|Last month I wrote about Comfort Zones versus Accountability and how many dealers have a different outlook regarding performance standards for fixed operations as compared to those for the sales operations. I hope by now you have started measuring the performance of your technicians and service advisors on a daily basis. Secondly, they should all have goals that require an improvement in their performance so that you, as a dealer or manager, can start moving toward 100 percent service absorption. As I have mentioned before, this requires an adjustment to their respective comfort zones.
Now that you have agreed to hold your people accountable for improving their performance, you must ensure that they do indeed have the tools, equipment, personnel and training necessary to perform at a higher level. What would be some examples? Here are a dozen of the simple ones:
Those are all fairly simple and straightforward, wouldn’t you agree? Great! Now, let’s look at some of the more difficult ones. To begin with you must determine how many service advisors you need in order to provide your customers with the highest level of service that you possibly can. Here is a formula that works well, but is probably outside of your comfort zone.
Total all of your warranty, extended service contract and customer pay repair orders for last year. Divide that total by 12 to get your average per month. Next, divide your monthly average RO count by 21 working days to determine the average number written per day and then divide that daily average by 12. Now you know how many service advisors you need.
For example: Last year’s repair order count was 6,000 customer pay, 1,200 extended service contract, 2,400 warranty for a total of 9,600 repair orders. Divide that by 12 to equal 800 per month. Divide 800 by 21 working days to equal 38 per day. Now, divide that 38 by 12 repair orders per advisor equals three service advisors. If you currently have only two advisors, it’s time to hire one. Of course you might want to adjust the math a bit to determine how many ROs your advisors are currently writing by dividing your average RO’s per day by the number of advisors you currently have. If that number exceeds 15, in my opinion, your advisors do not have the adequate time available to spend with each customer and that simply means they don’t have time to sell.
Once you have your service advisors working with 12 to 15 customers a day, you must then measure your shop productivity, which needs to be around 120 percent. Shop productivity is defined as the number of clock hours worked by the technician divided by the number of flat rate hours billed on the repair order. Please don’t confuse this with efficiency.
Now, it’s time to move your comfort zone again! Once you hit 100 percent shop productivity, you should start aggressively recruiting technicians. The reason being, that your service advisors will stop selling when they don’t have the hours available to sell. Can you blame them? If your comfort zone is telling you that your advisors must generate the sales before you hire another technician, then you have positioned yourself to produce exactly what you did last year and there will be no improvement!
I ask you this simple question: “What is it about making more money that you don’t like?” OK, so you agree with me and you want to hire a technician or several technicians, and you inform your service director/manager of your decision. You hear something like this: “Boss, this guy Reed doesn’t understand. You can’t find any techs in this market.”
My response is there are technicians to be had in any market, but you must search for them in different ways. To begin with, search for “C” level technicians and not “A” level technicians because that is the skill level of work that service advisors should be selling, (just like the aftermarket does) and the aftermarket is exactly where you should be recruiting. Of course, your profit margin on the “C” level technician is going to be substantially higher than that of an “A” level technician. This sounds like a pay raise for the dealer and that would be a good thing since we all want to work toward 100 percent service absorption. So, do you know the No. 1 reason why managers and dealers do not want to hire another technician? If your answer was: “My technicians will get upset and they might quit,” you just won the lottery! Sounds to me like the inmates are running the asylum.
Vol 4, Issue 3
Emerging service issues darken J.D. Power’s otherwise upbeat 2016-MY vehicle reliability report, which finds an industrywide improvement of 4% and mass-market vehicles outperforming highlines for the first time.