Happy buyers get TLC and coffee too

North Staffordshire-based Knights’ two centres were located in Stafford and Newcastle-Under-Lyme, but in July the Newcastle outlet relocated to Stoke. According to the centre’s Aftersales director Ian Dow, the 7.2 acre site is probably the biggest BMW/Mini outlet in the country – and includes the only Starbucks coffee bar in Stoke.
Dow has been in the BMW network for 23 years, working his way up the aftersales ladder from the service desk to his current role which he took up two years ago. He is responsible for the aftersales needs of both brands but for our latest profile, Motor Trader asked him to focus on the currently headline-making Mini side of the business.

This is a highly impressive centre, with its completely separate Mini facility you clearly have faith in the future of the brand. However Mini servicing takes place on the opposite side of the site in the BMW centre, why?
This has always been a strong Mini area and even on our other site we had a separate Mini showroom from day one of the brand, whereas several BMW dealers simply had a boxed-off area on the end of their existing showroom. In this new centre we have built in a car wash and workshop space but it’s currently only being used for valeting. When we get total separation of the two brands, which I think is only a matter of time, we will do our own servicing in the Mini unit. We’ve future-proofed the building, making it possible to transfer Mini and free up capacity in the BMW centre as needed.

Will such a move provide potential staffing problems in that technicians will experience a lack of variety in their work?
We don’t currently have Mini-specific service teams but we do have some technicians who prefer working on Minis. They have no qualms about a lack of variety, in fact you get more specialisation. We actually sometimes have problems getting our technicians to be MoT testers because they are so specialised. When they go to the Vehicle Inspectorate they find themselves dealing with equipment not fitted to our vehicles.

How difficult is it to find and retain suitably qualified technicians?
We are somewhat fortunate to have a fairly stable workforce but yes, good technicians are definitely hard to find. The skills required to work on our product mean when we employ from outside the franchise it can take them 12 months to get to know the product, which creates reduced productivity during that induction period. Retaining people is extremely important, it’s also a stabilising factor within the
whole dealership. It sends out the wrong signals to existing and prospective employees if you are constantly looking for new staff.

Minis are of course sold with
the five-year TLC service programme. Is this a good thing for your business?
For me, TLC was a no-brainer, we had virtually 100 per cent penetration from it, and while you are working at a labour rate of less than retail, because we are reimbursed by BMW at warranty rate, you have 100 per cent customer retention. I think service-inclusive packages should be offered on all cars. The hardest part of this job is getting customers back through the door and this brings them in, giving you the opportunity for further sales such as tyres, whereas previously the customer would not have considered you as an option here, going instead to an ATS or a Kwik-Fit. And of course the customer also gets to see the latest Mini developments, new models for example, which is a sales opportunity. TLC benefits the whole of the business, not just aftersales.

How else do you target repeat business – especially out of warranty work?
It’s not just repeat business we want, every car in for service is given a free health check there and then to identify any issues the customer may not be aware of. Anything reported and not sold on the day is diarised and then we call the customer to remind them of the problem and ask if we can make an appointment for them. All customers are added to the database and as active service customers are included in all marketing activities.

You mentioned tyre sales – is such work difficult to sell to customers accustomed to going to fast-fit specialists?
We’ve done tyre sales for quite some time, they are extremely important to us and we have employed our own specialist tyre technician since 2000. The hardest bit was breaking customer perceptions that we would be more expensive. But because we buy so many specific tyres for our models we are able to price-
match independent quotes and
we sell the benefits of the fact
we only stock tyres for our
models.
Our customers know that because we stock more than 250 tyres on the shelf for our cars, not Fords or Vauxhalls, we are more likely to have a high performance tyre for a specific Mini than most of the high street suppliers. We have been fitting tyres for years and as a result we now have an element of repeat business, customers
calling us first for a quote. We’re targeting 300 tyres a month from this site, we are currently doing around 250.

There remains a perception that franchised dealers are more expensive than independents for servicing work, despite such programmes as TLC. How do you counter this?
It is sometimes very difficult to overcome. I think you have to sit customers down and ask them to think what they are getting for their money. In many cases we find that prices from independents are only slightly cheaper. With vehicle repairs an independent may charge a lower labour rate but generally this is for how long they have worked on the car and if they don’t have the necessary diagnostic equipment they can actually spend a lot longer on a repair. Dealers invariably charge a fixed operational time and while the labour rate may be more the time spent is less and one evens out the other.
I am convinced the majority of vehicle owners would prefer to have their vehicles serviced at a main dealer and only use independents as a lower cost option. I understand that as a vehicle gets older it becomes harder to justify maintenance costs. so we have launched our low-cost servicing campaigns purposely designed to break those perceptions.
An oil service on a 51-plated Mini for example now only costs £55 – real competition for the independent businesses. Any additional work found when the car is in qualifies for a special rate of only £45 per hour. We are determined to recover a percentage of the over six-year-old market which traditionally has fallen into the hands of the independents.

Recent times have been tough in the new car market, so has that made aftersales more important?
Aftersales has always played an extremely important part in the business and I feel those who
only focused on aftersales because of slowing new car performance have missed opportunities previously.
However, in the present marketplace it’s crucial that we maximise aftersales profits and as well as the more traditional labour and parts sales dealers need to look at alternative sales opportunities. Associated sales of tyres, loan insurance, hire car commission, lifestyle and Mini items for example. Dealers need to look at reducing costs, alternative ways of working, more while-you-wait servicing, reducing service loan car fleets, different ways of operating the business. Service advisers are the sales executives of the aftersales departments, they need to understand the need for introducing customers to new services, and the promotions being offered.

So do you make a major effort in aftermarket sales, accessories and the like?
All opportunities for a potential sale are explored, sales executives’ performances are monitored for accessory sales per unit. We compare our national and regional averages to ensure we are keeping pace with competitors. As a company you have to ensure that what you are offering for sale is what the customer wants. We now offer and fit more iPod connectors than CD multichangers for example.
We also make the most of every opportunity so instead of sub-contracting what was previously considered specialist accessories, such as DVD players, games consoles and headrest displays, we do everything ourselves, sourcing the products directly from distributors or manufacturers. My philosophy is that the more work we keep in house the more profit is kept in house.

What percentage of service hours do you aim to sell and what do you achieve?

We aim to sell 100 per cent of our hours. However, if your are over 90 per cent productive you are doing well, complex diagnostic work means you will never recover 100 per cent of your time. But we do not allow time in our reservation diaries for possible walk-ins, as there is no guarantee people will walk in. If they do that’s when the skill of the service adviser takes over in accommodating such people.

How much of your workshop business is warranty/out of warranty work?
Retail business amounts to 43.7 per cent of our business while warranty is 16.1 per cent.

And your fleet/retail mix?
It’s approximately 25 per cent fleet but I prefer to consider what is fleet or service-inclusive as opposed to retail. BMW and Mini has been very pro-active in BMW’s Service Inclusive and the Mini TLC programme, and there are many individuals enrolled in the programmes. So when we talk about fleet business it gives an impression we are only talking about leased company cars, when in reality we have many more with inclusive maintenance programmes.

How was 2006 and how do you predict the end of 2007?
2006 was a good year and we are ahead of budget in 2007, but the job is extremely difficult and when you are already maximising your opportunities it is difficult to gain major growth.
We are seeing signs that the last quarter of the year will be more difficult than at any time across 2007.

Do you think you benefited from the block exemption changes or have you seen customers go to independents for their servicing needs?
I don’t think the dealers have seen any benefit from block exemption changes, and I do
think we have lost an element
of lease business since the changes.

Is the sector generally improving its customer service levels?
Yes I think so, but levels of expectation keep pace or even exceed those improvements so statistically I think it’s difficult to measure.