Service and Parts Benchmarks for Profitability | SDR #312

Welcome, everybody, to the big show. Today we're going to talk about service imparts benchmarks for profitability. There's some interesting news about some of the dealer groups and some sad news about Christian. Some very, very sad news about Christian. That and much, much more coming up on Service Drive rev.

Well, I know you have a lot of fans.

And I would just like to say to your fans that if they wanted to reach out to you in some way, it might be the time to do it.

It's time sensitive. You think?

Yeah.

Like, if anybody cares about Christian, you might want to send him a little note. Just what would that. What would be the spirit of that note? Like, you meant a lot to me. Sorry to see you go.

I think you made me smile. Would be like the best possible compliment someone could pay me.

That's what you want. Do you want that on your tombstone?

Yeah.

You said you had your affairs in order, but do you have, like, do you have what you want on your team?

I don't have.

Where do you want to be buried?

Probably in my family's plot in Illinois.

You made me smile.

Yeah.

If you're listening, Chris is right.

Can you. Could you ask. I know Alex is super busy, but can you ask her really nice to come in here for a second? So yesterday, just for everybody to understand, and I don't know why you asked to have your blood pressure checked. Also, I didn't know we had the machine here. I have one at home, but how long have we had the machine here?

Months. Months.

Why did you ask to have your blood pressure checked?

I just check it every once. But do you.

Did you feel like your eyesight going blurry or like what. What was going on?

No, I don't know how to explain it. So I've had. Where I've gone to the doctor and the doctor's like, oh, that cuff doesn't work. So then they would put a different.

But why did you ask to have your blood pressure? It was very random, like I was there and you go, hey, can you check my blood pressure?

Yeah, I just.

What was going on in your body? That's not a thing that you've ever said before. So something had to have made you feel like your blood pressure was high.

Yeah, like a fluttering is what I would suggest.

Okay. So your heart was like. Like Alex Van Halen, hot for teacher.

Not quite hot for teacher, but let's say.

By the way, for. For you young youngins. That's a song by a band called Van Halen, and it's a drum solo. At the beginning where there's a lot of double kick drum. And it's really fast.

Yeah, so not quite.

We can't assume. Everybody knows.

Yeah, it was more like maybe more like 1984.

Okay, the doctor is here. Okay, so you felt like a heart fibrillation or something? Is that what they would call it?

Yeah.

And how often have you felt that lately?

I don't know.

A few times, but I hadn't checked.

Okay, and what. What was it yesterday, Alex? To what?

240 to 142.

40 to 140.

Yeah, exactly.

Okay, relax. So just for. Just for context.

My blood pressure was 180 and they wanted to take me to the ER. Yours was 150 yesterday. No, I'm saying there was a time where I was gonna get a drip, you know, like a IV of vitamins. And they wouldn't do it because they said putting that much liquid into my system would. Would cause a problem. And they wanted me to go get it checked.

I love that you think this is so funny. Like you would.

You will.

You will have a stroke.

Just to be funny about it. Like, that's how committed you are to making people laugh. It's not good.

Is this thing working?

Yeah, it's way better.

Well, what is it? 209.

It was like 200 yesterday to 123.

Look at how much better that is.

Oh, yeah, Come way down. I attribute that because you're stopped drinking coffee. How old are you?

49.

Siri, could you check and see if. For somebody who's 49, if the blood pressure of 209 over 125 is okay.

Siri just called 911.

This is a hypertension crisis is what this just said. A blood pressure reading of 209 over 125 indicates that you are at a hypertension crisis as per latest guidelines.

If you encounter such a reading, call 91 1.

We are not calling 91 1.

What does that say?

It says that you could call 911 urgently. It says it's like, don't. Don't pussy foot around about calling 91 1, but urgently call 91 1.

I have a. I have a history of high blood pressure in my family.

You say that like it's okay.

There are so many.

I would just encourage everybody to reach out and tell Christian that he made you smile.

Just in case. Just in case.

Should I give out your cell phone number? I mean, it doesn't matter.

At this point, I feel like almost everyone has it. So it's not like it's not a security issue, but. But it did get me to kind of thinking, though, like, because I know one of the side effects of high blood pressure is a heart attack. Right. And do you know what. Do you know why Chuck Norris will never, ever have a heart attack? Why? Because his heart knows way better than to ever attack him.

You're not Chuck Norris.

I. I don't know. I might be invincible.

What is going on? What? What?

So is it. Is it your chick? She's just like tamales and tortillas every night.

Well, that doesn't help for sure.

However, this cooked in lard.

So the. The one thing that I do like about this. This new thing where she's. She's at her. At her business every night. I'm back in charge of my diet.

So I'm switching. I mean, just from a video that you sent me, but I'm going to switch to that keto diet.

Whereas that's not keto. It's carnivore.

Yeah. It's even more than. But you go into that. Yeah. You go into ketosis.

And I'll show you the thing I'm drinking in the morning. Off. Off. It helps.

Yeah. So. So if I had to do a diet change when she was making every meal for me, it's harder. But now I'm in charge of my own food, which is great.

Did you see what my blood pressure was?

I did. It was. It was perfect. 150 over 80 or something like that. Like, it was. I have blood pressure envy.

And you're working out, too. That's what's weird. It's all the food. It's all the food.

It's all the food. And then there was also from a video that.

You think she's trying to kill you?

I don't. I doubt it. I mean, she'd get some. Some insurance money, but, like, not.

That wasn't convincing. That wasn't convincing.

Not enough to. Not enough to make up.

You looked up and you're like, I doubt it.

Like a normal person. Be like, no, no way. Like, well, I doubt it. There's still a possibility.

I'm willing to accept that.

It's like somebody who says, try.

You're like, well, I don't think so.

Oh, my goodness, I'm worried.

I know. I thought Alex was like, there's another.

There's another thing that you should be taking that I'm gonna order you. It's. Besides that other one I gave you.

But.

That'S so scary.

Yeah. We'll get it all under control.

I won't work out until you get it down.

So I didn't work out last night.

Maybe just walk.

Yeah, I think I'm gonna stop running and just walk. I agree with you. Because I want to get 10, 000 steps a day and I think it's really healthy.

Yeah, well, that'll help you. But the diet will do it quicker than anything for sure.

I want to do both. So I think that it's just a really good Costco.

I know you love Costco. And just load up on steak.

Steak and yeah, whatever you. Whatever you do looks great.

And I'm not hungry. Like I don't get hungry.

So I think that the.

And I'm bulking up too. I don't know if you've noticed, but like.

Yeah, well, you've always looked really strong to me.

But I mean it's. The mass is. You know, there's just more muscle.

Yeah.

That's kind of getting my blood work too next week. I'm curious to see. But I bet you it's the best it's ever been.

Yeah. If I went in there, the vials would probably blow up like a milkshake. Yeah. I definitely need to stop snacking. Probably stop.

Well, if you just eat the carnival carnivore thing, you're not hungry.

Yeah, I would really like to not be hungry because I am a lot.

And then I, you know, I'm skipping the morning.

Yeah. So it's. The video said 16 hours. Just.

Yeah.

There's eight hours a day when you eat, which makes sense to me too. I can work with that.

So much more energy. Like I feel I'm getting more done. Like I'm also not drinking.

Yeah. So I'm not.

I would drink sometimes. Like, let me think. When we went to the World Series, I drank after. Well, but just we went to the World Seas. But I never saw you.

I was there, I promise.

Saw you.

It was so much fun. I've never been to a World Series game. That was really exciting and it was just. It was an engaging game the whole time.

Yeah. And I'm glad they won because I felt like with Luis, like every time we take it into a Raiders game, they lose.

Yes.

And finally like I took him to something where he won.

So I snuck a couple of looks at Luis and he was like an 8 year old.

He's a hardcore Dodgers fan and he.

Was so happy and like he was also his first first World Series game. So you got a lot of. First for the group that of us that Went. It was everybody's first time going.

Yeah.

And that was really, really cool. It's really fun. Everybody enjoyed it.

By the way, I owe my buddy Richard Fish.

Thank you. I need to call him and tell him the story, but you know how I got the seat? So I was sitting right behind home plate. Was on TV a couple times too.

Really?

Yeah. Well, people were texting me that they saw me on tv.

That's pretty cool.

My neighbor, she's. She's great. And she. She's probably in her 70s, I would think, and she's got this big dog, but she's the sweetest thing ever. But she got. She got in a fender bender, and she asked me, like, what to do. And so I called my buddy Fish, who owns a bunch of body shops, and I said, hey, where can I send her? He said, give her this phone number. She went. They took. She was so blown away by how quick it was and how good they did and everything, that when the playoffs were happening, she goes, if the. If they go to the world Series, I'm giving you my seats. And they've had those tickets in their family for, like, 30 years.

It's the only way to have those seats.

Those seats were selling for, like, 20 grand a piece.

Okay. So I saw seats very similar to that for 18. So that makes sense to me. And I don't think that they were. They weren't.

Row one, next to the. Hers were for sale. And it's funny, when you're sitting next to those people, knowing what they paid for those seats, like, it's crazy.

Like, she could afford it. The one. The one lady I was sitting next to, Brad Paisley, came and talked to her or whatever.

Oh, yeah. They showed Bradley on the jumbotron, which is odd.

There were so many celebrities. It was hilarious.

They showed Rob Low paisley. There's probably 10 or 20 people down.

There was just celebrity.

Yeah, that's pretty.

Wanted to be seen on tv. Even Magic Johnson was right there.

Yep, Magic and his wife were there. That's right.

Cookie. Is that her name?

Cookie is her name.

Good old Cookie.

Good for you. There's a. A friend of mine, actually, he had a heart attack. You got.

You got hard. It's not funny.

And can I tell my friend, you know, a story?

Funny is when you're having a heart attack.

I think it'd still be a little funny.

You won't, I promise.

But you're gonna want to live eventually. But, my friend, do it for your son. Yeah, that's a good point. So it's the, that's a main motivator for trying to get it right. But so my buddy, he has a heart attack and they end up carting him in the hospital, ambulance, everything like that. And they go to, he goes to this Catholic hospital and so after he wakes up, they save him. He comes out of it and the nun comes up to him and is like, hey, do you, do you have insurance? He's like, no, I don't have insurance. And he's like, well, well, do you have any, you know, are you married? He's like, no, no, I'm, I'm single. It's just me. He's like, well, do you have any family members that can help you to pay for this and everything like that? And, and he's like, well, I've got a sister, but, but she's a bachelorette and, and she's also a nun. And the nun goes to her.

She's a nun, she's not a bachelorette, she's married to God. And then the, my buddy goes, oh perfect. Then send the bill to my brother in law.

Oh man, we'll get there. Oh, I hope so. I'm worried about you. Okay. What, what's, what's in the news?

So I've got one topic in the news. It's out of automotive news, but the Q3 reports are for some of the big dealer groups. And so one of the things I do at the Automotive News typically is I'll kind of collect the profitability data. And I've got profitability numbers off of three large groups. Penske, Asbury and Autonation. So gut, gut feeling. Profits up or down year over year.

For the Publix?

Yeah, for those three.

Not the grocery store.

Publix, not beautiful grocery store, which I think you undersell the quality of that grocery store.

Oh, cuz that deli sandwich, that'll change your life. That didn't change my life.

With a salami. Unbelievable. Fresh meat producer. All of it.

It's a grocery store. Come on.

It's a really good grocery store. Okay. Up or down?

Well, I'm just going to, I'm going to guess because of the way you're presenting this.

Down. Yeah, they're down. So I thought if they were off just a little bit, that would kind of make sense. There was like the CDK thing and you know, hurricane that might have affected some of the stores and everything like that, but autonation down 24% in net. In net profit. Asbury 25 and pesky Penske down 14%.

That's bad.

Well, if anybody over there wants help, give us a call.

833 we can.

We know lots of dealers that are up.

Not everything is doom and gloom. It is funny because funny they're too big to. They're too big to change.

Yeah, I do think about that because sometimes we're in our own little bubble where we see the results are not connected to the stock market or the economy or anything like that. It's just execution.

Well, I think it's funny, like when we've had clients that have sold to those groups and then you see the numbers later and they always underperform, always like fixed stops, always goes down. Always like sometimes half.

Yeah.

Like it's nuts. What else is in the news?

That was really the main news. It was two of the news stories that I pulled were about the same thing. So I just kind of combined them into one story about how the groups are. Are going down. Oh, I do want to give a shout out to my new guy I just met this morning on a strategy session who is a huge, huge fan and has already done a great job of in his service department, looking to get to the next level. Hey, Josh. Nice chatting with you today.

Just Josh. Any random Josh?

Yeah, he'll know.

Where's Josh?

He is in St. Louis. St. Louis, Missouri.

So we're going to talk about service and parts benchmarks. What, what is high performance? What are the benchmarks that we get asked this question a lot, like, what should my net to gross be? What should my gross profit percentage be? That sort of thing. Right?

Yeah. I want to test you for a second because I asked you that question probably the first day that we met. And I believe that you're going to give me the same answer today as.

When we met in Chicago.

Yes. So 10 years ago. Just, just testing you.

But what was the question? I asked you what should a normal person's blood pressure be?

We didn't talk about blood pressure that day, but I did ask you, what do you think my natural growth should be?

I don't remember this. What did I say, 30?

No, it was timeless, ingenious. As high as humanly possible is what you told me.

I like that.

And you can still answer that today?

Yeah, I've told this story a bunch of times. But one year at our Top Dog event, we had this idea that we were going to have people stand up in order of their net to gross. And really what we wanted to do is kind of shame the people that weren't doing well. That was our goal.

Yeah.

And so we went through it. We went like 5%, 10%, 20, whatever it was. And then we got to 30% and most of the room came up.

Like the noise, the roommate noise from so many people standing up.

And later, like just thinking about that, I was like, wow. Like, it was interesting that there was only, I think 2. Two people above 40 or maybe 1.

I think it was just that one guy from Salt Lake City, Utah, and.

I don't even think he had expenses. Like, he was part. He was.

He was part of a group. And there was some, like, really?

Yeah, they didn't charge fix to them or whatever. So his 40 really was. I don't think it was 30, really. That. So I remember just going, oh, wow. Like we tell Everybody to be 30% and the ones that, you know or trying or whatever are 30. And so we decided to stop saying that. And now it's crazy how many we have over 40 and over 50.

We had two over 60 last month. Yeah.

Isn't it funny? And that's all because of us.

We just stopped saying.

We stopped saying 30 was the goal.

And we said as high.

And we just started talking about all the people that are doing 50 or whatever. Right. And talking about the elite group and that sort of.

Using them as a benchmark, I guess.

So that is kind of fun when somebody comes to you and they're like, oh, I made it to 30%. And then I'll be like, you had been in 45th place amongst our customers.

Yep. It's funny. And so just also to clarify for you, if you're kind of newer to this and you don't understand what net to gross is, the. That's a measurable of how much profit you're making as a percentage of your gross. Right. So let's say you did a million dollars in gross and you made 200,000 in profit. That means you'd be 20% net to gross. You would take the little number divided by the big number and that would give you the percentage. And so that's a measurement that, you know, we. We've looked at. There's been nada guides for it. It's a pretty common.

Thing. And most of the time, service managers don't see the financial statement and they're not aware of what that should be.

Yeah, they know how. They have no idea how to get there. They don't know even. They never heard the term net to gross before.

And when you talk about the public companies, most of the time the public companies don't put expenses into the department, so they. Their service departments might be 50% net to gross, but they have no fixed or semi fixed really in there.

Not real.

And so it's not a real number. We're talking about net to gross with real expenses, you know, covering your overhead, like a, you know, like a normal dealership would like. There's no funny business with the math and that sort of thing. That does happen. But we're just saying in. In our measurements, we're. Most of our clients are like, you know, single dealers or smaller privately owned dealer groups, and they are doing the accounting in the way that it, you know, should be done.

It's always clean. Or they make adjustments to make it clean because they understand that if they're not doing the right things, they're just making more work for themselves. Yeah.

And in our. In our competition, in our software, the second place audits first place. So we do have some accountability when it comes to the comp and that sort of thing. But yeah, I mean, the number. The numbers are real. And so when do you want to start? With parts?

Sure.

So what is the benchmark, like the top 20% for.

Net to gross? You have gross profit? Parts?

I don't have gross. I just have net.

So what is. What is the net?

Our top 20 for parts was 40%.

40% y. So that's the average of the top 20%.

20%.

And then what is it for service?

A little bit better. You. You had almost guessed this on the nose earlier. 42%.

What did I say? 41.

41.

Yeah. So 42% net to gross. And then do you have the gross profit?

I do. Just for service, though. 78.

Yeah, I was gonna guess 80.

Okay.

For.

For that, we have stores that are over 80, but the top 20 is 78. Yep. Good.

And so, you know, for every dollar in gross profit, you should be holding on to 40, 50 cents, like almost half of it, which might seem impossible and unheard of, but it's not. You just need the right systems. And I think the. The leverage that we have in the marketplace is we're really good at training service managers and service directors and parts managers how the numbers work. Like, we make accounting very simple for them. And then how you can create outcomes intentionally with those numbers, like what buttons you need to push to drive profitability. Most of the time, we don't. In, you know, in the average dealership, we don't see the numbers. And if you don't see the numbers, you don't know how to really create any sort of outcome or change. And what we're Told is just get me more gross. Get me more gross. So we'll spend our way into that. And so there is a. There is a lot of freedom in knowing. And, you know, if you're a dealer out there and you're thinking, oh, well, let me send the next guy that I'm gonna hire.

To your training, I would say send us who you have. Like, most of the time, we can turn somebody around just by showing them how it works.

They never had a chance before.

We're not arguing about anything. It's not a. It's not a foreign concept. We're just educating them and showing them where the buttons are. And you know what we've seen that works most of the time, they want to do it once they see it, because it makes sense. It's intuitive. Yeah, but there's a lot of guys out there that just have never been trained. They could be in the industry 20, 30 years or super confident, but at the heart of it, they really don't understand the numbers. And they're. They're living a dual life. The life of what the financial statement is and then the life of what they think the job is.

Yeah, I think it's. It's really rare that somebody comes out of our masterclass that's not like a net to grow Sniper.

Yeah. Because it just makes sense.

They just have a better understanding. And I was. I was just having this discussion not too long ago with somebody because they were just kind of having a discussion about whether or not, like, a service manager should be judged off of, like, departmental gross, you know, like that adjusted number after the direct expenses or whether or not it should be net. And I'm like, here's the thing. I would tell you this, is that every time. Every single time I've taught a service manager about financials, and I included all the stuff, and the net number at the bottom is what they started to focus on. The. That number didn't grow. You can make other numbers grow, and that number not grow.

Oh, you know. You know, another one that I think is funny, and I don't mean this to. To punch down. That's not my intention, but, you know, dealers that really care. General manager will say, well, we just built a new building. And I don't think they should be judged on those expenses. And I'm like, the opportunity of the new building is the. Is the opportunity. Like, let's go get the opportunity. We built a new building for a reason. We have more lifts. We have more. You know, it's shiny and new people are going to like it. Like, but a lot of times there's that mindset of, well, we don't really know how to get there. So let's, let's manage by deduction. Like let's take away measurables instead of just letting it be what it is. Like it's a business that has overhead and we, we need to run a profitable, healthy business.

Yeah. And having a fixed expense is a very reasonable thing of any business.

Yeah. And I do in these measurements, the one thing that's missing is retention. We don't have industry wide retention and everybody tracks it a little bit different. But I see a time here in the near future where we can track that and we will have retention numbers. I would love to have retention numbers by advisor too.

Yeah.

Think about the industry turnover for service managers and then think about our turnover for service managers. It's night and day. Night and day. I think we'd be below 5%.

Oh, you might be right.

When the industry average is over 50%.

Yeah. Once they, once they're armed. That's great.

So if you don't understand what this is, I, you know, I would. As quick as you can email info@chris collinsinc.com Set up a strategy session with us or we'll go through the numbers, we'll kind of explain it to you and you know, get in our training. The, the leverage and the ROI from what we can bring to the table as far as return on investment is insane. Like, I've almost in the market, I've almost doubled my money in the last four months. What we do is way bigger than that.

I would be upset.

I wish I could do what we do for my personal finances.

Yes, me too.

If somebody came in and said, hey Chris, I can 10x or 30x your profit, I would do it in a second.

Yeah.

And I would. What would we pay for that? We'd pay $1 million for that probably. Yeah. It would be nuts. So, you know, we've designed this thing.

To be.

For the person working in the dealership because I've been a dealer, we've worked in dealerships. We're not, you know, this isn't the idealized version of things. This is just like, hey, it's, you know, it's, it is what it is and this is how it works. And let's go get it.

Yeah, it's great.

Okay. Well, thanks everybody and we will see you next time on Service Drive Revolution. Please.

Text and encourage Christian to change his habits.

Signing off.

Thanks so much for watching this episode of Service Drive Revolution, 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 now that's offers.com Chris Collinsinc.com I'm Chris Collins, and I'll see you in the next video.