Chris Collins walks through red flags at car dealerships: pay plan changes, technician to advisor ratios, and what you notice watching customers in the waiting room. Look for these signs when you're evaluating a dealership.
Dealer red flags.
Okay, so explain the context of that.
So a lot of people ask us and it comes up a lot in the.
Interwebs, like on Facebook, LinkedIn comments.
We get emails directly. I'll. I'd say I get one to two a week. I don't know how many you get, but people reach out to you on Instagram too. So interweb social media.
It's a comment asking, like, how do I know if a dealer is good or not? Like I'm talking to this dealer. How do I know? I'm scared to jump. Right. That sort of thing.
Yep.
And so we have made a little list. You made a list? I made a list of red flags for dealers. I'm not going to go in the order that I have here because I think.
Are you going to try and hit your big point last?
I don't know which one you would categorize as the big point.
Okay. Okay.
So a couple of things and they kind of go together is.
In an.
Interview I would ask when was the last time they changed the pay plan. So if I'm interviewing and I'm assuming to be an advisor, but even if I'm a tech, I want to know when they change the bonuses, when did they change the paper? Now, what does it tell you if they change the pay plan a lot?
That they don't really know what they're doing.
Yeah, they're chasing it. They're managing the department through the pay plan, not through systems. And it's not scalable.
Let's say that's a very reactive.
Yeah, yeah. Technician to advisor ratio. So a lot of times we see dealerships that have two technicians. To every advisor it should be three to one or four to one. But if you have two to one, the advisor probably doesn't have a chance to really make money and the technicians are probably going to be over overwhelmed.
Yep. So one thing that I would do in that aspect, one, asking how many techs, how many advisors is really, really good. Asking how many they're looking for. But what I would ask a service manager do if I was sitting in front of him, I would ask for an advisor performance report from the previous month. You can learn so much just by looking at that data.
Yeah.
Because it'll tell you whether the average hours per ro. It'll tell you what the mixes of customer pay work versus warranty work versus internal work. You learn a lot just by asking that question.
Yeah. So let's touch, touch on that really quick because you bring up something that I kind of hadn't thought about.
It depends on the brand. Right. But let's say you go, let's just say General Motors, and you're looking at the advisor performance report, and 50% of their work is warranty. What does that tell you?
That they're not converting it to customer pay. They're just one line.
And that they don't have enough tax.
Yeah.
Because most of the time, if your warranty starts to creep up, it means you don't have capacity. Customers have to come to you for the warranty. If you're booked out four weeks, you're going to lose the customer pay to Independence because they can go to an independent for customer pay. It's the warranty they have to come to the dealership for. So that warranty to customer pay ratio is an indicator of not having capacity in the shop.
That's a really good point. I like that.
The next one is how many ROs do the advisors write? So I would just say, hey, how many? How many on average? How many hours are we writing a day? A hundred. And then you do the math. Do the math. 10 advisors, 105 advisors. In 100, they're writing 20.
Right.
That's not good.
So oftentimes there's commonalities between how many ROs the advisors write and turnover. And that's. The next one I have is what's the turnover? Yep.
So the tenure of the employees.
Yeah. So if they're churning through advisors, there's no reason to think that you're going to be the one that sticks.
Also, learn a lot. If there's five advisors and everyone's been there for two months except one person that'll tell you a story or two.
You brought up a good one that was, what would you do.
To kind of learn about a dealership? You would go sit where?
In the waiting room.
And what. But what would you observe?
So there's a couple of things. One, it's a lot like, to me, it's like going to dinner with somebody and watching how they interact with wait staff. I know that I can go into the waiting room and you'll get to see interactions with the customers. Or if there are barely any interactions with the customers, you know, that's telling you a story, too. But there's a weird thing that happens in the waiting room. It's like employees forget that there's people in there, and they literally. It's almost like if you put security cameras up somewhere for the first week, everyone's like, oh, crap, there's security cameras. But by week Two, they don't recognize that there could still be an audience. So, like the conversations you hear at the cashier window, if you have a cashier window or salespeople walking through the, the lounge and what they're saying and then the way that the customers talk to each other. So I'm looking for all that interaction and just kind of taking that feedback. Are the customers, do they seem happy to be there? Are they really frustrated or are they not getting any updates or, you know, like I said, when they, when they think no one's watching. You'll learn everything that you need to learn. Does the salesman or service manager have to go out and put out a lot of heat in the waiting room? You learn how people present usually, actually, yeah. There's a lot of stuff to learn.
Then you learn like how dirty the bathroom is, what kind of coffee they're serving customers. Is the coffee fresh? Just the overall attentiveness, how they treat customers, how they're going to treat employees.
I agree with you.
So the waiting room.
Oh, the cleanliness of the bathroom is really good.
Oh, yeah. That tells you. The cleanliness of the waiting room to.
How we do anything is how we do everything.
Like, sometimes you go into these dealerships and they have like 20 people in chairs watching one TV in the waiting room.
And, you know, not everybody wants to watch Fox News.
No. Or, you know, it's not a. It's not very well laid out.
Thanks so much for watching this clip of Service Driver 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 now that's offers.chriscollinsInc.com I'm Chris Collins and I'll see you in the next video sa.
