Issue link: https://read.dmtmag.com/i/536070
www.PowersportsBusiness.com SOLUTIONS Powersports Business • July 13, 2015 • 33 Three years and $485,000. What could you do with that much additional income at your deal- ership? For some of you that is paying bills, for others that could be improvements or bonuses. There are many things that could be done with that much money. So where would all this money come from? It is very simple, WARRANTY. In my last col- umn I talked about the number of days a repair order is in service as it relates to Lemon Laws. State Lemon Laws can cost dealers and manu- facturers a lot of money, but warranty work costs dealers money, too. I went to a dealership and was reviewing data. One area I always focus on is open repair orders and open warranty claims. Besides having too many open repair orders, I found hundreds and hundreds of open warranty claims. As I asked questions, the staff did not have any answers. I talked to the owner, got online and made phone calls to various manu- facturers. The end result: the warranty claims either had not been submitted, or had been submitted but the necessary part(s) had not been returned, thus the amounts were never paid. What a shame. The owner of the dealership was very non- chalant about this $485,000, almost as if his bank account was off by only a penny. I was flabbergasted and in complete shock. If this had been my dealership, I would have had the service manager in my office immediately, demanding to know why this happened and how he would prevent this from happening in the future. But no, the owner calmly looked at me and said: "OK, just write it off." As a dealer- ship principal, could you just calmly write off that amount of money? I couldn't. With many years of training and consulting under my belt, I dug deep down. What could I say to shock this owner into reality? Then it hit me. "I have an offer for you," I said. "I am going to quit my job with Lightspeed and come to work for you. I am going to be your warranty clerk." (You could see the excite- ment on his face!) "Here is my deal: I will process and be responsible for all warranty claims. I will only be paid if you get paid. I will receive 80 per- cent of the monies paid amount, and you will get 20 percent." I thought this was a great deal since he was currently losing all of it. He looked at me and said: "No way, you are ripping me off!" Imagine the shocked look on my face. I was not ripping him off; he was ripping himself off — which I told him. The light came on, and those not-so- pleasant conversations were now happening. This is a very common story. Dealers don't see the small amounts add up year over year. Or maybe you are not paying attention to the warranty work flowing through your dealer- ship. Not just the work, but also the entire pro- cess. For most dealerships this is your bread and butter during the slower times. Warranty work enables you to keep your service techs, and others, employed through those times. Submitting the warranty claim is critical, right? We all know unless you submit them, you will not be paid. Processing the payment is important as well. There should be one person dedicated to resolving warranty claims. Manu- facturers make mistakes, just like you and me. Anytime there is human interaction, there is a chance for error. One person resolving all claims allows consistency and a relationship to be developed. There may also be time constraints: you could be losing money and not even realize it. You have a new service manager, Bob, submit- ting warranty claims for Manufacturer A on Day 29. He knows all claims must to be sub- mitted within 30 days. Because Bob has held onto the warranty jobs that need to be submit- ted, his reimbursement rate dropped from cost-plus-40-percent, to cost. The dealership will no longer make any profit on the claims. Bob might not even realize this loss in profit for his department. Overcome this problem with training. Chart A shows the days to pick up for all units increased Q1 2015. In comparison, Chart B shows there were more jobs written in Q1 2015. This simple fact: Units are being kept in service departments longer, which makes dili- gence within the service departments even more critical. Again, the dealership's bread and butter. A well-run service department closely monitors warranty, knows the seasons and knows their customers. Excellent service managers know where they get their bread and butter. PSB Paula Crosbie is the training development manager with CDK Global Recreation. She has been training and consulting with powersports dealers for 13 years. She can be reached at paula.crosbie@cdk.com or 801/519-7570. Does your service manager capitalize on warranty? FOLLOW ME ATV 10 15 33% Motorcycle 7 11 36% Scooter 7 12 42% Snowmobile 10 13 23% UTV 10 16 38% Type of Unit Q1 2014 Q1 2015 Increase % MAJOR UNIT AVERAGE DAYS TO PICK UP FROM DEALERSHIP SERVICE DEPARTMENT ATV 46,661 52,642 11% Motorcycle 199,403 227,886 12% Scooter 7,130 8,154 13% Snowmobile 38,855 40,543 4% UTV 33,641 47,872 30% Type of Unit Q1 2014 Q1 2015 Increase % Source: CDK Global Recreation MAJOR UNIT NUMBER OF JOBS WRITTEN IN DEALERSHIP SERVICE DEPARTMENT Chart A Chart B you that is paying bills, PAULA CROSBIE