“Is your service department operating at its full potential? If the answer is “no” then let’s compare your operation with the performance levels of the most successful dealers in our industry.” — Don Reed, CEO, DealerPRO Training
Taking the First Step
After checking 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.
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% minimum|
|3. There is one service bay per productive technician|
|4. The labor gross profit margin is 70% of sales|
|5. The customer pay parts gross profit margin is 45% of sales|
|6. The gross profit margin on sublet is 20% 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 1% of total labor sales|
|11. One item repair orders don’t exceed 5% of total repair orders|
|12. Operating profit is at least 20% of gross profit|
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 above should be reviewed and evaluated daily. Your numbers listed above 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.
Daily Means Every Day
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.
Build Team Sales Skills
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?
Expand the Sale
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 who 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 two 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.
Do What the Quick Lubes Do
This is exactly what all of the quick lube 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 ROs you wrote in your service department last month, then multiply that number times 12 and 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.
Measuring to Manage
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.