< Previous20How “Bigfoot” Helps Prepare Your Dealership for Your Next Warranty Rate IncreaseCONGRATULATIONS! Your dealership just won the California AB-179 lottery! Whether driven by luck, or a scientific plan, your dealership has most likely realized unprecedented gains to the Warranty Labor Rate and Warranty Parts Mark-up. All that’s left is to sit back in your rocker and count your money….right? Not so fast; it is not one-n-done! The challenge now is that if you do nothing to impact your pricing, you will receive zero to minimal increase next submissions. You have an opportunity to capture a net profit lift perpetually…..year, after year, after year, and it’s a double dipper, you also capture a similar lift in your customer pay gross profit. Time to hunt for the “Bigfoot” in your ROs.KEEP MOMENTUM IN YOUR FAVORThere are several paths you can take from here; three of which stand-out from the others. The first is to take the profit gains and run – basically “go-it-alone” for the next round and hope that similar results will be gained again. The second is to continue on your current path putting out the daily fires and get a filing service at the last minute next year that basically takes your Repair Order data, applies some basic spreadsheet analytics and selects a range of ROs that generate an often sub-optimal increase in your warranty labor rate and parts mark-up reimbursements. The third option, and most lucrative, is to start chasing the ever-elusive “Bigfoot” ie The Perfect RO; working it into your regular routine and constantly optimizing your ROs in preparation for your next warranty reimbursement evaluation. On the surface, paths one and two appear to be the paths of least resistance and easiest options to deploy right now. Faced with all the daily pressures you have on the service lane, both of these choices enable the Fixed-Ops team to get “back to business as usual” and not implement any change as the next increase is not a priority anymore. As Fixed-Ops leaders seriously consider the self-submission methodology of going-it-alone, there are two options within this path. Accept the OEM’s 3-year Automatic cost of living increase but realize minimal gains. Or, manually attempt to find the best set of ROs that maximize your increase. You may deploy some spreadsheet magic to organize your ROs for self-analysis, however, finding the real “Bigfoot” may prove to be an easier quest.The second path of getting help for your next submission date is a viable one. However, if you have done nothing from now until then, your results will not be as stellar as the windfall received with the recent changes from California enacting AB-179. Without doing anything different in the year ahead, your next increase filing will land a little flat. Since Warranty Labor Rate and Parts Mark-up Increase reimbursements are based upon retail customer pay warranty-like repairs, doing nothing to move the needle here is not going to yield a significant incremental outcome next year.“BIGFOOT” & THE PURSUIT OF THE PERFECT REPAIR ORDERThis brings us to the third path; pursuit of The Perfect Repair Order. Start chasing the perfect RO now and you will be positioned well for next year’s increase filing. What is The Perfect RO? It is the ideal mix of Perfect Content and Perfect Price. This means that Service Advisors sell everything that is appropriate for the customer at the perfect price.21THE POWER OF PERFECT CONTENTIt is important to explore this newly introduced concept of Perfect Content in more depth; what is the perfect content on a RO? The answer is: “it depends”. It depends on what the customer in front of you plans to do with their vehicle. For example, two identical vehicles, with the same mileage and condition with two different owners may have completely different service requirements. The owner planning on keeping the car for several more years will require a different service plan than an owner trading the vehicle in within the next 30 days. The best way to determine a course of action for either of these customers is to ask about “their plans for the vehicle”. This is the magic question to scope out and tailor your service recommendations considering the customer’s goals. Once you have their goals identified, it is time to address the perfect RO content customized for the individual customer and their vehicle. There are four elements of Perfect Content:1. The work that the customer requests – this could be a symptom that they are experiencing requiring diagnosis of the problem to determine the course of repair, or they may have come into the dealership for required maintenance, to fix a known problem, or to have a recall work performed. Whatever the reason that brought the customer to the service lane, it should be captured on the repair order.2. Items identified during the “walk around” – integral to the write-up process, the walk around typically uncovers related services to keep the vehicle in optimal condition, such as tires, tire rotations, balancing and alignments, light bulbs, wipers, battery or fluid services.3. Items identified as due based on the vehicle history, time, and mileage – this includes OEM scheduled maintenance, dealer recommended enhanced maintenance, previously declined repair recommendations and recalls.4. Additional service requests identified in the shop and presented to the customer – resulting from the diagnosis of a customer concern, or the technician performing a multi-point inspection.Whether any of these identified services are accepted, or declined by the customer, it is crucial to have them all noted on the RO, creating the Perfect Content on the Perfect RO. Now that you have nailed down the Perfect Content, it is time to turn to charging the Perfect Price for the work you performed.ZEROING IN ON THE PERFECT PRICEBy definition, the Perfect Price is the price that is not so high that it impacts customer retention, nor so low that it leaves gross profit on the table. Finding that intersection point is not a simple proposition and must address numerous factors that determine each service’s Perfect Price. On average, Fixed-Ops leaders manage pricing for approximately 1,200 “jobs” across as many as 4 different customer segment types. While this is an extreme example, most dealerships are juggling about 4,800 price points within their service department. The type of work can be classified into 3 categories based on job complexity, skill and tools required and the competitive environment:• Lube Oil and Filter (LOF)• Maintenance• RepairAnd, the customer types are typically broken-down into the following categories:• A retail customer • A dealership employee• A fleet customer• An insurance company for extended warranty In search of the Perfect Price, the two main factors that must be addressed are the type of work being performed and the type of customer who is paying for the work. The amount charged to a fleet customer is different than that for a retail customer, or the dealership’s internal work rate. Pricing concessions, or reductions should be captured separately on the RO to differentiate the type of customer and attributable labor rates.While the LOF is the most common service performed on the vehicles, it is also the most 22CONCERNED WITH THE COST, COMPLIANCE AND SERVICING OF YOUR DEALERSHIPS’ INSURANCE?EPIC CAN HELP WITH YOUR BENEFIT AND BUSINESS INSURANCE NEEDS• CNCDA's only licensed broker for Health and Business insurance• The largest insurer of auto dealers in the state• The only broker with proprietary products specific to dealerships • 15TH largest brokerage firm in the nationWe know dealerships have specific needs and issues, we are here to help. Please contact us for a free evaluation of your insurance and HR/compliance packages.EPIC IS© EDGEWOOD PARTNERS INSURANCE CENTER | CA LICENSE 0B29370EPICBROKERS.COMAlison McCallum 949.417.9136alison.mccallum@epicbrokers.comEric Kitei 949.417.9145eric.kitei@epicbrokers.comAS THE CNCDA’S ONLY LICENSED BROKER FOR HEALTH AND BUSINESS INSURANCE AND THE LARGEST INSURER OF AUTO DEALERS IN CALIFORNIA, EPIC IS UNIQUELY POISED TO HELPcompetitive and available from a variety of providers. Therefore, it is usually the most price sensitive and positioned as a “loss-leader” to get customers into the service drive. Of importance, though the LOF is a relatively low skill level, low cost service to provide, it also drives the customer perception of your dealership’s overall pricing and critical to get pricing perfect. Turning to the Maintenance category, the required technician skill level increases and competition is still significant. It is important to cut through the confusion created by the competitors promoting similar services, even though they are not “apples to apples” comparable to the dealership offerings. Make sure to understand the nuances of OEM parts versus aftermarket, quality of parts and repair and warranties as you position your pricing for these services.The dealership’s and OEM’s greatest competitive edge is showcased in the Repair category. This is the highest skill work and often requires specialized tools and training that the competitors cannot match. Consequently, pricing for these jobs offer dealers the greatest flexibility and revenue opportunity. SETTING UP FOR THE NEXT WIN!Capitalizing on your current success, implementing a pricing strategy that drives The Perfect RO with the Perfect Content at the Perfect Price, and ensuring compliance to these requirements will help you optimize your dealership’s bottom line when filing the next warranty reimbursement submissions. The Perfect RO requires your constant focus on price and content. Stay true to this quest, track the ever-elusive Perfect RO and you may find “Bigfoot” hiding in the details while maintaining a Fixed Absorption over 100%.For more information and assistance in tracking Bigfoot within your Fixed-Ops hidden opportunities, please contact Darcy Silver, Executive Market President, Dynatron Software. DSilver@DynatronSoftware.com | 718.309.6133. Visit us at: THEPERFECTRO.com.GET TO KNOW LAURIE DAVIESCandidate for Assembly District 73Assembly District 73 includes Aliso Viejo, Coto de Caza, Dana Point, Ladera Ranch, Laguna Hills, Laguna Niguel, Las Flores, Mission Viejo, Rancho Santa Margarita, San Clemente, and San Juan CapistranoFavorite Bible Verse: I Can Do All Things Through Christ Who Strengthens Me (Philippians 4:13)Biography: Laurie Davies was elected to the Laguna Niguel City Council in November of 2012 and appointed Mayor in 2015. She was re-elected in 2016 and is currently the Mayor. Davies is a dedicated public servant with a proven track record of regional accomplishments addressing key public safety, transportation, housing, water, and economic development issues in Orange County. She has served as a Board of Director for the Transportation Corridor Agency as well as on the Southern California Association of Governments. In 2016, Mayor Davies served as the League of Cities Chair on the Transportation, Public Works and Communication Committee. She was also elected as President of the Orange County Division of the League of California Cities, as well as the Board of Directors for the League. Laurie was elected to Orange County Transportation Authority and serves on the Transit Committee, in addition to chairing the Legislation Committee. She served as a past President of the Board of the Association of California Cities Orange County and has been instrumental in placing Resident Recovery Reform (Sober Living).Laurie Davies firmly believes public safety is the most fundamental responsibility of government. Ensuring Orange County families and communities are safe has been her main priority while serving on the City Council. Appointed to the Orange County Fire Authority Board in 2017, she partnered with police services to put on programs including Girls Empowerment, Anti-Bully Prevention, Teen Drivers Safety and Neighborhood Watch. She has also worked closely with parents that have lost their children due to prescription drugs -- because education is everything when it comes to protecting our children and teens.Laurie’s primary areas of interest include transportation, public safety, and economic development. Laurie is a strong proponent of local self-governance and is committed to protecting and restoring local control.Laurie is a long-standing Chamber member and a 20-year owner of a small event business, she understands the importance of promoting the business community. Personal: Laurie has been an OC resident since 1989 and lives in Laguna Niguel with her husband Neil. She loves watching football especially the Packers and spending time with her husband and dog.Contact Information:(949) 370-5255www.DaviesForCA.com23High Experience Modifier? Take the Right Actions Now to Reduce Your Insurance PremiumsA company’s Experience Modifier (Ex-Mod) has a significant impact on their Workers’ Compensation (WC) policy rates. Therefore, it’s worth the time to understand Ex-Mods in order to move the needle and reduce insurance premiums. Some employers are aware of general strategies to improve their Ex-Mod (e.g., strong safety program, loss control, etc.), but many are not aware of tactical actions that can drop their Ex-Mod fast. Ex-Mods are one of the most significant factors influencing the cost of Workers Compensation insurance in California. Ex-Mods can drive up premiums, or reduce premiums based on the final calculation. Once an Ex-Mod hits 1.25 or higher you are considered to be a “High Hazard Employer” with an increased chance of an OSHA audit. An employer can’t change the Ex-Mod number that is developed by the WCIRB, nor can they change policies and calculations. However, there are steps employers can take to offset cost impacts. How Can I Reduce My Ex-Mod? 1. Start by Knowing what You Can and Can’t Control 2. Understand your Rating Period 3. Look at the Variable Split Point Formula and Understand the Impact 4. Determine Frequency of Claims versus Severity - It makes a big difference 5. Understand which Reserve Amounts significantly affect your Ex-Mod – 3 types 6. First Aid Option is No longer an Option 7. Determine if the Data used in the Calculation is Correct - Errors happen 8. Fix Ex-Mod Errors and get an Immediate Reduction in Insurance PremiumsPartnering with the right team (i.e., Broker, Defense Attorney, and Carrier/Adjuster) can make a big difference. Leverage the right expertise to ensure that the right actions are taken on a consistent basis to reduce your Ex-mod and keep it low. Then, your Ex-Mod will reward your company instead of penalizing it. If interested in a step-by-step guide that explains how Ex-Mod’s are calculated and how to reduce your Ex-Mod fast, please contact Dan Guth (VP, Alliant Insurance Services) at 714-402-4314 or via email at Daniel.Guth@Alliant.com to receive a complimentary eBook titled “High Ex-Mod? Take A New Road.2425For over 40 years, BBVA Compass has provided auto dealers with the exible and aordable commercial nancial solutions they need to operate asuccessful dealership: For your dealership Floorplan & real estate nancingEquipment financing & leasing optionsInventory & parts receivablesmanagement solutionsFor your customers Competitive retail nancing optionsQuick credit decisions & reliable fundingTerrance DempseyEugene Gonzalez Relationship Manager, Orange County Market 949-214-0017 Our experienced professionals are committed to helping you make your business more ecient and more protable — all with the added support of top-level customer service. 1-800-COMPASS • bbvacompass.comAll credit and accounts are subject to approval, including credit approval. BBVA Compass is a trade name of Compass Bank, a member of the BBVA Group. Compass Bank, Member FDIC. Give us a call today. Your business is built on service. So is ours. Follow us on:Dealer Relationship Manager949-212-040526ASKALISONQ: How does my Dealership have a successful Open Enrollment for our employees during COVID?A: The key to a successful enrollment is effective employee communication. It is vital that employees have the resources to learn about the value of their benefits and options, any potential plan changes or plan additions and coverage details. Many dealerships begin communicating with employees well in advance of Open Enrollment to allow employees ample time to learn about benefit offerings, ask questions and consult with their families so they are prepared to make the best benefit decisions possible.Q: How do I ensure my Dealership’s employees appreciate and understand our benefits if Open Enrollment looks different this year?A: A recent study shows that up to half of employees do not understand their benefits or perceive value in them, despite the major investment dealerships make in employee benefits. Frequently sending small amounts of benefits information using new technology (such as videos and mobile apps) will lead to a greater understanding of the value of the benefits you offer. In addition to technology – one on one enrollment (either in person with new protocols or virtual) payroll stuffers, breakroom posters and other traditional types of communication can help.Q: My Dealership may want to introduce additional, lower cost plan options this year. How do we drive enrollment to these plans and ensure employees understand the benefits?A: Individuals can take full advantage of benefits only if they understand what options are available and how they work. Health Savings Accounts (HSA’s) and Health Reimbursement Arrangements (HRA’s) require additional targeted communication to avoid confusion and encourage participation in these plans. Employees who understand their coverage options and feel empowered to make better informed, cost-effective health care decisions.Q: How does our Dealership make the Open Enrollment process successful during this time?A: The easier the enrollment process is for employees, the more successful your Open Enrollment will be. If possible, work with your insurance consultant and/or enrollment platform.• If still using paper, consider implementing a benefit administration system. If you use paper this year, make paper forms as easy as possible to understand and reduce the amount of required information.• Ensure the enrollment website is easy to navigate and includes links to more detail if needed, such as on eligibility and HDHP, HSA and FSA rules.• Ensure all up to date compliance documents are posted.Carefully thought out and prepared benefit communications can help engage employees, steer enrollment, increase perceived value and lead to a successful enrollment season.EPIC can help your dealership navigate the new challenges facing you and your HR team due to COVID-19.EPIC ranks among the top 15 retail insurance brokers in the United States and is the largest insurer of auto dealers in the state. Alison McCallum has been in the employee benefits industry for over 20 years. She is a Principal with EPIC insurance Brokers and Consultants, the only CNCDA licensed broker. With this partnership EPIC offers unique services available to OCADA dealer members at no cost. If you have questions or would like further information please feel free to contact her at (949) 417-9136 or alison.mccallum@epicbrokers.com.Effectively Managing a Well Communicated & Compliant Open Enrollment During COVID-19Tekion provides the world’s best business applications on the cloud and is currently focused on transforming the automotive industry. Its cloud-native platform brings the entire consumer, and OEM-Dealer ecosystem together by seamlessly connecting every part of the automotive retail journey through its comprehensive DMS, Automotive Retail Cloud. Tekion inherently uses cutting-edge technologies to bring modern consumer experiences to life including IoT and ML/AI. Born in California’s Silicon Valley, Tekion employs over 400 innovators globally. 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In Florida, the issuing provider and administrator is Vehicle Dealer Solutions (FL License #60132). Insurance coverages underwritten by individual member companies of Zurich in North America, including Zurich American Insurance Company. © 2018 Universal Underwriters Service Corporation. All Rights Reserved.Zurich is more focused than ever on helping our customers succeed. Zurich’s exclusive profit generation programs can help dealerships achieve an additional month of F&I revenue without selling one more car or increasing PVR by a single dollar.GIVE US 30 MINUTES TO SHOW YOU HOW.CALL COREY CORBIN AT 603-892-0971 OR VISIT WWW.ZURICHNA.COM/13THMONTHACHIEVE A 13TH MONTH OFF&I PROFIT IN 12 MONTHS. MYRA MIELLJASON ABBOTT 206-396-1323MYRA.MIELL@ZURICHNA.COM3737 Birch St., Suite 220 Newport Beach, CA 92660VITU INTERSTATEIS BUILT INTODMVDESK!If you use DMVdesk, try out Vitu Interstate today. 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