Kevin is giving us an EXCLUSIVE on how making small changes in your Fixed Ops Department can make a huge difference on your bottom line. Kevin’s ELR strategy creates internal accountability that will increase your effective labor rate, thus increasing your fixed ops revenue.
Tactical Tips Episode #1 Transcript
BRAD: Hey, Driving Sales, it’s Brad back here with a tactical tip. I have Kevin Deutsch, he’s a General Manager of Butler Lexus Atlanta, and he’s supposed to be my co-presenter, but Hawaii was more important to him than hanging out with us today. Not, really. He actually won a trip for doing such a great job and that’s why we have him on here, is to share some of the things that he does in his fixed ops department. It really makes a huge difference. He has a system that creates internal accountability that is pretty hands-off, and you don’t really have to do a lot with it, but it creates this accountability for the service advisors, for the technicians, for the service manager. Kevin, welcome, thanks for joining us via zoom a little earlier of Driving Sales. Let’s talk a little bit about your ELR strategy and your internal labor rate strategy that you came up with and kind of explain to us how that works in your dealership, because I think that’s really effective that people could take home and utilize immediately.
KEVIN: Yeah, I used to own a little Dodge store, Dodge Jeep Chrysler store, and always had the battle between my GSM and my service director going back and forth, and I wanted to fix it and I wanted it to be fair to both parties. So I told my service director one day I said, “well, if you want a raise, go out there and increase your effective labor rate, because whatever your effective labor rate is at the end of this month is what they’re going to pay for the next 90 days.” So they don’t pay a dollar more than the retail customer does and they’re charged very fairly. So that’s exactly what he did and it’s driven ELR literally since I’ve done that, and I’ve used it ever since. So I’ve been doing this for about 20 years now with the internal rate, and both parties respond, and it’s a fair number to both.
BRAD: Wow, that’s amazing. You mean you’ve been keeping this a secret from us for a long time then, so I’m glad that we got it out. You heard it here first at Driving Sales. So I think that this does multiple things that are really interesting, right, is it creates internal accountability on working for those warranty rates. You told me while I’m back that you’ve had multiple warranty rate increases. Can you talk a little bit about how that process works?
KEVIN: Well, yeah, actually when we bought the store it was a failing store, so we let it go for a little while to get in and get it fixed, and then when I did go for a bump, we went all the way in and we got a $20+ bump, which made a whole lot. Now my GSM was taking attention going wow. So we let them know that we’re going to ask for a warranty bump every year. But that’s only part of it. With our manufacturer we’re allowed to get a bump every single year without jumping through hoops and without going through a lot of pain and trouble. But it takes the internal with it by driving warranty rate up, we can drive up our our door rate also, and that drives up our internal rate because our effective labor rate continues to move forward.
BRAD: Yeah, I think that’s so powerful because, if you look at it, it creates accountability with the service manager to ensure that his service advisors are presenting everything on the inspection right. And we’re going to talk a little bit more about that. We have a lot of people around the inspection that’s going to talk. We got Damian Boudreaux coming up, we have John Luciano out here in Amarillo, Texas, and then we actually have Patrick Brown, a good friend of ours that’s in a lot of those things. So we have a lot of accountability systems to really help this. But I think it compliments this so well and so I’m super excited for people to take this back because I think this is a gem of accountability thing that, a lot of times when they come to these conferences they find a couple of gold nuggets, well we’re going to try to give him a sack full of gold nuggets today. So I’m excited. I appreciate you for being a part of it, Kevin and you’re actually the one that kind of spawned this idea of us taking all of these tactical tips. You know, we had a conversation on Clubhouse in our room that I run each week called Fixed Ops Fridays at 4:30 Central. So if you guys are on there, please join us. We have probably, usually, it’s around 30-60 people, so usually it’s been pretty good. But I want to thank you again. I want to wish you a great time in Hawaii and I’m going to put your contact information, and your email down there so in case anybody wants to reach out or has any questions.
KEVIN: Now, that’s fantastic. I’ll talk to them about anything. I’ll give you a little food for thought too. Do you pay your service managers on VSG?
BRAD: There you go.
KEVIN: This’ll drive the same behavior.
BRAD: Yeah, I think you should reach out to Kevin. He could probably elaborate on that. All right, Kevin, hey, have a great time in Hawaii and we’ll talk to you later, my friend.
KEVIN: All Right, thanks Brad, appreciate you.