A Service Drive Revolution episode (Chris Collins, Christian, Jeremy) answering viewer questions about dealership/service operations. Key topics in this chunk: whether maintenance labor should be priced at half the posted labor rate (discussion of variable labor quadrants, competitiveness, and the importance of diagnostic pricing), a light-hearted question about what parts departments always have in stock (answers: excuses, blame, keychains—humorous), and advice for a service advisor on phone communication (listen more, ask questions, watch tonality; prediction that telephone sales will decline in favor of digital sales).
Chapters
So, Christian, you want to do some questions?
I do. There's a couple of really, really good ones this week, so I'm super excited. The first one comes from Jared, and I think that this is a great question. It's something that we talk about all the time. And his question is, so how do you guys feel about general maintenance repairs being half of the posted labor rate? I do not agree with it, but it has been the policy here at our dealer for over a decade.
What do you think, Jeremy?
Well, so just so I can understand the question, he's concerned about the maintenance packages being half of what the labor rate the posted labor rate is.
Right? Correct. That's exactly right. So they do it at a discounted rate.
Well, but we. We teach the four quadrants of labor. There's four different labor types, and maintenance is one of those labor types. So to be competitive, I love having a maintenance rate because I don't want to lose out to some of the national franchise chains down the street. And your diagnostic rate should definitely be up there. So if you haven't learned about the four different quadrants of labor, the four different labor types get in the on demand platform and go through that video that Chris teaches and I teach as well. You got to have the four different variable labor rates because it's all different. Right. So maintenance doesn't require as skilled of a technician. And I think to be competitive in the future, we're going to have to even split this even more. We'll probably see eight or 16 different types of labor as we progress into the future.
Yeah.
What do you think, Chris?
I like it.
Well, that's all I've got to say about that.
So go watch your on demand training, sir. So, hey, and a quick question, too. I would. I would ask him if his posted labor is actually the actual rate that they're charging. I mean, when people ask us about labor rate, Christian, what are they really concerned about? Right. As a customer, you know, they're. They're inevitably focused on the wrong thing, which is price. Right?
Right. Yeah. And they're. They're not using the value proposition. So. So the big thing on that with me is, is I think that one. You're right on that. There's so many different types of. Of labor, and I think really, you have to be almost, you know, like you're dissecting everything that you're doing in your business, which is what a lot of other businesses do. But the truth is that no one ever woke up on Saturday morning and said, oh, crap, I better Go get an alignment or my car's going to blow up. Right. So that says that that type of repair or maintenance is more of an impulse purchase. Right. So it should be way less price sensitive and more about having the emotional attachment being presented and connecting with the service advisor that's doing the recommendation. Therefore, the price might not be as important as the connection to the client.
Right.
So if you're doing that at half of your posted labor rate, you might be leaving some profit on the table.
Absolutely. You know, it's. We had a job last week, a guy called me on a Honda Civic for major service, which the dealer had quoted him $1,400. And then now he's shopping that around to different shops. And I happened to ask him, I said, well, I'm just curious, what am I competing against? What's it going to take for us to earn your trust in your business? And he threw this number out there, which is literally half price of what the dealer quoted. And, man, I had to stop. I just scratched my head. I'm like, there is absolutely no way this independent shop can deliver the same thing the dealers delivering apples to apples for half the price. It's just not possible. Right. So. And obviously on Honda's, you know, we all know that Honda has in their major service, which is to adjust the valves if they're noisy. If they're not noisy, don't adjust them. Well, the dealer quotes the valve adjustment in their package, and then a lot of the independents throw that out and don't charge the time for it. So it's one of those things. I think you need to be ultra competitive on maintenance because that's the one thing that customers are going to shop you, especially if you're a dealership service advisor. As you build your customer base, you're building your trust fund, you're making that relationship with your rich uncle. All these things are gathered one customer at a time. And if you don't, if you're not competitive on these things that customers can shop, they're gonna leave you. And that's the point. They leave you. So I encourage variable labor rates. And answer the gentleman's question. I have no problem with the maintenance rate being lower than the posted labor rate. And then we also. But the one thing that everybody's missing is we've got to get that diagnostic rate way up there. And if you need more help on that, we can help you through our coaching. So.
Chris, I want you to pass the cigar through the screen, please.
I'm treating myself, you know, I Only.
Have one a month. One a month.
In futures. Right now, like, you're just smoking six years worth of cigarettes, cigars during the lockdown.
You can't really tell, but that cigar is four feet long.
You just tapes them together.
Drip some wax on it.
All right, this next one, I feel like there's got to be a punchline to this, but I think it's a great question. I'm curious to hear how this goes. It's from engine God Zero.
And he asks, he or she asks, what is the one thing every parts department never runs out of and is always in stock?
Is this a joke?
I feel like it's a setup to end all setups. I mean, we could go a lot of different directions here.
Keychains, excuses.
That's it. I'm gonna vote for excuses.
I was going to say blame. I mean, they never run out of blame because they blame the other departments. But it's always. Whenever there's an issue in the service department or the financials, it is always 100% of the time the parts department's fault.
You know, I got another answer for that. What about seat belts? I've never seen a parts manager that didn't wear a seatbelt all day. They never come out of their office.
Yeah, I can only imagine that. Like, the back of their seat is completely tattooed on the back of their body. Right. Like, they don't move at all. Good stuff. All right, this next one is. This is an international question. Kind of excited about this, and I'm going to do my best. I might actually paraphrase a little bit just for continuity's sake. Hello, sir. I'm Karan Koshi George. I'm working in Harley Davidson as a service advisor for the last four and a half years. But I was in the car industry. Eight months back, I came to bikes. But the job position is the same and I'm facing some issues in this position. I used to explain the problem for the bikes to the customer mostly through the phone, but the customer took it in the wrong way. They think that I'm arguing with them. So what do you do for that? Can I get advice from you, sir?
Good. Okay, so I actually, this question also came through on Instagram, and I answered him directly. But if you. If you want to submit questions to this, any of the social media platforms we watch. So in the comments on YouTube, LinkedIn, but also just email us directly@infohriscollinsinc.com but my answer to that, and I don't know what you guys would say My answer to that was, listen more.
You're not listening. Just listen. Ask more questions.
That's it. Like, listen.
You can't get in trouble by asking questions and listening. You only get in trouble by stating your opinion.
Absolutely. The second part to that is tonality. If it's been taken the wrong way, it's all in your delivery. And I would encourage you to go out and buy a webcam or buy a video recorder so you can record yourself during your presentations. At least listen to the audio recording, right? Because you want to hear what your tonality is. And then I've got a bold prediction for everybody. Telephone sales are dead. So telephone sales are dead. The shops and the dealerships of the future will have automated digital sales processes in place. Consumers don't want a service advisor calling them, dragging them through the mud, trying to upsell them on items they're not even concerned with. The shop of the future will be completely digital and we will not speak to our customers, especially with social distancing.
You heard it here first, Christian.
I like it. He is a soothsayer, prognosticator of all cool.
Is that the last question?
That was it. But those were good questions. I enjoyed them all.
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 at Chris Bulldog Collins and I'll see you again on the next episode.
