Article

Departmentalize Your Service Department

June 2010, Auto Dealer Today - WebXclusive

by David Keller, CPA, CFE - Also by this author


Your service department is one of the busiest departments in your dealership. Service deals with more customers than any other department on a daily, monthly and annual basis. The service department also sees more potential customers than any other department. These are potential customers who could purchase additional services and parts, detailing, accessories, body shop repairs, rental vehicles, and even a new or used vehicle.

Maximizing the service department’s profitability is very important for many reasons. New vehicle sales are in need of severe reconditioning, used vehicle prices are higher than ever with vehicles in short supply, subprime financing is in need of a new paint job, warranty labor and parts sales are gradually decreasing and customers are retaining ownership of their vehicles longer because of upside-down positions and the lack of financing. What a mess!

Not really! Now is the time to restructure your service department to maximize sales and profits. How do you do this? Well, you have to throw out what you are doing now. It will not work very well with where the auto repair industry is heading.

First, you need to get into your car with your service and parts manager and drive around town past all of your competition. Not just new car dealers, but all of those independent service facilities, tire stores, oil change shops, Wal-Marts, parts stores, brake, exhaust and transmission repair shops, air conditioning specialists, detailing shops, etc. Now, consider how long each of your competitors have been in business and how many employees they have. When you drive by, look at their doors or windows and write down the hours they are open for business. Count how many stalls they have. Look at how many of their stalls have vehicles in them.

Now go back to your dealership and go to work. No, I don’t mean go back to your normal jobs. You don’t have time for that. You had better sit down together and review how your competitors are eating your lunch and gradually and silently stealing your service and parts business.

How are they doing this? Very, very easily. They have structured their businesses to succeed based on providing simple, efficient and reasonably priced services to their customers. Compare that to your service and parts department. Yours is fairly outdated for the most part. Ask yourself how many stalls you have devoted to just tires, just oil changes, just brakes, just detailing, just transmissions, etc. Are you really focused on selling this type of repair?

You will need to separate your service department into departments to achieve success and higher sales and profits. You will need a new-vehicle area if you are a franchise dealer. You will need a reconditioning department to be able to repair used vehicles for a reasonable price. Next, you should have a detail department to clean and spit-shine those customer cars. Oh, don’t forget your tire, brake and alignment department.

You will have to also mystery shop your competition. This is how you find out all the things you are doing wrong in your service department—like what kind of signage you will need, how to up-sell, how to price your maintenance work, how to advertise to draw new customers to your dealership and what hours you need to stay open to make it convenient for your customers to visit your store instead of the shop down the street. Get the hint?

Retraining yourself, service advisors, technicians, parts counter salespeople and the rest of your dealership will be the toughest thing to accomplish. People don’t like change. It will take three to four months of constant attention to your new structure before it is accepted and running smoothly. If your current personnel can’t adjust to the new structure, then steal—I mean, hire—the people you need from your competitors. That mystery shopping tour you took through town? Make good use of it and try to attract the best employees of each type of business to work for you. Your training costs will be less because they are already trained and have impressed you. They have a different mentality and are more focused because they have to be where they work now.

Oh, I forgot to mention that new position in your multi-department service and parts department—sales. In the past you have expected your customers to just waltz in the door and provide the sales you need. Now, you have to rely on your staff to provide service sales. Put together a constant and complete advertising program similar to that of the competitor you are trying to run out of business. Monitor all their ads to make sure they don’t get the jump on you. Also, don’t just have this new salesperson sit in the store behind a counter waiting on customers who walk through the door. Market your new department as a shopping center for all a vehicle’s needs.

This new salesperson, preferably the best waitress or waiter you ever encountered in a restaurant, should go out into the community on a regular basis marketing your new departments and their services to all your non-competitor businesses in town. Why someone from the restaurant business? Why not? They normally work crummy hours compared to a car dealership. They can make more money working for you. You don’t have to train them in up-selling, customer service and follow-up. They already know how to do this, or they wouldn’t be the best where they are at now. They should have no trouble keeping busy just putting the word out in a focused method to everyone in town.

Provide a menu of items so potential customers know what you do and how competitive your store is. Offer a first-time visit coupon they can’t resist. Visit all the businesses so the word is out you can take care of all of their needs in a one-stop shopping center and you have changed the way you do business. Keep visiting those businesses until they get the hint you can take care of them. It will shock them at first you are even there, outside of your comfort zone, which is behind the counter.

Your parts department will need to stock the appropriate type of parts to supply all your new departments. This means offering alternatives to your OEM parts for brakes, oil filters, oil, tires, etc., so you are competitive with everyone else in town and are able to offer different levels of service based on the customer’s needs and wants. Your internal department will praise you for this.

You will need to change and adapt or die a slow death as all that increasing maintenance work customers need disappears along with any warranty repair work. Remember, you may think you are already there, but you’re not if new shops are opening in town and existing shops are still doing great. If your service department sales haven’t grown each and every year, you are doing something wrong. Go back to class until you get it right.

Vol. 7, Issue 4

Comment

  1. 1. Bob Silcox [ June 22, 2010 @ 05:20PM ]

    David; You have hit it on the head we need to change how we do business on a daily basis! We must look at every opportunity to make a profit from whatever source! We need to Service the current models of vehicles that are still in the Manufactures Warranties in one Department. Handle the Quick Service Customer in another Department you know that quick oil change like (Jiffy Lube). We need to take care of the customer's cocnerns with tires, wheels and alignments! Handle the brakes issues and concerns in a brake department. Detail, reconondition, paintless dent repair, trim repair, glass repairs and replacment of the glass in a Recon. Department. Thens lets dont forget the out of warranty vehicle that is 5 to 10 years old or older which muct be handled in a different way than the in warranty customer. Then the customer that is trying just to keep their vehicle running at a cheaper price!! Can we be (ALL THINGS) to all people! We are talking about handeling customer from 6 different areas of our competition! I think it's GREAT to be a "One Stop Shop" to everyone!! But I agree it is a totally new mind set for the average Dealership!!

    David you ideas are great!!

  2. 2. Bob Silcox [ June 22, 2010 @ 05:20PM ]

    David; You have hit it on the head we need to change how we do business on a daily basis! We must look at every opportunity to make a profit from whatever source! We need to Service the current models of vehicles that are still in the Manufactures Warranties in one Department. Handle the Quick Service Customer in another Department you know that quick oil change like (Jiffy Lube). We need to take care of the customer's cocnerns with tires, wheels and alignments! Handle the brakes issues and concerns in a brake department. Detail, reconondition, paintless dent repair, trim repair, glass repairs and replacment of the glass in a Recon. Department. Thens lets dont forget the out of warranty vehicle that is 5 to 10 years old or older which muct be handled in a different way than the in warranty customer. Then the customer that is trying just to keep their vehicle running at a cheaper price!! Can we be (ALL THINGS) to all people! We are talking about handeling customer from 6 different areas of our competition! I think it's GREAT to be a "One Stop Shop" to everyone!! But I agree it is a totally new mind set for the average Dealership!!

    David you ideas are great!!

  3. 3. Bob Silcox [ June 22, 2010 @ 05:21PM ]

    David; You have hit it on the head we need to change how we do business on a daily basis! We must look at every opportunity to make a profit from whatever source! We need to Service the current models of vehicles that are still in the Manufactures Warranties in one Department. Handle the Quick Service Customer in another Department you know that quick oil change like (Jiffy Lube). We need to take care of the customer's cocnerns with tires, wheels and alignments! Handle the brakes issues and concerns in a brake department. Detail, reconondition, paintless dent repair, trim repair, glass repairs and replacment of the glass in a Recon. Department. Thens lets dont forget the out of warranty vehicle that is 5 to 10 years old or older which muct be handled in a different way than the in warranty customer. Then the customer that is trying just to keep their vehicle running at a cheaper price!! Can we be (ALL THINGS) to all people! We are talking about handeling customer from 6 different areas of our competition! I think it's GREAT to be a "One Stop Shop" to everyone!! But I agree it is a totally new mind set for the average Dealership!!

    David you ideas are great!!

  4. 4. Bob Silcox [ June 22, 2010 @ 05:21PM ]

    David; You have hit it on the head we need to change how we do business on a daily basis! We must look at every opportunity to make a profit from whatever source! We need to Service the current models of vehicles that are still in the Manufactures Warranties in one Department. Handle the Quick Service Customer in another Department you know that quick oil change like (Jiffy Lube). We need to take care of the customer's cocnerns with tires, wheels and alignments! Handle the brakes issues and concerns in a brake department. Detail, reconondition, paintless dent repair, trim repair, glass repairs and replacment of the glass in a Recon. Department. Thens lets dont forget the out of warranty vehicle that is 5 to 10 years old or older which muct be handled in a different way than the in warranty customer. Then the customer that is trying just to keep their vehicle running at a cheaper price!! Can we be (ALL THINGS) to all people! We are talking about handeling customer from 6 different areas of our competition! I think it's GREAT to be a "One Stop Shop" to everyone!! But I agree it is a totally new mind set for the average Dealership!!

    David you ideas are great!!

 

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