Generating revenue isn’t always about getting more work and more customers. It’s equally important to identify where you’re losing revenue. Fixing the four most common revenue leaks in your service department could add tens of thousands of dollars — if not hundreds of thousands — to your bottom line every month.
1. Wasted Tech Hours
Every time a technician walks to the parts counter to order a part, waits for it, or walks back later to pick it up, they burn about 10 to 15 minutes of their workday. If they do it four times, that adds up to an hour of lost technician revenue per day. If you have 10 technicians losing 20 hours of revenue per month, that adds up to 200 hours of technician time that you are not billing. How much is that worth to your business?
Do the math, and you’ll quickly figure out that it’s wise to invest in technology that connects your service advisors to your technicians to your parts department. With the right shop tool integrated with your DMS, you can set up alert notification systems that will automatically alert the parts counter what parts are needed when the tech is assigned the RO.
An internal chat system is also effective for sending messages back and forth between technicians and parts. The tech sends a message requesting parts, and the parts counter pulls them and then alerts the tech when they’re ready.
2. Declined Services
Most stores don’t identify or monetize their declined work op codes. This is the first and most critical step to recovering revenue from unsold services. If you don’t know what to go after, you can’t create a strategy to go after it.
With a mobile check-in and MPI process, when the service advisor makes recommendations, and the customer declines, the advisor must check either “Yes” or “No.” This simple automated prompt results in a massive increase in the logging of declined services. A store with manual logging sees an average of 7% of ROs logged with declined services. Stores with a mobile process see an average of 30% of ROs logged with declined services.
So what would that mean to your bottom line? In a larger-than-average dealership, you might discover that you have $400,000 in declined service work every month, and you might be able to bring back $100,000 of that revenue.
Mobile tablet technology can help. Provide visual proof by taking photos or videos of worn parts, then text them to customers to increase job approval rates.
Additionally, use a multichannel strategy to follow up with declined service work. Don’t place the burden entirely on your service advisors’ shoulders. Today, much of the declined service follow-up process can be automated. Service advisors can record a friendly service reminder that can be automatically dropped into the customer’s voicemail at predetermined time intervals following each customer’s visit.
Meanwhile, have BDC agents reach out to connect in-person. One highly effective approach is to create a report with the top five safety op codes and prioritize those first. Incorporate a sense of urgency into your follow-up scripts.
In addition to phone calls, follow up with personalized emails and texts. Send visual proof again. Send a coupon as an incentive. Eventually, your customer will get the repair done, the only question is, will they bring their vehicle to your shop or take it somewhere else? Be persistent to keep your dealership top of mind when it’s time.
3. Scheduled Shop Hours
Many dealerships are inefficient in the way they schedule their shop hours. First and foremost, I always recommend overbooking in order to account for the fact there will be cancelations. If an airplane has 143 seats, the airline sells more tickets than there are seats because they know they will have cancelations.
You can do the same in your dealership to maximize hours. Look at your schedule right now. Is 4:30 p.m. on Friday booked? Probably not, if you’re allowing your service advisors to schedule all their own appointments. If your BDC is booking appointments, allow them to book your technicians until 6:00 p.m. instead of 5:00 p.m. Most techs won’t mind the extra pay, and you will automatically see a revenue boost. It doesn’t mean your technicians will be there until 6:00 p.m. every night, because there will be cancelations.
I realize there’s only so much a technician can do in one day, but in my experience, most service managers underestimate what can be accomplished. The only thing you have to sell is time, so be aggressive and sell more of it. Some days will be busy, but most of the time the no-shows will be balanced out by the extra appointments, and you’ll be close to 100% capacity.
The failure to sell a customer their first tires might be the biggest leak in your service department. If your dealership sells a customer their first tire, you will see that customer four times as often during the lifetime of that vehicle. You’re more likely to get brake jobs, alignments, and other customer-pay work as well.
Unfortunately, many dealers don’t do a good job at merchandising and selling tires in the service lane. Ideally, service advisors will always measure tread depth during the multipoint inspection process, then have the ability to offer customers several tire options with menu selling on a tablet.
As dealers rely more on fixed ops revenue to boost dealership gross profits, learning how to stop common revenue leaks is equally as important as generating new revenue. Addressing these four areas could add hundreds of thousands of dollars per month to your bottom line.
Bill Wittenmyer is a partner with ELEAD1ONE and a 20-year automotive industry veteran with expertise in sales, marketing, OEM relationships and large-client accounts. Contact him at [email protected]