Article

Check Out Your Service Department

August 2006, Auto Dealer Today - WebXclusive

by Don Reed - Also by this author

Is your service department operating at its full potential? If the answer is “NO,” then compare your operation with the performance levels of the most successful dealers in our industry.
After you check out your service department, you will find the problem areas that need to be addressed, and possibly form an action plan as to how you can make a difference in the upcoming months.
 
First question: How many answers did you not know? Second question: How many answers did your managers not know? To formulate an action plan for improvement, you must first realize that you “can’t manage what you don’t measure.” All 12 items listed below should be reviewed and evaluated daily. Your numbers listed below are the results of the efforts of your people, so if you focus on “managing the efforts” of your people daily, your results will improve. Additionally, to maximize your results, you must pre-plan the efforts of your people through daily performance goals. These goals must be given to your technicians, service advisors, service manager, shop foreman and parts manager daily and then evaluated at the end of each day, similar to what you may be already doing in your sales department.

Successful Dealers What’s your number?

1. Each Service Advisor writes between

15 and 20 repair orders per day ________________

2. Total shop productivity (billed hours to

Clocked hours) hits 120 percent minimum. ________________

3. There is one service bay per productive

Technician ________________

4. The labor gross profit margin is 70 percent of

sales ________________

5. The customer pay parts gross profit margin

is 45 percent of Sales ________________

6. The gross profit margin on suble is 20 percent

of sales ________________

7. The number of technicians per service

advisor is between four and five ________________

8. There are two technicians for every support

person in the service department ________________

9. The number of hours sold per repair order

is 2.5 ________________

10. Policy adjustments don’t exceed one percent of total

Labor sales ________________

11. One item repair orders don’t exceed five percent of

total repair orders ________________

12. Operating profit is at least 20 percent of gross

profit ________________
 
When it comes to selling to our service customer, the service advisor is where it all starts. Now ask yourself this question: “How much sales training have I given my advisors?” The answer I’m sure is, “Little to none.” We must understand that a service advisor is a salesperson and not a clerk. As such, they must be professionally trained how to meet and greet the customer, investigate to determine their needs, select a product that satisfies those needs, make a feature/benefit presentation on the product and ask the customer to buy it! Sound familiar?
 
In addition, you must embrace the philosophy of all the fast food chains in America. “Would you like to SUPER SIZE IT for 50 cents?” By this, I mean you must simply give every customer that drives in your door the opportunity to say YES to one additional purchase. Is this not what you do in your F&I department? For every 10 service customers you ask to buy your product, a minimum of 2 will immediately say OK, another 1.5 will do so on the second try. That sounds like a 35 percent closing ratio, which in turn will give you a 35 percent increase in customer pay parts and labor sales. This is exactly what all of the independent service centers are doing with their $19.95 oil change customer. Research shows that the average “quick lube” service center has an average sale per repair order of about $86! That equals an average upsell of about $60 per RO. Multiply $60 times the number of customer pay RO’s you wrote in your service department last month; then multiply that number times 12 to see how much additional sales you should be getting in the next year. To put it in another perspective, this is how much you “lost” in sales in the last year by not training your advisors to SUPER SIZE IT.
 
Let’s review our strategy. First, you must “measure what you need to manage.” Second, you must “inspect and evaluate” the efforts of your people “daily.” Last of all, you must get your service advisors professionally trained on how to “sell in the service lane.” The results will be there for the dealers who are committed to operating their service and parts departments as profit centers.
 
Vol 2, Issue 7

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