Testing the Market for Extended Hours Demand
In last week ’s article we discussed the basis for why we may need to consider extended hours and we discussed ideas on how to improve the current productivity in your service department. This week we will lay out a plan for analyzing your market to determine if your dealership could benefit from extended service hours. If your due-diligence determines that your service department is “ripe” for extended hours, we share ideas to help you sell the concept to your staff.
Service Market Penetration
What is the Service Market Penetration of your dealership? – Different manufacturers use different means of calculating service customer retention. In some environments, the calculations are based on service visits from customers in your DMS database. In other environments, the calculations are based on visits from owners in your assigned dealer market area. The latter calculation is a better means of determining your opportunity. Here’s how to accomplish this:
Calculate your twelve month unique service customer retail or contract maintenance visits (under 5 years old – by zip codes) versus 5 year market Units in Operation (UIO).
- Gather the 5 year or newer UIO (units in operation) for your market. Many times, the manufacturer will have this information. This would not be the same unit count from your DMS as many of these UIO customers have never visited your dealership.
- Once you have gathered this information, run a report in your DMS to determine how many different VIN’s have visited your service department for retail or maintenance work in the past twelve months (by same zip codes as UIO market). For example, if you have 10,000 vehicles in your assigned market and you have serviced 3,000 unique vehicles from the same area, you have a 30% Service Market Penetration.
- Is there an opportunity to grow your business? Many manufacturers believe that 50%+ is an acceptable accomplishment. If you believe you have opportunity, go to the next step to determine the cause.
What do your customers want? Ask them. There are a couple of effective ways to do this. Best method is to use both. Remember, you are making a very serious decision and if you are going to convince your staff that it is or is not the right thing to do, you must perform due-diligence.
- Mail a survey to 200+/- of your customers, from your DMS, who have not visited your service department in the last twelve months.
- Put a fresh dollar bill (or two dollar bill) in each survey envelope to encourage and improve response. Indicate that their feedback will assist in providing better service in the future. Enclose a self-addressed, stamped envelope for return of the survey. Consider offering a log-in internet survey as an alternative for the customer. The survey and cover letter should be a candid, research survey with no sales offerings. The average response rate for this type survey is an amazing 36%. Ask, primarily, the following questions:
- Where do you go for maintenance service?
- another dealer
- an independent or chain service provider
- I do it myself
- Why do you not return to (Your Dealership) for maintenance service? (circle all that apply)
- Service hours are not convenient
- Takes too long
- Location is not convenient
- Prices are too high
- Personnel are too busy or non-caring
- Quality of workmanship
- What is the likelihood of extended evening and/or weekend service hours improving your chances of returning to (your dealership name) for maintenance service?
- Very likely
- Ask them essentially the same questions that you asked the mail survey but solicit conversation on the subject matter
- Challenge the group to help decide what suitable hours would look like.
Survey the Competition
- What is your competition doing? Who is your competition? It is probably not another dealer. Your customer survey question #1 should verify that. Statistically, 30-40% of customers who take advantage of weekend or extended hours are customers who would not have chosen that facility, otherwise.
- What hours and days are the independent service providers (ISP’s) in your area open? If they are open evenings, Saturdays and/or Sundays, there are likely expectations by your customers that they can receive service during these periods of time.
- Drive by or visit their facilities on Saturday or Sunday. How busy are they? How many of your “brand” vehicles are visiting them on these days?
After performing these steps you should have a really good concept of what is right for your customers and your staff. It also shows your commitment to doing the right thing. But you have to be honest with yourself. Your responsibility as a manager is to produce profit and customer retention. We must have a very high awareness of this as take the steps needed to grow our business. Next is a guide to assist you with implementation of extended hours as well as several extended hour options.
Implementation of Extended Hours
Armed with this information, you should be able to make a determination whether extended hours is something you should or should not do. Be honest with yourself. If it is time for extended hours, rally the troops and begin building the process. Remember the statement: “With and for – not – to and against”. All affected employees should have input. When you have done your research and can document a good case for what you need to do, your employees will usually support your cause. Brainstorm ALL of the potential problems that might be associated with the changes: Communications, Staffing, Toolboxes, Cleanliness, etc. Depending on the number of employees, you can present this in a couple of different ways:
- Small Shop (8 or less technicians) – Conduct a General Information Meeting to explain the need for extended hours. Present the option – pro’s and con’s and solicit feedback.
- Medium or Large Shops (9 or more technicians) – Conduct a General Information Meeting to explain and introduce the need for extended hours to all employees. Select a group of 3-5 technicians and 1 advisor to become a process team and help develop the plan. The membership of this process team should consist of one or two of the most respected technicians in the shop and one or two of the most vocal technicians. Don’t be afraid of the “vocal” folks, you’re going to hear from them anyway. They can and probably will be your best allies in the implementation of change.
Managing the process – Most dealerships that employee modified work schedules utilize some form of “Shift Manager”. This person(s) can be a foreman, assistant service manager or lead advisor. This person or persons should have the authority to make a decision in the manager or directors absence. If you are doubling your production staff, it may be a good time to add a foreman to supervise the shift. The manager at Wal-Mart doesn’t work 24/7 and neither should you.
Use the extended hour options described in the next chapter(s) to determine which options might work in your situation. Ask your team to evaluate and determine a plan for your shop. As with any major undertaking, there are a lot of questions that will need to be answered: “If this happens, then what do you do?” It is the team’s responsibility to create solutions to these problems. Make sure that you get the solutions on paper. It will be important that you cover and cover again all of the variables such as work transfers and coverage’s. Get it in writing! WE MUST create documents to support our change and development. When a question comes up, two weeks, two months or two years from now, we can refer to the document.
Modified work days can dramatically improve facility utilization, as much as 2 techs to one stall. In each of the charts for the different schedules you can count the number of technicians that will be on shift each day. In the example of 3-13’s, you could employee 10 technicians in as little as five stalls. The negatives to the improved facility utilization are:
- Dirtier shop – you must have a cleanup plan for double the mess
- Massive toolboxes need to go home – depending on your facility you probably will need to limit the size of toolboxes allowed. In extremely tight situations you may consider purchasing built-in tool box workbenches for technician’s tools and take their boxes home (or sell them). These toolboxes not only improve shop space utilization, they also really dress up a facility.
- Lighting – the facility must have good lighting to allow the technicians to perform at a high level after dark
Whatever you decide to do, DO NOT let extended hours be your “best kept secret”! Promote it using social media, dealership advertising and e-mail blasts. If you use a BDC, provide a word script encouraging appointments during extended hours. Offer special prices or discounts for after-hour customers. The most important thing to remember is the saying: “Whether you think you can, or whether you think you can’t, you’re right!”
The options for extended hours are described from the most basic to the most complex, in order of complexity. Many different configurations can be developed by mixing and matching the various options described.
Coming next week – Part 3 – Extended Hour Options without Modified Work Weeks