I've heard the claim: "It all starts when you sell a car." But is that still true? Is it worth losing money on that sale in hopes of gaining a service customer?
I think most dealers have it backward. They practice a perverse version of the old 80-20 rule. They spend 80 percent of their time on the part of the business that yields 20 percent of the profits: sales.
That's an over-generalization. In fact, fixed ops often represent 15 percent of revenue and 40-45 percent of profit. Yet it's barely on the radar of many dealer principals.
Most dealers focus on sales because that's how they reached the top. It's the sexy, fun side of the business. It's where they learned a crucial skill: how to wrestle with the factory. Today, they keep a close eye on the new-vehicle sales department because without proper oversight, it can be the hole in the hull that sinks their yacht.
But do you really need to sell the car to get the service business? I believe the real goal should be this: Provide great service so customers bring their next car back to your service department, whether they bought it from you or not.
CarMax won't service their cars. Neither will the Nissan store across town that bought into Nissan's high-volume strategy and doesn't have the matching service capacity.
Over the next three years, I predict, your dealership's success will depend less on how many new vehicles you sell than on how many customer-pay repair orders you write (and how well you manage your used inventory).
If you agree, that will influence which exhibitors you visit while at the NADA Show. Lots of them want to help you sell new cars and trucks. Some will help you run your service and parts departments more effectively. Where are you spending your time?