DID YOU BEAT LAST YEAR’S FIXED OPS PROFIT BY 40 % OR MORE?

Don Reed, CEO

How Do You Identify Your “Sales Problems?” 

A sales problem translates to a lack of additional gross profit which results in lower net profits. To begin with, let’s identify these problems as opportunities for improvement since that is exactly what they are. In order to do so you might want to know what the “Performance Guides” are for the most successful dealers in our industry.


# of repair orders written per day per Service Advisor

Total shop productivity

# of service bays per Technician

Customer Pay labor gross profit margin

Customer Pay parts gross profit margin

Shop supplies expense

Number of Technicians per Service Advisor

Customer Pay hours per repair order

Effective labor rate as a % of the retail door rate

One item repair orders as a % of total CPROS

Operating Profit as a % of Gross profit-Service

Operating Profit as a % of Gross Profit-Parts

12

120%

1

75%

45%

-0-

4

3.0

90%

15%

20%

30%


Now, do the math, calculate your numbers and then place them alongside mine. At a glance you can see your opportunities for improvement. By the way if you happen to be a Service Director, Service Manager or Parts Manager you should know the answers to the first 10 guides, respectively, without having to go to your computer because these are all guides that you should be measuring on a DAILY basis.

If you are a Dealer or General Manager and you don’t expect your department managers to provide you this information DAILY then now we have identified problem #1. If you did not meet or exceed all 12 of the Performance Guides then what can you do to improve? The answer lies in a quote from one of the most famous golfers of all time:

 “If you fail to get the proper kind of instruction, no matter how much you practice, you’re only going to get better at making yourself worse.”-Bobby Jones

In other words TRAINING can turn your performance problems into profit opportunities. Let’s look at these Guides and discuss their importance since some of you reading this article are already convinced that I am NUTS!

A Service Advisor should write about 12 repair orders per day. (Customer Pay, Warranty and Internal.) Most of your Advisors are probably writing more like 20 or more repair orders per day, which is why they are most likely averaging around 1.5 HPRO (Service Writer). Get “outside the box” for a moment and make a list of all the responsibilities that your Writers have and determine how much time it takes in a given day to fulfill those responsibilities. Here is a sample list for you to use.

• Schedule appointments 
• Walk around presentation 
• Prepare the R.O.
• Dispatch the R.O.       
• Answer the phone         
• Prepare estimates
• Status calls to customer  
• Review results with Techs 
• Active Delivery

• Explain the 3-C’s     
• Rental cars     
• Close repair orders
• Code warranty claims   
• Bathroom breaks     
• Lunch
• Road tests           
• Up sells             
• Special order parts

• Sublet repairs       
• Meetings with Manager   
• Call “no shows”
• Selling the estimate   
• Prepare for tomorrow       
• Carryovers
• HEAT customers       
• Extended Service Contract authorizations

What Should You Do? 

You may add to or delete from this list based on your own processes. Your Advisor should be spending about 15 minutes per customer to Meet & Greet, conduct a Walk Around, present a Maintenance Menu, Advise on a Maintenance Inspection, prepare the Repair Order and have the customer sign it. At 20 repair orders this process alone takes about 5 hours which leaves about 3-5 hours in the day to complete everything else including lunch.

If you calculate all of the above based on 20 repair orders per day you will find the total time needed is about 15 hours which of course does not work, which means something does not get done, which means your Service Writer has no time to ADVISE his customers, which is exactly the reason why they are not Advisors. Do the math honestly and you will find that 12 repair orders per day is the number that will enable your Writers to become Advisors and increase their sales per RO while providing your customers with a much higher level of service. This will, of course, increase CSI and Owner Retention as well, plus your shop productivity will go up.

By now you might have concluded that in order for your Advisors to write only 12 repair orders per day you will have to hire another Advisor or two. Your first reaction might be that this is an added expense that you can’t afford. My response is “YOU CAN’T AFFORD NOT TO.” Besides if you have all of your Advisors on a “performance based pay plan” the only costs you will incur are fringe benefits, just like Technicians. You must understand that Service Advisors are “productive personnel” not “Administrative.” In other words they do not cost you any more than an automobile salesperson if they are compensated on their individual sales performance.

Start off the New Year by increasing your sales per repair order. To do so you must give your Advisors the time they need to “ADVISE.” You must insure that they are professionally trained on how to provide every one of your customers the highest level of service that they possibly can every time they visit your dealership. Once you get this accomplished, then you need to focus on bringing more customers into your Service Department, which we will discuss in detail next month.

‘The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.”-Peter F. Drucker

Call me toll free at 1-888-553-0100
Or email dreed@dealerprotraining.com.

 

 

 

 

Don Reed
CEO-DealerPRO Training=

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6 WAYS TO INCREASE YOUR SERVICE TRAFFIC

“If you are like most dealers, you do not have an expense problem but you do most likely have a lack of gross profit.

This is why you are not realizing the net profit that you deserve from your investment in fixed operations.”

Don Reed, CEO

DealerPRO Training

senior man smiling

Don Reed is the founder and prime mover of DealerPRO Training. As a former Car Dealer, Don knows it takes a well-trained team in Fixed Operations to be successful in the auto industry. His passion for excellence in service is highly contagious and is why Dealers across the nation consistently vote Don’s ideas to be among the best they’ve ever heard in Fixed Ops.