In Part 1 of this two-part series, we discussed how dealerships can improve their service operation’s performance and start producing the net profit they deserve.
So I ask you “Is hiring another advisor an expense or an investment?”— Don Reed, CEO, DealerPRO Training
Earlier we discussed meeting industry benchmarks and the importance of a profit improvement plan. In this article, we’ll delve into implementing changes and the training process dealerships need to provide your fixed operations team with the skills they need to accomplish their goals.
Are You All In?
If you are all in on making some changes, you must identify what needs to change and, more importantly, how you’re going to implement those changes to get the results you deserve. These changes will obviously have to address what you plan to do to have a positive impact on your out-of-line conditions as determined with the above exercise.
Here is an example:
- Your three service advisors are each servicing 18 customers a day for a total of 54 customers.
- Your KPI is 12-15, so do the math and you actually need four service advisors.
- Plan of Action: Hire one service advisor and now your four service advisors are averaging 14 customers a day
Some of you may be hesitant to do this because your perception is hiring that advisor will simply increase your personnel expenses. Instead you should calculate how much that extra advisor will increase your gross profits on labor and parts through the following benefits:
- All four advisors now have more time to spend with each customer both on the phone and in person.
- More time spent means better feature/benefit presentations to the customer.
- Better presentations by your advisors means a higher closing ratio on upsells.
- A higher closing ratio means increased labor and parts sales and higher gross profits.
- Increased labor and parts sales creates a higher HPRO.
- Increased HPRO results in higher technician productivity.
- Higher gross profits increases service absorption.
- More time spent per customer results in a higher CSI and owner retention.
As a result of all the above you can easily see how adding one more advisor creates a very small increase in payroll expense while producing a very high ROI with new-found gross profits.
So I ask you, “Is hiring another advisor an expense or an investment?”
By the way, make sure you compensate to motivate all of your advisors by using a pay plan that is based on individual performance for sales or gross profit plus CSI. This should equate to either 5 percent of parts and labor sales or about 10 percent of parts and labor gross profit on all repair orders written by each advisor.
Making Your Plan Work
You must have a training process to provide your fixed operations team with the skills they need to accomplish your goals as outlined in your plan. All of the management team must be trained to become better leaders and managers by first of all measuring the performance of all employees daily.
Teach them how to hold accountability meetings and become the coach that every team needs. Advisors must be trained on the proper use of maintenance menus and feature/benefit sales presentations while technicians must be schooled on the necessity of thorough multi-point inspections. These are not optional processes and everyone must be held accountable for compliance. Everyone! Remember, your customers deserve nothing less.
Once you have completed all the above you will have a profit improvement plan identifying all of your opportunities for improving your service and parts retail operations for years to come.
Get ready for change and prepare yourself to get committed to following your plan for a record year in net profit.