Fixed Ops 5: Episode 7 with Corey M. Smith and COO of Konect.ai Jarrod Kilway.
Welcome readers, in this post, you’ll get an in-depth look at one of our podcast's appearances on the episode titled "Sales to Service Handoff." The episode features host Corey Smith, National Fixed Operations Training Manager for National Auto Care, and industry expert Jarrod Kilway, discussing the challenges and opportunities of sales-to-service handoff in the auto industry. As an experienced service operations advocate, Kilway shares valuable insights into how businesses can optimize this process to enhance customer satisfaction and streamline operations. Whether you're an industry professional, or just starting in the world of fixed operations, this episode is sure to offer valuable takeaways.
Before we really get into this episode, tell us what company you work for and what your work title is.
Absolutely. I work with a company called Konect.ai. I'm the COO over there, and our main goal is to increase dealer communication to guests, whether it's from your sales or service side. And that's what we're going to talk about today, a little bit of a mix of both.
Can you dive into what the company does as a whole? Is it an online platform? Is it an app?
Konect.ai, we're an AI-based SMS communication platform, so we have integrations into dealers' CRM. A part of our big NADA release was the service enhancement operations as well as the service-to-sales component, which we're going to talk about. So, our goals are to connect guests to the dealer at the right time, in the right place, but also to be able to support them with AI to help answer some of the frequently asked questions guests may have, to help guide their journey path whether they're purchasing a vehicle or selling their vehicle or asking questions about a service. And being that knowledge guidance for the dealership. A lot of people right now are talking about ChatGPT and all these cool things you can do with it, and that's why I'm here today with Konect.ai. I see the integration opportunity within automotive dealerships and AI being the fastest growing segment here in the next 18 to 24 months for dealerships worldwide.
Can you tell us more about you, what got you into automotive, and how you got to this point in your career?
Sure. In terms of automotive, I always was that kid growing up who knew what car drove by and what kind of motor was in it. So, I’ve been absolutely a car nut for as long as I can remember. I got into this in college. I was the kid in high school with a loud stereo and the fast cars that always excited me. So, I had worked my way into that, and in college, I took some classes about ASE certifications and learned quite a bit more about that side of the automotive industry and dealerships and service.
I always had a background in technology and new upcoming things and integrations. I was just absolutely blown away about how the automotive industry here was booming.
From there, I worked with different dealers for multiple roles, from internet sales to BDC director to secondary finance director, and learned a lot in that time frame, really anything and everything in between. I used to work on VinSolutions on their CRM training side, so I’m familiar with the training side in the automotive industry.
I’ve worked for Lexus National Accounts as a consultant for them. I’ve worked for Lexus dealers on digital processes, digital strategy, best practices, and how they can really grow into the digital age from 2011 to 2013. Then in 2016, I came back to retail as the director of digital operations from 2016 to just this past year. That was when I decided "I need to do something else, AI is the new growing piece. There's an opportunity." That's when I met the team of Konect.ai, and here I am a year later.
I really want to delve into why the sales-to-service handoff is so important.
It’s mutual. Sales to service is equally important as service to sales. If we know a vehicle is broken, we need to get it fixed and make that connection. However, it's the loyalty element that we build through our sales department by introducing customers to our service department that's crucial. Every General Manager, Sales Manager, and Fix Ops Manager in the automotive industry knows how important this is, but we don’t always hold people accountable for it. So, one thing that I worked on with Brian Kramer at the store was finding other ways to acquire inventory because they were no longer buying vehicles from the auction due to the crazy pricing or the damages that were hiding. We tried different solutions but they weren't efficient enough to manage the vehicle demand in our used car department. So, we had to do things differently. We looked at it as our biggest opportunity for inventory vehicles that we needed to turn over in a fast cycle period, grow profits, and build loyalty. We developed a very simple, easy-to-execute concept, and that's what I want to walk you through.
So, the process looks like this: you have the data better than anyone else, so you don’t need to pay anybody else for it. It comes down to communication with you rguest who’s already coming in. Your guest is coming in for service tomorrow. We should be reaching out to them today. And it’s not the worst track in terms of outreach to be like, “hey, if I can get you into a new car with lower payments, just a couple of hours here and there, would you be interested?” Everybody has been doing that for years, but it must be directed to the point: “Hey, do you still have your make and model vehicle?” We already know the answer because they’re coming in for service, but they don’t know that. They’re going to say "yes." ’‘Hey, great news, we’re looking for vehicles like yours, and we would love the opportunity to purchase it from you in well above-market conditions. Would you be interested in selling it to us?" And then you’re filtering down the people like, "yeah, I’m open to it’ over the people that are like, "no, I love my car, I’m good, I don’t need to worry about it."
So, when you look at it from service in an average store, customers are coming in tomorrow for service. If you reach out to those 100 customers, you’re going to get about 40 responses of people saying "yes, I’m interested." Now it comes down to what happens when you get them into the store. This is really the key piece, communication is one piece and the second piece is when they come in. A lot of people would go right to just say, "Hey, would you be interested in upgrading?" No, you must pause and hit the time out and continue with the funnel path that you were on when you had them on the phone, which is, "hey, let's look at your car. We’re going to walk around it together while you do your MPI (Magnetic Particle Inspection)." At the same time, you work with the advisor, dedicated salesperson, and the customer. You walk around together and talk about it: "There’s a little scratch here, down here. Do you want us to get the bodywork done while you’re here too?" "No, I’m thinking about selling it to you guys, let’s not worry about that, let’s just do the service offer.’
And from there, we bring the guest in and evaluate their vehicle while the serviced department takes it to the shop. We then go through the trade process, taking pictures of the MPI to determine its value. We have knowledge of the car's details, as the guest has had service with us before and we know what has been declining. We use this information to set up a value for the car. Then, we go back to the guest and say, "Here are the values. If we come to terms, can we buy it from you today?" Knowing that there are two or three other people interested in vehicles like theirs, we ask if they can sell it to us today if we reach a number. They say, "yeah, okay, absolutely." Here is the big question that I use for companies that are implementing this plan - it may sound a little cheesy, but it works out every time: "Since we're going to buy your car today, do you want us to arrange a shuttle driver to take you home, or would you like me to call you an Uber?"
Just go for that right there, and they are going to stare at you and look at you in the face like, ‘What are you talking about? I need another car.’ Perfect, let that be the change point, that is the premade switch position right there. I would go like, “Great, I understand what car you would like. What’s the best option for your trade?” and set just the traditional sequences process. It makes sense-their car is in service, what else are they going to do? Sit and watch Netflix at your service department? So, that is the rundown sequence of how everything works and now the very exciting thing is that initial step of outreach, that we’re automating that within Konect.ai.
We’re utilizing AI to reach out to all your virtual service appointments for the next day automatically, via SMS, asking the questions to see if they own it and if they would be interested in selling it because we need it, and presetting appointments for those applicable out of your service department the next day. So, you, Mr. Dealer, are walking into the store potentially with, based on how many there are, ten to forty or even more people coming in that are interested in getting their trade value while they’re going to be in for service.
Can this work in RV and power stores too? What do you think?
I think this works everywhere, from RV power stores to heavy equipment, because the same issue with the service process is the same issue everywhere: time spent, appointments, wait times, etc. Also, the education, now the guests are educated, knowing that ‘Hey, if you won't give me a number for my car, I can go to three online places that will’. So, you have to be more transparent and treat them as loyal guests because they're in for service. You have to provide. So, we look at success and measure the percentage. So, we would look at out of a hundred ROs from yesterday; let's say that those were customer pays. Our goal should be to sell two cars of that or a 4-5% close rate of customer purchases. That should be your target every month from CPRO account to that 4 and a half to 5% close rate on those. That is your production from a sales element of the process, but you should also be able to acquire an additional 4 or 5% of vehicles through that process as well.
So, should the dealership, whether it's RV or powersports, have a rhythm process of how it will work or map it out?
A hundred percent, that's the only way a process works. The only way to learn how to take the tires off a car is to learn through experience and by having a rhythm diagram of the process. So, it's like a map. If anyone is listening, you can send me a message on LinkedIn or Facebook and reach out to me. I have the process built out from mapping and can help your team strategize this plan and make it.
What's the percentage of customers calling you back and saying, ‘Hey, I was in. This is the appraisal that I got that day. Is that appraisal the same? And I really want to get the newer model.’ How does that work?
Yeah, that 4 to 5 %, when you start seeing it all day every day, is because the guests who came in for service 60 days ago may have a situation occur that requires them to get a new vehicle. They come back and reach out. So that reach-out point for those guests who had been in but didn’t buy or sell continues to drive that momentum from 4 or 5% to closer to 8 to 10% as well, so there’s quite a bit of opportunity.
So, we can't be closed-loop minded in that conversation of where the guest is. All we can do is reach out, communicate, provide options and data, and let them know there are options. From there, it's up to them to make the decision of what path they want to take. We can only be the guide. We can't be the one pulling them down the path. We have to make it their idea.
So, while you were doing this process, did you reach the goal you were looking to get where you didn't want to go to buy these wholesale vehicles someplace else and get all the damage?
That store didn't purchase an ad option since 2018. Even through the inventory crisis, we were not buying from auction. Not saying you may not supplement still a bit, but with a defined and detailed process like this, this can help reduce the need to go purchase 50-60 percent of your inventory from an auction.
I love it. So, we're right up against the time, Jarrod. Before we end the show, I want to get your perspective on the three takeaways from this episode in your mind that whether it's a service manager, a GM, an owner, whether it's RV, power sports, or whatever, can take away from this episode.
Number one: Be open to change. Change, I know, is scary at times, but change with a drawn-out map process can be very successful and rewarding. So, embrace the change and embrace the openness and willingness to change. The second thing is to do something to solve a need you have, whether it be inventory, parts, or something else. Find a strategy, build a strategy together to fix your needs, and then see how that fixes and changes, then apply it to your entire business structure. And then number three is human capital and AI. We know human resources, people, they're going to continue to be hard to find here in the next 18 to 24 months. Look at how much could be done through the automation of a company like mine. I'll throw a shameless plug for Konect.ai. Look at the utilization of that and as, not a takeover, but as a back staff to support your current staff and not overwork them, and take some of the redundancy off their plate so their quality of life and work-life balance can improve, and overall, provide your guests better experiences while they're at the store.
Do you want to provide more than that, deliver a higher level of customer service, and generate more revenue for your dealership? We provide the tools, knowledge, and training needed to unlock the potential of your dealership.
Listen to the full podcast episode here.