Every year I do numerous on-site consulting and training sessions with dealers. I find that, despite the training and resources provided by the OEs and companies like Gart Sutton & Associates, many dealership service departments struggle with lack of profitability and poor CSI scores.
Since industry surveys show that a powersports customer’s service experience has a major impact on whether they will buy another product from your dealership, this can be vital to your success.
Here are seven suggestions for things that you can do to improve your service department profitability and customer satisfaction. The two tend to be closely linked. Quite often it is your efforts to improve your CSI that will make you more profitable and successful.
1. Hire and empower an effective service manager. Sadly, it is rare to find service managers who were hired for their management and people skills. If you have a good manager, empower him or her to manage by providing a budget and some authority to hire and fire. Share the numbers with them and hold them accountable.
2. Provide sales and customer relations training for your service advisors. Your SA creates the customer’s first impression of your service operation — and it needs to be a positive one. The ability to properly greet and probe your customers will determine how effective the SA is at documenting customer issues while taking advantage of opportunities to up-sell service and P&A. Satisfying the customer’s wants as well as their needs is important to customer satisfaction.
3. Have an adequate number of service advisors for the workload. Our 20 group data analysis proves that dealers who average less than 180 ROs per SA per month sell more labor and P&A per RO. When your SA has to deal with more ROs than that, they don’t have enough time to complete a proper diagnostic and a thorough walk-around, let alone build a relationship and up-sell service and P&A.
4. Establish an effective parts-to-service process. This is a common area of “opportunity for improvement” within most dealerships I visit. First, it is vital that the parts department understands that service is their most important customer. They must respond immediately to parts orders from service. At $90 an hour you lose $1.50 for every minute a tech is not cranking a wrench. Techs don’t pull parts — it costs too much. Parts should have a designated parts-to-service person. Service parts orders need to be expedited, not held to meet minimum freight programs. A $2 part order can tie up a $1,000 repair and cost you a customer.
5. Increase productivity (hours worked divided by hours available). More productivity = faster turnaround on repairs = more profit and higher CSI. I can give you dozens of suggestions, but here are some of the key points:
• Provide an efficient work environment with easy access to all necessary tools and adequate heating and cooling.
• Have two or more lifts per tech, so they can continue working on another unit while waiting for parts or repair approvals.
• Pre-stage service jobs and have hourly people put them on and off the lifts.
• Control “distractions” like pushing bikes, cell phones, customers in the service area, smoke breaks, etc. Do a study to see what your techs are doing besides cranking labor.
6. Monitor and maintain a 70 percent gross profit margin. If you don’t make close to this margin (revenue less tech compensation not including benefits), you won’t be able to pay your bills for this department. This means overall tech compensation can’t exceed 30 percent of revenue. If it is out of whack, you need to increase revenue or decrease tech compensation (that will go over well).
7. Keep your labor rate up-to-date and menu price your services. Is your gross profit too low? Have your expenses increased? When was the last time you updated your labor rate? We tend to run low on the scale compared with car dealers — why? Our techs have as much (or more) skill and training as an automotive tech. Charge what you’re worth and build value to support it; have a high quality shop appearance, clean uniforms, name tags, tech diplomas displayed, etc. If you use menu pricing, your labor rate will become less of an issue. Price jobs according to what the market will pay and get the focus off the labor rate.
Steve Jones is senior projects manager at Gart Sutton & Associates. He has worked in the powersports industry for more than 30 years, for dealerships and manufacturers, and as a consultant and trainer. Contact him at firstname.lastname@example.org.
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