minimal efforts in improving service selling techniques could result in substantial profit increases. For instance, a dealer averaging 500 customer pay ROs per month with advisors making menu presentations to 70% of customers resulted in: – Menu Penetrations @ 70% – Manufacturer Minimum Services Sold @ 30% – Additional Service Sold @ 0% – Increase in HPRO @ .2 – Monthly Gross Profit Increase @ $12,268 – Annual Gross Profit Increase @ $147,227

These figures show that even a slight improvement in HPRO can significantly enhance profits with minimal effort from the advisor. Imagine the potential if advisors were properly trained to advise customers on necessary services and preventative maintenance!

The difference in standards and expectations between sales and service not only hampers profitability but also affects customer satisfaction. Eliminating this demarcation can lead to more consistent service experiences, improved customer trust, and ultimately, higher dealership profitability.

To bridge this gap, dealerships must implement ongoing training programs for both sales and service, support both with adequate resources, and enforce accountability across all departments. This alignment can significantly increase fixed operations’ contribution to dealership profit, which as per the NADA Operating Guides for 2023, constitutes 49% of an average dealer’s gross profit.

It’s time for dealers to reevaluate their internal policies and ensure that their operations are not just aligned but optimized for maximum efficiency and profitability across the board. If you’re interested in transforming your dealership’s operations and maximizing profitability, reach out to DealerPRO Training. We’re dedicated to helping dealerships eliminate these outdated demarcations, fostering a unified approach to customer service and sales that drives success.

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