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Apr. 6, 2009: A daunting task for this new service manager

April 6, 2009
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 is a multiline dealership located in a city of 50,000 with a drawing area of around 400,000. It has an excellent, freeway frontage, high-traffic location. They had been a part of a group of dealers owned by a large corporation and had a poor reputation for customer service. In March, they were purchased by the current owner, who previously owned several unrelated businesses. The new owner has been remodeling and upgrading the facility and signage.
In the first three parts of the series on this dealership, GSA consultants reported on their analysis of the overall dealership, the sales department and the parts and accessories department. This fourth part examines the service department.

Service analysis
They just hired a new service manager. He previously had dealership experience as a technician, service writer and service manager. For the past several years he has been operating his own dealership. I was impressed at his positive attitude in the face of the daunting task of getting this department organized and running correctly. He already has accomplished a number of improvements in the short time he has been on the job. However, he will have his hands full bringing this department up to break-even, let alone profitability. He certainly has the knowledge and experience for this assignment. If he can just get a handle on the technicians and manage them for productivity, he should succeed in this position.
This department is near the bottom in
performance. The previous manager was not reporting the numbers correctly and the department looked better on paper than it
actually was. Their indicated gross profit (if the numbers we worked from can be trusted) was around 50 percent. It needs to be closer to
70 percent in order to pay the bills for this department. Although they have an $80/hour labor rate, the indicated labor rate was only
$46 and they were only logging $57 labor
per RO.
Numerous additional issues with the current service facility and the service procedures were documented on the assessment checklist and in the action items. The new owner will be starting from ground zero with this department.
The layout and appearance of the department is very poor. The remodel plans include significant improvements. The possible layout changes for the department were discussed, including a drive-in, write-up area with accessory displays and a viewing window into the shop area.
The implementation of a reception checklist and proper technician tracking was discussed. A time clock needs to be installed and its use strictly enforced in order to ensure accuracy in the technician performance measurements for this department.

Action Items
Install and enforce the use of a time clock for any time the technician is on a job that is recorded on an RO.
Ensure all technician labor time is documented on an RO.
Begin tracking available hours, billed hours and actual hours for all techs on the spreadsheet provided. Ensure techs are aware of their performance on a weekly basis. Provide incentives for exceptional performance (this may not necessarily be money).
Familiarize yourselves with all state laws regarding repair authorizations, authorized
signatures, phone authorizations and dealer warranty reimbursements.
Develop a menu board for common services. Keep it simple and generic (use price ranges). Develop a menu book to document the breakdown of specific model pricing.
Strive to attain a 70 percent department gross margin (30 percent of revenue for tech compensation).
Run the open ROs report weekly, strive to reduce the number and ensure all ROs represent a unit in possession.
Utilize the Reception Checklist and a camera with RO write-ups to increase sales and customer satisfaction and provide protection for the dealership.
Prevent customers from entering the work area.
Promote and advertise the service department in all dealership ads.
Put all processes and procedures in writing for the service department.
Monitor the percentage of first service returns. Implement programs to improve this number.
Work with upper management to develop monthly performance goals and incentives for the department.

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