Friday, October 25, 2013

Hey, That Person Who Owns Your Customers Makes Minimum Wage

by David P. Carlisle


I love this industry. It’s the passion that I thrive on. We sell beautiful, drop-dead gorgeous products that have more computing power than some Fortune 500 companies had in the ‘80s. Outside of a home, the stuff we sell represents the single largest thing people typically buy. Beyond the physical beauty and value of these products, they seem to last forever because we measure and manage finished quality more than any other industry. We thrive on happy customers because they are the life-blood that sustains our future. In fact, more so than any other industry, again, we measure our success by all those smiles, and when we detect a frown, all hell breaks loose.


Awesome.


Our customers are kings and queens and we have fistfuls of programs for them when they come to the throne rooms we have built to serve them. That’s because these original new-vehicle customers hold on to their cars and trucks for about five-and-a-half years and, sometimes, come back to our dealers for service. Used? Heck, we pretty much never see them.


We call our guardians of the throne room “Service Advisors.” Carlisle & Company just completed its inaugural Service Advisor Survey in which approximately 4,000 Service Advisors participated. Here are some interesting facts about these guardians of the throne, these keepers of customer satisfaction, and masters of customer repurchase loyalty.


Service Advisor base pay is close to minimum wage, or about what they pay a cashier at your local Kmart. Call it $10 an hour.
  • About 11% of their total take-home pay is based on customer satisfaction-related bonuses. Here’s the image you need to put into your mind. You are a cashier at Kmart1 making about $10 an hour, and the store manager says that you can make an additional $3 an hour if your customers all say they are happy. He says he does not give a damn if they are really happy; he just wants them to say they are happy. After work you go out for a couple of Buds with your friends and figure out how to make even pissed off customers “say” they are happy. Heck, you just fill out the damn ‘happy’ survey for them! After a six-pack more of brainstorming you come up with a bunch of other sure-fire ideas. That $3 an hour is pretty much in the bank!
  • It gets better. Approximately 55% of a Service Advisor’s take-home pay is based on selling commissions.
    So, you are at Kmart and make $10 an hour, plus another $3 for your customer satisfaction bonus. Your boss comes over and says that he’s got a great deal for you. He says that you can make another $15 an hour based on commissions. You say to yourself, “Holy crap, that’s more than my base plus my happy money! Hey, man, I’m all ears!” So, your manager says, “Great kid, just go out and sell more crap!” So, Maria Alvarez pushes her loaded cart up and she’s got an $11 coffee pot. You say, “You know these things break all the time, I can sell you an extended warranty for just another $5 that will cover you for two years!” She says “Yes please!” Old Mrs. Casey is next and she’s got a load of $3 towels. You tell her that you saw her car as she drove in and it sounded a little rough – You tell her it needs a new battery. Cha ching!!! Yes mahaaaaam. You’re a Michelob guy now!

Recently I held a focus group of automotive Service Managers. We talked about Service Advisor compensation. They think we are stuck with it.


Bottom line: I love this industry. I love it because the OEMs are brilliant in product development. But they are simply stupid when it comes to the basic things associated with execution. It makes me feel like I have a life purpose. I can’t develop a new car, but I sure can tell them what’s idiotic about the care and feeding of their customers – and some of their employees – when they’re bringing those products to the market.


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1 I am using Kmart just as an example of a local tarnished brand that is everywhere. Any pay levels or programs in these examples are more a reflection of the motor vehicle industry than Kmart.

Monday, October 21, 2013

Diagram Processes to Improve Service Lane Performance

Nearly every time we talk to dealer Service Managers, we hear complaints about warranty claims. The process is different depending on which part the claim is for...and just when everyone has it figured out, the rules change. No wonder Techs and Service Advisors can’t keep up. Even though we hear the most complaints from dealers, they aren’t the only ones hurting. Dealer confusion means the OEM needs more warranty claims specialists and help desk staff to handle incomplete submissions and answer questions.


There’s a reason warranty claims are a problem – they’re complicated. Warranty claims are just one of many dealer processes that involve multiple variables, such as different parties, different parts, and different requirements for those parts. Maybe you can’t fix the warranty claim problems immediately, but there’s a way to simplify the complexity: a process diagram.


Diagrams make complex processes easier to follow. Process diagrams put events into the proper order, clearly identify the responsible party, and account for decisions. Service Managers can create their own diagrams, or OEMs can distribute diagrams of common processes to dealers. Regardless of who creates them, these diagrams will help dealer staff. Service Managers can tack a copy on the wall of every space the process is used. Staff will be able to see at a glance what their next step needs to be. Everyone (technicians, service advisors, and anyone else) will be working from the same process. By the time an issue gets to the Service Manager, he or she will know who’s performed which steps, and who to go to with problems.


Below is a diagram of a sample warranty claims process. Whether you work at a dealership or for an OEM, you only need to know a few things to do this yourself:
  1. Who is involved? The horizontal bars (called “swimlanes”) represent different people in the process. This sample process has Technicians, Service Advisors, and a Service Manager.
  2. What are the actions? The squares represent an action, for example, “Review Claim.” The box is located in the swimlane of the person expected to perform the action.
  3. What are the decisions? The diamonds represent a decision, for example, “Drivetrain issue?” There are always at least two routes from a decision, typically labeled “yes” and “no.”

We used graphic design software (Microsoft Visio) to make the diagram you see above, but you don’t need any fancy programs. You can sketch a diagram on a whiteboard and take a picture with your phone. Function far outweighs form here – you’re going for clarity, not an award for artistry.


At first glance, process diagrams look like glorified checklists. So why not make a checklist? Because process diagrams perform better in two ways: how they depict who performs which actions, and how they depict decisions. Here’s the sample warranty claims process in checklist form. You can see how quickly it becomes confusing – it’s hard for a user to find where they need to look.


High-Level Warranty Claims Process
  1. Service Advisor investigates customer issue and checks warranty status
  2. Technician diagnoses vehicle issue and reviews warranty status
  3. Technician checks to see if issue covered by warranty
  4. If not covered by warranty, Technician refers to Service Advisor who informs customer of the issue
  5. If covered by warranty, Technician checks to see if the issue is related to the drivetrain. If not drivetrain-related, proceed to step 8
  6. If the issue is related to the drivetrain, Technician photographs affected part
  7. Technician then uploads photos of affected part to dealer portal
  8. Technician fills out warranty claim form in dealer portal
  9. Technician submits claim to Service Manager
  10. Service Manager reviews claim
  11. Service Manager either approves or denies claim
  12. If Service Manager approves claim, he or she submits claim to OEM
  13. If Service Manager denies claim, he or she refers claim back to Technician and Service Advisor
  14. Service Advisor and Technician work together to revise claim, then return to step 9, repeating this cycle until complete
The checklist gets the job done, but the diagram presents the same information in a format that’s faster to read and easier to understand. As a rule of thumb, the more complex the process, the more useful a diagram.


Bottom Line: Odds are that you’re struggling with at least a few processes right now. But if you can’t fix the problem, diagram the process. Diagrams put everyone on the same page, add consistency, and make it easier to pinpoint problems. If you’re an OEM, make diagrams for your dealers. If you’re a dealer and your OEM hasn’t taken this advice, make the diagrams yourself. They’ll save time and effort and improve the speed and accuracy of your key processes.

Tuesday, October 15, 2013

NAPB Data You Don’t Report or Collect – But Should

You’ve heard the adage “You can’t manage what you don’t measure?” Does it apply to you? Read on.


The Carlisle data team is gearing up to collect data for the next North America Parts Benchmark (NAPB). NAPB is the yearly cooperative benchmarking forum for thirty motor vehicle companies in the automotive and heavy equipment industries. We focus on service parts operations and we collect, for each calendar year, three distinct but interconnected sets of data to fully compare performance across the industry – Warehouse level, Company level, and Costs.


Most years, our clients suggest new metrics for benchmarking, many of which the participants quickly utilize to improve their business. However, in the past few years some key metrics have had less than 100% participation, despite the importance to your customers and your bottom line.


Supplier Management

Here’s an example: if you want sufficient inventory to fulfill customer demand, you have to manage your suppliers – because problems here can mean backorders and low fill rates. We all know this. So it’s no surprise that OEMs who have used metrics on their suppliers’ past performance to award future business actually improved supplier performance


We’ve collected supplier on-time performance data for NAPB since 2003, yet only half of the automotive companies reported it for 2013 NAPB. Heavy equipment (HE) companies are doing better, with almost everyone reporting. Starting in 2011, we collected supplier performance by type: “local internal”, “overseas internal”, and “external”. About two-thirds of the heavy equipment companies report internal supplier on-time percentages to this detail, but only a third of the auto companies. If you can’t even track internal performance, what hope is there to track your external suppliers?


In order to gain a different perspective on suppliers, we have recently added to the data collection the average supplier past due line level. Though two-thirds of HE companies report this data, only a handful of automotive companies do.


Without accurate data, a company cannot create incentives to improve a supplier’s performance or penalties for those who don’t meet the standards. Supplier problems disrupt the supply chain, from the warehouse workers who must unload an unexpected delivery, to the dealer whose order is delayed.


Transportation

Transportation is one of the most important pieces of the supply chain but also one of the hardest to track. Since the beginning of NAPB, we’ve tracked lines shipped by mode. In recent years, we’ve added metrics such as outbound transportation costs by mode, transportation damages by mode, and on-time delivery by mode, in order to better quantify transportation performance.


No one needs to remind you that transportation costs are an important area to measure and manage. For NAPB participants, outbound transportation costs make up a median of 40% of the annual supply chain costs. A small decrease in these costs can have a large effect on the bottom line. Almost all OEMs can report outbound transportation costs as a total, but a third don’t report costs by mode. On-time delivery reporting is similar; about two-thirds of the OEMs can report it by mode.


Transportation damages have the lowest level of participation for these metrics. Less than half of OEMs are able to report damages, depending on the mode. Parcel has the highest reporting percentage, compared to LTL (less-than-truckload), DDS (dedicated delivery service), and air. Damages matter to your customers (if you have any doubt, take a look at your NAPB Parts Manager Satisfaction Survey verbatims). Are you taking steps to identify gaps in performance across the modes and carriers who may be causing that damage?


Bottom Line: Start measuring; start managing. In other words, this year, collect and report data that might not have been available in the past. Compare yourself to the industry; discover where you can improve.

Thursday, October 3, 2013

Carlisle Launches 2nd Annual Technician Survey

On September 16, Carlisle launched the second annual Automotive Technician Survey, with the support of 18 automotive OEMs across the U.S. The inaugural Technician Survey (September 2012) was wildly successful, with over 11,000 technicians responding. The 2012 survey was our first attempt to better understand what makes technicians tick, and therefore focused primarily on demographics – what kind of background do technicians come from, why do they choose to become technicians, and what are the primary issues that impact their retention?


With the launch of the 2013 edition of this survey, we have modified the questions to focus on how to better enable technicians to deliver efficient, quality repairs. Specifically, we are addressing topics such as training, technical support, tools and diagnostic equipment, technician-service advisor communications, etc. In addition, we delve into the latest service lane technology to understand what works and what doesn’t.


Similar to last year, the technicians broadly support this survey. Just one week into the survey, we have received over 4,000 responses, with hundreds of compliments similar to those found below. The survey will remain open for three more weeks. Stay tuned for the results.
  • I appreciate this survey, it is long and thorough … I think no other attempt made to at least give the appearance that we matter (not just are required) has made more of an improvement in morale than this survey. Thank you very much, I think the improvements made year over year have been great.
  • Best survey I've done as a XX employee. Maybe it will open somebody's eyes.
  • I feel that this survey was much more detailed and comprehensive than last year. It is also warming to know that XX really does seem to care about the satisfaction that we as technicians do have, and what they can change. Thanks to you.
  • Good survey. Seems like someone is listening.
  • I liked this survey because it is the first one I have ever done that actually seemed to want to know my opinion as a technician of 28 years.
  • I am very happy to finally be able to voice my concerns!
  • I like it, hope it gets used to make needed changes to support the product, personnel and customers.
  • A little long but required to obtain useful info.
  • A survey like this should be done every six months or so...
  • All good and thanks for asking!!
  • Survey is fantastic, I feel it targeted a lot of important topics and I hope this feedback helps.
  • Depending on the number of technicians in the dealership, please have the managers see this just with no tech numbers etc.
  • Detailed, without being lengthy.
  • Excellent survey.
  • Finally a survey that we can actually comment.
  • Fine, good pertinent questions.
  • Format was good easy to understand.
  • Format was quick and easy. Thanks.
  • Glad to be able to take this survey and hopeful it can help me or others in this position.
  • Good survey covers all that happens in the work place.
  • Good survey. Needs to happen more often.
  • Great questions and the length was right on.
  • Great survey and thank you!
  • Great survey! Thank you for taking the time to listen to the technicians!
  • Hope some of this will actually be recorded and used to promote a positive working environment for all of us involved.
  • I am very glad to have the chance to take this survey.
  • I appreciate XX taking the time to see how employees feel.
  • I enjoyed this survey, and wouldn't mind taking more.
  • I feel it was a good survey overall.
  • I am glad that someone wants to hear my side of what it's like fixing cars at a dealership.
  • I like the survey! It should be put out annually.
  • Made me feel like XX cares a little about technicians.
  • Overall a 9 of 10. Should be available to all service personnel.