The Truecar Controversy (and our opinion of it)

Jim Henry's article on his Forbes Automotive blog yesterday caught my attention because I've been doing nothing but trying to understand the deeper relationship between their integration with dealer DMS data, and the concern so many folks have expressed on popular automotive networking sites.  I've finally come around to the notion that their technology may have a good application somewhere but it isn't going to change the profit and loss structure of the new car departments in dealers that have integrations feeding Truecar.  My comment was called out by the writer and I am repeating it below for easy access.  Let me know your thoughts and we can correspond directly or via the MotiveLogic blog.

Profit left new car sales years ago. The semantics of MSRP, Invoice and Sticker Price are irrelevant to the discussion, since the average new car is sold below dealer COST. According to the National Association of Automobile Dealers recently released NADAData2011 study “New-vehicle department operating profit at the average dealership continued to decline and was below breakeven in 2010″.

While the controversy about the impact of Truecar’s technology is interesting, more interesting is how dealers can generate additional revenue from their service departments. Simply put, service profits keep dealership doors open. But their core systems (called DMS) inhibit business improvement in service.

Changing the game to improve and sustain additional profits for dealers will happen in their service departments as they adopt state-of-the-art technologies to gamify and reward the service employee’s role in customer value creation and satisfaction.

Gregg Gerdau
CEO
MotiveLogic Corporation

How to Fish Like an Expert

Jennifer Schraders, in her recent blog for Ignite XDS, “Reaching Sales Customers as Service Customers", shared some great information. She said “on average, dealerships convert 20% of sales customers into service customers.  Why are they allowing 4 out of 5 customers walk out and do business with the competition?”  And, as she correctly pointed out, “…their processes are flawed.”

Some might say our customers are more fickle today, while others would call them discerning or frugal.  The long and the short is that customers have limited bucks for services and want to make wise choices.  Our challenge is to attract them by getting the message out about what we can best do for them and how it solves their problem.  And, how to do it efficiently and effectively.  But how do we do it?  Do we target our services that work for other dealers or do we take advantage of what keeps our customers returning to our shop in the first place?

My Grandpa was a great fisherman.  He could find bass in a lake more often than anyone I knew.  And as you can imagine, what made him so effective, is that he had discovered the what, when and how of fishing.  He knew what lure to use, what part of the day to fish, and how to cast to attract the fish.  I could try all day long with a live nightcrawler on a bobber, and while that worked with other fish, it wasn’t what caught that largemouth bass for dinner.

MotiveLogic℠ Fixed Ops Marketing Dashboards™ give you the what, when and how for effective marketing of your service operations by providing exact information about how customers find dealer service departments and what they purchase most of when they get there.  Now, dealership management can know their highest value services purchased, and determine maximum profitable service segments for each dealership to target. Auto dealers now have the tools to determine exactly what and where to promote in order to elicit maximum response from customers and drive more profits from their service departments.  Such precise information is not available from any other auto dealer marketing tool.

Jay Baas

Increasing Technician Efficiency

Who are your best technicians?  What comes to your mind first?  Is it his pay rate, or his efficiency rating, or maybe even his skill level, or maybe how reliable he is or how long he has been with you?  And all of these are important because they all influence our ability to grow our business.  These are our guys who help us deliver on the promises we make to our customers every day.

But can you get to the metrics behind your ratings?  How quickly can you compare the data to the impression?  I don’t want to rain on your parade but you may be doing your employee and yourself a really big disservice if you can’t provide concrete results that back up your relationship.

How many hours do your techs flag a day?  Are they 80% efficient, flagging 6 hours in an 8-hour day?  Let’s say you have two of these guys.  And another one who can only turn 5 hours.  And maybe another who can turn 9 hours on average?  What if you could develop your 5-hour guy into a 6-hour guy and move the 6-hour guys to 8 hours?  You just went from 26 hours per day to 31 hours, a 19% increase in hours available to turn and generate revenue, without adding any employee benefits or other fixed overhead costs.  That means 20 more hours a week or 1,040 hours a year.  What could you do with this “margin on the margin” revenue stream?

Look at it another way.  How often do you have your “A” tech doing oil changes or tire balancing and rotation?  The natural migration of technician pay plans in shops is to move to the “A” tech pay plan.  

Unfortunately the work doesn’t necessarily follow that schedule and we end up with labor costs that suck away our profits.  

What if you could, in real-time, compare your tech average labor rates with the actual work they are doing day in and day out?  Easily, instantly, from anywhere?

MotiveLogic gives you the tools you need to monitor and manage these issues.  Using real-time dashboards that have flag hour goals for your techs, you can help them raise their efficiency, making them and you more money.  You can identify training opportunities to raise the skill level of your techs, to broaden their abilities and your flexibility.  And, as you grow, you can know exactly what type of technician you need at just the right pay rate.

Jay Baas

Filling your Idle Bays

What is the worst picture of your shop?  Is it the scrap pile out back, the compressor that continually leaks oil on the floor, that one technician who is always borrowing someone else’s tools because his bay is such a pigsty that he couldn’t find a 5/8” wrench if he had to, or is it the customer bathroom that looks more like a biology project?

I’d wager to say, at the end of the day, it is a picture of empty bays in your shop. Those bays that not only aren’t earning any revenue right now, but they may be a drain on your bottom line because all space costs money.

What if you had atool that allowed you, your service writers and your technicians to see where those idle areas were in real-time, allowing you to make a plan to fill those with work, maybe work that you had scheduled for next week that you could call and bring in today.

Imagine that customer who gets the call and hears that we can take care of him today rather than next Tuesday.  He can have the car fixed by the weekend and be back on the road.  And we can now work to fill that space he had originally scheduled for next week.

MotiveLogic allows you to do just that.  With real-time dashboards that let everyone in your organization see the “opportunities” to keep those wrenches turning.

MotiveLogic is an On-Demand software service that helps you immediately identify and capitalize on opportunities, better use your assets, and grow your organizational bottom line.

Jay Baas

Recapturing (a lot of) Business from the Independents

In the last few years we’ve seen a renewed focus on Fixed Operations as the primary contributor to dealership bottom lines.  At the same time, independents have continued to take our market share, capturing more and more of traditional maintenance and repair work that otherwise could have been the bread and butter of dealer existence.  A lot of talk occurs around trying to build the dealer fixed ops revenue stream with increased warranty sales.  And while that is a sound strategy, let’s not forget what “got us to the dance,” the traditional repair and maintenance business.

Before we concede that the independents will continue to erode our repair customer base, let’s talk about how we can recapture work.  What are the drivers causing our customers to go down the street, past our shops?  It comes down to the three basics:  faster, better and cheaper.  How can we compete?

First we have to make sure we have challenging but achievable targets for our faster, better and cheaper. Then we have to know how we are doing in real time, all the time.  Why wait until the end of the month to know if your actions “raised the bar?”  You must know, at every point in every day, how your team is doing to help you accomplish your goals.  More importantly, you must get the team to motivate each other through healthy competition to drive past the goals.

MotiveLogic is the one solution that does that for you.  With high visibility dashboards that capture your target goals, and let everyone, from your technicians, to your service writers, dispatchers, managers, and the executive office, know where you stand right now and take immediate steps to make necessary changes.  MotiveLogic is inexpensive, easy to install, and easy to use.  You can see results as soon as you start using it.

Jay Baas