Fixed Ops Profit Secrets Nobody Is Talking About

Spring, and what you can do today 0:00

Steve Shaw: Dave Rogers, what's on your mind tonight?

Dave Rogers: What's on my mind? I'm not going to bore you with the weather. It's mid-month, and the spring season is here. As I said last time, I'm excited to get some warm weather for a change and watch the trees get their leaves again. You actually feel like you're

back in the world of the living, and not in some nuclear-looking holocaust area, which is what the Northeast has been for the last four months.

Steve Shaw: That's awesome. So I had this idea, and we kind of talked about it the other day. I'm sitting out on my balcony, and as I've said, I don't really drink much anymore, zero. So I'm eating chocolate ice cream on my balcony watching the sunset, and I'm like, you know what, we're going to do this. If it's okay with you, let's talk tonight about this: if a guy was watching this podcast,

what could he do? Maybe he's a new service manager or a GM. Let's talk about the top one, two, three, four, five things, whatever we can come up with in a half hour, that a guy could do when he signs off this podcast to go improve his repair order performance. So I'm asking you: what could a guy do immediately to improve his repair order performance?

Video every multi-point, TikTok style 1:25

Dave Rogers: I'll take the easy pickings. Make sure you're doing multi-point inspection videos 100% of the time. I'd stick with the multi-point. The technicians video the multi-point 100% of the time, and each of those multi-points is presented to the customer 100% of the time. I believe that.

Steve Shaw: Can I add to that? You and I were talking about this at the convention: TikTok-style multi-point inspection video. And if you want more, call me. But everybody I ask says we've got to get rid of these fucking, excuse me, these five-minute videos and make them TikTok-style videos.

Dave Rogers: No, I agree with you. And I think the challenge on that, and you and I agree on this point,

is that selling the green is a waste of time. In theory, I agree with it. In theory, it's nice that if a customer comes in at 5,000 miles, you show them their tires are at 8/32nds, and when they come in at 15,000 miles they're at 6/32nds or whatever, and you can show them the gradual wear and tear. I agree with that to a certain extent. But does it really need to be on the video?

Can the video be, like you said, thirty seconds? I don't know what a TikTok video is, thirty-five, forty seconds? Just get to the meat of it, because I think you're right about people's attention span now. Everyone's used to looking at reels.

Steve Shaw: What's the job of the advisor? He has to write a ticket, and then he's got to deliver the car at the end of the day. That's where you do all your explanation and the final multi-point. That's where that comes in. Everybody forgets that the goal of the multi-point is to create a need. If they create a need, the customer buys. If the technician is jacking around telling these stories, that's lost. And then what's the job of the advisor?

Let's just put a robot in there. Let's put in the kiosk and call it a day. We don't need those advisors making 150, 200 grand. So I love it. The multi-point inspection is the ticket. I think that's the number one thing you could do to have the highest impact right away.

Dave Rogers: I think that makes the most sense. You put me on the spot, so I came up with the low-hanging fruit.

Your top 10 op codes 4:02

Steve Shaw: Awesome. My turn. My favorite thing to do, ever, is top 10 op codes. I would run an op code report. I want to know the top 10 op codes sold in any given period of time: yesterday, a week, 30 days, whatever. What are your top 10 op codes? That's my big thing.

Dave Rogers: So you look at the top 10 op codes, and then what are you going to do with that? Make sure you put a TO process in, so that if somebody says no to tires... What are you going to do with the op codes?

Steve Shaw: Well, the real question, and I'll put you on the spot again: what's the number one op code in your store in Pennsylvania?

Dave Rogers: I'd want to say oil change or state inspection, because I'm in Pennsylvania, but I'm going to say miscellaneous, because I'm real.

Steve Shaw: Miscellaneous. You're probably right. With miscellaneous, we don't know anything aside from miscellaneous repairs, "customer states." I would have suggested state inspection, oil change, tire rotation as your top three. The statistic is that the top 10 op codes in your store represent 75% of your business.

So wouldn't I like to know what my business is? If the top one is state inspection, number two is the multi-point inspection and number three is oil change, well, the top three op codes aren't making me any money. And then I've got air filter, cabin filter, whatever. If we don't have some of those fluid op codes, some of those repairs in our top 10, it certainly tells you about your business, doesn't it?

Dave Rogers: I agree. Then you can check your pricing on those op codes. One of the things I'd tell everyone, and I'll use CDK as an example, is to run the UOC, run the full view, and sort it by flat rate cost, flat rate sale and flat rate hours. You'll see that advisors and other people have entered the wrong information, and you're giving up money. You'll find a flat set

of numbers. I used to laugh: somebody would add an op code to the system, "plug tire," and they feel like they have to fill in the boxes in CDK for some reason. So they put in flat rate hours of 030, flat rate cost, which I don't even know why it's in there, of 030, and flat rate sale of 030. Now we're selling something for three tenths, the cost is 30 cents, they sell it for 30 cents, and you make no money on it.

Steve Shaw: And then parts puts an engine on that line, and you've got an engine walking out the door for 30 cents.

Dave Rogers: Yeah. When you look at these systems, and I don't care which one it is, you've got to look at the op codes, because you're not only going to find what you're selling, you're going to find all the mistakes in there. I've walked into CDK stores and picked up thousands of dollars just by fixing the op codes. So I think that's a great first thing to look at.

Steve Shaw: Absolutely. The top 10 op codes are 75% of your business. So if I've looked at the top 10, priced them appropriately, and I do have that miscellaneous op code... I'm an op code junkie, man. I love op codes, and I want to know

the categories. Was it a diag? Was it a repair? Was it a decline? I really like to break it down, without overcomplicating it, to understand what my business is and what my work mix is. And then, if I know my op codes, what am I going to do with them?

If everything is miscellaneous, like you said, how do I know how many transmissions or engines I worked on? How many hybrid technicians do I have? I don't know. But we keep going out looking for master techs when the great majority of our op codes are maintenance. It's the technician mix against my op code mix. That's going to tell me a lot about the business as well. Op codes, I'm a junkie, man. You can't feed me enough info on that.

Dave Rogers: I am too. I still randomly pop into the stores and look at their op codes. Every time I get some spare time, if I'm sitting in the office idle, I'll go through the stores: let me look at the op codes.

Steve Shaw: Awesome. Well, it begs the question: if I know my top 10, I might want to look at my bottom 10, or randomly down the list. I don't think we should have more than, say, 25 to 50 op codes. That would be the max. We don't need a million op codes, because that leads into what you were talking about, all these things that are wacky. And then people can pick and choose stuff we don't want them to do.

Dave Rogers: I agree 100%. I had a consultant tell me one time you should have about 100 op codes for customer pay. You have service pricing guides you can use now. There are a lot of different things you can use. But I think that's a big money finder for you.

Special order parts on the shelf 9:02

Steve Shaw: Awesome. What would be your next one? What else would you look at when you got off of here and went into a store?

Dave Rogers: I'd go look at my special order parts shelf and see what I have in inventory. How much inventory is tied up? How many hours have we wasted diagnosing cars and never putting the parts in? When you run your parts manager reports and look at your special order parts, your NS parts are generally from special orders. It's usually a sizable amount of your inventory.

Steve Shaw: Non-stocking parts. I was trying to figure out that acronym. Non-stocking.

Dave Rogers: NS, non-stocking. If it's a phase-in, it has no status. It's blank. Then it goes to NS, which means you added the part to the system and there was no demand for it. So you had special order parts. Go look at them. For every hundred dollars in parts cost you see, you mark it up and it's 200 bucks. If your parts-to-labor ratio is dollar for dollar, now you have 200 in labor. So now you have a $400 repair on that $100 part.

Basic quick math. That's $200 in gross. For every dollar in parts you have there, it's $2 in gross profit. So why wouldn't you grab those parts, call the customers, get them in the door, or put somebody in a mobile van and go put them on the car, and basically double the cost of your parts in profit and make some money?

Steve Shaw: There you go. It's a random question, but what would you guess, on the low side, a store's special order parts inventory is?

Dave Rogers: There's probably a number out there from some of the consultants. Your inventory should probably be less than 5% special order or NS parts. But depending on the brand, the franchise and how long people have been there, you could find 40, 50, $60,000 in parts. Some of those you're never going to get to put on. Some were ordered for used cars and new cars and never installed.

Steve Shaw: And some were ordered for customers where the advisor did not call the customer back. Thank you very much.

Dave Rogers: Or didn't even tell the customer he had a part ordered. It's one of the hardest things to get everybody to use: the special order system built into these DMSs. Yet if they used it correctly, it's a moneymaker. If you want to find some money in your store, if you're looking for business today and want something to pick up your number, go back there and look at your special order parts. I guarantee you there's gold in them thar hills. Guaranteed.

Walk the lot with your work in process 11:40

Steve Shaw: That's a moneymaker right there. My next one is one of my other favorite things to do: walk the parking lot with my work in process report. I like to touch every car in the parking lot with my work in process. I want to know what cars are sitting in the parking lot.

Dave Rogers: That's a good one. Do the physical inventory. Find how many cars have no open ROs. Find how many cars have closed ROs, with money sitting in the bucket waiting to be picked up, sitting on a receivables schedule somewhere. That's a good one. You're going to find all the metal.

Steve Shaw: And think about it. All these big dealers in Texas and California... most of the stores I know have a small lot. I was in Kansas, and they had a couple of pastures. But how many employees have a car sitting on the lot taking up a spot? How many employees have a boat sitting on the lot taking up a spot?

Dave Rogers: All the time. We had a manager leave us not too long ago, and the guy had a car, a motorcycle, a trailer and parts. It was amazing how much crap the guy who came to pick it up took out of there after he left. You have cars on the property. And listen, I've found people, I don't know what the motive was, who would close the RO

and the car would still sit out back, no work done, voided out, whatever it was, whether they were Mickeying it. We talked about that once. I had somebody doing it. In the last few years I've seen cars sitting out back with no open RO on them. Had you done a physical inventory, you would have found it. Then you start digging in, find some money, and find out what happened. I think it's a huge opportunity.

Steve Shaw: I'm such a fan of that. I've been accused of many things in my life, and I always say I was kind of a hard-ass back in the day.

We would walk the parking lot every day. I had my paint pen, like the body shop guys have, and I would write the day I touched the car, write advisor comments and sign it "SS" in big white letters on the window. We'd walk the parking lot, I'd ask everybody what was going on, I'd bark orders and tell everybody what to do. And by 10 or 11 o'clock, I'm having my second Diet Coke, at the time, chilling out in my office, because my day's done.

I knew everything that was going on. And guess what happened? There were no more customer complaints. We talked about work in process at the time. I wish I'd done it back when I ran that really big store. But once you start touching those cars, man, they start flying off the shelf. It's even more powerful than just going through the work in process report. That's a big deal.

Dave Rogers: It's true. And going over the top five oldest ROs with every advisor every day, or every other day, minimum weekly... We used to do mini month-ends every Friday to make sure everything was buttoned up, and you could go over your open ROs and your oldest ones. I had a boss, and this is how I learned month-end, who had us take a highlighter to the RO. All my advisors had to bring me their ROs, we'd go over them one by one, with the physical RO, and

if it was going to stay open, it got highlighted. Then all month long, you could walk around, and if you saw a highlighted repair order, you knew it was a holdover from the month before.

Steve Shaw: That's awesome.

Dave Rogers: And if you got to the next month and had the same one with the yellow highlighter, now you're using orange. Now you had a problem. Why has this car been here for two months? We've had that: back-ordered parts, special issues, body shop jobs, whatever it is, that can stay two or three months. It happens. But it's diligence. Inspect what you expect.

What do they say? Trust but verify. That's the other one you've got to do with open ROs.

Review 25 closed repair orders 15:59

Steve Shaw: That's awesome. What's next? Is it my turn?

Dave Rogers: I think yours was the open ROs, right? If you've got a good one, you can jump ahead of me.

Steve Shaw: Mine was the parking lot walk. I was thinking while you were talking. I watched our podcast from earlier, where you were talking about training, and that really hit home. You said you don't have to take an hour off your day, you don't have to do it after work or before work. Call somebody into your office. So I love the idea of going to the cashier's office, or wherever your closed repair orders are, and pulling

yesterday's. "Call the cashier, bring me the last 25 tickets, sit them on my desk." Then have a service advisor come into your office and review those 25 tickets. That would be pretty cool. What the frick would we learn looking at those last 25 tickets? I think it'd be fun to do. I'd probably get enjoyment out of it.

Dave Rogers: Oh, absolutely. In my last years as a manager in a store, I had a rule everyone hated: every single RO from every single day had to wind up in my office, at the end of the day or first thing in the morning. It used to drive my warranty administrator crazy. "Why?" Because I want to look at them.

Now, there was one store doing 130 hours a day, and there was no way I was looking at all of those. So I'd let her come in and grab them back. And what I'd do is grab a stack of ROs.

I don't know where I came up with this, I might have read it somewhere. Today's date is the 14th. So in a smaller store, any RO that ended in a four, I'd put aside, and the rest could be filed. I'd go through those ROs and look for signatures. I'd look at the multi-points. I'd look at the three C's. Were there any warranty lines I didn't know about? I used to do that with my assistant or an advisor all the time. It was the easiest way to train

somebody, because when they saw stacks in front of me, they all knew they were coming to visit me at some point. And you know what they did after a while? They stopped making the same mistakes.

Steve Shaw: That's what it's really all about.

Dave Rogers: In some systems, you also have an exception report that runs every day.

When I first started running that exception report, I'd get aggravated. It was Reynolds, and the RO would be Z'd out but wouldn't close, because it was out of balance. "You idiots, you can't close an internal." But after a while I realized what a great thing this was, because it wasn't closed, it wasn't in accounting, and it wasn't too late to fix it. Now you can look at it and go, "Why'd you put $50 to policy? Why'd you put $50 here? Why'd you give this discount?" It made for great training for

the advisors. They always used to go, "How did he ever figure that out? How did he know?" Because you didn't close the RO yet. You forgot to put the internal offset in, so it didn't close. It's a great way to educate people, a great way for people to learn, and you see what's going on in your store.

Make sure you're open for appointments 19:26

Steve Shaw: Awesome. I think we've got time for one more.

Dave Rogers: I think we had a guest on one time and talked about this: go through your appointment system and make sure you're open for business. You want to bring more money in the door? You want to add another dollar to the bottom line tomorrow? Make sure you're open for appointments. Make sure that online you can make an appointment for an oil change in 24 or 48 hours, whatever. People do it.

I know this will surprise some people, but I'm seeing stats as high as 40% of people in a store making their appointments online now.

I never would have believed it. Some of the systems are easier to navigate now. You don't have to put in the VIN. You don't have to give a drop of blood or your firstborn. You just go in and make the appointment. But 35%, 40% is a lot of people making appointments. And if your system isn't open and looking for that... forget about your internal people. If you called me, Steve, I could just tell you to come in for an oil change. But if I have an outside BDC,

they might not have the ability to do that in every case. Or if somebody's online... I learned when I was a GM in sales that people call your dealership either to buy a car or to shop you and scratch you off their list. So if I call Steve Shaw Motors to ask about a car you have out back, or about something you do, and you don't have time for me and you're flippant, you know what? You just saved me a trip. I'm not going to visit you.

And people will do that with service the same way. If I pick up the phone and get the runaround, or I don't feel like you're warm and welcoming, or I go online and can't make an appointment for a state inspection in the last week of the month, and your next appointment is the 15th of next month, I'm going somewhere else. You have to look at those things. I think appointments are one of the biggest things we miss.

Steve Shaw: Well, I think you're right. You and I talked about this, and by the time this airs I'll have just taught a class called Hospitality. I actually referred back to Damon and said hospitality is about making things frictionless. I literally put that in my class. My phrase is, "Make it easy for people to spend money." And you're so right. If you give me a hard time about anything,

I'm going to walk away. It's easy for me to click off and go to another website, and it's easy for you to hang up. How powerful is that? Holy cow. That's a great tip, man.

Dave Rogers: How many times do you get aggravated with technology? Phones, apps, websites that don't work and aren't intuitive. You want to do something simple, and it asks you for multi-factor authentication, it sends a text, and the text doesn't come through on your phone. You look down and you've got a bad signal, so you're standing there holding your phone in the air on one foot. Some of this stuff aggravates the crap out of you on a daily basis.

Every day. And then you get on the phone with somebody and they give you a hard time about bringing your car in for an oil change? No, I'm going somewhere else. I'm done. Or your website doesn't work. I've seen it. We mystery shop all the stores twice a month. A couple of the women in the office and management do it on the 15th of the month and toward the end of the month. They go in and try to make an oil change appointment as a

waiter, and then try to make a check engine light or state inspection appointment, depending on where it is, since not every state has state inspections. Then I get a report, and we show it to the GMs every month at the GM meeting so they know how we're doing, because I can't be in every store. I can go in and fiddle with their appointment systems, but that doesn't mean they won't go back in and change it. It's got to be organic. It's got to come from the store. But it's a huge opportunity, and we check it every month.

How many techs you need, and how long a video should be 23:37

Steve Shaw: You know my mantra when I was consulting in the beginning: you don't have enough techs. I figured out a calculation. I'll look it up, I don't have it with me right now, and I'll say I made it up, though somebody else might have it. How many days out are you for an appointment? What are your hours per RO? How many appointments can you take per day? That tells you how many techs you have to hire.

And if you're going to do right-now service, then I need to know

what my availability is and when I can get a car in, based on all these parameters. If I want to service a car right now when anybody calls, I need to know that number. I wish I had that calculation with me, but I'll look it up. If you're going to make me wait a day or two or a week to come in, I ain't got time for that. It's too much. It goes back to the TikTok video. Give me what I need to know right now so I can make a decision. I don't have time for that stuff. I don't want to make time. I'm conditioned

not to hang out. The first time my mind can wander, it's "squirrel," and I'm out. I'm gone. So that's powerful. I love that you guys are actually mystery shopping your own stores.

Dave Rogers: Yeah, we do it internally. And we do phones too. The manufacturers do phones, and we hire a company that does it for sales and service, just to see how the phones are getting answered. I saw a podcast the other day where they were talking about the videos, and the experts, because there are experts everywhere now, are telling you the video has to be less than two minutes. I think that's a long time.

I agree with you 100%. I've told you before, I'm not a real big video guy. I scroll through reels here and there, but I don't spend a lot of time on YouTube. I watch our podcasts, but most of the time I listen to stuff. I don't sit there and watch videos.

But with the multi-point video, you have to watch it to understand it. So I'm starting to think a minute forty-five or two minutes is a long time for people to pay attention. Like you said: squirrel, I'm gone.

Steve Shaw: I have a couple of stores, some really good stores, where we talk about creating a need.

That's our whole philosophy: creating need. It's need plus value. And as we said earlier, the advisor does have a role in this. If I send you a video that's thirty seconds or less and give you that information, and you want more, you'll call and ask: "Hey, Johnny, I just got the video from my tech, and he said X. Can you fix that? I need more info." But if we think every customer is sitting

out there wanting this amazing amount of information, that's value-based selling from twenty years ago. That's not the way the customer wants to be sold today. I don't have a TikTok account, but I do like the reels, whether I'm scrolling on YouTube with my clicker or swiping on my computer. I get a kick out of them now. I never did until a recent vacation. And that's me as an old dude.

Even with the young ones: I ask every young kid who comes into my class how they'd like to have it, and they say, "Give me the info and move on. I don't have time for all this nonsense." We're literally rewriting our video multi-point inspection class right now, because it has to change.

Dave Rogers: I think it's a great idea. I really do.

The GM tip: do something different 27:26

Steve Shaw: Well, these could all be GM tips of the day. But what would you say to a GM who says, "We've got to come up with some money. The sales department's not getting it done this month. I've got to make some money now"?

Dave Rogers: I'd say take any one of the four, five, six tips we just rattled off, whichever one you feel comfortable with, and try it. Get together with your service manager. Get together with your parts manager. Do something. You know the definition of insanity: doing the same thing over and over again

and expecting a different, more positive result. That's Einstein's definition. So stop doing the same thing over and over. Do something new. Make sure the videos are at 100%. Train, coach, go through the op codes, go through the open ROs. Do something different and you'll get a different result. If it's not a good result, change it up. But I guarantee if you do any of these five or six things, you're going to get positive results.

Steve Shaw: Awesome. That was a great podcast. I think we got some great ideas and a lot of laughs. Let's do it again next week. And if somebody out there listening has an idea, shoot it over to us. I just got a couple of text messages while we were here. Send us a message with your thoughts and we'll bring it up as a topic. What's your favorite line, Dave? What did you say you were going to write a book about?

You can't make that... what did you say?

Dave Rogers: You can't make this shit up. That might be my life in the car business.

Steve Shaw: You can't make this shit up. That's all we've got to talk about. All right, you guys, good to see you, Dave, everybody. We'll catch up with you next week.

Dave Rogers: All right, Steve, have a good one.