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[Webinar with Kenect and Bob Clements International]
McKay Allen:
Bob Clements works with a ton of dealers. We work with a ton of dealers as well, and we collated the best things that they're doing in their service department for this webinar. As we said, the panelists today, Bob Clements, owner and founder of Bob Clements International. You all know him. And then Trevor Allred, he's our head of business development here at Kenect. Work with dealers and manufacturers a lot, all day, every day. It's what Trevor does.
McKay Allen:
So we're grateful that both of them have agreed to join us. So Bob, why don't you give us a little bit of background about Bob Clements International, the types of dealers you help and what you do to help them?
Bob Clements:
Sure. Great. And I'm excited to be a part of this. So we've got a great relationship with you folks at Kenect, and I appreciate having an opportunity to do this. So what we do as a company, we are a dealer consulting company. We work specifically with dealerships. Sometimes we work through manufacturers as a part of that, but our primary focus is helping dealers be successful, be profitable, have a stress free life if that's ever actually possible in a dealership.
Bob Clements:
But really help dealers build a strong foundation that they can choose to either retire on and make a ton of money with or grow on out. So that's really what we do, and we have several different ways we do it, but that's our focus is helping dealers be successful, get their lives back, get the insanity out of their lives and actually start making money.
McKay Allen:
Sounds pretty good. That's awesome. And then Trevor, why don't you give us a little bit of background about Kenect?
Trevor Allred:
You bet. Well, I will throw right back at you, Bob. The joy is ours to work with you with the same mission to help dealers generate more revenue. And I love Bob, because he's very revenue and profitability focused. But we are a software company. We're based on the very warm sandy beach shores of Salt Lake City, Utah. Just kidding. I think it's a crisp 22 degrees right now. So for all of you across the country, I hope you're in warmer climates than we are.
Trevor Allred:
But we were founded by a former dealer. We have a text messaging software platform. We work now with over 2,500 dealers across North America. So we welcome some of you that are Canadian friends, but our aim is to use text messaging for you at the dealership to communicate more efficiently, generate new leads, collect payments, and drive online reviews. Today though, obviously, we're just going to be talking about the service focus. So we're excited about that.
McKay Allen:
This will be a great topic and a great discussion. So why don't we keep moving and talk through our actual topics here? So we're going to spend the vast majority of our time today on this slide. We want you to, as we jump in here, note a couple of things. First, this is being recorded. So you can share this with folks at your dealership or colleagues at other dealerships as well. We'll send you the recording after.
McKay Allen:
The second thing is, we really want this to be interactive and we really want you to ask questions. So on the right hand side of your screen and the GoToWebinar panel there, you're going to see a little question box, question area. To get practiced using that, why don't we all go in there and just type in where you're dialing in from today? Just give a city and state, for example.
McKay Allen:
Just where you're dialing in from today, and that'll help you know how to use that and where it is, and it'll help us know who's on the call. And so then when you're ready to ask questions, you'll know exactly where it is, and we want you to ask questions. All right, we got people doing it. We got Richard in Washington. We got Greg in South Carolina, Ryan in New Jersey. We got some folks from Florida, more New Jersey, Nashville, Ohio, Atlanta, West Virginia.
McKay Allen:
Very good. That's one of the states I've not been to, Eddie, and I should go there, Ohio. We've got Neil Campbell up in Alberta. That's great. Pennsylvania, Wisconsin, Texas, a lot of New Jersey today. I think this is five or six in New Jersey. So that's awesome.
McKay Allen:
Awesome. Well, let's jump into this. Let's jump into this. Bob, let's start with you. So the current state of service departments. It's been an interesting year. It was an interesting summer, a really interesting fall, and now as we head into winter. Where are service departments right now? Where are they at?
Bob Clements:
Well, I would say there's a lot of chaos going on in service now. We are lacking technicians and that's been the case for a long time. It's not improving, but with the COVID situation and technicians having to go home and things like this, it has been a little bit crazy in the dealership world in 2020. We do see that becoming a better situation in 2021, but the challenge that I think we're seeing is we look at 2021.
Bob Clements:
So many of the dealerships in the industries that we work in had such phenomenal, whole good sales this year. There's going to be so much product out there. There's new product and warranties and all the different things that come with new product, way more than there's ever been that I think is going to put some incredible stresses on service departments. So that's where we see it.
Bob Clements:
And we're really working with our service managers to make sure that they really got their stuff tuned up to be able to handle that influx of new business. That's going to be warranty, business, service business, and stuff from new units. So it's exciting, but it is going to be a little bit chaotic, I think, in 2021.
McKay Allen:
Trevor, what would you say to add on to that? Seeing the same thing, a chaotic stretch for service departments?
Trevor Allred:
Well, I smiled just a bit, first of all, because I'm on a swivel chair and as you can all see, I'm having a little too much fun with it. Shame on me. But we had a series of webinars earlier this fall where the title was How To Handle A Tsunami Of Fall Service Opportunities. And so to build more on what Bob said, each of you picture a tsunami. What is it? It's a huge tidal wave that can be quite oppressing, if you will.
Trevor Allred:
And so I agree with Bob 100%. I have to smile, because in a recent dealership visit, I saw salespeople who were strutting around like they were the best thing since sliced bread. They've had a strong sales year and by golly, we know it was them and their charm and their good looks. Don't try to tell them it was favorable market conditions. So in dealerships, they're strutting around thinking they're wonderful.
Trevor Allred:
And in the same dealership through the next wall are the service people who are what they are literally shaking in their boots, because of that fall tsunami. And so is it a good position to have had strong sales and lots of service opportunities? Yes. But at the same time, that's why I'm pretty excited about sharing some of these best practices, because the last thing you want is your service people doing a little too much shaking in their shoes.
Bob Clements:
Exactly.
Trevor Allred:
We want to give them nothing, but opportunity to be positioned to succeed. So the state of the service department is a little on edge. It's been a strong sales year, but at the same, I'm fully confident that some of the secrets we share with you today will make it a win-win solution for everybody.
McKay Allen:
That's great. So I think the way we want to go through this is hit each bullet point and have you both each address each one. Because we both talk to a lot of service departments. I know you do, Trevor, and of course Bob Clemens does. And so we're going to try to tease out what are the best things that the top dealers are doing in their service department. So let's talk this first one first as we would, because it's first, reviewing pricing strategies.
McKay Allen:
Tell us ... Let's start with you Bob, what are you addressing when you're talking about reviewing pricing strategies in service?
Bob Clements:
Well, there's several things. So service is a supply and demand business. There's going to be a greater demand on our ability to service than we have the ability to service it going into 2021. So just like any other type of business from an economic standpoint, if we have a supply and demand issue, as we have a higher demand for let's say something like gasoline, then you guys know that the price of gasoline goes up.
Bob Clements:
If the demand goes down, then the price of gasoline goes down. But we're in a situation where I am confident with all the dealers we work with, we are going to have a larger demand than we've ever had on our service departments. And we're going to have a lack of supply from a technician standpoint to do it. So we're really working with our dealerships to say, "Look, this is a time to take and rethink about our pricing strategies, because pricing your labor rate, how you price out jobs can either be a brake or an accelerator."
Bob Clements:
And I tell that to dealers all the time. So your posted labor rate is either going to be an accelerator. If I need more work in, then I do service specialists and I do things like this. I do some discounting off of my posted labor rate. And most of the dealers on here have winter service specials or off season service specials and you do it. And what you're doing effectively is you're doing maybe 10% off.
Bob Clements:
But you're doing a reduction in your posted labor rate, because you're trying to accelerate volume of work coming into your shop. But on the same token, if we know we're going to have plenty of work coming in, just like what Trevor just said, there's a tsunami of work out there. So I'm going, "Look, we have to then somehow put the brakes on this. Even if it's in an artificial way. And to do that, we've got to start limiting some of the people that would come into our shop on maybe stuff that we don't really want to work on any way, but it comes in."
Bob Clements:
And you do that by then advancing your labor rate up to some point where it starts becoming a little bit more restrictive for just the common person that didn't buy from you anyway, to come in. Now, if there are dealers that did buy from us, we have programs called preferred customer programs. So they're not impacted by that increase. So we take care of our customers.
Bob Clements:
But my concern always is that the people that bought products that you could have sold them, but they bought it from someplace else for an extra $50 lower and they drove a hundred miles to get it. Then they're going to drag it into you when it needs warranty work, because their shop sucks and yours doesn't, and they're going to want you to do the service it. So that's really what I'm trying to do. So that's the first thing is to go back and just really evaluate your posted labor rate and say, "Do I need a brake or do I need an accelerator?"
Bob Clements:
And I'm going to just tell you, and I'm a hundred percent in agreement with Trevor on this, you're going to need a brake. You're going to need to slow down the volume coming in. And you do that by advancing and moving up your labor rate. The other one then again ... So you can do that. That's a part of your pricing strategy, but the other part is looking at how you're pricing jobs out.
Bob Clements:
So again, in our shops, we don't do work by the hour. We do work by the job. You guys are probably familiar with the concept called flat rating. Well, that's what it is. And so again, so the goal again is to do a higher percentage of the work in your shop, by the job, through a flat rating process rather than through time and material. And so we're really encouraging our dealers to say, "Look, this is a time right now where we need to go back and say, 'Are there more of the jobs that we do that are normal jobs that we do every day?'"
Bob Clements:
Somewhat like what you do with menu pricing, when you do your basic annual maintenances and things like this. "Can we do more flat rating as a part of our pricing structure?" Because flat rating, the time and a flat rate project is based upon a B-level technician, not an A-level technician. So you can gain some efficiencies utilizing your flat rating as a part of your process. And I know some of you go, "Well, Bob, there's no flat rates in our industry."
Bob Clements:
I go, "Sure, there is. They're called manufacturer's warranty rate guides." And you don't want to use that as your pricing strategy. That's not what you want to price off, because most of you are not getting paid at a hundred percent on your warranties. But what you should do from a flat rating thing is use their guide as a guide and look at your warranty recovery rate from that particular manufacturer.
Bob Clements:
And so if you're only recovering an 80% on warranty from XYZ manufacturer, you know that their warranty rate guide is off by 20% relative to your shop. So you never want to be at a hundred percent. You always want to be at a minimum of 110, because in services, always those things that catch you and bite you. So if I had a manufacturer and I had their warranty rate guide, and I know that I'm only recovering an 80% on my warranties, I would add 30% to their time.
Bob Clements:
And that's what I would use for my flat rate time on that job on a piece of equipment that was in near new condition, just out of warranty. The thing you always have to keep in mind with flat rating is flat rating increases as the equipment conditions deteriorate. So you have three different levels when you're doing flat rating. You have Level 1, which is equipment that's just out of warranty, which is in excellent, good condition.
Bob Clements:
If I'm recovering an 80% with my manufacturer, I would use their guide. I would add 30% to their time. That's going to get me at about 110% for a B-level technician. If the equipment's in what we call Level 2, good to fair condition, we would add another 20% onto that time. And if it's in what we call Level 3, fair to poor condition, rust corrosion, somebody who's been on bolts with the red Loctite, you should never put on anything. You don't want to cut off with a welder.
Bob Clements:
Then I'd add another 50% to my Level 1 time. So then it's again using some strategies like that. But if you're just ... In essence, now you're going to build again by the flat rate. So you're going to improve your billing efficiency. And I will tell you, you'll improve your ability and efficiency by about 25 to 30% if you do more flat rating. And that's a piece of what you're doing too.
Bob Clements:
Then the other one real quick, and then I'll wrap up here is as you do time and material jobs, do not put an A-level tech on a time and material job. Put a B-level tech on a time and material job. Because if all you're getting paid is the time it took to do it, why would you want to give up your best tech when they should be doing flat rate work and make an extra 20 or 30% on it?
Bob Clements:
Put your B-level tech on it, and then you charge your B-level tech time out from that standpoint. So don't use A-level techs on time and material work. Use B-level techs and use your best technicians on your flat rate, because that's when you're really going to maximize your dollar. So that's really what we're working on with all of our dealers right now is second look.
Bob Clements:
We probably need to put a brake a little bit on our volume coming in, in 2021, just like what Trevor said. There's this tsunami going to happen. So let's go ahead and move our labor rates up. You can still discount back to your current labor rate with your existing customers. We call that our preferred customer program. But about 50% of the work that comes into your shop is going to be from what we call non-purchasing customers.
Bob Clements:
And we might as well move our labor rate up and take advantage of it. It will slow some of the volume down, but you'll do a little less work probably, but you're going to make a ton more money.
McKay Allen:
So let me ask you a follow-up to that. And then Trevor, I want to hear your thoughts as well. Do you think that the ... Because we know over the summer, there was all the industry data around new buyers in all of the dealership world. First-time buyers for boats and first-time buyers in power sports and things like that. How has that, or will that manifest itself in terms of service demand and types of service requests over the next six months? And what are we already seeing there?
Bob Clements:
Well, if the service departments are marketing to the people they sold to, they should see an incredible increase in just service. Because the people that buy things today, really, they don't have an understanding of how to service it. They're looking toward you as a dealership to give them advice on the best thing they could do to keep what they just purchased in optimum condition.
Bob Clements:
So there should be some good marketing going on right now from the dealerships themselves to the customers that you sold to reaching out to them. If it was in marine, they should be reaching out to them to get their boats, depending upon where you're at. If you're at the lake and the beach area in Salt Lake City that I've been to many times with Trevor, they probably need to winterize their boat about now.
Bob Clements:
If you're in Florida, like some of you folks are in Florida you're probably fine without winterizing boats. But again, depends upon where you're at. But you should be ... If you're in a service department, I would be reaching out and connecting with people. This is to me and I'm not here to do an ad for Kenect, but I've worked with Kenect and we got so many of our dealers do it.
Bob Clements:
This is where to me Kenect explodes with what can do quickly and easily with just keeping customers updated with the product. So I'm not doing emails. Nobody uses emails anymore. And dear Lord, we don't ever call a landline anymore. So anyway, so that's what I would be doing. if it were me. I think the opportunities are there, and there's nothing more profitable than doing maintenance, service work, not repair work that's not as profitable.
Bob Clements:
Just doing basic maintenance and stuff. You'll make a ton of money doing basic needs. And there's a lot of that stuff out there. So, great question.
McKay Allen:
Cool. Trevor. Anything to add on the pricing stuff or on the demand question that I mentioned?
Trevor Allred:
Wow. After following Bob, I'm afraid to say anything. That was amazing. Thank you, Bob. Just a couple of thoughts here. We've all heard the slogan or the mention of the fact that repeat business is always born where? In the service department. And so Bob, my mind started whirling when you said on average, 50% of service comes from non-purchasing customers. And so what a great opportunity in terms of new revenue.
Trevor Allred:
Because in that case, a repeat business isn't born in the service department. New business can be born in the service department. So that just adds to the whole topic of this webinar is as you continue as dealers to deliver an excellent service experience at even top dollar if necessary, two things happen. Number one, your clients are going to be super satisfied. And the irony is, they may be paying a premium for your service, but they are going to be super satisfied.
Trevor Allred:
And on the flip side, you're going to have a more sane service department, because you are only handling what they can handle, but charging a premium for it. And so I just wanted to reiterate quickly before I share my one or two thoughts. Bob, I love your rules of thumb. And so I wrote them down. In general, charge 110% of the warranty rate guide, and number two, add 30% to the time estimate.
Trevor Allred:
So for all of you on that call, I hope you're taking notes, because those are some great rules of thumb. As you look at our first bullet there, review your pricing strategy, "Where do I start?" Well, take those two rules of thumb and jump right into it. My quick comments on pricing is you now have a great opportunity as I've seen dealers begin to do to consider what's called the premium.
Trevor Allred:
Bob had mentioned his preferred customer program. You have customers that will be willing to pay a premium price for some unique treatment from you. Take advantage of it. So even take it one step further in the form of a subscription. And so we have a few over-anxious dealers that are trying subscription plans for service, including a replacement unit, including on-site storage during the off season. Each of your dealers think about it.
Trevor Allred:
You've had a lot of inventory. For most of you, that inventory is completely gone. And what now do you have at your disposal all winter long? A huge lot where you can improve in your premium or preferred customer plan, free storage onsite under lock and key. And you can even throw in a winter shake-down, meaning you remove the snow after big storms type thing. But that can include a customer preferred program on the service side, on the parts side, on the storage side and on delivery.
Trevor Allred:
And we'll talk more about that when we get to collecting payments remotely. So a lot of great information there, Bob. Thank you for sharing your ideas on the pricing strategies. Each of you, as dealers, are in a great position to really extend the excellent customer experience and still make a decent profit. And I love what Bob says, it's all about profitability. He's even been known to say, "My only goal is to help you dealers make obscene amounts of money." Sorry, Bob. I stole your tagline.
Bob Clements:
That's all right. Well, that's the truth. That's what we're here for.
Trevor Allred:
Okay, McKay. It's all you.
McKay Allen:
I was just talking away, and I was muted. Let's talk through the second bullet point here, establishing a performance-based comp program. I assume you mean for techs on this one, Bob. Talk to us about how that works and what that looks like, because I think a lot of dealers have tried this, but maybe it didn't go well or they weren't exactly sure how to structure it.
Bob Clements:
We do this for every position in a dealership. So we're talking about service here. So that's my focus, but I don't have ... In dealerships that we consult with, every person including the person that keeps the lot organized, has the ability to make more money. So I'm a big fan of capitalism. I don't know. It just seems to work pretty darn well.
Bob Clements:
And what I find is if only one person gets to participate in capitalism, say the owner, then it doesn't work as well. But if you can take and create an opportunity through bonus and compensation programs that let everybody play in the game, it revolutionizes how your dealerships work. So we're going to talk about the service side of it.
Bob Clements:
So one of the challenges we have in service is we have this process in the service department that's called slow-walking. And slow walking is, "I'm a little tired today. I'm going to get this job done." And so what technicians do is they tend to get into a bad rhythm. And I guess that's for lack of a better word, I'll call it. And they get used to just working at a pace. They can do more.
Bob Clements:
And they did do more when they first started, but they got into what we can just call slow-walking in the shop. And "I've got to fix that, because I don't have lots of ability to get new technicians. I've got to take my technicians and make them perform at a higher level." And so you can do that with rubber hoses and shotguns and things like that. That's a short-term way to get people to move faster.
Bob Clements:
But for the most part, most people come to work because they want a paycheck. And I find that most of them are excited about getting a bigger paycheck. Now, I'm not going to pay you more money just because you showed up, but I am more than happy to pay you more money if you help me make more money. That's how it works. And so what we really work with our dealers on is to create a performance-based compensation program and it's based upon tech efficiency.
Bob Clements:
So this goes back again to where in our shops, our technicians are always clocked into a work order. So there's never a time in our shop where our technician's not on a work order. And that they may be out unloading a truck, but we have a work order for that. So we're keeping track of their time. So always keep in mind that in a service department, we don't sell labor dollars. We sell time.
Bob Clements:
Time is our product. We buy it by the hour. So a technician's there eight hours a day. So we buy time by the hour. We track it by the 10th of an hour. Every six minutes, we want to know what's going on with that time. And then we either bill out by the half hour or hours. So we bill in half hour or hour increments. That's how we use time in our shops. So what I want to do is I want to say, "Okay, well, if this technician is here eight hours and they produce eight hours worth of billable time for me, that's worth something."
Bob Clements:
Now, most of the shops that we start with are only producing at about 60% of their level of efficiency or productivity. So in an eight-hour day, most of the shops we're working with are maybe billing out five. That's terrible, and you'll go broke at that level. You'll never make any money in your shop at that way. You really don't start making money at a shop until you're billing out at 75%.
Bob Clements:
The minimum we start bonusing out is 85%. And we have shops, because we do a lot of flat rating that literally are getting 10, 11, 12 billable hours out of a technician in an eight-hour day. But that's because we do flat rate and as a part of our structure. So what we do is we set up a program for the technicians. It's just based upon their efficiency on work orders over a two-week average period of time.
Bob Clements:
So if Trevor was one of my technicians and I was paying Trevor ... Let's say I'm paying Trevor $21 an hour. Your hourly rate is based ... That's not a very high rate for a good technician, Trevor. I just shorted you on money. So that's a bad rate. So if you're a really good technician, you're going to spend good money to get a good technician. But anyway, so I've got Trevor on an hourly pay structure. I don't change that.
Bob Clements:
So if Trevor's making $21 an hour, in our program Trevor still makes $21 an hour. But what I do is I say, "But look, Trevor, over these next two weeks, we're going to create these work orders for you." We're going to put on there what we think is plenty of time to do these jobs, because we're adding some extra time on it." So on these work orders, if you're 85 to a hundred percent efficient ...
Bob Clements:
So in a two-week period of time, you're there 80 hours. If you can at least bill out 68 of those 80 hours, I'm going to give you a $2 bonus on each of those 68 hours plus your $21 an hour. So if you're 85 to 100% efficient and a minimum 85, I'm going to give you a $2 bonus on every billable hour you produce over that two-week period of time. If during that two week period of time, you're 101 to 125% efficient, so now I'm getting about 90 hours in a 80-hour week at a minimum.
Bob Clements:
81 would be my minimum on it. But instead of a $2 bonus, I'm going to give you a $4 bonus on each one of those billable hours you produce plus you're at your $21 an hour that you're getting now. So that never changes or goes away. But if you're really a good technician and you're 126% efficient or higher, so now in an 80-hour period of time, you're billing out a hundred hours or more, I'm going to give you a $6 bonus on those hundred hours instead of a four or instead of a two.
Bob Clements:
And in our program, it's always retroactive back to the very first hour you bill. So you don't get the $2 on the first 68. We go all the way back to the first billable hour. And then we use that times the $6 an hour to get you your bonus. So then the technicians, all of a sudden, they become little entrepreneurs. They're sitting here going, "Wow, I can make literally an extra $1,200 a month at a minimum if I'm at that top level."
Bob Clements:
And by the way, those are my A-level technicians. And they're consistently at 125 to 130% efficient in our shops. And so these guys can make an extra 600 minimum to $1,200 a month. I actually have a dealership that's down in Abbeville, Louisiana. It's a two-store operation. They do marine, compact utility tractors, power sports and outdoor power. I have one technician down there, his name is Kendall. The best technician I've ever seen, and Kendall is 178% efficient.
Bob Clements:
So think about that. So in a two-week period of time, Kendall's billing out almost twice as much time as he's actually there. And he's 126% on his recovery. So Kendall's making about an extra 2,500 to $3,000 a month over and above. And I think Kendall's ... I don't want to say what his hourly is. But anyway, Kendall gets paid well per the hour. But he's phenomenal technician.
Bob Clements:
So Kendall's like a surgeon in an operating room. We've got two bays there. He's working on one. He's got his next one set up and he's moving back and forth. Kendall will never leave that dealership, because there's no other dealership in the world that's ever going to have a program like what they have set up for him. And they're making tons of money off of Kendall. So it's not like it's killing them.
Bob Clements:
This is a guy here that I'm paying to be there eight hours a day, and he's given me almost 14 hours a day of billable time. So the other hours over and above the eight, the other six hours, I didn't have to pay him almost 30 bucks an hour on. I just had to pay him $6 an hour. That was his bonus for those other hours. So that's really what you have to do if you want to really increase that performance.
Bob Clements:
Now, to your point, a lot of dealers have tried this and it doesn't work. It's because you don't have good processes in place. So your technicians literally can't hit their bonus levels, because they're going out and getting their own equipment. They're looking up their own parts. They're cleaning their own equipment. They're sweeping out their own base. I don't have a guy that can bill out $14 an hour ever touch a broom.
Bob Clements:
He doesn't ever touch a wash wand and wash any of his equipment down. We've got a person called a service coordinator in our shops. That's done for them. They're a surgeon and an operating room, and that's how our shops operate. So our technicians, because they're so hard to find, I don't ever have a technician doing anything I can pay somebody else to do that doesn't require the technical skills the technician does.
Bob Clements:
I can hire somebody all day long for $15 an hour to go wash a piece of equipment or sweep a floor. I can make ... With Kendall, he's at $129 an hour for their labor rate. He can make me $129 an hour. I'll hire somebody for $15 an hour to sweep behind him. So that's really the attitude you have to have. And you've got to make sure your processes are right. And so that's really where it is.
Bob Clements:
If you've got these barriers and hurdles that are artificially created, because your process is broken, they're never going to get those bonuses, and then they just give up. You've got to create a situation where they just get to be technicians. The technicians love to take things that are broke and fix them and make them work. And if we can have everything set up for them. We already have all the parts pulled, because we have a part of our process called triaging.
Bob Clements:
We look at everything within 24 hours after it comes in. We already know what parts it's probably going to need, and the parts are already on order. And we don't even bring that unit in until all the parts that we think we're going to need are there for it. Then at that point we bring it in, we tear it down, we repair it and then we send it out the door. That's how we get our efficiencies out of our shop.
Bob Clements:
Not magic. We just got great processes and our technicians can do well with their bonus programs, because all they do is they're just technicians. They don't do anything other than they turn a wrench all day long. So that's why that performance-based compensation program is so important. It'll radically change your service department, radically change it.
McKay Allen:
This seems to something like ... And that's fantastic information. That's awesome. How common of an issue is this in service departments, Trevor and Bob, with technicians cleaning stuff up after someone leaves the bay or washing this off or finding tools? It feels like you need to have somebody that you're paying 13 bucks an hour to do that while you're technicians actually in surgery, if you will. How common of a problem is that?
Bob Clements:
Trevor, you're in shops [crosstalk 00:31:35]. I'll let you answer that.
Trevor Allred:
Oh, okay. Well, much more so. And I think all of you dealers on this call will agree, much more so than we want. And it's just simply because too many times, especially during a fall busy season, we're concerned about what? Efficiency? No, we don't have time to worry about efficiency, because we've got people coming in and people calling and people needing their units.
Trevor Allred:
And so that's why I love the idea of process, Bob. I think that's excellent. And it makes me want to call you and hire you for my dealership, so we can get things in the perfect order. But I think that's a big issue, and I'm guessing 90% of you dealers on the phone are nodding your heads. Because when you're paying certain rates and yet you're having people do stuff that people at much lower rates can do, not only are you having people that aren't as pleased with their working environment and get into that slow-walking mode that Bob has talked about.
Trevor Allred:
But also what happens to efficiency in the dealership. And we all know that service revenue has what? The highest margin.
Bob Clements:
Exactly.
Trevor Allred:
So those are excellent comments.
McKay Allen:
That's great. All right, let's go to the next one, communicating effectively. Trevor, this is Kenect's specialty, if you will. So why don't you start with this one and then we'll go to you Bob, if that's okay. But Trevor, this is a huge one. The one I've told before to tee this topic off in a previous webinar we did was around when I had an experience, when I took my pickup truck into an auto repair shop to get replaced.
McKay Allen:
They literally couldn't reach me. They called me, I was in meetings. I'd call them, I couldn't reach the right person. And so this minor issue that if they could've just texted me immediately, they could have solved in two or three minutes and gotten my permission to work on my truck, took them two full days of phone tag to get me and wasted their time and my time. But they couldn't reach me.
McKay Allen:
And communicating effectively, honestly, is the linchpin between a dealership that has really an efficient process and then one that doesn't.
Trevor Allred:
Oh, absolutely. And before I jump into that fully, Bob, I've just got a tease you. I think you used the phrase, You don't want to have to use shotguns and rubber hoses on your employees." Did you really say that? I had to point that out.
Bob Clements:
Yeah, I did.
Trevor Allred:
How many times have you been on a webinar where someone used the phrase shotguns and rubber hoses?
Bob Clements:
I like that. I like it. That's our first method of motivation. If that doesn't work, then we change to compensation.
Trevor Allred:
There we go. There we go. I love it. Well, let's talk about communicating effectively, and way to tee up McKay. The funny part about this bullet number three here is we all hear that all the time. We all talk about it. We all claim we practice it. But take it a step further. In McKay's case where they're trying to reach you on the phone, if you're the service department manager, what just happened to your efficiency as you've got their piece of equipment pulled apart, or their boats pulled apart, or their bike pulled apart in your service department, taking up space in a bay, waiting for owner approval?
Trevor Allred:
Well, it comes to a screeching halt. And so what I love about some of the principles we've already talked about today for you as dealers in your service department, we're not talking about long range plans to go out and find and hire more technicians. We're not talking about long range plans to build three more service bays on the lot behind your dealership. We're talking about some immediate things that can be done to improve efficiency now.
Trevor Allred:
And again, the benefit there is you've got happier employees, you've got happier customers and you've got a better throughput. And so that's why these principles are so important. And so my favorite example, we're big fans of ... You'll never guess, something called simple technology. And the kingpin of simple technology is text messaging. All of you on this call, shame on some of you, you're texting even during this glorious webinar.
Trevor Allred:
So shame on you, but it's proof that text messaging is a great way for your dealership to communicate effectively. Why? Because it's simple. Why? Because it's easy. Why? Because it's effective. And so let's say Bob brings his brand new boat for service in my dealership. And as I'm servicing it, I'm the technician, and I notice an engine oil leak.
Trevor Allred:
Think of the power if I can take a picture of it, text Bob, and say, "My name's Trevor. I'm the technician working on your boat. I noticed this engine oil leak. It's an $80 seal that we can replace and your boat will still be ready by five o'clock today." Now, two things happen right at that moment. Number one, let's say Bob is sitting in a very important board meeting, but he's hiding his phone under the boardroom table like everybody else.
Trevor Allred:
And he sees that the incoming text message from me, his favorite dealer, and he's likely to respond and say, "$80 done by five? Go for it." And so how is he feeling about my approach in terms of customer service? He's probably feeling pretty good. Bob will slip me a candy bar to say, "Absolutely."
Bob Clements:
Absolutely.
Trevor Allred:
There you go. And the second thing that happens is if I'm the service manager, how am I feeling right about now? I feel great, because I got, in literally seconds or minutes instead of hours or days, confirmation from my customer to proceed with a work order, and that confirmation was in writing. See how efficient that is? And so I'm the tech. I get the thumbs up. I jump right in. I move Bob's unit right out of my service bay and I move in the next one.
Trevor Allred:
And that's all made possible because of quick, easy and effective communication. And you know what? Text messaging has a 98% open rate. Each of you on this call, look at your phones. Do any of you have unread text messages? Probably not. You want to use that with your prospects and customers. 95% of messages are read within three minutes and 89% of people now in North America prefer to interact with business via text messaging.
Trevor Allred:
So to communicate effectively, use text messaging. Include photos, include videos, and then in our Kenect platform, we also have text to chat. And so if you really want to blow the socks off of your customer, text them a link that they tap on, and lo and behold, you can do a live walk-around of their unit, pointing out service opportunities, parts opportunities. I know this webinar isn't about sales, but think of the impact that can have on your sales department.
Trevor Allred:
So a lot of reasons there for you to communicate effectively, and I'll throw in one more. Using text messaging, you can actually text service appointment invitations and text or schedule to be sent out later, text messages confirming those appointments. And so if you really want to grab the bull by the horns in terms of communicating efficiently in service, be proactive in scheduling your service appointments.
Trevor Allred:
Because if you're reactive, they're all going to show up on the last week of October for winterization. But if you reach out starting in September and August and you're scheduling those, it saves your neck in terms of workflow. And it improves the customers' experience, because you've picked a time that's convenient for you that also works for them.
Bob Clements:
And Trevor, I think also one of the things ... Not only does good communication impact the customer in a positive way, which is what we're always trying to do, but I think one of the things that a lot of dealers don't understand is bad communication at a shop cost you thousands and thousands of dollars that you're writing down on work orders. Because the customer wasn't informed of what the price was going to be, the customer wasn't kept up to date.
Bob Clements:
And all of a sudden, you've got 30 hours on the job and the customer comes in, they go, "I can't believe that. You didn't tell me that. You told me this and this and this." And the service manager's not going to sit there and take a chewing. They're going to go, "Well, let me see what I can do." And the first thing they do is they start giving away the owner's money and they just start writing things down.
Bob Clements:
It's literally ... Trevor, I'm in shops all the time, it's thousands and thousands and thousands of dollars that dealers write off. The service manager does, because they didn't communicate and keep the customer updated as they were finding new things and the price started to accelerate on them. And I'm just telling you, it's thousands and thousands and thousands of dollars a year.
Bob Clements:
Because of bad communication with the customer, we end up writing down work orders, writing off to make the customer happy. They're still not happy, because they still feel like you cheated them. So communication is so important internally. But I'm telling you bad communication, if you're not communicating with customers as things are progressing on a job, like you can do with your texting, Trevor, and you wait until the end and surprise the customer with a bill that's $3,000 more than what they thought, are you kidding me?
Bob Clements:
You don't think they're going to be unhappy with that? And you're going to write down $1,500 to make them happy, all because you didn't communicate and you didn't keep them updated. So not only is it a plus from a customer wow experience, I'm just telling you, good communication will save the dealership thousands and thousands of dollars on ticket write-downs throughout the year.
Trevor Allred:
Love it.
McKay Allen:
And it seems too ... And we're getting a few questions here. We can take a lot of these at the end as well. But one of the questions I think is important, and I'm curious for your guys' thoughts on this. Richard asks a good one. He says, "If I'm wanting my technician to use texting, do I have to provide a phone for them?" My reaction, and Trevor I'm curious if you agree, is no, because they can just download the Kenect app on whatever phone they have and they can use it directly on their phone, on their device. Would you agree with that?
Trevor Allred:
Yeah. And that's a simple one. And for all of you dealers know that part of our Kenect services, we actually convert your main dealership phone number to be text enabled. And that's huge for two reasons. Number one, your employees no longer have to give out their personal cell phone number. That they can still use their personal cell phone to send and receive text messages in the Kenect texting app. So that's great.
Trevor Allred:
Number two, by converting your main dealership phone number, we also put you in a position to be able to track and manage and act upon all of the two-way text messaging communication that is already going on in your dealership that you've never been able to track before. And we funnel all those into a very simple and easy email-like inbox. So great point McKay.
Trevor Allred:
The answer is I would use your employees' cell phones, but let them know you're providing a full service text messaging app, so that they'll never have to give out their personal cell phones and sleep with their phones, quite frankly. And we know employees that do that too. They're afraid they're going to miss a call or a text on their personal line.
McKay Allen:
Love it. Awesome. Collecting payments remotely is the last one on here. We've heard this from a lot of dealers that the actual transaction itself breaks their flow and their efficiency to walk somebody in behind a register and talk to them, that kind of thing. Bob, do you see that as a big problem? And then Trevor, I want to hear how this collecting payments remotely thing works.
Bob Clements:
Yeah, it is. Anything that takes a service manager's extra time to go do something is a bad process. Why would I ever want a service manager to make a phone call? It's a waste of time when I can use texting or something like that is standard of it. So yeah, it is a big issue. And again, especially as if you haven't communicated correctly, then you may end up having an extended conversation about payment and things like that. So it is a big issue.
Bob Clements:
And again, I don't want anything to disrupt what's going on in my shop. So anything I can do to prevent any disruption at all makes me money in a service department.
Trevor Allred:
Oh, and that's the whole premise behind it. And this is why I wanted it as its own bullet point on this agenda in terms of talk practices from the best dealers on how to operate efficiently in the service department. Because most of us are familiar with the payments terminal at the service desk. But think of the power now of collecting payments remotely. And you're going to imagine I'm going to be an advocate of using a 98% open rate communication methods, such as texting.
Trevor Allred:
But I know for our Kenect customers, for example, using our Kenect app, they can collect payments remotely. They tap on the link for remote payment collection in a text message. They enter the amount and the invoice number and hit send. And then the customer gets a text message with a link to a 100% secure and PCI-compliant transaction field where they can complete the transaction.
Trevor Allred:
So literally, how many seconds does that take a service manager or a sales manager to transact the payment collection? As long as it takes them to type in the number of the invoice and the amount and hit send. It is that easy. And then for customers, it's just as easy. I love to refer to remote payment collection as Venmo for dealerships, because it's that easy, it's that simple and that convenient.
Trevor Allred:
But more important, the reason why you want to do it is now more than ever, thanks to COVID if you will, people want a contact list transaction. And so how powerful is it if you can text them payment collection requests or deposit requests on the sales side, on the service side, on the parts side, that is a hundred percent secure and can be easily transacted?
Trevor Allred:
Our background supplier is CardConnect. They're a national payments processor. They're backed by Bank One. And so the gravy on top of all of this is we represent to CardConnect over 2,500 dealers. So guess what happens to your rates? They go down. Now, it doesn't mean you have to change any of your current payment partnerships or payment processor partnerships, but it does mean now you can, using text messaging, very quickly and easily transact that.
Trevor Allred:
And the second big reason why this is so important is what happens now to the service opportunities you can introduce to customers? They expand, because now that you can collect payments remotely and deposits in advance, guess what makes it easier to do? You can do curbside pickups, curbside drop-offs, after hours. I mentioned earlier subscriptions to a premium customer package.
Trevor Allred:
You can now do at-home pickups and at-home drop-offs. And guess what happens to the efficiency in your dealership? It goes up, because you're in charge now of when the unit's there. It's not the customer and you can run it through even more quickly. So collect payments remotely, use text messaging. You'll have happier customers and you'll have a higher efficiency workflow in your service department. That's a big one.
McKay Allen:
Cool. Thanks Trevor. All right. Let's do the final takeaways piece. And I want to ask you both two questions and we haven't rehearsed this or ... You guys aren't sure what I'm going to ask. So thanks for playing along here.
Bob Clements:
We may choose not to answer them.
McKay Allen:
Yeah, you could just say, "I'm not going to comment." When you go into a dealership, Bob initially, and you're trying to help them make more money and be more efficient, what is the most common thing as you look in their service department that you say, "Oh, that's broken?" What is the most common thing that you can see right away is broken in their service department? Or maybe said nicer, not broken necessarily, but could use improvement. There's an opportunity for improvement.
Bob Clements:
The crap they have all over their floor that I trip over as I go back to the service manager's office. You can't be efficient in an environment where there is mess every place. When we go into a dealership and we do a shop turnaround, first thing we do is we shut the shop down for a day. We take literally everything out, including lifts. We clean everything, throw everything away that's not needed in their power washed floor. Restruct the floor.
Bob Clements:
We come back in and we do that all in a day, because I can't get a process where I've got junk and stuff that's stuffed under benches and things. So it's just simply ... It's so disorganized, nothing can happen in it. So that's probably the first thing that we see is it's just the disorganization. Once you get that solved, then you can start actually getting a process where everything starts flowing.
Bob Clements:
You bring everything back in, make sure that you're getting away from any pinch points or bottlenecks and stuff like this and reset it. But that's the first thing that we do when we actually physically go in a shop.
McKay Allen:
That's great. And that's really obvious too when you walk in.
Bob Clements:
It is.
McKay Allen:
Trevor, same question to you. Biggest initial challenges when we work with a dealership to onboard Kenect, what are the first things that we see that are like, "Oh, that's broken?"
Trevor Allred:
I smile, because it piggybacks off of what Bob said. So he notices the disarray of the service department. I notice that highly paid service techs are the ones that are cleaning the bays, cleaning the units and laying out parts. And that drives me crazy. And Bob knows and each of you as dealer principals understand that as well. So you've got Bob situation where everything's in disarray and then you've got my thing that I notice, and that is the wrong people are the ones that are trying to keep it organized and they're laying out parts.
Trevor Allred:
And so you go back to Bob superstar, Louisiana service technician. I know he'd never be caught dead doing any of those activities [inaudible 00:49:45] in the service department and then the wrong people trying to clean it up and keep it organized I think are the number one [inaudible 00:49:55] I notice [inaudible 00:49:56].
McKay Allen:
That's great. And Trevor, you got a little bit of an echo there for that last answer for some reason. I don't know why.
Trevor Allred:
It's because I'm being taken up into heaven, I'm sure. That's what it is.
McKay Allen:
Maybe so. That could be, Trevor. And then final question for you both. Trevor, I'll start with you this time and give Bob the last word. As you look into 2021, 2020 was an unexpected historic year for lots and lots of reasons in the dealer world. As you look to 2021, put on your prediction hat and say, what is the biggest hurdle or challenge that service departments are going to have to solve in 2021?
Trevor Allred:
Wow. That's a big question. I love it. I would say in that service departments work on the backbone of parts and given the scarcity of parts in 2020, I would say that would probably be my recommendation for a focus for you as dealers in 2021. And here's what I mean by it. Obviously, you want to have great relationships with your manufacturer, but so do all of the 3,000 other dealers.
Trevor Allred:
And so the strategy is try to order early, but I think even more importantly ... And Bob, you can shed some light on this. As I've talked with dealers and manufacturers and other experts in the industry, I think you're wise as a dealership in your service department to order at 2019 levels instead of 2020 levels. However, knowing your unit movement in 2020 may affect that a little.
Trevor Allred:
But my only concern is that we will all over-order for 2021. And you know in service departments, you want to be as close to reality as possible. So that would be my takeaway is base your orders probably on 2019 numbers plus what units were purchased that are needing warranty work in 2020.
McKay Allen:
Bob, what about you? And then we'll take maybe three questions before we go from everybody. So go ahead.
Bob Clements:
I'm in agreement with Trevor on that. But the other thing that we're really trying to get our dealers to do is say, "Look, you've got to become significant to your manufacturers. You can't be dating every manufacturer out there that handles competitive brands and think that a manufacturer then is going to be tied to you." And so we're really trying to get our dealers to fend down the number of manufacturers they had where they're competing against each other in the dealership.
Bob Clements:
We're going to get focused more on manufacturers that compliment, not compete against another manufacturer, so that you can spend more money with a manufacturer. So when you need that favor, that part that's out there, there's three of them, I want to be the one that gets at least one of those. And I say all that happened this year. We've got some of our dealers that are very manufacturer loyalty. They're not forced into it. They've made a decision to do it.
Bob Clements:
Some manufacturers, they force you into being loyal to them. They don't really care still about you at that particular point anyway, but where you have an option and you're really loyal to a manufacturer and you give them the bulk of the business you can, they do everything they can to take care of you, everything. And I've seen dealers this year that other dealers couldn't get inventory.
Bob Clements:
And what the manufacturer did is they took it from other dealers that weren't loyal to them. And they moved that inventory over to the guys that, "Look, you're a partner with me. You take care of me. I take care of you. This is how it works." And I tell dealers this, if there's nothing that proved in 2020 the importance of building loyal relationships, good, strong relationships with those manufacturers, then let them know that you're loyal to them. It's going to play out in the end.
Bob Clements:
And I saw it happen this year, and we're really encouraging dealers to look at your manufacturers. Do you really need all that you have? And does it make sense to have two manufacturers that you both sell to compete against the other rather than one that compliments the other one? So that's what I would be looking at from that standpoint.
McKay Allen:
Great. That's really good stuff. Guys, this is awesome. We've got about five minutes. I'm going to propose we take two or three questions here. Does that sound good?
Bob Clements:
Sure.
McKay Allen:
All right, we'll have to be somewhat quick.
Trevor Allred:
Sounds good.
McKay Allen:
So we've got a lot of questions about Kenect and Kenect pricing. We're not going to get into the pricing specifics. We think it's better to have one-on-one conversations with that, but just know we've seen it. Not like we're ignoring your question. But we'll have someone reach out if you asked about it. This is an interesting one, Bob, for you. How do you compensate service management? You talked about texts. How do you compensate service management?
Bob Clements:
Great question. So service managers, we evaluate a service manager based upon the recovery rate of the shop. How many hours of time did you buy versus how many hours you actually had your technicians turning wrenches? So that's a measurement called recovery. And so they get their bonuses based upon recovery. So the higher their recovery rate is, they get bonuses that two, four, and six, just like text do, but it's based, not on efficiency, it's based upon the recovery.
Bob Clements:
So if I got four texts there and I'm buying 32 hours of time a day, what percent of that time are you selling every day? What percent of that time are they turning a wrench on? So it's a similar structure, only the measurement is on recovery rate, not on tech efficiency. Great question.
McKay Allen:
Yeah. I love that question. All right, Trevor, and this one's for you. You mentioned the written permission authorization in the service department via text. What about how some dealers will actually require a signature? It's not required in every state, I don't believe, but it is in some. How do you handle that? Because obviously you'd need more than a text. In that scenario, I think they can send actual signature documents via text message, right? And then take a picture and scan it back.
Trevor Allred:
That's absolutely correct. And not just take a picture and scan it back, but you can text links to live documents such as DocuSign is something we use all the time when we're enrolling new dealers. It's a simple text message with a link to a DocuSign that can be signed just as instantly by Bob, while he's sitting in a board meeting. Remember that example? By just attaching a link.
Trevor Allred:
And so in our Kenect tool, right next to your "Type a message and send" is a little paperclip button where you can attach exactly such documentation. So we've got that. We've got you covered. It's quick and easy.
McKay Allen:
And then one more question, people are asking where the Kenect mobile app is. It's in the Google app store, it's in the Apple App Store as well, but you have to be a Kenect customer for it to work. You can download it. It just won't let you in, unless you're a Kenect customer. Very good. And what we're encouraging you to do is we've got phone numbers here to call Bob Clements International directly to see if they can help your dealership.
McKay Allen:
Obviously, we know the reputation that Bob and his company have and recommend that you reach out to them if you have any needs at all. And then on the Kenect side, there's our number. You can call or text us at that number and experience the texting first. And then Trevor, what were you going to say there? I saw a hand raise like that.
Trevor Allred:
Oh, I just said reach out to us. We're happy to address things. Our pricing model has three factors. And so that's why McKay mentioned, give us a call and we'll get you set up with those answers.
McKay Allen:
Yep. That's awesome. So reach out to both of us, if you have any questions at all. And on my side, thank you so much, Trevor and Bob, for taking time. I know you're both busy and it's really, really been a pleasure. And we're getting a lot of great feedback about the content that was shared and how good it was. So thanks again for taking the time and really, really appreciate it. So everybody, have a great ... What's today, Thursday. Have a great Thursday, great Friday and a great December. Thanks everybody.
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