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Sept. 22, 2008: How to reach the service department

September 22, 2008
Filed under Archives

These articles recap some of the opportunities uncovered by Gart Sutton & Associates’ powersports specialists during consulting visits.
These are followed by recommended actions that address the issues. Our goal is to provide ideas to help improve your dealership.
Dealership Details
This multi-line dealership has been a family owned business for more than 30 years. The owner is not involved in the business on a regular basis. His son and general manager took over the daily operations of the dealership several years ago. The dealership has a history of involvement in motorcycle racing, and still avidly supports the sport. The owner and his son were both successful motorcycle racers.
The dealership is located in a rural market with a population of 4,000. They have used discount pricing to attract customers from a metro market of more than 400,000 less than an hour away. Their annual unit sales are 700-800 units. They have operated on very small margins. They are hoping to find ways to increase floor traffic and sales while holding better margins. They are open to improving the structure and processes of their business.
The first part of this series looked at the store’s sales department. The second part described the action items for the overall dealership as well as the sales and F&I departments. The third part reported on the store’s parts department and this final part examines the service department.
Service Department
The service department has a reputation for doing good work. They have a full-time machinist, machine shop and dyno in this facility. The shop area has recently been remodeled, but needs better organization. Only two of the five techs have two lifts. Customer access becomes a problem when the overhead doors are open for the summer. This needs to be addressed for liability reasons as well as technician efficiency.
They have been discounting labor to sales. This deflates the service department’s profitability while inflating the profitability of the sales department. We will not be able to complete an accurate analysis of the numbers until they convert to retail on all interdepartmental transactions. It is important to the overall dealership profitability that this department approaches the 70 percent gross margin benchmark.
They have been using flat rate times 1.4 to establish billing rates. There is evidence that all tech time is not being accounted for by billing to an RO. The service manager will work to ensure this is taking place so we can get accurate efficiency, proficiency and productivity numbers. He will also work with the parts manager to establish a parts-to-service liaison and service parts process. This will increase the efficiency of the techs. The service manager also was charged with monitoring first service returns. This will help him establish and measure programs to increase the percentage of returns. The service manager was provided with spreadsheets and job aids to help him track profitability and technician performance numbers.
They have not been using a reception checklist or working for add-on sales at the service write-up. A reception checklist and instructions were provided to develop this process. Implementing this and a 72-hour follow-up with service customers will improve customer relations and increase add-on sales of service and P&A. It is recommended that sales training be provided for the service writers.
Action Items

  • Put all processes in writing and hold staff accountable.
  • Begin charging retail for internal ROs. Ensure every time a tech is working on anything, someone is being billed on an RO.
  • Begin monitoring tech efficiency, productivity, proficiency using the spreadsheet. Post the weekly results for the techs to review. Provide performance incentives.
  • Work with parts on development of a parts liaison position and ordering procedure.
  • Begin monitoring first service returns. Use this as a basis to implement and measure programs to increase the percentage of returns.
  • Implement motorcycle and ATV reception checklists to ensure all details are checked and increase sales.
  • Achieve and maintain an overall 70 percent gross profit for the service department (accounting for seasonality).
  • Implement the comeback log and post it in the tech area.
  • Develop signage and parking lot markings to indicate service reception area.
  • Develop a phone process for customer satisfaction surveys at 72 hours.
  • Provide at least two lifts per tech to increase efficiency and productivity.
  • Implement a special tools checkout list so these can be tracked. Inventory special tools on a regular basis.
  • Develop customer access controls to reduce liability and increase productivity.
  • Develop goals for labor sales and profit for the service department. Review these monthly.

    Gart Sutton has been a leading provider of on-site dealer consulting, dealer 20-groups, online financial composites, accounting rescue services, and OEM and dealership training solutions for nearly 30 years. For additional information on these services, visit www.gartsutton.com

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