Dec. 22, 2008: Support staff key to service department profits
December 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.
This store began as single-line store in the 1980s. They moved to a high-traffic highway location in 2001. Since then, they have added several major product lines. They are located in a rural town with a population of 17,000. They are 60 miles from a major city. The bulk of their sales are in ATVs and UTVs. Their current volume is around 400 units, but the store has done close to 600 in the past. The store changed ownership last year.
In the first parts of the series on this dealership, GSA consultants provided an analysis of the operation, on the sales and F&I and parts departments. For this fourth part, the consultants report on the service department.
The service department
John, the service manager, has a background as a technician and a service advisor and received factory service management training from both automotive and motorcycle manufacturers. He appears to be quite capable of leading this department. He has built a strong team that has an excellent reputation.
However, John was not following some important procedures necessary to make this a profitable department. John has not been tracking and measuring technician performance because they do not use a time clock on ROs. This is a non-negotiable practice for a service department. They have not been using a reception checklist to improve documentation, customer satisfaction and increase sales during the write-up. John appeared open to improvement and willing to make the changes necessary.
They have a good-looking shop area, but it is very small for the number of techs and not laid out efficiently for work flow. Two benches per tech would improve productivity significantly. They have a good menu that was provided by one of the OEs. They were encouraged to expand on the menu process by creating menu prices for common services and putting them in a binder available in the write-up area. Discussing menu prices is more acceptable than hourly rates to most customers.
The lack of support staff for the write-up process is hindering the implementation of a reception checklist. This tool documents the condition of the unit at receiving and improves add-on service sales. Customer satisfaction is improved due to fewer calls to repair items missed during the write-up. A part-time (peak time) service writer should be considered.
Their biggest issue is the loss of billed labor hours by the techs. They are pushing bikes, writing ROs and pulling their own parts in addition to other non-billed activities. This must be corrected ASAP in order to bring the department up to an acceptable level of proficiency and profitability.
John must track technician efficiency, productivity and proficiency on a weekly basis. A spreadsheet was provided for this purpose. These numbers should be shared with the techs. Their competitive nature will help drive improvement.
Assembly, prep and accessories installs must be charged to sales at retail in order to allow this department to reflect comparable numbers to benchmarks. Multiplying flat rate times by 1.5 would be in line with common best practices to compensate for conservative OE flat rate times.
Service Action Items
• Install and utilize a time clock for all ROs. Utilize the Lightspeed clock to monitor employee start, lunch and end of workdays. Sell the techs on the potential to improve their productivity and income.
• Do everything possible to maximize tech time spent on billed labor (internal, warranty, customer).
• Strive to maintain a 70 percent gross profit margin (revenue minus tech compensation).
• Measure technician efficiency, productivity and proficiency on a weekly basis. Ensure they are informed of their performance. Provide rewards for exceptional performance.
• Report on service performance to benchmarks at monthly manager meetings.
• Limit customer access to the service floor.
• Implement a reception checklist to ensure all repairs are uncovered, note unit damages (digital photo) and maximize add-on sales of labor and parts.
• Consider adding a part-time service writer/assistant during peak periods. This will increase sales and improve tech productivity.
• Monitor first service returns and implement strategies to increase the percentages.
• Replace the negative signage in the write-up area with a Service Policies sign.
• Expand on the menu system. Develop a book with most common services by model groups.
• Work with the owner on remodeling to increase productivity and install two lifts per tech.
• Put all processes in writing.
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