|Last month I asked “Did you beat last year’s profit by 40 percent or more?” I hope you compared your dealership’s performance to those benchmarks so you could identify the opportunities for improvement in your service operations. I also stated in my opinion that most dealers do not have an expense problem, but they do most likely have a lack of gross profit. This is the primary reason they are not realizing the net profit they deserve from their investment in fixed operations. Assuming your expenses are in line, there are only three ways to increase net profit.|
1) Increase your gross profit margins on labor and parts sales.
2) Increase your sales per repair order
3) Increase your repair order count
Let’s focus on the latter one this month. How can you increase your repair order count or “service traffic”? I’m going to give you 6 ways to bring more customers into your service department and they won’t cost you anything. So relax, I’m not going to suggest you double your advertising budget!
How many days do your customers have to wait to bring in their vehicle for service? Your aftermarket competition will tell your customers they can bring their vehicle in “today” or “tomorrow.” So your answer has to be one day. If it takes two days or longer you are losing business to the aftermarket because they are more convenient and responsive to the customer’s needs. Our research shows that most dealers are scheduling appointments out three to five days, which is one of the main reasons why their retail service traffic is stagnant. In this instance they have either low-shop productivity or a lack of capacity
What is your shop productivity? If you are at 100 percent or higher, you need to hire technicians because you can’t reduce the wait time for your customers to come in unless you can complete the repairs in a timely manner. Some common excuses I hear from service managers are “I can’t find any master technicians. Besides, if I hire another technician my existing techs will get upset, and I might lose them.” If you are a dealer or general manager and you hear this from you manager, then I ask you “Who is managing the shop, the techs or the manager?” You don’t need master technicians to increase your service sales. You need “C” and “B” level techs that can perform lower skill level repairs and maintenance. Hire a technician and your existing technicians will produce more. An average technician will generate a minimum of $10,000 in gross profit per month so what is holding you back? Nine out of 10 of you need to hire a tech TODAY.
What is your appointment process? Research shows that over 80 percent of your customer pay sales start with a telephone call to your dealership. Most of these calls are going to a service advisor. In some cases, they are going to a BDC, CDC or an appointment coordinator. Please understand the primary mission of the person receiving the call is to schedule an appointment. They do not simply quote prices so the customer can shop around, and they should never diagnose the customer’s concern. They should immediately give the customer the option to bring the vehicle in today or tomorrow so a factory trained technician can properly inspect the vehicle and provide an accurate diagnosis. Would you allow your salespeople to simply quote prices of your vehicles over the phone? Would you allow them to appraise trade-ins over the phone without ever seeing the vehicle? I think not. Train your advisors to ask for the appointment.
Call “no shows.” All of you have customers who do not show up for their appointments. Oftentimes they just forgot. What processes do you have in place to call them to reschedule? Your service advisors, BDC, CDC or appointment coordinators must call every “no show” to reschedule. Your customers will appreciate it.
Call customers on special order parts. If you walk back to your parts department, you will most likely find a section of bins your parts manager has designated for ‘Special Order Parts.” Your manager will tell you the primary source for special order parts is the service department and/or the collision center. In many dealerships the parts manager’s obsolete inventory was ordered by the service department and never installed on the customer’s vehicle. Again, you must have a process in place to call the special order parts customer and secure an appointment for the repair. Mailing a post card to the customer to advise them the part has arrived is not sufficient. The service advisor, BDC, CDC or appointment coordinator should call to secure an appointment.
Schedule your customer’s next appointment. Before your customer leaves your dealership, you should automatically schedule their next service appointment based on time and/or mileage. Give them a card with the date and time of their next appointment. You probably have experienced this at your dentist’s or doctor’s office. Additionally, you should review with the customer the “required” maintenance that will be due on their next visit.
When you implement these six processes you should see your repair order count increase by a minimum of 10 percent. If you are currently writing 500 CPRO’s per month equating to roughly 50 additional repair orders monthly which annualizes to 600 additional selling opportunities. That, in effect, gives you an additional month or 13 months of customer pay sales and gross profit in your 12-month fiscal year. Your fixed expenses remain the same, but now your net profit is improving dramatically. So I ask you this question: “What is it about making more money that you don’t like?”
Vol 3, Issue 2
Recapturing lost revenue is the first step toward fixed ops profitability. Use this four-step process to reduce or eliminate wasted tech hours, declined services, inefficient scheduling, and lost tire sales.