How Service Managers Get Promoted (Service Drive Revolution)

I don't care if you're a truck dealership, a car dealership, an independent shop. Service managers are going to be the new leaders in the industry. And let me tell you why.

Because most general managers or dealers came from the sales department. They know nothing about service. Their egos are tied to how many cars they sell.

So when they wake up in the morning, they're thinking, how many cars are we going to sell today? If they're sitting in a bar and you're like, how are you doing? They're going to talk about how many cars they sold, what their front end, what their back end gross is. Most of the time, they know very little about service. In fact, I wish I had a dollar every time a dealer had told me, can you just take my service department so I don't have to deal with it? Like, literally. They only have it because they have to have it. Right? And so as the industry is changing and manufacturers are doing everything they can to go direct to consumer, and as we're going through this and factories are shut down, there's going to be disruption in the pipeline.

All of a sudden, service is sexy. All of a sudden, fixed stops is where it's at. Right. And now the flip to this and what's concerning and what's dangerous is just like dealers, general managers know nothing about service. Service managers know nothing about financial statements. They know nothing about sales. Most of the time, a service manager came from the shop and they were tech. That was the most trustworthy, did good work, ethical, and got promoted up through the ranks. Never trained on financials. How many times, Christian, have you done a boot camp where a man didn't you just tell me that a manager. 15 years. Yeah. Never seen a financial. Just yesterday. 15 years, never seen a financial. We see it all the time. So we need to train service managers. We need to train them on financials, we need to train them on sales. One of the best things that ever happened in my career is I went to f and I school. I sold cars because I come from fixed stops. I was a very successful general manager. I owned my own dealership and I came from fixed ops. I'm a success story when it comes to that. But I knew that I needed to understand f and I. I knew that I needed to understand salespeople. You know, managing advisors and managing salespeople are two completely different animals. Right. You were a sales manager. It's a completely different world, and it's an experience you can't fake. Yeah. And you start at zero. Like the thing that we take for granted in services. The traffic's kind of coming in. Like the traffic's coming in. You don't really have to work that hard for it. Sales is zero. Like nobody's coming in unless you do something. Mike, you might have like, let's say you're a Toyota dealership, you might have one hot model. Everybody wants the new Highlander hybrid or whatever. But after you sell your nine of those, everything else is work. You gotta, you gotta understand marketing, you gotta understand sales, you gotta understand how to manage salespeople systems at a completely different level. It's different and it's harder in different ways. It's not that service isn't hard, but it's just different. Right, agree. And so we've been talking about it over and over again in our coaching groups, how we're going to take service managers, we're going to turn them into general managers. That's the path we want and we want to show them through the steps, like how you do that, through the training and the mentoring. We came up, we actually came up with a cool, like, list of steps in the process.

Chris, do you know why this is also going to be true in the future and why it's really relevant now?

Tell me.

Well, Peter Drucker says that the principal purpose of business is to do what? A, create a profit, B, create five star reviews, or C, to create a customer.

The answer Trucker said 5 star reviews.

No, he didn't. He's.

Yeah, because he was like this, he was like alive in the 1940s, right?

Dude, he just passed away a few years ago.

Yeah, he's like a few years ago, like 85.

So profit and customer experience, basically.

He didn't say profit. He says that the principal purpose of business is to create a customer. Now here's what's changed. Changing. When you look at the sales side of a dealership, where do they create their customers from? A lot of it's product driven and now with technology, we can take the salesperson out and just go right to the app and let the app sell for you. Right now what's going to change is this. If the principal purpose of your business is to create a customer, where are you touching the most customers at? It's going to be on the service drive. So somebody who has a service mindset is going to be able to take that same sales potential and take that funnel and convert at a higher rate because they already understand, already have the relationship, already have the trust built in with the customer and then it's just A simple process of overlapping the products that we sell. And when you're serving a customer in the service department, making a sale is super easy. Selling them a new vehicle because the need is there, you already have the relationship. So I think this is a concept whose time has come, but it's built on the foundation, the old school foundation of building customers and then letting the profits and the money roll in. So I think you're absolutely spot on with this.

One other thing I would say, Jeremy, and I've been guilty of being a prophet before, so I've been accused of being psychic reading people's minds.

Interrogation, hypnotist, hypnosis.

You've been right 100 of times when you've called me being late for a meeting. So I give you that.

Yeah, so I'm very intuitive. I predict that in the next 10 years, manufacturers will consolidate. So I don't know who it'll be, but let's say just for the fun of it, BMW eats up Nissan and Renault or something like that, that there'll be consolidation. That happens. But there will be some manufacturers that go direct to consumer and the dealership model goes away. For those manufacturers, I don't think it'll be all of them, but there will be some. And I believe that the service manager in that situation will become the new dealer and will own the service shop. They will become, they will need to do warranty work, but they won't need the front end, the sales department, because they'll go direct to consumer and the service part will be available as a franchise that can be bought by the service manager in some situations. The dealers that we have right now, the dealer body we have right now is so disconnected from service and how valuable service is, and they will just go away and go into other industries. They'll be landlords, they'll buy other businesses, but they won't be able to put their head around just owning service shops because it's not, it's not a, it's not a match with how they see themselves, their self image, their ego. And a lot of service managers will end up owning those businesses in the next 10 years.

You know, you know what's interesting? I look, I like to take a journey back in time, go back 100 years ago to the 1920s. And when you look at the development of the automobile and how it started to progress, the dealership model that we have now was born out of that era, right? So, you know, Henry Ford came out with a production line change the way that they produce cars and all that and I think right now we're living in a very interesting time where a lot of industries are going through these massive shifts, and our industry is definitely no different. I think the automotive industry that we see it today is going to be completely gone and completely different. In 15 years. I think there's going to be a whole new model that comes in. We may even have new car manufacturers that can actually build, you know, whether it's a fuel cell vehicle or an electric vehicle that the consumers want, that totally goes against everything that every car manufacturer does right now. So I think there's a lot of paradigm shifts coming up. So it's very interesting. And you know, Chris, when you look at the dealership model that we have now, one of the hardest parts on the manufacturer is getting service coverage out to, you know, places like Hisperia, California. Right. It's just getting their customer service. So these service centers, I think, is definitely gonna come true. That's a brilliant idea. I think it would work out great.

Yeah, they're gonna need to be able to do the service work, but the purchase will mostly be done online service, special order. The idea, like, the idea right now that dealers have millions of dollars in inventory that they're paying flooring expense or they're paying an interest payment on that inventory is going to go away. You know, that's. That's a thing of the past. People are going to order their cars the way they want them, they're going to customize them, then they're going to be delivered. Then walking on the lot and picking one out will be less and less of a thing. And the business model just won't support that. And I see that coming out of this. Interest rates will go up because we'll have hyperinflation. Interest rates might go back up to 8, 9, 10%, because it's just kind of. That's how the cycle goes. And at that point, it just won't pay for dealers to have a big inventory. And that's when, you know, that's when some of them will flip, not all of them. I think that, you know, High Line probably will stay kind of where it's at. It'll change and morph. But I do think some of the manufacturers aren't going to be able to survive. And they see, because I've sat in the meetings, they see the dealer body as.

An obstacle to them servicing customers and selling cars the way they want to. Yeah, I think it's really clear that the direct to consumer thing is on the horizon right now. Even With Tesla, you don't go and look, look at them, look at the lot. Super interesting that Toyota saved Tesla giving them, gave him money and, and a plant in General Motors, like literally saved them because they want, they want that deflection. They want somebody to be the first one through, through the wall. And so Tesla was the first one through the wall. But now oddly, even in Texas where he had a hard time selling and if you go to Dallas, there's more Teslas than anything. It's like a badge of honor there. Even though he can't sell them there, it's a badge of honor. Now he's going to open a plant there and so they'll have to allow it. Right. And then the biggest state. That still was the holdout that really matters because Texas does, does, you know, sell a lot of cars. Will now be direct to consumer to. Yep. And you can do it in a shopping mall. So just my, my point is service is the future. And so if you're a dealer, if you're a service manager watching this, you need to get hip to how fixed ops works, how like Jeremy said, Peter Drucker said, how profit is created. Because that's what business is about. And reach out, let us know, we'll help you. But that's, that's our model now as a company is moving more towards how do we take service managers that have been under trained but are good man, you know, good leaders and turn them into the future general managers and dealers, shop owners in our industry. Thank you so much for watching this clip of Service Drive Revolution. Now you can catch the full episode on YouTube, iTunes or Spotify or wherever you consume your podcast. If you have any questions, go ahead and post them in the comments below. Make sure you subscribe and hit the bell icon so you're notified when we post new episodes. I'm Chris Collins and you can find me on Facebook and Instagram @chrisbulldog Collins and I'll see you again on the next episode.