November 2014, Auto Dealer Today - Feature
Smart dealers know that fixed ops represents their best bet for steady, consistent revenue. Yet the majority of service departments are leaving major money on the table. Why is this happening?
It’s a perfect storm of lax inspection processes, a pronounced lack of accountability and a “service, not sales” mentality. In a market where competition is up and ROI is shrinking, you can’t afford to have your service technicians missing opportunities or just picking low-hanging fruit — such as brake and power-steering flushes — rather than completing a thorough inspection and selling customers on the services they actually need.
Not only does the full-service approach improve sales, it also breeds loyalty and trust among your customers. If you want to get more revenue out of your lanes, make sure your service manager can answer these three questions:
1. “How Many Hours and Dollars Per RO Did We Recommend Last Month?”
When I ask service managers how much they sold in the prior month, they often give me a gross figure. “That’s great,” I say, “but what did you actually sell?” I know most of those vehicles rolled into the lanes and said “Fix me, I’m broken.” Most service managers are not measuring what has been recommended and what has and hasn’t been sold. This is crazy.
Service is a multibillion-dollar industry, but very few dealers are tracking sales in that department. Sure, you can recite the stats for every member of the sales team, but on the service side, you’ve got nothing to go on. To change that, you have to start looking at service as a sales business. Your fixed ops team is there to sell labor and parts. To grow sales, you have to measure and track their progress and reward their success. No service manager should find this daunting, and they should be motivated to boost revenue.
You may be surprised what the numbers can reveal. Let’s say you determine that the average service unit has 80,000 miles on the odometer but your techs are only trying to sell tire alignments and air filter replacements. This tells me they’re not performing real inspections. If they were, they wouldn’t rely on over-recommended services. They would be uncovering real issues and keeping your customers safe.
2. “What Was Our Most Recommended Service?”
This question is a wake-up call for service managers who have no idea whether their technicians are actually recommending any services. When we dig into the numbers, we usually find ROs listing the same old low-hanging fruit.
Too many technicians robotically recommend services the customer may not even need. This should tell the service manager two things: First, they’re not getting anywhere near as much business as they should, and second, their technicians are not spending enough time inspecting each vehicle. Your service manager can use this information to enforce an inspection process and hold people accountable to the process. This creates results.
3. “How Many Customers Received a Multipoint Inspection Form Last Month?”
If they say, “All of them,” and you believe it, you’re fooling yourself. Too many dealers put a process in place, walk away and assure themselves it is being carried out with every customer. Unfortunately, in the vast majority of dealerships, it isn’t.
Consider the case of a large dealer group with which we recently worked. The fixed ops director was caught off-guard by this question, but he was sure a review of the ROs would reveal a complete inspection every time. We dug in and quickly determined the opposite was true. Again, management can mandate all the processes they like, but that doesn’t mean it’s happening. Consequently, this group implemented a forced inspection process that includes professional customer-facing status reports. Sales went up dramatically. And because they were recommending services that truly needed to be done, they increased customer trust and loyalty.
Work with your service manager to scrutinize the data and put processes in place to turn your service business into a sales business. Revenue will soar. It’s that simple.
Fred Fordin is the divisional sales vice president of fixed operations for Dealertrack. Contact him at FFordin@AutoDealerMonthly.com.