Is Repair Order Count Growth Killing or Saving Your Service Department? | SDR #278

Welcome, everybody, to the big show.

Today.

We're going to talk about is your RO account killing your service department and how to address it. We have an exciting announcement about 4th of July and much, much more coming up on this edition of Service Drive Revol.

I have a exciting news. I have an announcement to make to everybody.

Oh, do I know the announcement? You do. Okay.

Christian will be joining me for the fourth of July boat parade.

In the beautiful state of Washington on an unknown lake. He's going to be in an RV and he's going to drive that way and probably break one of the jet skis.

But if not, break dent.

Yeah, but you can be in the boat parade. It's a big deal.

I'm excited about this whole thing. Yeah.

So I want to have the biggest American flag this year. I know a guy behind the boat.

I know a flag guy.

Really? Yeah.

We can get you flag.

I don't want it. I don't want it to drag. Like, I want it to be big enough that it looks really, really cool, but I don't want to disrespect it.

Yeah. So it's all about the flag pole, Right? Right. All right, we can work on this. So we're going to do the pontoon, and then are the jet skis allowed in the parade also? Because we could put mini flags.

No jet skis on the parade, but we can do whatever we want. Yeah, I'm sure we'll be the outcasts.

We could flag everything up, people.

They're a little stuffy.

Really?

Hey, did you know that they came out with a 325 horse jet ski like the ones that I have?

That just sounds ridiculous. Those ones are so fast already.

This one's fin faster.

My gosh.

Let's get me on a faster jet ski.

It comes in two colors, one of which is red. Bright red.

Okay. That sounds fun. The thing I would say about your jet skis, don't you think that it helps you to kind of drive above your pay grade? They're so easy. It actually makes you look like a better jet ski driver than you are. Just because the. The machine is phenomenal.

They're great.

Yeah. So this. This 300 horsepower one would make you.

Seem like, I gotta get those things in for service.

That's right. I.

The winter service.

I can't imagine what that story is going to be like.

Oh, it'll be impossible because I need to do that. And then the boat. And I'm gonna have to explain to him, like, hey, I want to time it so when the Jet Skis are done, we can drop the boat off. When we pick up the Jet Skis, that will blow. The way they can handle that, blow their mind.

Don't ever suggest anything like that to them. That's a terrible idea. To have organization and thought behind that.

Yeah, yeah, it'll be fun. Anything in the news?

Are you saying the top cars? I do top selling cars.

So I thought this was really interesting. The first three.

Vehicles in the top ten sellers were trucks. So America, America. Number one, F series truck. So 1502-503504-50550. Number two.

Chevy. Like a rock. Chevy Silverado. All right, number three, you're on a roll. Donch the Ram pickup. That's exactly right. Okay. Then we start to get a little bit more surprised.

Yeah, Toyota makes a pretty good truck.

So Toyota's truck's nowhere on this list.

Surprises me, but maybe they just don't make enough of them.

I also think too that Toyota does a, does a pretty healthy split between Tundra and Tacoma. So like there's no.

They're cannibalizing.

Yeah. So they're cannibalizing themselves, which makes their units. Okay per brand go down.

Serious question.

Yeah.

If you, if you were in the market for a truck, what would you get?

So you got the Ford.

Chevy, Dodge.

You could get, you know, Toyota, Jeep, whatever, any truck you want.

GMC Sierra.

Really?

Yeah. The AT4 specifically. Okay. With the speakers in the tailgate.

What's four on the list of best selling cars in 2023?

Toyota's first appearance on the list is the RAV4.

So that's a pretty good seller. Number five is the Tesla Model Y. So the SUV, ironically, that Kosh has two of the top 10 or had two of the top 10. He had a RAV4 and he has the Model Y. Now number six is the Honda version of the RAV4. The CR V GMC Sierra was number seven. Then this is the thing that I thought was really, really interesting. The only passenger car on the whole list is eight is number eight. And there's only. That's the Ford Taurus, the Sho. Remember that thing? The Toyota Camry is number eight and then number nine. This surprised me also a little Nissan hopping up there. The Nissan Rogue. And then number 10 is the Jeep Grand Cherokee.

Really?

So the Rogue is really interesting because the sales were up 45.6%. So I thought that was really impressive. So please, Nissan, make a comeback. Take Infinity with you. Just a little note from me A.

Little request from Christian.

Little request from Question.

He's got an affinity in his heart.

I do. I would love to see them make another comeback. They've done it a couple of times.

Don't want to come back. We've been here for years.

That's right. So, yeah. So. So some surprises.

2022 versus 2023. Sales ended 13% up. So then they expect sales this year to go up even more. So they're gonna. They're thinking they're gonna sell 16 million units in 2024. So it's pretty exciting.

So we're hearing this more and more now all of a sudden.

Especially around this time of year where people start saying, we need more ROs. We need to work on our RO account. How do we get our ROs up? We need more traffic. The problem is traffic.

It's really funny when you give them all the reasons that it's not traffic, and then they'll go back to its traffic.

So I can think of a handful of times that I went into a service department and it was traffic. And every time it was a new point that had been there less than two years. So it was a point that was awarded to the dealer. They were starting with nothing and they were trying to build.

A clientele. But beyond that, traffic is rarely ever the issue. So, first of all, the average service department in the country is booked out how long?

Three weeks.

So you have traffic pent up. You just don't have enough text.

Yep.

Second of all, way before we talk about traffic, let's talk about what you're doing with the cars that are coming in. We have this odd sense in our industry that being super busy is success, because most service managers don't know how to read a financial. They don't understand how to create profitability. So then let's just be busy, because that feels like winning. Being busy. Yeah, because we got stuff to do and we're behind and we got stuff to do and we're behind and we got stuff to do and we're. And we never catch up. And so that's success.

Yeah. The R rated version of this podcast would be blanket harder.

Blanket harder.

Like cover yourself with a blanket.

No, blank is in. Oh, a swear word.

Yeah.

That's what I think about when they're like, we need more.

But that's not the answer, surprisingly. Yeah, like the 10X. Like, just get it harder, hit it harder.

Whatever.

There's. There's usually a better. There's a better way to do it because it's not scalable. To just always blanket harder.

I always come back to just the the easy way versus the difficult way. How hard is it to increase hours by writing higher quality repair orders on what you have coming in?

Not only is it easier, it's more fun, less.

Stress.

Less friction.

And then we talk about not having enough technicians. What do technicians like when they're at work?

More hours per ro.

Because that means they can do more hours with less ros.

Because pulling cars in and out of the shop doesn't make them time.

Yes, sir.

So what we need to do is a recruiting tool to get the problem fixed that we have in the first place.

Wait, wait. This shows about RO account, not recruiting.

You could make a case that it's all the same conversation.

Okay.

So before we chase.

Repair order count, we want to look at what measurable. So we want to look at hours per ro.

Yep.

So could we be doing more with what we have which would mean better inspections, better communication from the advisors, a better process in the drive for the advisors to make friends with the customers, petting the dog and so on.

Right.

So hours per hour. Next one would be your maintenance penetration. So just a simple math is how many ROs did you write and how many alignments did you sell?

Yeah, we call that the wild card percentage.

Yeah. And so you know, anything around 50.

Is pretty good if you're a domestic, 75 if you're a high line. One to one. But 50% is where you can start to have the conversation that you're getting.

Closer to capacity now about right now in every service department. We're done talking.

Yeah, like these three things. Like you're booked out three weeks, you need text. That will increase your RO account. But I will say one other one, other one is you might need more advisors.

In order to write more.

Rose, I'd agree with that. I, I was going to say you didn't have that written down, but that was going to be. The main thing is don't start talking about increasing RO accounts until you're booked to the next day. Like don't even have the discussion with anybody until you can't handle the. Until you can handle the demand.

Don't even open your mouth.

Don't say a word.

Keep your mouth shut.

Until your next day on.

Complete engine rebuilds.

Yes, everything.

That'S good. Though I would say though besides new points.

I don't remember, I don't have a big recollection of ever having to increase RO count. It's expensive and hard to do.

Unless. Unless. And this was the Other thing I was going to say is how many times have you gone to a service department and you put it back together and you fix it and you have a really high level of customer experience. And without advertising or doing anything, the RO count increases because happy customers are actually, they're both coming back and talking to other people about it.

I would say scientifically, somewhere around 100%, roughly.

Right. It could be 94, it could be 101.

Because there's only 100%.

Right. But the truth is, is that you build that system. That was the other, other thing that I had written down here is, is that RO account growth has to be done systematically and your business model has to be scalable. You can't put the ros in first and think that you're going to figure it out. What you're going to do is you're going to send your RO account the other way because the more people that you have in here that are not happier, the less that are going to come back in six months. Yeah.

So you're, you're asking the wrong question. If you're asking about RO account, fix the. Fix the hard things that you don't understand but actually are easier to do.

Okay, so before we go further, I think that the audience would probably really love your guidance on this is how does the service manage? So we've done a lot of calls and we're kind of asking those questions like the, the pulse of the industry or whatever. A lot of service managers are telling us RO accounts. Where are they getting that from? Where do you think they're getting that narrative that they need to increase RO accounts from?

I don't know. I thought it was them.

I think it's coming down from higher up. I think that that's coming down from the owners and general managers saying, hey, we had a reduction in RO account, we need to fix that this year. Oh, so January is a time that you kind of set the goals. So my belief is that I've talked to service managers that.

That have a really good head on their shoulders. They understand all the stuff that we're talking about with RO accounts, but what they really need from you is guidance on how to manage up. So why do you think that the higher RO count is so attractive to owners and GMs?

Because they think about car sales and they think in volume.

Right. And then when we were talking about this earlier, you pointed something out to me. What's the difference between increasing volume on variable versus fixed?

It's night and day.

It's A completely different game. But the thing on very. So on the sales side, the, the.

Thing that most dealers, general managers and sales managers get wrong.

And I would say this is comparable to when we say we need more ros. When we. We don't even have. If we had more hours, we didn't have the text to do it.

Right. Yeah.

So it's not well thought out. They're just looking at a number, like you said, on the sales side, and you know this from working in sales, is there's just. There's two camps. There's the camp that believes you do high volume of car sales and little gross. And then there's another camp that believes you do low volume, high gross.

Neither one of them are true.

Yeah. What's the truth?

Because I've proven twice what the dealership I owned and one that I ran that you. We were the highest in gross and the highest in volume.

They're not.

Opposing forces.

It's just we think that way. So then that's what happens.

Yeah.

And so most of the time that's how dealers or general managers think. They think, oh, the reason why we're not. We're not making money in service isn't because of our 90 effective labor rate and the fact that we're booked out three weeks and the advisors are scared to sell anything because they can't get it done. It's that we need more volume, we need more count. And it, it, it's just not logical.

Right. The thing that I.

It's an assumption. It's not a well thought out idea.

Yeah. So the thing that, that I thought about after we had this discussion earlier was remembering that on the variable side, myself and my coworkers, when we started to get into a rhythm, the selling the cars was way easier. And let's say that we had a Saturday where we sold 40 cars. And by the end of the day, we look back on the body of work of the 40 cars, the 10 that had the highest gross were usually the ones at the end of the day because we'd done 30 and we'd gone through so much. And then like we're doing the muscle memory, we're hitting all the steps, everything like that. Whereas in a service department, if you're doing 40 when you normally do 20, the second 20 are terrible.

Oh, yeah. Shortcuts.

Yeah. But. But when you're, when you're doing it.

Right and they're not coming back to your really good point is when you slow it down and increase the experience and the attention to detail they're coming back.

Yeah. So the thing that I think is missing from variable to fixed is that fixed on a general any day of the week are operating way closer to capacity than variable on variable. Like, if I've got 20 salespeople, I could realistically sell 60 cars in a day, maybe more. Like each one has a capacity to sell two, three, four cars a day. Right. So you could sell 60 cars. But if I've got everybody riding 15 ros a day, getting them to 20 is terrible. And the only way to get there is by cutting corners. But I can do every One of my 20 salespeople can do three cars a day and not skip steps because literally they could spend four hours per customer.

And if you just think about the independence and in dealership service departments, 80% of the customers end up going to independence. So that means that 8 out of 10 customers are leaving you very soon.

And you earned it, like very soon.

And so we spend very little time trying to.

Create an environment where they don't want to leave us.

That's right.

But if we did, we would have more than what we knew what to do with anyways.

Well, I'm excited about the fourth of July Boat Parade. If you can help me with that flag, I'd appreciate it.

Always.

And.

Start shopping for swimsuits.

Can I make a suggestion that I don't drive the boat in the parade? Do you imagine?

Could you imagine how many people let you drive?

I wouldn't want him to let me drive, but I could probably run into a record number of boats in the parade. Just little nudges to the side, left, right, little prop work.

Kind of got to stay in your place.

That's what they say.

Thanks, everybody, for hanging out with us. We'll see you next time on Service Drive Revolution.

Thanks so much for watching this episode of Service Job Revolution. We're uploading new stuff every day, so make sure you subscribe and click the bell icon so you don't miss out. If you have a question you'd like us to answer on the show, call 8333 Ask SDR and we'll answer your question on the show. That's 8333 Ask SDR. For special deals on our books and training, head over to offers.chriscollinsinc.com that's offers.chriscollinsInc.com I'm Chris Collins and I'll see you in the next video.