Joe Clementi

Do a quick Google search of “should I buy a service contract” and you’re likely to see about 480 million results. Quite mind-boggling when one thinks about the decision whether or not to purchase a service contract.

Of course, there’s myriad of different service contract products but for the purposes of this article we’re going to reference those products that cover repairs on automobiles. There’s a wide-variety of opinions on the value of service contracts and the return on the investments. Rather than create debate over the validity of the products (author endorses/recommends extended coverage) instead this article will focus on the product presentation from a sales persons perspective.

The first critical element to offering service contracts is credibility. Do you believe in the value proposition the product provides the client?

Let’s address a few obvious value proposition questions:

• Is the product likely to cover mechanical failures?
• Does the service contract provide extra coverage for the client?
• How are claims handled?
• Who’s responsible for the contract?
• Are there other options available to the client?
• Does the product offer sense of security against unexpected repairs?

Product credibility is essential during the sales process. If a sales transaction was completed successfully the client must like, trust and respect the salesperson. That trust is easily abandoned if the client perceives the product is unworthy.

The sales persons role in the presentation of this intangible product is elementary. Three steps to help deliver the value proposition:

1. Present the products. The product offering should be initiated at presentation stage to enhance the factory coverage. Present the product to every client during every presentation, every time without exception. Don’t prejudge whether the client will say yes or no. Simply present the product without prejudice so the client can make an intelligent and informed decision.
2. Endorse the product. The salesperson has the relationship with the client and through the process of a sale there’s a transference of trust. Endorsement through product needs identification is key for value proposition. If the salesperson understands the product and identifies genuine value in the offering, than endorsing the product is natural.
3. Speak intelligently about the product. Proper education is essential for this part of the process. Understand what the questions/objections are and how to properly address those concerns with facts and historical data. The sales persons depth of knowledge is key to being able to speak intelligently about the value proposition.

In closing, it should be said that nothing replaces good sales processes. If training is the foundation than practice is the framework. Practice is essential for skills to progress and for real learning to take hold. Practice is the preparation and provides the right environment to ask productive questions, listen intently and gain perspective.

Leverage the analytics. Measure the performance expectations and understand where the buy-in gaps are and how to properly address those specific voids.

“Measure what you intend to improve and let everyone know the score” – unknown.

 

As mentioned in part 1 “How to Capture those lost sales in service”, we outlined the specific areas to address while reviewing repair orders.  This article will address three specific steps to help your service operations capture potential lost sales.

This is a guided three-step outline that creates the pathway to performance improvement. These steps aren’t the cure-all philosophy but, they can better position the service department to deliver better results.

1. Step 1: Make an “op” code for the service adviser for all work offered but not purchased. One suggested “op” code is ASR (Additional Service Recommended). The service manager must drill into the service advisor head that logging the “op” code is not optional and will bring incremental business back to the team.
2. Step 2: Pull the “op” code report weekly to review the number of lost sales. All lost sale customers’ in that op code gets either (a) a phone call from your Service Manager (b) a follow-up phone call from your BDC or appointment setter (c)an email from the dealership.
3. Step 3: Find out why the customer declined the work.

Many customers have time constraints and plan on returning at a later date for the repairs. Extend a free rental to them if they come in sooner.

Some clients will say the cost was too high so review the services offered and give them a good, better and best scenario. Sometimes,the best approach is to do the smaller repair today and delay the larger repair for another date. Make sure you’re scheduling the larger repair today once you have approval to delay.

Offer the customer a discount to perform those services by the end of the month. A common discount amount is 15% but the value should be commensurate with the services declined. Bigger services that bring in time and money will warrant a larger discount.

The decision to fix or repair has taken a back seat to larger problems in this economy. If the customer’s perception is they save money by using an aftermarket provider, they will bring it to the city garage. Competition for the customers’ attention has grown substantially over the past five years. Independent facilities have captured millions of dollars in revenues from the dealerships units in operations.

Watch the morning coffee clutch gather for their morning ritual. Try to listen in to what the tone of the day is going to be. Are they focused in on trying to solve the world’s political problems? Maybe the tone will be centered on global warming, or the price of oil? There’s always that center-of-attention person trying to steer the conversation towards what’s not happening rather than what is happening.

If you were to observe the attention grabbing lieutenant you might be able to see the driving force behind his/her failures. Generally speaking, the disruption in the mental psyche of the staff is at the provocation of this person. Noticeably missing from this collective group of disenchanted mourners is the top producer. Coincidentally, the top producer is busy working at his/her game-plan for the day. They’re following up on unsold customers, greeting existing customers in the service drive, mailing out thank you cards, sending intelligent and engaging emails and constantly working their managing the client pipeline. Truth be told, they don’t have the time to sit around and talk about world issues.

The remainder of the staff that support the coffee clutch group generally make up the bottom third of sales. Those under-achievers wonder why top producers stay at the top and consistently make more money. Some are content watching sales being conducted around them while they ponder why no customers’ are walking through their front door.

The common misnomer is the top-tier sales producer seems to be lucky.  It’s no wonder the elite appear be in the right place, they put themselves in that position.  They’re not off smoking cigarettes, on an endless coffee break, running errands or conveniently unavailable when a challenging customer arrives.

The intellectual cancer that metastasized needs to be managed. The severity of the destructive behavior dictates the treatment be swift.

Surrounding your salespeople with positive productive people is essential to a successful sales environment. In every sales environment there are the “outliers”, that is the small group usually consisting of one to two people who are on the edge of greatness. The outliers want to be great, they think there is a possibility of greatness but, they just haven’t experienced success yet. The outliers haven’t been poisoned yet but there’s potential to be misdirected by the masses to be mediocre. These are the people we need to redirect and save from the mundane.

In the end, it’s the mood of the coffee clutch that tells you what’s happening in and around a sales environment. If the tension is transparent to leadership then one can only imagine what the customer is likely to feel and see. Don’t allow the undercurrent of the coffee clutch to affect the performance. Work to disrupt the course of the scheduled meeting by offering constructive solutions to downtime. Disrupt the mental conditioning being created by giving the group a list of tasks to promote intellectual stimulation.

A lot of great leaders have said that enthusiasm was the single most important ingredient to their achievement and success. Enthusiasm then is at the very epicenter of selling success. Values such as; persistence, work-ethics, effort and other attributes contribute to massive and consistent success.

Surround the sales environment with those individuals that have high expectations and inspire superior performance through the daily activities.

Live good, be strong in your convictions and make it happen!

Generally, service managers only measure the tangible metrics such as; hours per repair order, effective labor rates, sold hours, productivity, efficiency and proficiency. Often, these indices tell a great story about the performance of the department. One of the challenges of any service facility is managing the opportunities.

Each metric is finely tuned to provide insight into the sales performance of the service department. In analytics its common practice to measure sales, the challenge is coming up with an accurate measurement tool for those unsold opportunities. What happens to those customers who do not purchase service items with you? Is there a measurement to determine the effectiveness of those lost sales?

Here is a review outline:

• How many customers leave the service drive without buying the services offered?   What if the customer was leaving the facility only to drive four miles down the road to a competitor? Highly successful service departments keep very tight reigns on repair order opportunities.

• Do we know why the customer said “no”? Customers come into service because they have a concern (mechanical related or maintenance related). Customers are researching prices in the beginning stages of their process. Yes, price is an issue just as getting a “deal” is to a purchase. Service must deliver value with a compelling enough “why”. If the cost alone were the issue, customers would never come into a factory trained facility. The perception that services cost more at a factory trained facility than the independents is alive and thriving. Service manager’s need to find out why the customer is saying “no” to their offerings.

• The only inventory the Service managers are responsible for is time and time is the one inventory that cannot be replaced.  Manage and measure the unsold hours based on the total hours available.

• Leverage the analytics. Do we know how many dollars are leaving the shop? Determine the number of lost sales or the number of customers who said no to the service offering. Take the lost sales and divide them into the average sales per repair order. That number will be the total revenue lost per month.
• Is there a final eye reviewer in the service drive? The reviewer would make the final presentation and deliver the value proposition.  While it’s accurate to say that the service drive is a different sale, the goal remains the same.

• All repair orders involving declined safety related repairs require service managers involvement.  No customer should leave a facility without the service managers review of the safety concerns and thorough documentation on the repair order including but not limited to; a customer declination statement.

In our follow-up article we will outline 3 simple steps to help capture those potential lost hours/dollars in the service department.

To suggest there’s a paradigm shift in the way consumers purchase products would be a massive understatement. Information gathering and data processing is evolving by the minute. Innovation is creating opportunities and new careers such as; social media directors, digital marketing specialists and e-commerce positions dot every major job posting.

Online retailers have decoded the buying process as unwittingly, consumers have been providing data through systematic tracking of historical search patterns. Geo-fencing gives retailers the strategic leverage to use the power of product placement with precision. Using a virtual perimeter for product placement is the latest tool in the marketing tool chest.

Market compression through mergers and acquisitions have littered the conventional automotive dealer network. Those unwilling or unable to evolve their customer experience have become or are becoming extinct. Conventional dealerships and the predator-prey sales relationships are no longer the norm. Pricing pressures were exasperated by shrinking margins and commodity driven sales practices. The competitive landscape in today’s retail world is the embodiment of “survival of the fittest”.

Consequently, third-party buying services are directly attributed to the reluctance to adapt to today’s consumer purchasing preferences. Social media platforms have been embraced as the new community. These multifaceted branches link a single client to, hundreds if not thousands, of connections in the virtual tree.

Today’s consumer requires transparency and fluid communications they can control.  It’s incumbant upon dealers to develop a strategy to improve the buying experience by combining technology and social media so they work in tandem. Today’s consumers expect social responsibility and community involvement. Connect your dealership and community to payback the resources that depend on support. Ask associates to donate time and encourage neighborhood involvement.

Manufacturers have improved product quality leveling the field of choice and brand equality. Dealerships are clustered in markets where the separation is measured in yards rather than miles. The dealer/group individual brand is the key to connecting and keeping a potential buyer. The ultimate goal is not customer satisfaction but rather, customer loyalty.  Loyalty is the new measuring device as the great equalizer to continued growth and market dominance.

With information readily accessible it becomes more important to have flawless execution at the dealership level.  Associates that are informed and processes that are in-tuned with customer buying intelligence are essential for success.

The end of month has come and gone and a new month is here. If you’re excited and ready to embrace it then chances are you are having success.  If you are on the other end of the spectrum, well then most likely you have already given up.

If you have been trying to find the “secret” to massive success by hoping it will arrive on your “someday ship”…STOP LOOKING

What you do today and every day can make everyday your best day.

• Show up. Show up consistently and on time. Sometimes, the only edge you need you gain by just showing up consistently. Be committed for the long-haul (average of 22 work days per month).
• Make the call, send the email or text you were dreading.  Don’t hesitate, procrastinate or the failure will resonate.
• Greet everyone as if they are going to make a purchase.  Everyone is a buyer! The only question is…when?
• Become a willing participant in your continued growth and development. Read a book that helps develop or improve a skill. Watch a video that inspires you to take action. Listen to a Podcast that opens your mind to new ideas and challenges you. Learn something new today!
• Interact with the loyal customers who already Like, Trust and Respect you. The best clients are loyal clients.
• Offer something of value! Don’t just sell…provide value to potential customers by exceeding their expectations.
• Plant the seeds of prosperity. In today’s economic climate you are not touching just one person you are touching every branch on their social media tree.  When you connect with one person you extend your branch to the next customer (without your knowledge) and the connection grows. The fruits of prosperity may not present itself immediately but over time the dividends payout exponentially.
• Put in the effort and fail instead of failing for lack of effort.  With each successful “no” you receive it brings you closer to a “yes”.

“The accomplishment of any goal is the progressive accumulation, or compound effect, of small steps taken consistently over time.” – Darren Hardy

Each day your team comes to work they arrive with a purpose. This intention may not always be evident or align with future aspiration, but they come to work, nonetheless. The situations that salespeople encounter are as unique as their actions and the reactions, as a result of those circumstances. Consider the role that money plays in the ebb and flow of a business transaction. Factors such as; low or inconsistent margins, poor customer relation scores, confrontational customers and of course, the all too common defeatist managers. All of these influence and ultimately drive down the overall effectiveness of a sales team. As a manager or company leader, determining the mindset of the sales team can be a challenge.

Do you interrogate them as they arrive for work or just ignore them? Are the sales team beginning their day with the proverbial coffee-clutch huddle? There is a more pro-active and productive approach to influence the intentions of your sales team.

A slew of external conflicts come to life in most sales environments resulting in a dichotomy of emotions. As a result there are a significant amount of distractions that lead to the mood altering circumstances. The manager is tasked with the responsibility to understand the activities at play. Then in the appropriately manner, find ways to re-focus negative energy into a mutually beneficial outcome. So, how does a manager take something as dynamic and complex as the sales landscape and build a road map for success?

Team meetings are an effective tool for reinforcing goals. These meetings should be built on an encouraging and re-affirming platform supporting positive thinking and action. The process of team meetings can alter the course of a potentially negative situation into positive progression.

Here are a few simple steps to serve as a tool to guide your team through their day:

• Start by re-affirming simple goals.
• Speak in a positive manner encouraging mind, body and spirit that any goal can be accomplished.
• Simplify the goals so that they are understandable and perceptually realistic.
• Set five achievable tasks that are easy to commit to and can be accomplished in a short period of time. Remember, the project itself isn’t as important as making sure the person is on task. Momentum is key to creating results.
• Sign-off on the tasks prior to leaving that day. It’s important to make the salesperson responsible for his/her productivity. Having them sign off on their objectives holds them accountable for their respective level of success.

Sometimes all people need is a little encouragement, group acknowledgment and positive energy. The sales manager(s) must command responsibility for the emotional energy of the staff. Success is a choice as is failure, so make sure your salespeople chose wisely by influencing the intention. Make a conscious effort to improve the quality of life for those with whom you work with.

Provide individuals with a clear and concise road map to reduce uncertainty and instill accountability. All leaders are the key holders to greatness. The burden of dealing with a wide variety or personalities is a job requirement. All managers must inspire the results they demand. Stay on the lookout for those who look for reasons to fail. Generally, the underachiever will attempt to bring others down, in the process of finding fault in something or someone to excuse their mediocrity. Separate the confused from the disillusioned and teach focus and discipline.