Customer Excellence Through Operational Excellence

Customer Excellence Through Operational Excellence

Guest writer Troy Ottmer walks us through the holy grail of customer loyalty: “Customer Excellence Through Operational Excellence.”

Achieving Customer Excellence is the holy grail for businesses. While everyone strives for it, the path to achieving it remains elusive for many. Why? Because they often misinterpret its meaning.

Customer excellence isn’t just about superior customer service. It’s about exceeding expectations in every interaction, creating truly unforgettable experiences that foster deep loyalty. To achieve this, you need to understand what “excellence” means to your customers. What are their unique needs and expectations? How do they define value?

This is where operational excellence comes in. Operational excellence is the engine that drives customer excellence. It’s about streamlining processes, optimizing resources, and continuously improving how your business operates.

In addition to prioritizing your employees, prioritizing your customer needs along with aligning your business processes is critically important. This means understanding their needs, preferences, and pain points, and then designing your operations to address them effectively.

Simplicity is key. When your internal processes are easy for employees to understand and execute, they can focus on delivering a positive customer experience.

Keep it simple: You don’t need complex systems or massive overhauls to achieve operational excellence. Start with small, incremental improvements that focus on efficiency and effectiveness.

Prioritize your employees: Adopt an employee-first mentality. Engaged employees are your greatest asset. They are the face of your company and the key to delivering exceptional customer experiences. When your team feels valued and empowered, they are more likely to go above and beyond for your customers.

By focusing on operational excellence, you can:

  • Deliver products and services faster: Reduce wait times and improve turnaround times, exceeding customer expectations for speed and responsiveness.
  • Enhance quality: Minimize errors, improve consistency, and ensure your offerings always meet the highest standards.
  • Personalize the experience: Operational excellence allows you to gather and leverage customer data to tailor interactions and offerings to individual needs.
  • Empower your employees: Efficient operations free up your team to focus on building relationships and providing exceptional service.

Remember: The customer is always right, even when they’re not. It’s about understanding their perspective, empathizing with their concerns, and finding solutions that leave them feeling valued and satisfied. It’s all about having engaged employees who believe in your company and can authentically sell your brand and its values to the customer.

I would note that the phrase “The customer is always right” is a common business adage, but it’s important to understand its nuances and limitations. While it emphasizes the importance of customer satisfaction and providing excellent service, it doesn’t mean that customers are always correct in their requests or expectations. Instead, the phrase should be interpreted as a guideline to prioritize understanding the customer’s perspective, empathizing with their concerns, and finding solutions that leave them feeling valued and satisfied. This approach involves active listening, clear communication, and a willingness to find common ground, even when there are disagreements.

In essence, operational excellence provides the foundation upon which true customer excellence can be built.

Here’s a simplified approach to get started:

  • Listen to your customers: Conduct surveys, gather feedback, and analyze customer data to understand their definition of excellence.
  • Map your customer journey: Identify key touchpoints and opportunities to exceed expectations.
  • Optimize your processes: Streamline workflows, eliminate bottlenecks, and leverage technology to improve efficiency.
  • Empower your team: Provide the training, tools, and autonomy necessary to deliver exceptional service.
  • Measure and improve: Track key metrics, analyze performance, and continuously seek ways to enhance your operations and customer experience.

By focusing on operational excellence and prioritizing your employees, you can create a customer-centric culture that consistently delivers exceptional experiences and builds lasting loyalty.

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Who Plays the Most Crucial Role on Your Team?

Who Plays the Most Crucial Role on Your Team?

This week, guest writer Troy Ottmer shares the elements and roles in team culture that will make or break your team in “Who Plays the Most Crucial Role on Your Team?”

Another way to ask this would be “Who is the Most Important Person on your Team”?

Ask any group these questions, and you’ll likely get a variety of answers. Some may point to the team leader, others to the star performer, and a few might even say the client or customer. However, the truth is more nuanced: there is no single most important person on a team. Every member, regardless of their rank, role, or skill set, plays an integral part. The ultimate success or failure of the team hinges on each individual understanding and embracing their equal importance in achieving the collective mission.

Building a Unified Team: The Challenge and the Goal

Creating a high-performing team is not just about assembling talented individuals; it’s about building a cohesive unit with shared goals and trust. For example, consider the challenge of consolidating multiple business units into a single, unified operation. The objective in such a case might be to leverage synergies across similar market segments and drive market expansion.

Yet, achieving this kind of integration is far from straightforward. It requires overcoming significant hurdles, such as:

  • Combining Cultures: Teams often come from different cultural backgrounds, with distinct ways of working and communicating. Bridging these differences is critical to alignment.
  • Aligning Business Models: Merging operational processes and strategies involves harmonizing divergent structures into a cohesive whole.
  • Developing a Singular Focus: Establishing a unified market approach that maximizes potential and minimizes friction.
  • Creating Trust: This is perhaps the most crucial factor in any project. Trust fosters collaboration and ensures the team moves forward as one.

Keys to Success

In my experience, three critical pillars support the successful integration of teams and operations:

  1. Customer Satisfaction
    Consolidation can create opportunities to offer a wider range of products and services, ultimately enhancing customer loyalty and satisfaction. When customers see the value of an integrated operation, it builds trust not only in the company but also in the team that delivers the results.
  2. Employee Morale
    Employees are the heart of any organization, and their engagement is crucial during periods of change. Creating a sense of belonging, listening to their concerns, and offering opportunities for growth contribute significantly to morale. Happy, motivated employees are far more likely to perform at their best and support organizational goals.
  3. Leadership Development
    Change requires strong leaders who can guide the team toward unified objectives. Leadership development programs empower individuals to navigate challenges, inspire confidence, and drive long-term success.

Steps to Building Trust as a Leader

Leadership is the foundation of any successful team, and trust is the cornerstone of leadership. Building trust requires deliberate effort and consistency. Here are the key steps to fostering trust as a leader:

  • Listen and Empathize: Active listening helps leaders understand the concerns and feelings of their team members. Empathy demonstrates care and builds rapport.
  • Support and Guide: Leaders must help their teams’ overcome challenges while remaining mindful of team dynamics and their own behavior.
  • Influence with Respect: Leadership isn’t about authority—it’s about persuasion and inspiration. Influence should be wielded with respect, supported by strategic foresight and planning.
  • Steward Resources Wisely: Efficiently managing resources shows a commitment to the team’s well-being and success. This includes investing in personal and professional development for team members.
  • Foster Belonging: Building a sense of community within the team encourages collaboration, loyalty, and resilience.

By embodying these principles, leaders can cultivate an environment where trust thrives, and teams excel.

Empowering Employees and Driving Sustainable Growth

Empowered employees are the cornerstone of any high-performing team. When individuals are given the autonomy to innovate, the resources to grow, and the recognition they deserve, they are far more likely to contribute effectively. Fostering empowerment requires focusing on several key areas:

  1. Autonomy: Allowing team members to take ownership of their work increases their engagement and investment in outcomes.
  2. Innovation: Encouraging creative problem-solving helps the team adapt to challenges and seize new opportunities.
  3. Development: Providing training and career development programs demonstrates a commitment to the personal growth of employees.
  4. Recognition: Celebrating achievements, big and small, fosters a sense of accomplishment and motivates continued effort.
  5. Well-being: Prioritizing mental and physical health ensures employees can bring their best selves to work.

In tandem, these efforts lead to a workforce that is inclusive, motivated, and ready to deliver exceptional results.

To drive sustainable growth, consider these practical strategies:

  • Data-Driven Decision Making: Metrics provide transparency and ensure decisions are grounded in reality.
  • Creative Staffing Solutions: Cross-training and workload optimization enhance efficiency and adaptability.
  • Effective Communication: Regular updates and open dialogue build trust and clarity.
  • Strategic Planning: A clear roadmap with contingency plans ensures the team remains focused on long-term objectives.

This holistic approach ensures that teams are supported and equipped to meet both immediate and future challenges.

A Fundamental Shift in Strategy

Adopting a new “Go-to-Market” strategy is a prime example of how a team’s collective effort drives success. While implementing such a shift is never easy, the results often justify the challenges. It requires persistence, trust in the process, and a willingness to adapt.

The rewards of this effort include:

  • A unified team that collaborates seamlessly across functions.
  • Improved morale, as employees see the results of their collective effort.
  • A focused, strategic approach to market opportunities, maximizing growth potential.

In essence, the negatives associated with change are outweighed by the positives, provided the team works together with a shared vision and purpose.

Conclusion

So, who is the most crucial or important person on a team? The answer is simple: everyone. A team’s success doesn’t hinge on the contributions of a single individual; it’s the collective effort that drives results. Whether it’s the leader setting the vision, the star performer delivering results, or the quiet contributor ensuring operational continuity, each person plays a vital role.

By fostering trust, empowering employees, and aligning efforts toward common goals, teams can achieve remarkable success. The key is recognizing the equal importance of every individual and leveraging their unique strengths for the benefit of the whole. With this mindset, any team can overcome challenges, embrace change, and thrive in the face of adversity.

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Absorption in 2024 and Beyond: The Lifeblood of Dealership Profitability

Absorption in 2024 and Beyond: The Lifeblood of Dealership Profitability

Guest writer Troy Ottmer returns this week with a timely blog post for our industry: Absorption in 2024 and Beyond: The Lifeblood of Dealership Profitability.

What is Absorption?

In the modern dealership landscape, absorption remains a critical measure of success. Defined as the percentage of a dealership’s total operating expenses covered by the gross profits from parts and service, it underscores the importance of back-end operations. Whether managing an automotive, truck, agricultural, or construction equipment dealership, a strong absorption rate is essential for weathering economic fluctuations.

This metric reflects the back-end’s ability to sustain the dealership’s overall financial health, independent of variable income from new or used vehicle sales. High absorption rates ensure stability and profitability, especially during periods of economic uncertainty or reduced sales activity.

Why Absorption Still Matters

The economic and technological changes of the past decade have only amplified the importance of absorption. Challenges such as supply chain disruptions, inflationary pressures, and shifting consumer behaviors demand that dealerships maximize profitability from service and parts operations.

The rise of electric vehicles (EVs) or Alternative Fuel Vehicles, Connected Technologies, and 

AI-driven Diagnostics has reshaped the service landscape. While EVs require less frequent servicing than internal combustion engine (ICE) vehicles, the complexity of repairs and the specialized tooling required have made dealership service departments indispensable. These industry changes underscore the need for a sharper focus on absorption.

A Historical Perspective

Historically, dealerships relied on gross profits from new vehicle sales as their primary revenue source. Higher margins and steady demand allowed parts and service operations to function to some degree as secondary gross profit generating departments.

By the 2000s, however, the industry began shifting:

  • Intense competition and slimmer new vehicle margins reduced gross profit opportunities.
  • Rising operating costs increased the need for more efficient business models.
  • Evolving vehicle technology demanded significant investment in technician training and specialized equipment.
  • An increase in technician wages to hire the best and most technically qualified.

By the early 2020s, parts and service departments had become critical profit centers. Absorption transformed from a success metric to a survival strategy, helping dealerships navigate challenges like economic downturns, supply chain issues, and changing consumer preferences.

Today, absorption remains a cornerstone for dealerships, enabling them to adapt to an evolving landscape marked by electrification, connected technologies, and changing ownership models.

Adapting Absorption Strategies for the Modern Dealership

Modern dealership challenges demand innovative strategies to maximize absorption. Below are the key trends reshaping the industry:

 

  1. Electrification, Alternative Fuels, and other Advanced Technologies

EVs, Alternative Fuels and other Advanced Technologies have shifted service demands. Although EVs require less frequent maintenance, their repairs involve complex software updates and high-voltage systems. Similarly, Alternative Fuel vehicles add another level of complexity, as does the extensive list of other Advanced Technologies. 

AI-driven diagnostic tools and over-the-air updates also transform service models. Investments in these technologies improve efficiency, reduce costs, and enhance customer satisfaction.

 

  1. Supply Chain Resilience

As with the Covid-19 inspired supply chain disruption during calendar years 2020 to 2023, dealerships continue to face continued supply chain disruptions and along with other inflation related side effects. Dealerships must adopt data-driven inventory management, leveraging AI and predictive analytics to optimize stock levels, reduce carrying costs, and maintain parts availability.

 

  1. Subscription Services and Value-Added Offerings

Subscription-based services, such as extended warranties, telematics monitoring, and software upgrades, are growing. These services boost gross profits and strengthen customer retention, creating a virtuous cycle for parts and service departments.

 

  1. Workforce Development and Retention

The evolution from “mechanics” to “technicians” highlights the growing need for IT expertise. Today’s technicians must navigate complex software and advanced systems. To thrive, dealerships must:

  • Offer competitive pay.
  • Invest in ongoing education and advanced training.
  • Create clear career development paths to attract and retain skilled workers.

Calculating and Leveraging Absorption

The formula for absorption remains simple:

Parts & Service Gross Profit ÷ Total Dealership Expense* = Absorption Percentage

*Note: there are various methods/philosophies as to what all goes into the “total dealership expense” calculation. Consult with your controller or CFO for your specific calculation. 

Example Scenarios:

  • Scenario 1: Gross Profit = $1,200,000; Total Expenses = $1,000,000
    Absorption = 120% → The dealership generates an additional $200,000 in gross profit, boosting profitability.
  • Scenario 2: Gross Profit = $800,000; Total Expenses = $1,000,000
    Absorption = 80% → A $200,000 shortfall puts pressure on sales to close the gap.

High absorption rates protect dealerships from reliance on volatile vehicle sales, creating a financial safety net during economic downturns.

The Symbiotic Relationship Between Sales, Parts, and Service

The ongoing synergy between sales, parts, and service drives dealership success. New vehicle sales bring in future service opportunities, while exceptional service experiences build customer loyalty, ensuring repeat sales.

By fostering collaboration between these departments, dealerships can create a sustainable profit model that thrives even in challenging times.

The Bottom Line: Absorption is the Sum of a Unified Focus on Maintaining Profitability

In 2024, absorption is no longer just a measure of back-end performance. It represents a holistic strategy for managing dealership profitability across all departments.

To succeed, dealerships must:

  • Embrace emerging technologies to enhance efficiency.
  • Invest in workforce development to manage evolving repair complexities.
  • Maintain competitive wages for technicians and critical dealer staff.
  • Foster customer-centric strategies that align sales, service, and parts operations.

By focusing on absorption, dealerships can not only survive but thrive in today’s competitive environment, ensuring long-term profitability and resilience.

In conclusion, absorption is more than a financial metric—it is the heartbeat of a dealership’s sustainability. By adapting to industry shifts and investing in technology, workforce development, and customer-centric strategies, dealerships can ensure steady profitability amidst change. A unified focus across departments empowers dealerships to weather economic fluctuations and emerge stronger in an evolving marketplace.

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Re-Inventing Customer Service: Improving the Employee Experience in the Modern Era

This week we introduce our new guest writer, Troy Ottmer. He joins us with his blog post “Re-Inventing Customer Service: Improving the Employee Experience in the Modern Era.” Troy Ottmer began his career in 1987 as an automotive technician, with a specialization in electronics, including drivability diagnostics, anti-lock brakes and other new emerging technologies for that era. Over the years, he expanded his technical expertise across automotive, light-duty, medium-duty, and heavy-duty trucks, eventually venturing into off-road construction equipment. His early career included roles in shop and mobile technical repairs, as well as fleet management, culminating in his entry into the John Deere dealer network in 1998. 

From 1998 to 2017, Troy built a reputation as a leader in dealer operations, excelling in areas such as New & Used Sales, Rental & Lease, Parts, Service, and General Operations. His tenure in the John Deere dealer world provided him with a solid foundation in customer-centric leadership and operational excellence. 

Troy’s leadership journey continued with prominent executive roles, including Vice President of Fixed Operations at Doggett Equipment Services (2010–2017) and Vice President of Operations at Koppers (2017–2020). At Koppers, he managed operational efficiency and spearheaded strategic growth in specialized industries, including material recovery services for biomass materials. From 2020 to 2024, he served as General Manager at Rush Truck and Bus Centers, where he successfully oversaw operations and drove business growth. 

In addition, Troy held the position of Director of Parts, Service, and General Operations at Rush Enterprises John Deere Construction from 1998 to 2010, until the franchise transitioned to Doggett. 

With a robust technical foundation in both on-road and off-road equipment, Troy combines strategic acumen with hands-on expertise. His extensive executive experience spans over a decade, marked by a proven ability to enhance operational efficiency and implement innovative solutions in the transportation, industrial, and equipment services sectors. 

In today’s highly connected world, customer service is more critical than ever. Yet, to deliver exceptional customer service, businesses must start by focusing on their employees. Happy, empowered, and well-supported employees are the foundation of a superior customer experience. Metrics like the Customer Satisfaction Index (CSI) and Employee Satisfaction Index (ESI) serve as vital tools to measure and improve both experiences, but the core truth is simple: a happy, productive employee will almost always translate to a happy and very satisfied customer. 

 

Customer Expectations in the Digital Age 

 

Customers today are more informed and connected than ever before. With social media and search engines, word-of-mouth travels at lightning speed. A single negative experience can reach thousands of people instantly, while a positive interaction has the power to build lasting loyalty. 

Beyond satisfaction, customers increasingly value authenticity, transparency, and ethical practices. They care not only about how businesses treat them but also about how companies treat their employees. A company’s employee satisfaction often influences customer perceptions, making the Employee Satisfaction Index (ESI) a critical factor in boosting the Customer Satisfaction Index (CSI). 

 

The Employee-Customer Connection 

 

The connection between employee happiness and customer satisfaction cannot be overstated. Employees who are engaged, motivated, and empowered are more likely to: 

 

  • Provide proactive and personalized customer service. 
  • Go above and beyond to resolve issues. 
  • Build genuine, positive relationships with customers. 

 

This is because an employee’s energy, attitude, and commitment to their work are directly felt by the customer. A disengaged employee, on the other hand, can inadvertently communicate indifference or frustration, leading to subpar customer experiences. By creating a work environment that prioritizes employee well-being and productivity, businesses set the stage for consistently high customer satisfaction. 

 

Using ESI to Improve CSI 

 

The Employee Satisfaction Index (ESI) measures how happy and engaged employees are with their roles, workplace, and leadership. A high ESI score often correlates with a high Customer Satisfaction Index (CSI) because: 

 

  • Engaged employees are better problem-solvers. They approach customer issues with creativity and determination. 
  • Happy employees create a positive atmosphere. Customers notice and appreciate this energy. 
  • Satisfied employees are more loyal. They develop deeper institutional knowledge and stronger customer relationships over time. 

 

To ensure employees are happy and productive, focus on these key areas: 

 

  • Training and Empowerment 

Equip employees with the skills, tools, and autonomy they need to excel in their roles. Confidence in their abilities translates to confidence in customer interactions. 

Provide ongoing training in areas like communication, conflict resolution, and technical expertise. 

  • Workplace Culture 

Foster a culture of respect, recognition, and inclusivity. Employees who feel valued are more likely to treat customers with care and empathy. 

Create opportunities for collaboration and camaraderie, which enhance job satisfaction and productivity. 

  • Feedback and Communication 

Regularly conduct ESI surveys to identify areas for improvement. Employees who feel heard are more likely to stay engaged. 

Share CSI results with employees and involve them in strategies to improve customer satisfaction. 

  • Recognition and Rewards 

Recognize employees for exceptional performance. Whether it’s a simple thank-you, a shoutout during team meetings, or formal rewards programs, recognition motivates employees to continue exceeding expectations. 

 

Reinventing Customer Service with CSI and ESI 

 

Both the Customer Satisfaction Index (CSI) and Employee Satisfaction Index (ESI) should be central to your customer service strategy. Here’s how to use them effectively: 

 

Track and Compare 

Monitor CSI and ESI regularly and analyze their correlation. A dip in employee satisfaction often signals potential issues in customer satisfaction. 

Identify patterns: Are specific teams or locations excelling? Are certain departments struggling? Use this data to replicate successes and address challenges. 

Proactive Engagement 

Anticipate customer and employee needs. For example, ensure employees have clear schedules and manageable workloads, which allows them to serve customers with more focus and energy. 

Align Goals 

Set shared goals for improving ESI and CSI. For instance, initiatives like reducing customer complaints or increasing first-call resolution rates benefit both metrics. 

Measure the Impact of Changes 

Test new strategies or tools and assess their effects on both indexes. For example, implementing a new CRM system could make employees’ jobs easier and improve customer service quality. 

 

Why Employee Happiness Translates to Customer Satisfaction 

 

When employees feel supported and valued, they are more motivated to provide outstanding service. Their enthusiasm and commitment create a ripple effect: 

 

  • Higher Productivity: Engaged employee’s complete tasks more efficiently, leading to faster resolutions for customers. 
  • Better Communication: Happy employees communicate with clarity and warmth, creating positive interactions. 
  • Customer Loyalty: Satisfied customers are more likely to return and recommend the business to others. 

 

Conversely, a workplace that neglects employee well-being risks disengaged staff, higher turnover, and ultimately dissatisfied customers. The connection is so strong that many businesses now see employee experience as the backbone of customer experience. 

 

Modern Best Practices for Reinventing Customer Service 

  1. Personalized Customer Interactions 

Use CRM systems to track customer preferences and history, enabling employees to deliver tailored service. Employees benefit from streamlined processes, and customers feel valued. 

2. Omnichannel Support 

Provide consistent service across platforms, from phone and email to social media and live chat. This ensures employees have the tools they need to provide seamless support. 

3. Transparency 

Keep employees and customers informed at every step. Transparent communication builds trust on both sides of the service equation. 

4. Celebrate Wins 

Celebrate both customer and employee milestones, such as achieving high CSI scores or completing team projects. Recognition strengthens the bond between employees and the organization. 

 A Symbiotic Cycle of Success 

Happy employees drive customer satisfaction, and happy customers boost employee morale—a symbiotic cycle that fuels long-term success. Investing in the employee experience isn’t just good for business; it’s essential in today’s competitive landscape. 

By prioritizing both the Employee Satisfaction Index (ESI) and Customer Satisfaction Index (CSI), businesses create a thriving environment where employees and customers feel valued, heard, and connected. This dual focus is the cornerstone of reinventing customer service and securing a competitive edge in the modern era. 

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