COVID forced the evolution of the industry
3:24 Jeff: PUBLIC SERVICE ANNOUNCEMENT on "what is a good deal at a dealership"
Shawn: sales, makes customers and the service keeps them
6:28 Shawn regarding emphasis on selling cars vs servicing (AKA serving, taking care of the client for years after the sale)
6:55 Shawn debunks the independant vs franchise dealer service myth.
13:37 Shawn on how COVID-19 has forced evolution in the industry. is presented me with my newest career opportunity, where I've just recently been picked up by a fin tech company. And I am a shareholder, and I am going to be involved heavily in the business development as well as product development.
16:20 Shawn on his new career. (outside of a car dealership)
18:44 Jeff schools Shawn on the value of sales vs service people
car, service, dealership, people, opportunity, business, customers, sales, manufacturer, sales manager, parts, vehicle, specifically, absolutely, dealer, shawn, sell, buy, product, number
Jeff Sterns 00:00
Jeff Sterns connected through cars. This episode is part three, with my good friend, Sean armour, who's going to get extensively into where the service department comes into the dealership. And this is good if you're not in the business, and also talks about should you use the dealership for service? or using independent? You might be surprised by his answer that and a lot more. He's a very, very interesting guy. I'm so happy that he was on the show. Enjoy. I'll see at the end, there's a very good chance that after paying electricity, giving the salesman whatever the minimum commission is on an ad special car 100 bucks, 200 bucks 300 you know, whatever it is, maybe on $100,000 car, it's 400 bucks, you know, that if you don't buy anything from the guy that you see next in the finance office, they could lose money. I think the average profit on a Toyota Camry right now in United States is something like $116 negative.
And this is really what separates me from from other businessman Ross stuck at home. Alright, so it's a new reality for all of us, you know, juggling running seven dealerships from my living room, but I'm also a grade five teacher to my 10 year old, right. So there's been a tremendous amount of pressure and stress on absolutely everybody. So what a lot of what I would tell a lot of customers is give us a chance to to navigate through this new reality for us. I've just recently been picked up by a FinTech company
Jeff Sterns 01:31
decided to learn the product codes. Now let me disclose I was director operations in a dealership I never learned the product code or the service code. There's a lot for somebody with no particular education. In an area in the car business. My
wife is Simon Sinek says, because somebody spent their hard earned money to have their car washed.
Jeff Sterns 01:52
I don't mean sales is everything. Service is nothing I just mean sales people are better than service people.
Jeff Sterns connected through Guys, if they're big wigs, we'll have him on the show. And yes, we'll talk about cars and everything else. Here he is now, Jeff Sterns.
Jeff Sterns 02:19
So I agree with you that there's no margin and I would even tell go further and tell the prospective car buyer that if you walk into a dealership and pay sticker for a new car, they're still making less than they were making 25 years ago after negotiating for five hours. Absolutely. There's enough. What's in a new car now? 7%?
Yeah, maybe if you're lucky, you're doing well. I don't know. Forget f&i products, but no. 7%. Yeah, I would have
Jeff Sterns 02:49
to agree. So in and Shawn brought up f&i products, that stands for finance and insurance products. So this would be the dealer making a few dollars, or processing your loan, or selling you an extended service contract, or an insurance policy against tire damage from road hazard or nails in the road.
It's the person you go and see when you're done with the salesperson,
Jeff Sterns 03:15
right? Who might be the only opportunity for the store to make anything.
Correct, actually, yeah,
Jeff Sterns 03:22
normally now the way the deals are, let me just tell you a public service announcement. I mean, tell me if I'm wrong, if there's a published price or an advertised price, and you don't buy any other products in the store, do your loan with them, get your warranty with them, whatever, there's a very good chance that after paying electricity, giving the salesman whatever the minimum commission is on an ad special car, 100 bucks, 200 bucks, 300 you know, whatever it is, maybe on $100,000 cards, 400 bucks, you know, that if you don't buy anything from the guy that you see next in the finance office, they could lose money, right or wrong?
I would have to agree with you.
Jeff Sterns 04:04
I think the average profit on a Toyota Camry right now in United States is something like $116 negative.
Which brings up an excellent point. And I think it should be said, when I first started off in this business, don't forget those first seven years. I came up through the service drive. I didn't come up to the sales. And this is really what separates me from from other BDC managers. I want to be very specific right now. I don't think I'm better than anybody. I really don't. I'm in competition with nobody. I mean, I'm in competition with myself, What am I yesterday, so at the end of the day, and I don't think I'm better than anybody, but I'm telling you now I'm definitely different. Because of my perspective, coming to the service side. This is my adage sales, makes customers and the service keeps them so we're so busy. As I was saying earlier on, on results, results, results, sell, sell, sell, sell, so let's sell as much. But what happened to building relationships? like I did with you? What about repeat business? Why are we so focused on the front end and not the back end? Right, you're going to come and buy a car, you're going to come and buy a car, it's a transactional event, but then think about it for the next 456 years, you need to come back to the dealer to service the vehicle. So what are we so afraid of? Right? We're often too much. And this is really where COVID is put things into perspective. But often more times than not, the service aspect of a dealership is irrelevant. You know, we're so focused on hitting those numbers and selling, selling, selling, because there's a lot of pressure that comes down from the manufacturer, like let's call a spade a spade, I'm sorry, you know, at the starting of every month, it's not the sales managers that sit down, say, Hey, listen, let's sell 100 cars this month, he let's be fair to every single sales manager, salesperson, and whoever the desk manager out there. The targets are set by the manufacturer based on whatever metrics they're using, I don't want to get into it. But at the end of the month, or at the starting of a month, metrics come down from a manufacturer and say, Listen, this is where we need to be. Right? Whereas then the sales manager intern turns around to his team, and they put strategies in place and promos in place, or what have you to try as much as possible to get to that metric. However, what about the service aspect? What about the customer service aspect? What about, hey, Jeff's gonna be coming to see us twice a year for the next four to five years? Right. So I mean, that that, you know, we really need to find find us on that aspect of the business. The last time you opened up a newspaper, when's the last time you saw an ad for how great my service was?
Jeff Sterns 06:55
there? The listener might be skeptical that why would a dealer do all of this, if there's virtually no profit margin in a lot of new cars, and when I say no profit margin, I remember selling Nissan's. And I remember the new versa, that was an upper teens or 20 ish window sticker, this is going back had like under $1,000 margin in the car. And I remember when I was selling Rolls Royce, when the window sticker was 330 grand at full sticker we made 17,000. So either way, it's disappointing. The customer might be wondering, Well, why bother? Well, here's why bother. Sometimes you do make money on a car. Sometimes you do make money on a car when you're doing. But really, like Shawn mentioned earlier, there is money to be made on used cars and still not massive money because the Internet has compressed, what you get asked for it because someone's on the lot or someone's looking at your listing, they go to their phone, they look at the other 100 of them for sale within 50 square miles or kilometers. And if you're not within that range, I mean subject to condition equipment, colors, whatever, you're out anyway. So you can't ask the world for used car. But there is more margin in a used car than a new car. But the real thing to Shawn's point about service is all of these new and used car sales, as long as you live in the area are very good for the dealer, because they become units in operation for many, many, many years of using the service department. And what Shawn mentioned about the service department making the second sale. I can't he's 100%. Right. I mean, I can't tell you how many people had a wonderful relationship with the people in our service department. And they were ready for their next car and there was no consideration about where they were going next. So at least it didn't turn into a giant battle for the last for the last 25 cents on us versus a competitor what they'll sell for, they just come in from the service department say I want that car, give me a good deal I'll buy they're not going to go to four other competitors like they may have. And that's thanks to the service department. But I want to ask you a debunking myth. A lot of people go to an independent shop once a while to repair something not in warranty to do a non warranty repair or once the car is out of warranty or to do maintenance like oil changes and stuff. Do you have any opinion about that?
I do have an opinion. I say do what works. What I mean by that is some people like RC cola and some people will drink Coca Cola. So in some cases yes the service the service department at your manufacturer or at your dealership is a bit more expensive. However, no one ever really explained why that is. First of all the parts that we use on the vehicle are OEM parts or original equipment, right? Absolutely 100% however, depending what that part is, the parts in question from the manufacturer are specifically designed and tested to fit that exact vehicle. Whereas your generic part isn't. Right. That's number one super important. That's why generally speaking, your generic brakes will squeak and then your original OEM parts won't. Right? As a lack of a better example,
Jeff Sterns 10:20
number two, by the way, oh, e M stands for original equipment manufacturer. Go ahead.
Yeah, sorry. Number two, the corner garage. And this is not to say by any stretch of the current garage is no good. Absolutely not. However, the technicians or mechanics that will find at the dealership are specifically trained for your exact product. Your corner garage guy, very good probably been in business a very long time. But he knows a little bit about GM a little bit about Honda's a little bit about Toyota's, he may or may not be up to date with the most recent developments of the technology of the vehicle, etc. When you're going to the dealership, the technicians are specifically trained specifically for the product that you're driving. There's a lot to be said about that. Okay, it's kind of like saying, you know, what I rather go to you know, what I rather than let a doctor do mouth to mouth resuscitation? Or would I let a dentist do it. Like, I'll let whoever whoever I have the, the greater amount of chances of surviving is going to do it. The dentist still technically a doctor of sorts, however, not specifically trained for that. So that's definitely two very big things. So the parts, definitely your technicians that are specifically true, I know that I would want my person to know everything about the car. Secondly, if you're going to the corner garage, or they specifically trained to look for any kind of safety recalls, or security, etc, etc. So there's a lot of reasons that you would go and pay top dollar. Now, listen, don't get me wrong, you could do your little oil changes at the corner garage. But I strongly recommend that at least once a year, you bring the car to the garage and let them do a thorough inspection based at the dealership, correct? Absolutely. 100%.
Jeff Sterns 12:05
Well, I agree with you on that I get all of my even my oil changes done on my own car at the dealer, which could be slightly less convenient than the 15 minute oil change place. Although they've got it down pretty good. Usually I'm in and out of there in an hour, which is fabulous for a car dealership. But when I take my car in just for an oil change, or just for a tire rotation or something, they're still plugging it in, and they can tell me recalls. And they can tell me, you know, updates from manufacturer that can be done through computer.
Yeah, yeah. And let's not forget your updates doesn't always just mean, you know, because unfortunately, a lot of customers have a lot of people that are not in the car business. You know, what we mean by updates, it's not just Hey, my check engine light is on what's the diagnostic, there's improvement campaigns, right? It's not always a recall or a safety campaign. There's what we call improvement campaigns. Now, just by if we talk about gas mileage, gas mileage is not only Well, I'm idling at 3000 RPM on the highway. It also depends on how the your car's computer is programmed. Right? We could go on and on and on and on. But these are very, very important elements that we have to consider. So again, can you go to the corner garage? Absolutely. What I recommend going to your your dealership once a year. Absolutely. So just a balance of both. Right now we were talking a little bit about digital marketing. We were talking about, you know, going to your corner garage, we were talking about a lot of stuff. Did you see how things work? So let's not forget that during this COVID I mean, it's messed up. People have lost jobs, people have lost family members, we're all at home. We're all stuck at home. All right. So it's a new reality for all of us, you know, juggling running seven dealerships from my living room, but I'm also a grade five teacher to my 10 year old. Right. So there's been a tremendous amount of pressure and stress on absolutely everybody. So what a lot of what I would tell a lot of customers is there was a chance to to navigate through this new reality for us. I mean, never before in history in the cart world. I'm not sure about how it is. But here in Montreal or Quebec or Canada, that is we're not allowed to have anybody at the dealership at all. Everything for the last seven weeks has been online. Everything. The entire buying process has been done online. So it's all new for us right now. Right and we are pivoting we are making changes some faster than others some none at all. You know, they're suffering from what I call the hubris syndrome, right? They're all like, no, this will pass. This is not gonna pass. Right? So just just be patient with us. And let's grow together and understand that this is also a very new, a very new reality for us as well at the dealership and we're learning we're fixing things out as we go along. You know, this is not there's no book on this new normal. And you know, we're like I said, we're figuring this out as we're navigating through through this COVID. situation,
Jeff Sterns 15:12
well put in, I don't know if it's appropriate to talk about here, or you're ready to talk about it, or if the news is out, but can you talk about your new career, your new business?
Yeah, well, I guess by the time this comes out, it'll be okay. So yeah, I've recently had this amazing opportunity. I mean, unfortunate, I hate to talk about it, because so many people have been affected negatively by this COVID situation. However, in my particular case, it's done. It's presented me with a lot of opportunities, a lot of opportunities. The first opportunity is never before in history, have I ever stayed home 24 seven, with my son for seven weeks. So it's given me an opportunity to re bond with him something but I haven't necessarily had the opportunity to do and number two, it's me with the ability to join you on this show, and educate people as much as I can. So I love being of service. And number three, is presented me with my newest career opportunity, where I've just recently been picked up by a fin tech company. And I am a shareholder, and I am going to be involved heavily in the business development as well as product development.
Jeff Sterns 16:20
Well, Shawn, you deserve all the success, you've got coming your way, this appreciated finance technology company, grabbing this kid who started as a car washer.
Jeff Sterns 16:34
went into service, decided to learn the product codes. Now let me disclose I was director operations in a dealership, I never learned the product code or the service codes. Okay. So and, I mean, really, what you've done is amazing. And it it really also shows from a success standpoint, for those of you not in the business at all, and you're trying to figure out your career path. There's a lot for somebody with no particular education in an area in the car business. Do you agree?
Yeah, absolutely. And it's all about like I was saying before, take your time with it. It's a beautiful industry, if you know where you're going. But you got to work hard. You got to put in the hours. And you have to you have to know, I didn't go into this because it was the car industry, right? Whereas a lot of everybody's journey is different from mine. Specifically, it was about two things. I mean, listen to my story. And you can't lie about this. Number one was work ethic. What did I tell you? I came in as a car washer. First things first, there's a lot to be said about a car washer that shows up to an interview in a suit and tie. Number one, not that let's call a spade a spade. Number two, I came in with the mentality of I am going to wash the shit out of this car as best I can. And number three, why. So that's my work ethic. Number three, my why as Simon Sinek says, because somebody spent their hard earned money to have their car washed. I don't care if it's 20 bucks. I don't care if it's $30. Somebody trusted me with their vehicle to make it look good. And that over time has precipitated me into being a customer centric expert. And when I'm on the phone with somebody, never does it have anything to do about the sale and results. Is that what ultimately we want the end result to be? Of course, like you said, sales is everything. Services. Nothing right, Jeff? However, I've been so customer focus,
Jeff Sterns 18:44
I want to make sure it comes out right. I don't mean sales is everything. Service is nothing. I just mean sales people are better than service people. All right, continue.
Of course, they're Of course. Yeah. And then every month, you're as good as your last month. Thank God. So so because of because I come from a customer centric background. When I'm on the phone, I'm able to deliver in a minute, am I able to illustrate that with with my customers because I'm not governed and I'm not driven by results. I'm governed I'm driven by offering the best service possible, which will produce the results that we're looking for
Jeff Sterns 19:27
passion comes with everything you do, brother.
Well, I appreciate that my man and I can't thank you enough for this opportunity and that it's been an absolute pleasure and honor to working with you and all the people at card shot 24 I hope they see this. I mean, you guys, like I said are offering me the same level of service that I offer my customers and it's we've grown together. We've grown together and you guys have taught me a lot.
This has been Jeff Sterns connected through cards
BDC specialist and consultant. CRM developer. FinTech equity partner.
Seasoned automotive BDC (Business Development Center) growth expert with a career spanning 19 years
forged through car washing and the service drive. Held positions as jockey/appt coordinator / Service advisor / used car sales / Service manager / BDC manager 13 years / Asst fixed ops (parts and service) director
Looking to engage and help dealers reach maximum growth potential in the service drive by way of the BDC.
- 1985 VW Gold ( grandma bought it for me) 1st ever car
- 1992 Honda civic - white rusted hatchback that hardly ran with no heating
- 1988 Iroc Z T top ( first car ever with my own money)
- 1989 Mustang 5.0 GT 25th anniversary
Lexus ISF ( 5 litre)
Mercedes Benz C300
2013 Mercedes Benz C 300