The Six Steps To Fix A Struggling Service Department

We want to talk about the architecture of how to turn around a struggling service department. We've. We've turned around thousands of service departments, and we definitely start to see patterns and consistent.

You know, objections. Mindsets in that. In that process. So we came up with a list. Christian and I made a list of.

The basic architecture that we think you could take this list and.

Understand if you wanted to turn your department around, how you could do it, and that.

Some of the things on the list will keep you from doing that by yourself. That's the funny thing to this whole thing. How long did it take us to come up with this?

Not long.

It was. It was minutes at the most when we.

When we proposed the idea that I wrote three of these instantly. And. Yeah, and it's a pretty accurate list. Like, if. When our coaches hear this list, they'll be like, oh, yeah, that's it.

Right? And. And they're gonna. I think probably number one specifically is the one. They're gonna be like, yep, that's the magic thing right there. So.

So there's. There's six of them here on the list.

We're going to unpack each one of them for you. How to turn around a struggling service department.

Number one is you have to admit your baby's ugly.

Yeah. I think honesty is the best policy.

So this. This happens all the time, that people are achieving less than desirable results.

But then when you go to talk about changing the outcome.

They. They forget that their results are bad, and they want to talk about everything else. So it's like the example or the analogy would be that you're 50 pounds overweight. You go to a nutritionist, and you say, I need to lose weight. And then the nutrition is like, okay, well, this. Well, this is what we're going to do for breakfast. This is what we're going to do for lunch. Hold on. Before we. Before we get to lunch. No, no, no, no, no, no, no. You know, my. My grandfather always ate pancakes. My dad ate pancakes. And that's. That's a family tradition for us to eat pancakes with butter and syrup and a couple eggs, and that's how we start the day.

My grandpa lived at 87. Like, it's always that. Right?

Well, and then the nutrition is like. Well, the problem with. With that is that you've. You ate more calories than. And carbs than you should in a week. Every day by breakfast, you're like, well, no, that's not negotiable. Okay, well, let's talk about lunch. We're going to so you're going have a chicken. No, wait, no. Every day for the last 20 years, I've gone to the deli and I have a pastrami sandwich with French fries. That's.

Right. So you're like, I need to lose £50, but then nothing.

Yeah.

You say or do shows that you want to lose 50 pounds.

That's right. It's. I want to lose 50 pounds, but I want to do it the way that I'm doing it now and just have the £50 go away.

Yeah.

Like, it's literally, I don't want to change anything. I just want the £50 to go away.

So if you don't admit that you're fat, you don't admit that your baby's ugly.

Just accept the fact that you're underperforming and make that your identity. I'm an underperformer. I like it. I like to lose. Just trying to get to my tombstone number two that we've learned. And this always surprises.

New coaches coming into our team when I say this, but there is a scale of broken. And I remember a mentor told me this early on when we were looking at a financial statement and they were losing $100,000 a month. He said.

Broom sweeps clean was his.

Oh, that's good advice.

And being naive and wanting to fix everybody and help everybody or whatever. I was like, no, he's wrong. That's not true. He was right. There's a degree of broken. If you're losing, if you're making. Let's say you're 10% net to gross. So 10% of your gross ends up at the bottom line as profit.

You're on the cusp of being really good.

Yep.

You can take a service department that's 10%, anything above zero, really, and flip them pretty quick.

Yep. 10 to 30s. Like that.

Yeah. Now zero.

Is a little harder. So it's like you got to go from 0 to 10, then from 10 to 30 kind of is the. The way it works. If you're losing 5%, you're kind of broken. So if you're negative 5% net to gross, you're kind of broken. Anything beyond that, your. Your people, your systems, your mindset, your entire. Like, there's dead body somewhere. Most of the time when you're losing that much money, people are stealing, there's theft involved.

It's always deeper than everybody thinks, too.

Yeah.

Funny.

And so, you know, I get really apprehensive when we're looking at financials and it's losing a lot of money. We always know it's going to be way harder than what they are assuming it's going to be because just to get to break even is like giving childbirth. And then the problem is when you get to break even now, you got to double down and do it all over again. That's just, you're, it's a, it's a huge fight to get from losing a bunch of money to zero. The, it's people, you got people in there that are bad. Most of the time your culture is bad systems. You're gonna have to make some, some tough decisions. It's, it's, you know, it's not by accident that you're so much money.

Yeah, it's hard to watch a little bit when somebody does so much work and gets so hard work, so hard to get from like the negative to the zero. And then like you break the news to them that we have to do it all over again. Like, can you just see that defeated look? Oh, no, no.

But here, here's kind of what happens, right, Is like you'll, you'll go for like four or five months and they, so let's say they're, they're losing 50 grand a month and then now they're losing 10 grand a month. Then the next month, like that fifth or sixth month, they'll have a month where they lost 325 bucks.

Yeah, you're like two alignments off or.

Whatever you were like we always say, like, if you would have called me, I would have given you the 325 so we could show zero. And then usually what happens is they'll go back a little bit and they'll lose like a couple grand and then they'll have that month where they break even and they make 100 bucks. Then right there they think that they won and they just got in the game.

Yes.

You got to double down on everything.

That's right. And if they're not careful, the next month they sink.

Yeah, it's, it's very fragile at that break even point. Yeah, it's a rebirth in a sense. Now you, because what, what happens is you're, you're doing everything you can to sell, to get the right people, to get the tax, all this stuff just to break even. And you think, well, oh man, I did all this work and we just broke even. Like, it's a, it's a really hard thing to swallow. And then at that point you realize, I got to work. I got to, you know, I got to be more committed than I was now. To get to the next thing. And all it is is at every level, that performance becomes habit and it gets easier.

Yeah, well, I think that, too, as you get better, the levers get smaller. Like, that's the one thing that's great about going into a store that's losing a bunch of money is like, there's, like, the price is right wheel that you pull that can make things change. But when you're going from, let's say, 20%, that's a gross to 30. Like, it's way more little tweaks than it is like the big levers. So I think that the attention to detail goes up immensely at that point. But it's meticulous, I think, is what happens at the end.

Okay, so number one is you gotta admit that you're broken, that you need help, that the baby's ugly. Number two is that there's scales and levels to this. And the more broken you are, the more. The more you have to understand that it's going to be harder than you think. Yeah, you got to accept. You got to accept that.

Number three is you have to rip off the band aid and you got to move fast. There's a lot of things that need to be fixed when you're losing money or you need to turn something around. And every compromise, like, we have this in our leadership training, we call it the axiom of compromise. And every compromise is going to put you further behind. And so, you know, just examples, like, let's say we go into a service department that's losing a bunch of money, and they're charging $99 for an alignment, and they're paying the tech two hours, the tax. Right. So your effective laborator on that is 50 bucks. You'd be better to hand the customer $100 bill than to do an alignment. Like, there's things that you're selling that you're not making. You're losing money on those. On those items right now. You're like, well, we don't want to tell it. We don't want to change the tech times because the tax will be unhappy. We don't want to change the advisory pay plan because we actually. This new terrible pay plan that we have, we just put it in two months ago.

This new terrible pay plan is.

New terrible pay plan is the worst version of the pay plan we had before because our advisors weren't selling anything. And we. They kept leaving because they weren't making money. So what we did is we decided to pay them more money for less performance.

To keep them and so, yeah, we made it worse for ourselves, but we were, we were trying to fix the symptom, not the cop, right? And so now we come in and we say, okay, well, we're gonna, we're gonna sell more. But the advisors, you know, you can't. We can't maintain paying the advisors 20% of the gross. Like, it doesn't, you know, it doesn't make sense. We have to improve their performance and, you know, right. Size the ship with pay and that sort of thing. Well, the techs are leaving early. We can't change the tech times and pay them what an alignment should pay because they're. They're leaving early now and they don't have work. And so you got to rip off the band aid and fix everything at once, at one time. We always say measure twice, cut once, and you launch it all at one time. Not, you know, not here and there. And you can't change the tech time without the advisor selling more like it's. There's a little alchemy and timing involved in it, but you got to fix everything at once. If you just fix one, it actually makes it worse. So you made it worse by changing the advisor pay plan to pay them more for less performance. You're going to make it worse by changing the tech time, but not getting the advisors to sell. You got to do it all at one time.

Yep. We call that death by a thousand paper cuts.

Yeah, it is crazy. You slowly bleed out by just treating the symptoms and not fixing everything all.

At once in the most painful death. Like, it just hurts.

Yeah. Okay, so that, that's number. That's number three.

Okay.

Right. So rip off the band aid. You gotta, you gotta move. You gotta move fast.

Now the, the next one, number four, is you have to realize that you're not different and you're not special. Your market isn't different. It's not special whatsoever. And you're not different. You're not unique. Probably we need to go back to number one is you need to admit that your mindset, your act, what you do all day long is causing this outcome. So you're not special. Like, none of us are special and.

Yet everyone will convince us, try to convince us that they are.

I have two recent experiences that just kind of show this in a little time capsule is the first one isn't related to our industry. The second one is. So the first one is, you know, I'm really into hi fi stereo stuff and so, you know, I've made friends with hi Fi dealers around and when they find out what I do, just like with anything they like, oh, can you help me with my business? I'm not making money, you know, whatever. And so.

I.

Two different hi Fi stores, both not really making money, and two completely different models that they think is special and unique and part of their identity. See the hat. The thing that happens is when you start to say something over and over again and you start to believe something, it becomes a part of your identity and then you defend it even when it isn't working anymore.

Right.

So one hi Fi stereo place, their model is they make their money on labor and installation. So they will sell you the, the stereo, the speakers or whatever it is at a very competitive price below market. And then what you're going to do is you're going to pay them to come in and install the home theater, install the stereo, because this stuff is complicated. They're going to, they're going to upsell you on cables, like, like speaker cables, things like that. And if you're not into hi fi, you wouldn't understand that people will spend.

More than $25,000 on just a speaker cable.

That's unbelievable.

People are nuts.

Wow.

Like nuts. And so this guy that owns a stereo, hi Fi stereo store, his model is that we sell the item, the commodity, at a lower price and we make our money on the labor. And so, I mean, in a sense, it's like a parts in a service department, but we're going to discount the parts. Now we run into this all the time where we will have dealer clients where in their parts department, their back counter gross profit percentage is like in the 30s.

We've ran into independents recently that their gross profit on parts is somewhere around 70%, the same as labor. They don't see it any different. Now if you tell a parts manager and a dealer that they think is not true. Yeah. Even though the parts manager is not really doing anything to sell the part, they. Because it's part of their identity, they will argue the price thing. But right down the street, the independent selling it for. Well, a lot of times the independent's buying it from them and then marking it up more than what you would sell it for. Right.

The independents, actually, I think in a lot of cases they get really good at negotiating with the dealers on the wholesale side and then they just pull all the money for themselves. It's a pretty, it's pretty smart.

But the parts manager in the dealership doesn't want to hear any of that for sure. Now, just like the stereo hi Fi shop Owner, his identity is we can't charge more for the speakers in the stereo. Even though we're not really making money. We're moving a lot of labor and parts through, but at the end of the day, when it washes out, we're barely getting by. We're barely making a profit, Right?

Makes no sense to me.

Makes no sense. Now right down the street is another high five shop owner and his model is. We sell the, the, the stereo equipment at a high gross, and we don't want to install it. We don't want to deal with that. So now you go to that guy and he's losing. He's actually losing money, right? He's having cash flow problems and all that. And so you say, well, why don't you offer? You know, because I've, I've bought stuff from you, and I don't know how to hook it up, and I actually end up paying somebody from the other place to come install your stuff. Why don't you offer installation and charge, I don't know, $200 an hour? No, it won't work. Oh, it won't work. Why won't it work? Well, you know, nobody. It's hard to find kids that know how to install or.

What's it cost? Okay, same thing. We do this all the time, right? When it comes to flat rate. Well, what do you pay these kids? Well, you know, 15. $15 an hour. Okay, well, what if you ran an ad and you were gonna pay $50 an hour because you're charging 200 for something you're not doing now, and you made 175, and these people for 50 were professionals. They did a good job. And also they could, you could pay them a percentage of what they sell. So if they upsell cables, they up, you know, they see somebody like, hey, you know, the streamer you have is seven years old. Or, you know, the streamer you have was invented when Al Gore invented the Internet. Things have come along and, you know, maybe we could, we could interest you in a new streamer. And they sell things in the home, right, because they're doing a needs analysis. And so they. You pay them a little commission on what they sell. So they're getting their 50 bucks, a little commission on what they sell. You're making.

150 and selling cables and all that.

No, that won't work. Same thing in one day. So this happened to me in one day on the i5 IS. I went to a heavy truck dealership. I won't name the brand, but I am in there, the guy's not making any money. And he's saying, well, I can't make money because my clients, most of what we sell is fleet and it's to the school system, right? Because they're selling school buses and to the city. And most of what we sell is like 200 miles away, 100 miles away. And so what happens is we get a huge rush in the summer where they bring it in for warranty work, but they have their own mechanics and, you know, blah, blah, blah, blah. And I said, well, why don't.

To me, this makes perfect sense. Why don't you hire some mobile technicians in that area that work remotely that can go do. I'm not even done with my sentence. No, that won't work.

They are so convinced that won't work.

Okay, why won't that. Well, they wouldn't be efficient. Blah, blah, blah.

Okay, so then, literally.

I want to say 100 miles north on the I5 corridor, same day, go in, and I'm talking to a manager. He's running this thing 24 hours a day. And I just casually. I wasn't even thinking about the mobile text. Wasn't even in my mind. I'm like, so how many texts do you have? And he goes, oh, well.

We run shifts of 12. We have two shop for them and blah, blah. And then we have seven mobile texts. And I go, oh, you have seven mobile. Well, that doesn't. How doesn't work. Mobile techs don't work. I said, what's the efficiency on those mobile techs? And he says, oh, they run at about 100, 110%. I go, well, how could a mobile tech run at 110% efficient? And he goes, you charge for travel time. I go, customers will pay for travel time. He goes, yeah, like, I'm. Like I'm crazy.

Yeah, it's so great.

It's the same. It's this. You're not special. You're just not special. You've attached your thing that isn't working, that isn't getting you the result to your identity, and you want to fight for it. You want to say that mobile tax won't work. You know, you want to say that. Oh, I can't. I can't have people do the installation on the stereos. But the truth of the matter is, is the customer's paying for the tech. The customer will pay for the travel time. You know, what business is about is solving a need for a customer, not about what you think.

Right? And then just. Just to kind of double down on that is how many times in that conversation, like, so you say, hey, Christian, why don't we try mobile text? And then you say, well, that, that won't work. And then you probably say something. Can you guess what you say, we.

We tried it once.

You read my mind. You're psychic. We tried it once. Yeah, that happens with the 410 work schedules, whatever. Oh, lateral support. Well, we tried lateral support. It didn't work. And then we're always like, oh, we're gonna do it and it's gonna work.

You also find out that they did it with like 13 weeks in 1980.

Yeah. You know what I used to do? I used to try to ask why it didn't work, and now I just don't have patience. I like, didn't. Yeah, I guess it didn't work. But it's gonna work now because it works. Right? So number four, you're not different. You're not like, you're not special. You're not different. Customers everywhere want to be treated right. They want to, to spend money on things that they perceive value in and with people they like and trust. That is true in Afghanistan. It is true in Brazil. It isn't true in Kansas. It's true in Canada. It's true in Wyoming. Everywhere you go, that is the definition of business.

Yeah.

Your market isn't different. It isn't. Now, maybe the nuances of the weather or the nuances of the culture are a little different, but for the most part, what we're talking about here is your close mindedness, not the fact that your market's a little different.

Yeah. You're looking at what you can't do, not what you can. Yeah.

Number five is. And we kind of have two different ways of explaining this, but it's the same thing. It's about the outcome. Everything is about the outcome. Like, I don't know how many times.

We.

Talk about something and then one of us will say, well, what was the outcome? And we're surprised by the outcome. Like, I'll give you guys a perfect example is Christian and Steve a while ago. So Steve is a coach. He runs. Most of his clients are the elite clients.

Yes.

So he runs our elite group. Super talented guy. Maybe the honor. Well, can't say that because quite a few of our guys are techs at heart. But he's a tech at heart. Right, for sure. You guys are telling me about what you're, what you're doing with entry level techs and how you're creating this career path and they're Getting a raise every month or two months and they're literally, somehow we've taken the position of Quick Lube Tech and turned it into, I'm an executive vice president of Quick Lube. After like a year, like we've, we've created all these, these levels and raises.

In me. Like, my initial reaction to that is, geez, they can't. They just do their job? Like, right.

You were disgusted, I think, at first.

But the industry has a turnover rate there somewhere close to 70%, depending on the manufacturer, but it's really high in the first two years. So kids come in and they, they leave within the first two years. They don't want to be taxed. And so my question is, well, what's the turn? What's the turnover when we do that and it's below 20%.

My opinion does not matter. The outcome matters. If it's working and we're retaining text, my opinion is irrelevant.

Yeah, right, yeah, the outcome. And I think the other thing is that really you have to know the math before you get started. Like, use the math to figure out what the outcome is. So many times we'll talk to clients and they're like, oh, yeah, I'm ready to get fixed. But then they don't understand what it takes to get fixed. And I always say, work from the outcome backwards. Actually was just on the phone with one of our coaches this morning and she was doing exact same thing. She's like, okay, here's what I want and how do I get there? And working it backwards. I think that the outcome is. If you're not thinking about the outcome, you're missing the boat.

In every high level meeting I've ever been in with some of the most talented people you would ever meet, the meeting always starts with, this is where we want to go. How do we get there? Not, this is where we're at. This is where we're at is irrelevant. It stops the conversation, in a sense, because you're just talking about where you're at, you're justifying where you're at, why you're at where you're at. And what happens is it's about feelings, it's about beliefs. The further away from feelings and beliefs and the more you get to outcome, the faster you're going to get there. And the straighter the line.

It becomes the true north. Yeah. So that's number five is outcome math.

Less feelings. Right. And then the last one that I have on here, number six, is that at the end of the day, most of what we do can be described by one simple thing.

And Warren Buffett has that famous quote where he says, business is easy. It's the people that are difficult. Some version of that. I'm gonna he words it a little different, but that's what he's saying is it's all psychology.

Most of the time, when I talk to people and we're talking about what they do and what I do, and that very quickly they're like, oh, you're a psychologist. I'm like, yeah, basically, I study more about human behavior than anything else. Because the math, at some point.

It'S just the math, it doesn't change.

There's no emotion in it. But everybody wants to imply their beliefs. Everybody wants to impose their. Their trauma, you know, their past experiences. But at the end of the day.

What. What's. What's the.

What's the ideal outcome or what are we capable of? Right. And let's try to focus on that. Not all of our weird beliefs and trauma and that sort of thing, but psychology is what kind of gets us there. And so the most important element I have found in turning any business around, not just service departments, is it's way more about psychology. And it's. It's closer to magic than anything else.

That's right.

It really is. You know, you're controlling focus, you're controlling people's behavior while you're moving things around. And, you know, you're distracting them, moving things around and then creating momentum, and then that becomes the new norm. And if you do it right, they don't really know what happened except that they're happier and things are easier.

That's when it works the best.

Yeah.

It'S psychology, and it's closer to magic than anything else. And.

We say this all the time to be a really good leader. You're not taking the credit. If we do it right, we should be taking very little of the credit, and we should be handing that off to the people that are actually doing the work and that matters. That's right.

Yeah. And I think that the psychology at the end of the day is the. It's the magic pill between current level of success and potential level of success. Like, it's all about the brain.

Yeah. Let's just recap. Number one, you gotta admit that the baby's ugly. Number two is.

There'S levels to it, so don't underestimate how broken you are. There's levels to turning something around. The more money you're losing, the harder it's going to be. The more dead bodies there are, the more fraud there is, you know, that sort of thing, the more entitlement. All that. Number three is you got to rip off the band aid and fix it all at once. You can't. You can't piecemeal it. Death by a thousand paper cuts. Number four is you aren't different. You're not like, it's just simple business. At the end of the day, your beliefs are different, your trauma is different. You want it to be different, but it's not. It's, you know, it's pretty, pretty much the same everywhere. Number five is you want to focus on the outcome. The outcome is what matters. Reverse engineer. Where do we want to go? What are we capable of? And work backwards. Don't work from where you are. From where you are is going to be about feelings, beliefs, the marketplace, what everybody else is doing. And then the last one, number six is it's all psychology. Math is easy. People complicated with emotions, beliefs, feelings, all of that. So that's our list. It's basically the list is six, you know, key ingredients to turning around a struggling service department. 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 hi, I'm Chris Collins and I'll see you in the next video.