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Patrick talks about how his group has transformed their recon processes and re-worked their tech pay structure to benefit everyone.

Tactical Tips Episode #5 Transcript

BRAD: Awesome, guys. Brad Pascal here with another tactical tip for you, joined by my friend Patrick Brown. He’s a COO of Viva Auto group out in El Paso in the New Mexico area. Patrick, how’s it going today?

PATRICK: Good! How’re you doing, Brad?

BRAD: I’m doing fine. I’m really excited to get you on here because I know that you guys have a big organization, and so I want to talk a little bit about the changes that you guys have made when it comes to internal work and recon and things of that nature. Can you kind of give us a little background on how things have changed for you since you removed those from your normal customer-paid dealerships, and kind of how’s that set up? 

PATRICK: So we had a challenge that we were faced with in our shops, and first of all is real estate, right? Sometimes you don’t have enough bays available to fix vehicles, and so you’re pushing appointments back. You’re getting people sometimes a week out, two weeks out, depending on what the job is. And then you have the issue of, you know, naturally, a lot of technicians want to work on the gravy. They want to fix up the quick stuff, get in and out fast and get those harder jobs and push them aside. And typically, that gravy work is mostly internal business. Right, it’s used cars we purchase, trade-ins, like model trades, things from the auctions, and stuff like that. And when we get those vehicles in, they’re quick in-and-out, and the technicians are turning a bunch of hours. So what we decided to do, this project started last year and it finished at the end of last year, beginning of this year, is we migrated all of our internal work from all of our service departments within our El Paso stores, which there’s 8 in that area. We have a centralized reconditioning department and what that is, is it’s basically another off-premises shop that has, you know, 18 bays, and all they do is internal used car recon. So we have technicians in there, we have photos in there, we have a detail shop in there, we even have our used car acquisitions team in there. It’s a straight-out used car buying center, centralized appraising, so everything is done there. So basically, what happens is when the store gets a trade or the cars that are purchased at auction, everything goes to that location. We have a few trailers that go around and pick up cars. They get re-appraised if need be by the acquisition team to make sure they’re on the money, not missing anything, and they get reconditioned right there, and then they get sent back to the lots where they either were traded it in for or maybe the car you know, we took in an import that works better at one of our import stores that will go there instead of the store that traded for it.

BRAD: And I think one thing to mention, right, because you’re going to have a lot of service managers that are going to be here at Driving Sales, is that you don’t take that revenue away from the stores, right? 

PATRICK: No, no, we don’t. What we actually do is whatever trade was purchased, or whatever auction car was purchased for that store, we actually journal entry that profit revenue right back to the dealership because we do need to work together. I don’t want to go into this to, you know, cut anybody’s pay and cut the store’s financials and things like that. We just wanted a better process. That’s what we really wanted is a better process, a better way of doing things, and so it creates the mind for them because they’re in it to make a success on their end too.

BRAD: Now, have you had to change how it works with technicians in the stores now when it regards customer pay, or do you have some strategies around that too?

PATRICK: Yeah, it actually changed a little bit. At first there was a little bit of pushback from the techs because they’re like, where’d my gravy go? But really nothing changed because we’re able to get more work in, which means we can get more work out, which means the technicians that were at the dealership level that didn’t go to the reconditioning center, they actually increased hours because we were able to push more work their way and it was a more efficient process. We had parts delivering parts to the bay instead of the technician going to the bay to help that process out. So when it ended up, you know, we’re ending up turning more hours in our shops, and we ended up turning more hours in recon.

BRAD: And then you were telling me a little bit about how you’ve changed the pay plan when it comes to those technicians in the dealerships to really focus on maximizing inspections and maximizing the presentation of services that might need to be done. Can you elaborate a little bit on that?

PATRICK: Sure, so we have what’s called a “Variable Labor Rate.” So what that basically means is our job skills are code-based on the level that it’s at. So I have a technician that, say, gets paid $32/hour on his flat rate. That’s an advanced skill that he has. So everything that is coded that advance skill, like an engine or whatever, transmission or something electrical, he’ll get paid at that $32. But any other skill level, like an oil change, would be paid that at an A level, which is lower than the B level, which is like kind of in the middle. So what that does is it helps keep payroll online, so you don’t have a high-dollar tech changing a bunch of oil and paying $40/hour to make oil changes. But to supplement, we have a bonus structure that’s pretty huge. So if somebody comes in for electrical diagnosis and the technician finds that it needs some transmission work extra or needs an alignment, or needs whatever this and that is. They’ll get paid their variable labor rate, but they will also get 5% of that ticket as an override for the upsell at the time. So it pushes them to actually use a multi-point because if it’s not in our digital multi-point system, it didn’t even happen. We don’t even know what that is. So they use a digital multi-point tool, and it gets presented to the customer, and the technician actually will help present it to the customer because they want that 5%. They want to make sure they get that work. So they’re not going to lean on the advisor and depend on him if he doesn’t sell it. They’re going to go out there and make sure they get sold.

BRAD: And at the end of the day, what we’re doing is we’re creating incentives for these people to make sure these cars are safe for customers to be on the road, and so I think that’s valuable. I think it’s a great accountability system that you put in place to ensure that. Would expect nothing less of Viva. You guys do a fantastic job. Thanks for joining us today, Patrick, and I’ll put your contact information down here in case anybody wants to reach out.

PATRICK: Sure! Thanks for having me.

Haile Clifton

Haile Clifton

Haile is the Marketing Coordinator at Fixed Ops Digital. She has worked in Digital Media & Design for 6 years and helps with internal marketing and Drive Service Specials deployment at FOD.

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