Quickly undertake these changes in pricing, recommending and scheduling.
BY ROB GEHRING
Every service department wants to maximize its results on repair orders – just ask them. The tone of the conversation will change, however, when you ask how they expect to maximize RO productivity.
Personally, I find it fascinating how incremental changes in ROs can have a huge financial impact on the dealership over time. Take, for example, a dealership that performs 1,000 repairs per month. If that service department improved its average technician hours sold per RO by 0.2 and increased its effective rate by $4.00 per hour, then its parts and labor sales would jump by $500,000 after 12 months. If the RO count increased to 1,100 a month (assuming the same gains in hours sold and effective rate), then revenue would climb by $846,000 after a year.
I hope I have made the point that achieving relatively small changes in RO results and achieving them consistently can have a major payoff. In this article, I am going to discuss several such incremental improvements that will help you maximize results.
Stop The Discounting
I believe most people take the path of least resistance in life. In that regard, I see service across the country discounting labor and parts pricing on ROs as soon as they learn the price is higher than the estimate they provided to the customer. They also habitually give discounts to family members, friends, people from their church; the list goes on.
These advisors are taking the path of least resistance, as it is easier to give a discount than phone the customer and increase the bill over the estimate. Most service managers fail to monitor discounts in a consistent manner, so the advisor is never challenged about the reason he or she discounted the customer. While discounts can be examined in most DMS exception reports, the formats are not the easiest to read or understand.
The most innovative way I’ve seen to control advisor discounts is a product called ROAMS (repair order analysis & management system) from KEEPS Corp. These easy-to-read reports show a percentage of advisor compliance on every RO that has been written on customer pay. They then give a detailed breakdown of non-compliant ROs, which are highlighted so the user can click to review them.
It then becomes easy to review non-compliant discounts with the advisor to get the reasons for his or her actions. At that point, the path of least resistance for the advisor no longer includes discounting customer labor or parts sales on the RO. The goal here should be for every advisor individually and the dealership as a whole to be more than 90 percent compliant on a consistent basis.
Charge More For High-Skill Repairs
Today’s dealerships have many competitors providing easy maintenance services such as oil changes and tire rotations. Due to the complexity of the latest automobile systems, the level of competition drops off dramatically it comes to electrical, diesel engine or transmission repairs. The independent shops typically offer little or no factory training of staff and no special tools. However, the dealership has invested hundreds of thousands of dollars in brand-specific technician training and special tools needed to repair the vehicle correctly the first time.
Who is your competition for complicated repairs? To maximize service results, dealerships must be unafraid to charge the customer higher prices to offset these investments. Your dealership will never make large profits from oil changes and tire rotations.
I have talked with many service managers who believe they cannot bill over a certain figure even for high-skill repairs. Remember, most of your customers do not come to a dealership service department expecting the lowest price. What they do expect is a properly trained tech who can perform a quality repair and make their vehicle safe.
Recommend More Services
As we all know, every year billions of dollars of needed maintenance and repairs never even gets recommended to customers. I must share some of the most destructive reasons I’ve seen for this failure.
Let’s say a tech thoroughly inspects a car and notifies the advisor about several issues. The advisor quickly responds: “That’s Mary. She never buys anything. Just button it up and go to the next car.” I am not a mind reader but I bet I know what that tech is thinking now: “I just wasted 15 minutes of time for which I won’t get paid, caring about problems that the customer won’t even know about. See if I do that again.” Going forward, the tech is likely to recommend less service because he assumes the advisor won’t sell it.
It’s critical that you understand nobody wins in this situation, including the customer. Whether a customer buys a repair or service isn’t the biggest concern. The dealership has an obligation to inform that customer about his or her vehicle’s needs.
Advisors need to encourage techs to make a complete list of recommendations, and service managers should tour their shops looking for repairs and service procedures that weren’t recommended. During these shop walks, I always discover work that was not suggested to the customer.
Be sure that every multi-point inspection is presented in the first 15 minutes of the customer’s visit, with recommended services listed. We know that 80 percent of all approvals are given in the first 25 percent of the visit, so emphasize that your people are presenting inspection reports quickly in a disciplined fashion. Then, track and record each declined service, so that your advisors can review it in detail with the customer during a future visit.
