Dan Shine – Fixed Ops Roundtable

Last week, I attended an online forum where dealers, fixed ops directors and service managers shared their views on how the coronavirus pandemic was affecting business. They traded ideas on how best to deal with the current situation and pondered what the service drive would look like in the future.

Most agreed that dealership fixed operations will not go back to business as usual once COVID-19 passes. Customers have become accustomed to some of the concierge services that have been rolled out by service departments as they attempt to do business while also honoring social distancing protocols. Things such as vehicle pickup and delivery, mobile servicing, video multipoint inspections and touchless payment.

Brian Benstock, whom you can read about in this newsletter, said service departments need to change and reinvent themselves. Why?

“Because the game has changed,” said Benstock, general manager of Paragon Honda and Acura in Queens, N.Y.

The message was the same at an NADA Academy webinar this month. The crisis is a chance to innovate, to be creative, to launch something a fixed ops department has been considering but hasn’t had the time or courage to try.

“It is a great time to do amazing things in fixed operations by showing customers the true difference between yourselves and the competition,” NADA Academy instructor Bob Atwood said.

With dealership service departments being deemed an “essential service,” the fate of many of those stores rests with the men and women turning wrenches and running parts.

“Service is the backbone of the dealership. It’s not the back end,” Atwood says.

“Most of your states have said the service department is an essential business. It is essential to the U.S. economy.”

Alyssa Ruane, CPA

Automotive Mobility Trends

Trends within the automotive industry are often referred to as “disruptions” given the shift in consumer behavior and technology. However, as Michael Maroone, CEO of Maroone USA, has noted, these disruptions are “pivotal moments” for the industry as a whole. Dealers can benefit from these changes by focusing on long-neglected areas, like fixed operations.

According to NADA, consumers spent $485 billion on vehicle repairs in 2018, but dealers captured only 20% of the revenue. Therefore, there is ample opportunity to advance a dealership’s service department by implementing innovative, competitive programs.

Pickup and Delivery Program

One dealership that seized this pivotal moment is Paragon Honda in Queens, NY. Paragon became pioneers of automotive mobility by implementing a program known as Pickup and Delivery. In collaboration with Google and RedCap Technologies, they have streamlined the process of vehicle services and maintenance- every auto owner’s dream.

First, customers schedule a service appointment either online or using Google Voice Assistant. Then, Paragon Honda uses RedCap Technologies to have the vehicle picked up from the customer’s desired location and returned when the service is complete, adding an unprecedented level of convenience for consumers.

Since the implementation of Pickup and Delivery, Paragon Honda has reported an astounding 475% increase in ride count growth from August 2017 to August 2019. Additionally, their Repair Orders have increased by approximately 56%, and their fixed operations gross profit has increased by around 58%.

Dealership Competition

Although the Pickup and Delivery program may seem more feasible for metropolitan dealerships, other dealers, and even service centers, in rural areas have implemented similar mobility services programs. For example, Oxford Automotive in Ohio has a similar program that will even leave a loaner car for the customer in the event of prolonged service.

If auto repair businesses are taking advantage of a Pickup and Delivery program, dealerships are at risk of losing even more of the market share then they already have.

Paragon Honda is using this pivotal moment in the automotive industry to identify how the modern consumer behaves and offer a solution to the modern consumer’s needs. Automotive mobility solutions, such as Pickup and Delivery, are a seamless way to generate loyalty and provide a convenient service for current and future customers. Though this program may not be practical for all dealerships, it forces the industry to reexamine its traditional service model or otherwise risk falling behind the competition.

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JIM HENRY  Fixed Ops Journal

WOODSIDE, N.Y. — Brian Benstock’s service department is operating at peak efficiency, working three shifts around the clock. Yet there’s no rush-hour logjam of customers waiting to drop off their cars and trucks at his dealership.

Benstock, the general manager and partner of Paragon Honda-Acura, in the New York City borough of Queens, wants to see few — or no — customers in the service waiting area. He loves the sound of phones not ringing off the hook with service calls, even though that would drive most dealers crazy.

“The customer provides absolutely no value by being at the dealership,” Benstock told Fixed Ops Journal. “I don’t need the customer. I do need the car.”

Benstock gets thousands of service vehicles to his dealership each month by picking them up from customers’ homes or workplaces and returning them when the work is done, at no extra charge. The most prevalent inquiries from service customers — “When will it be ready?” and “How much will it cost?” — are responded to by text message, along with the details of vehicle pickup and delivery, Benstock says.

Benstock: Valet service pays for itself in bigger repair orders.

Paragon launched its valet service in 2017. After some growing pains and false starts, the service’s customers now use an app on their mobile phones to arrange more than 3,000 valet trips a month, or an average of more than 100 each workday, Benstock says. Paragon does not limit the service to customers who bought their cars or trucks at the dealership — it’s available to anyone.

That number probably reflects about 2,000 monthly service customers, Paragon says, since not all valet customers opt for both pickup and delivery. The service has exploded in popularity: Paragon says it logged around 2,000 valet trips a month in October 2018, and about 1,000 a month in October 2017.

Cox Automotive estimates that 28 percent of new-vehicle dealerships offer some form of valet service (related story, Page 30). But the nature of such service varies widely, and few dealerships’ valet service is as extensive as Paragon’s.

PICKUP PROFITS
Paragon Honda Acura says the values of its average repair orders are substantially higher for service customers who have their vehicles picked up and dropped off than for customers who take them to the dealership
With valet service Without valet service % increase
Avg. customer-pay r.o., Honda $566 $278 103.60%
Avg. customer-pay, r.o. Acura $650 $295 120.30%
Avg. customer-pay, r.o., total $600 $283 112.00%
Avg. warranty r.o., Honda $303 $199 52.30%
Avg. warranty r.o., Acura $520 $307 69.40%
Avg. warranty r.o., total $405 $240 68.80%
Source: Paragon Honda Acura

Anthony Petito, service manager of Paragon Honda, says the Honda-Acura dealership originally intended to provide valet service only to and from Manhattan. That decision included what Benstock now calls his “stupid” plan to pay for space in four Manhattan parking garages where Paragon service customers could drop off and pick up their vehicles.

Demand for valet service didn’t take off until the dealership switched to an Uber-style reservation service and allowed customers to choose their own locations for pickups and deliveries, Benstock says.

“We wanted to be like Starbucks — there’s one on every corner,” he says. “We can’t put a garage on every corner. So we decided we will put it on every corner by putting it on people’s phones.”

Once word got around, Petito says, service customers in Queens wanted pickup and delivery, too. “We said OK to a 5-mile radius around Manhattan,” he says. “Now it’s 10 miles. But the reality is, if someone asks, we go to New Jersey; we even go to Montauk” — more than 100 miles from the dealership, at the far opposite end of Long Island.

Petito: Going 100 miles to pick up

“We don’t do it very often,” Petito adds, “but we do it.”

Benstock says those extra-long rides don’t “pencil out,” but he figures they are worth it to encourage service-customer loyalty. Thanks in part to the valet service, he says, his fixed ops revenue is a leader among Honda and Acura dealerships. His customer satisfaction scores have greatly increased from their “notoriously poor” levels earlier in the decade, he adds.

The greatest proof that pickup and delivery works, Benstock says, is that the average repair order for valet customers is considerably higher than for customers who drive themselves to the dealership.

“We expected loyalty — return customers,” he says. “But we never expected it to pay for itself, and it’s paying for itself. So, really, it’s free.”

Spend it to make it

Well, not exactly free. Petito says the average cost of a valet trip is about $53 one way. Those occasional, extra-long rides could cost $300, he adds.

To run the system, Paragon uses a logistics platform provided by RedCap Technologies of Fort Lauderdale, Fla. It accepts and dispatches orders for valet service, tracks the valet drivers and their driving behavior, supports customer surveys and handles customer communications. Paragon obtains its 30 valet drivers from another supplier, Driver Network Service.

Benstock says he insisted from the beginning that the valet service would be free.

“When we first started discussing this, we were wondering, how much should we charge?” Benstock says. “Would it be a subscription that you purchase? For how much — $20 a month, $99 a year? Something F&I would sell? So I said, let’s make it free.”

Petito says dealership managers were floored by Benstock’s decision. “We all said, what? You know, you can’t go the other way. You can’t make it free and then charge people if you find out you have to.”

That hasn’t been necessary. Through August of this year, customers who used the valet service averaged $405 per repair order for warranty work — almost 70 percent more than customers who delivered their vehicles to the dealership and retrieved them when the work was done.

The difference was even greater for customer-pay work — $600 per repair order on average, more than twice the average for customers who took their cars and trucks in. This added revenue more than pays for the valet service, Benstock says. When Paragon’s service department recommends additional work, customers are more willing to approve it in return for the convenience of valet service, he adds.

Outrunning the bear

Valet service is an example of creativity that dealerships need to show to win service business from aftermarket providers, Benstock says. “We are presenting this as an antidote to the independents,” he says.

Some dealerships don’t bother to advertise their quick-lube services, Benstock says, because they think they can’t compete with the aftermarket on price. “That’s baloney,” he says. “Customers don’t do it for $9 oil changes. They do it for convenience.”

Instead of ceding business to independent and chain stores, dealership service departments must make themselves more convenient by offering such things as pickup and delivery, he says. He cites the old joke about the hiker who doesn’t have to outrun the charging bear — he only has to outrun the other hikers.

“I don’t have to outrun Jiffy Lube or Pep Boys,” Benstock says. “I only have to outrun the other Honda dealers.”

I love mobility in all forms, and the incredible opportunities that are created give people greater access to safe, affordable, and reliable transportation. This includes the exciting prospects for vehicles capable of providing transportation on the road or in the sky.

Flying cars seem to create more problems than they solve. However, easy access to vehicles that move people above the traffic quickly and affordably could have many benefits, especially along the country’s busiest corridors like the Long Island Expressway or the 405 in Southern California. Both roadways seem to be jammed regardless of the direction traveled or the time. These roadways are little more than slow-moving parking lots. Think of the loss in productivity our society is forced to endure while people are stuck in their vehicles.

On Long Island, there are services like Blade that shuttle commuters back and forth from the Hamptons via small aircraft or helicopters. Flying past congested roadways, arriving at their destination in 1/5 the typical driving time must be quite the treat for those able to afford the airfare (typically $500 per one way trip). But somehow this fantastic service misses the mark. Creating a fleet of medium capacity flying taxis with specific routes could help to create mobility options for many (more) people alleviating road traffic and more importantly giving the riders more time.

As more people opt-in to new services the prices of these services will inevitably be reduced. Additional services will be added to more markets, and many more customers will be able to take advantage of the offerings, whether we are talking about flying cars or autonomous cars. Think of the freedom that will be available to customers who have been liberated from unnecessary hours spent stuck in their cars. People would be able to go upstate during the weekend to visit their country home or to go apple picking or see the fall foliage, without being subjected to the hours of traffic going to and from these wonderful locations. Imagine the business implications as these remote locations become accessible to many more customers.

Make no mistake; mobility solutions will continue to evolve, on the roads, above and below the ground. As they do, more and more opportunities will be created as society moves quicker and more efficiently. May the best user experience!

https://www.bloomberg.com/news/articles/2019-08-04/where-s-my-flying-car-the-lowdown-on-personal-flight-quicktak

Artificial intelligence will enhance the relationship between the retail salesperson and his/her customers. The best companies in the world are using artificial intelligence to reliably and predicatively serve their customers.

In the world of CRM’s, there is no better example of this than Salesforce. Most CRM’s are merely data gathering repositories for the user. Data without intelligence is like a book sitting on the shelf that you’ve never read – it’s useless. Salesforce has introduced AI in a unique way and they are leveraging this with their clients. The exciting news is that retailers in every industry can utilize sales and customer data to create lookalike audiences and set up predictive cadences for communication. This will enable us to serve our customers better (while protecting their data).

Those who can get this balance right can substantial advantage over those who are using intuition and trailing data to make decisions. Facebook and Google have incredible advantages in this space (perhaps to a fault). There is great power and opportunity in the legal use of first-party data. This is increasingly incumbent for retailers to understand as regulators continue to limit activities surrounding data. We have an incredible advantage over some of the larger aggregators of data. Namely, our ability to and use first-party data to serve our customers better.

When we combine this advantage with platforms such as Facebook and Google, we can leverage readily accessible data. Not only to serve our customers’ needs but to anticipate them in such a way that everybody wins. The future is fast, frictionless, and intelligent.

https://www.forbes.com/sites/falonfatemi/2019/08/10/5-ways-artificial-intelligence-is-transforming-crms/

Brian Benstock is the General Manager and Vice President of the #1 Certified Honda and Acura dealer in the world, Paragon Honda and Paragon Acura. The Queens, NY dealerships continue to grow rapidly, selling more than 1000 cars per month and 34 cars every single day. Brian has more than 30 years of experience, and he has definitely acquired countless golden nuggets of wisdom that he wants to share on the show today. Most of you have heard of ROI (return on investment), but what about ROL, or ROE? You’re going to have to tune in to find out. We’re also talking about how business owners today need to ensure that their systems serve the customers as opposed to themselves, and why you need to adapt your business to match modern consumer behaviors.

Here is an interview I did on Carl Scaramuzza’s podcast:

GM & VP of Paragon Honda in NY, Brian Benstock, joins me on today’s episode. After starting selling cars in 1982, he realized there were a lot of people he worked with who he did not want to become. From there he has grown to change the car business for the better sharing his mission statement that the future is frictionless.

Here is an interview I did on Forbe’s Riley’s Radio Show:

The retail industry as we know it, will cease to exist in less than five years. The future of retail is frictionless; easy, simple and intuitive. Big technology companies like Apple, Amazon, Facebook and Google are challenging brick and mortar stores, mom and pop shops, and even bigger corporations to move forward at faster pace. If you’re not moving towards frictionless customer service, you’ll be out of business before the future hits. Brian Benstock knows how to stay ahead of the game.

Here is an interview I did on Daniel Alonzo’s podcast:

Brian Benstock knows that the secret to success is not strength or smarts, but being able to adapt. He has accomplished an enormous amount himself, as the General Manager and Vice President of Paragon Honda and Paragon Acura, the #1 certified Honda and Acura dealer in the world. Brian is also a keynote speaker, author, and thought leader in the automotive industry. In today’s technology-driven world, it’s an extremely exciting time to connect and communicate, but we must remember to adapt to the customer first and foremost.