Our team spends quite a bit of time in dealerships all across the country and the greatest fixed operations challenge today is recruiting and retaining qualified technicians. I can’t tell you how many times I have asked a dealer, general manager or service manager, “What can we do to help?” and with few exceptions, the first answer is “find me some technicians!”
While finding good technicians remains an industrywide problem, there are other areas of improvement that could give great benefits to a dealer. One item often overlooked is service consultant performance. Performance of your service consultant team can be measured in many ways. For our discussion, let’s focus on a tangible we are all familiar with and measure on a routine basis — hours per repair order.
Paradise Motors represents a big three domestic brand with a service department of 16 technicians possessing various skill levels. Here are some numbers to look at:
- Average hours/month: 2,400
- Shop productivity: 95% assuming all 16 technicians work a 40-hour work week and accounting for days off.
- Breakdown of hours:
- Customer pay: 50%
- Warranty: 30%
- Internal: 20%
- Total retail hours = 1,200
To get those 1,200 retail hours, the team produced 706 retail repair orders, giving the dealership a retail hours per repair order result of 1.7. With this dealership representing a big three domestic, there is obviously some room for improvement.
For the purpose of this discussion, let’s assume an addition of just three-tenths to each retail report order. Why three-tenths? Because it’s achievable in any service operation. If done, it not only would improve the store’s financial performance but equally important, improves its technician team’s satisfaction while working for Paradise. Let’s take a look:
Our retail repair order count of 706 X 0.3 would give Paradise an additional 212 hours of billable production hours. Paradise’s revised monthly shop production is now a healthy 103%.
By increasing service consultant performance, Paradise will also increase technician team satisfaction and attract additional talent in the ever-tightening technician marketplace.
As we discussed earlier, this additional three-tenths can also have a dramatic impact on your store’s profitability. With Paradise’s current effective collection rate labor gross profit, and parts gross profit retention rates, monthly fixed operations gross profit increased by $21,993 and yearly gross by a very impressive $263,916.
Ready to have this newfound gross fall directly to your net profit line? Here’s how Paradise did it:
- They used the reporting tools in their DMS to track and monitor service consultant performance.
- They developed a sales process for their service consultant team.
- They continuously train to the sales process.
- They develop merchandising tools and marketing efforts to support the sales process.
- They develop compensation plans that drive your desired result.
- They change the paradigm. Think of your service manager as your service sales manager.
- They imbedded accountability into their culture.
With today’s continuously shrinking margins in variable operations and the increasing technician shortage, paying close attention to your service consultant team and providing them the tools and training they need to succeed will get you on your way to three-tenths to Paradise.
For a free copy of the spreadsheet to calculate what three-tenths will do for your store, please email me at [email protected] with “Three-Tenths to Paradise” in the subject line.
