Why Service Managers Make the Best General Managers | SDR #244

Welcome, everybody, to the big show. Today we're going to talk about why service managers make the best general managers. Christian is going to share with you an invention that I think is going to save marriages and relationships everywhere. Right. Would you not agree?

I think it will.

And much, much more coming up on this edition of Service Drive Revol.

So what did we just fig? Well, let me tell everybody what we just figured out, that we can't go on a dating show because I just filmed a video for the library channel, a new channel that we're launching of my top seven books of all time.

Yep.

If there's anything that you and I talk about often, it's books. Weird.

What.

What was the first thing I did when I came in this morning?

Gave me a book and talked to me about a book.

I read you. I've read you my highlights in a book.

Yeah, that's right. That's right.

And so how many of my top seven did you get? Right.

Three.

I feel like it was two. I think I helped you with the other one because you said 12 rules play. And then.

Yeah, I get two out of seven. Yeah, that's a good batting average.

No, no. But that's not on a dating show.

No. I feel like I've got. I've got a really good. I'm well rounded in my Chris trivia, but, boy, I just think it was too hard to choose the ones that I. The ones that I selected were pretty good books.

There was a couple that are on your list. I never would have guessed.

It is interesting how much my relationship with my books has changed now that.

We have the library and we're surrounded by them all the time. And there's been a couple of times where you just pulled one out and showed me since we moved in here, which is really kind of so cool.

To have them just around like that. And also, like, now I'm buying books in a different way because I'm trying to fill certain sections that.

You see them differently when they're on a shelf together. Yeah.

So my favorite thing that you just did, because we had our quarterly meeting right. Where we had all the clients out and everything. So at the. In front of the stacks, you have two, like, really beautiful, like, book. I don't know what they would be called, but it looks like a. Just a little platform for the books to sit on. And then you had them, like, strategically opened up and you had a book on each side. One was about cars and then the other one was about Muhammad Ali. And it was neat. I just watched People go through and leaf through them. It was pretty fascinating.

Yeah, I need to do more of that. I need more books around because I think people are a little intimidated to touch them. So I need to put books out that they feel comfortable touching.

Well, they look really special and really expensive. So I get it why people would.

And some of them are really special and really for sure.

It's, it's probably the ones they don't think that are the ones that are really special and really expensive.

Yeah.

Okay.

You want to get to the news and then I'm excited about this topic today.

Okay. So speaking of Tesla, I'm pretty impressed with this. I don't know if anyone saw over the last week a game changing and surprising Tesla and Ford pact to disrupt the EV universe. Brought to us by Ford Motor Company. They made this press release. So Ford company Motor company revealed that it joined forces with no other than the EV king, Tesla Inc. So it's electrical. Electric vehicles can be charged at the Tesla Supercharger station across the US and Canada. Smart move. So as of 2025 all of the Ford cars are going to be equipped with the Tesla charging port which is a little bit different than, than other electric cars. But it's, it was really, really easy to deal with. So F150 Lightning, the Mustang Mach E and the E Transit are all going to have the, the Tesla hookup to it starting in 2025. Yeah. So that instantly makes their charging network. The infrastructure just got way better really, really fast. Yeah.

It's the best thing for consumers. Like if everybody was on the same electric, you know, network, consumers would have tons of options. Having them be separate is kind of archaic. Like you don't have different gas stations.

Outlets in a, in a hotel. Like could you imagine having to have converters?

It's the best thing for perception and the customer experience for it to be easy and.

So smart accessible. And they've just got so many more. Right. Like if Ford had to go build its own charging systems that would be so successful.

Way ahead.

Yeah. Why not hop on their bandwagon? So and I think that Tesla had made the, the sourcing of how they did everything with the chargers public domain. Yeah.

So only benefits them if perception of.

Electric cars is plus they own the superchargers. Right. So they're going to collect revenue off of the money. Yeah. Nice.

So it's pretty 5 Tesla stock.

Okay. Talking about the impact of AI on the automotive industry beyond self driving cars. And it says AI is transforming the way cars are designed, manufactured and Maintained the technology has the potential to revolutionize the entire automotive supply chain, streamlining production processes and enhancing efficiency in ways that are once unimaginable. Which I think is kind of interesting. I never thought about the AI helping out the building of cars.

Yeah. So I, when I bought that Tesla, I got the self driving option. Which you did not do when you had your. I didn't.

Which you made fun of me for.

I did.

Yeah. Because you thought it was way safer for me to not be driving my own car.

That's true. Well, it's safer for others.

She didn't use it for a year. She never turned it on. And then one day she turned it on and used it. Now she uses it all the time.

Okay.

And literally she cannot stop raving about it.

And do you notice that the AI, is it a better driver than she is by herself?

Sometimes when you're in like situations where there's a lot of cars around and it's like a busy intersection, it, it gets messed up. But if you're just on the road with cars in front of you, just think about stop and go traffic. It's so easy. It does it for you.

Yeah. I think that eliminating some of the.

Eventually you're going to be able to watch a movie or work, right?

Yeah.

That'S my thought is, is that, you know, like just taking for instance, like me right now I don't have much of a commute because I don't want to sit in LA traffic. But if I could work while my car drove, then it would make a lot of sense actually for. So I could live, live in Nevada. I could live 40 miles away, 50 miles away and not have to be kind of caught up in the downtown Los Angeles thing and I wouldn't be less efficient. Yep, that's brilliant. I think.

Cool.

So, yeah, so it's just an article talking about that welding, painting. The assembly is going to be faster, it's going to be more precise, that humans won't be able to keep up with it at the end of the day, which makes a lot of sense. But that's our news for today.

Great stuff. So let's start this off by saying I'm a service guy who became a general manager. So I think I have firsthand knowledge of what this journey is like and what the advantages and disadvantages are. Also, we have made a conscious effort in the last couple years.

To promote the idea and.

Really encourage the elite group. So our managers in our elite coaching group. Best of the best, the best of the best. To become General managers. Three of them did the last year and then one got promoted but didn't get the job until this year. So really four, right?

That's right.

And we, we encouraged it at every level. I don't know that in every case we can be attributed with the credit for it, but it hadn't happened up until then.

So. And I would say too that we, if nothing else, I mean the, the people got the job on their own merit. But I don't know that the idea nor the conversations would have happened without us really pushing it.

Yeah. The other thing that I would say is going into the next five or 10 years, as manufacturers go direct to consumer and the sales process becomes more automated.

What'S going to be left as the core of the business is going to be fixed stops.

That's right.

So fixed stops is going to take more of the center stage in the upcoming evolution of the industry. So there's an advantage for dealers or dealer groups to start thinking about fixed stops as the future leaders of the industry because that's kind of how it's going to go. There isn't going to be the same sort of salesmanship needed or involved in selling cars because they all kind of want to go to an order.

Method and also like more and more manufacturers will probably go to some sort of subscription. It's just going to change.

There's a lot of possibilities for sure. So good.

Let's kind of go through the list of why.

Service managers make the best general managers. So the first one that I have is when I went from service to sales.

The thing that I had known, but it had never been in my face, like I knew this, I assumed this. But because sales downplays it a lot and it's kind of the relationship is passive aggressive a lot of times between sales and service. I did not understand to what degree the service department affects the sales. Like a lot of times I think salespeople or general sales managers or sales managers because they don't understand service or general managers also they don't understand service. They make certain concessions for the fact that somebody bought a car yesterday, their check engines lights on and they can't get in for two weeks. Yeah, they start to accept these things that aren't customer friendly, that affect the car deal, that affect customers perception.

Because they don't know how to interact with service. They don't know anything about service. For me, I knew how to fix service and bridge that gap because I came from service. And once I realized how much of an advantage it was in the marketplace, when your service department was easy to deal with and made the customers want to come back, it sold more cars and your grosses were higher. And so a general manager that realizes that but doesn't understand fix ops can't fix the service department because it's an unknown.

Right. They don't know what levers they can pull. Yeah. Okay, that's good.

So that was. That's the. The first one.

Okay.

The second one is, for the most part.

Sales departments are kind of like country clubs. Right.

Well, I definitely would tell you, from my experience of going from sales to service, my interpretation was that service was going to be way easier, and I was wrong.

There's more structure.

There's. Yeah, I think that there's less ways to screw it up on the sales side.

Hence, you have to have more structure service. Right. Yeah, because there's. There's more variable. So on the sales side, most of what is happening is good news. Like when somebody gets a new car, they're in the new car ether. They're excited.

Yeah.

They're thinking about showing their friends. They think, oh, I deserve this. This is something I burned. Yeah, it's great. Like, they. There's something about the new car smell that has an intoxicating effect on people. And so it's fun. Like, it's fun. In the service department, you're mostly dealing with problems. Things have gone wrong. It's not something you don't even want to maintain. You have to come in, that sort of thing. Right. So in service, we have more systems and processes. In sales, it's pretty loose. There's. They don't really. You know, most sales departments don't start off with a plan in a shift meeting. They don't hold people accountable for what they're doing that day. That sort of thing. So when you apply a process or a system to sales, the leverage is 10, 10, 20 times what it is in service.

Yeah. For sure.

The. The. The effort goes. Goes way further than it does in service because for the most part, it's left to chance.

Yeah.

But it's a lot of defense, not offense. On the sales side.

Yeah. Because what. At the end of the day, whatever the. Whatever the sales department has, they have the car, which is the prize. So it's just a different. It's a different type of leverage with a customer. Yeah.

The. The other thing is how valuable fixed absorption is to your overall.

Strength in the marketplace. Like being able to go through the seasons. When there's more inventory, you can be more aggressive. Where if your Fixed stops isn't really profitable. You really are kind of left to play a different hand. In a sense, it's harder.

Do you think that a GM that doesn't understand the fixed and what the fixed absorption brings to the table, they might be letting deals go out the door that they don't have to. Whereas a service manager turned GMs, like, no, we got money left over where we can help them out. So it might be strategically.

Well, just think about this because I've done this and experienced this like, so if your, if your fixed ops is really, really profitable, like let's say, you know, 40% net to gross and parts and service. Right. And you're putting serious money to the bottom line. And now you're in a marketplace where you're competing against an autonation in a Lithia. And they are, they're, you know, they're paying their general managers on market share. They aren't so concerned with gross or profits and they're giving cars away in the marketplace or doing it in a different way. You can, you can step on the pedal and affect the market, demoralize your competition and have a system on the back end that your grosses are actually higher. So we would be 5 or $600 higher per copy than everybody else. They perceived that we were lower.

Yeah. Their perception is what matters.

But that's because we could step on the pedal and create momentum. Because sometimes, you know, like for a week, if you really step on the pedal and create momentum and deals are happening, it just attracts other deals.

Yep. You feel it when you're in the showroom.

It's contagious. And so you have the ability to push in and lose $200 a car for a minute to get the momentum going the other way. So you literally, day by day could choose how aggressive you want to be on the Internet and your mark, whatever, you know, just on the floor, whatever it is. So it's a huge advantage when you understand the numbers. Also, if you, if you're really good at the service thing, you understand the financial statement better than everybody else. So you understand how to create profit. You understand how somebody might come in on a free oil change and you can move them up so you can give a car when make it in the back.

Yeah. So that's the parallel that I was going to make is that a service manager gets it that sometimes you have to have an oil change special. Right. So maybe on the sales side we have to have an ad car. But the truth is, is that we're, once we get them in front of us and we wow them when we do a great job, that it's going to leave being a winner, even if it might have come in a loser. That's the thing. I think a service manager would, would get that like we can sell it at a loser, then we'll pick up money in the, in the finance department and then the car leaves. It's a winner. And I think that a service manager would come that would just, they would make that parallel between that and an oil change.

Also like understanding that you can make money on the accessories too. So like, you know, we would do between 150, 200,000amonth in just accessorizing new cars with wheels and different things.

Most of the time somebody who comes up in sales is afraid of that. They don't understand how to create a system where they can get done. They don't understand that you could have the technician there on a Sunday to do that easy stuff that's just internal. Right. So you, you know, you can create systems where that sort of stuff can be easy and facilitated. Where you know, most of the time they put some wheels on a car, somebody wants that car, but they don't want the wheels. And then what do you do with the wheels? And you can't get them done on a Sunday. And you would just rather avoid that. Yeah. So that becomes your leverage in a way. It's something that you can create profit when nobody else can.

Yeah. So the thing I had on my list, which just essentially is exactly what you just said, I put down that they understand production. All right. So the second thing I have on there is that they. Service managers are way more prone to embrace complexity.

Yeah.

Which would, which would help them in the long run. Like you said, trying to figure out how to compete with Lithia and Autonation and everything like that. A service manager has to figure out 10 different ways to fix a car. Like if a recall comes out and they need all this stuff done and somehow magically the service manager gets the shop ready to handle a repair that's never been done before in 24 hours. Right. So that complexity, they kind of live in that world that they're having to kind of plan for the unplanned. And that then would translate really well into the sales world. Because I think that in a lot of cases it's like the sales process, it's your, it's your 12 step sales process. And then if you just don't deviate from that. Whereas I think a service manager, if a deviation happens on the process, they'll be able to make a new lane. So did you like that one? That's pretty good, huh? Okay, so then the other thing I've got on here is that usually the service department has the biggest headcount. So if they're already half of the employees are working underneath them, them just adding on the other half of the employees isn't that big of a deal. So I also think that kind of along that line where, and we've seen this in our group, is when the service managers get promoted to gm, what happens is that their service departments get better because they're kind of managing it from that higher level and they put someone in there that can do either what they did or better than what they did and then they just fix the sales thing and make it go. So both fixed and variable get better because of that, that understanding of people. And then the other thing I really like about service managers is they don't need the credit, they just want to win. So they defer all of their credit to their team, which, uh, sometimes with a general manager you might catch them in a place where they want all the credit. I think that the best leadership is where they defer the credit to the team and that gives them self esteem and helps them to grow and get better.

Yeah, that's good.

I did.

Okay, great.

So if you're a service manager, please, please consider that route. And if you're. Yeah, if you're an owner, don't rule that service manager out.

That would be.

That would be my advice.

Yep. Thanks for tuning in. 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 now that's offers.chriscollinsInc.com I'm Chris Collins and I'll see you in the next video.