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Track tech time closely for service profit boost

September 5, 2011
Filed under Features

These articles recap some of the opportunities uncovered by our GSA Powersports Consultants during actual consulting visits. These are followed by recommended actions that address these opportunities. Our goal is to provide you with ideas to help improve your dealership.

Part 4: Our GSA Consultants report on their analysis of the service department.

Dealership Details
The current owner purchased this dealership about 20 years ago. He is an enthusiast with a powersports technical background who had worked in dealerships prior to buying the operation.

The dealership carries three major product lines and sells about 500 units per year. The dealership is visible from a major highway, but it could use some renovation and increased parking. The service department is located in a separate building. Another building is used for cold storage and assembling some units.

Service Manager
The dealership’s service manager is tasked with both service writing and service management. He started riding at an early age and has maintained an interest in the products and the sport. He has some sales background and worked as a service writer at an automotive dealership and at another powersports dealership.

In addition to being personable and likeable, the service manager/writer has an understanding of the sales process and building value for the customer. These are important qualities for a service writer.

Service Department
The service department’s gross profit is only 44 percent; it needs
to be closer to 70 percent to cover the bills in this department. The numbers the dealership supplied indicate tech efficiency at 100 percent (as it should be), but productivity is only 29 percent. However, there are a lot of issues with accurate tracking of technician time. Dollars and hours per repair order are very low. They have not been tracking actual time on the ROs, so they aren’t billing close to what they are investing in time. In addition, their labor rate is well below that of the local automotive dealers.

The service department is in a separate building, near the main store. There is a small sign, but it is not visible from the main building. The shop area is fairly well organized, but it needs fresh paint. It’s a better service department than it would appear. There are an exceptional number of high-end tools such as a boring bar, dyno, wire-feed welder, balancer, etc. These are saleable services that should be promoted. The layout is functional as far as space, air lines, electrical setup, etc. There is no integrated exhaust system other than opening the door or turning on the wall-fan exhaust.

The write-ups are taking place outside or in the shop itself. No reception checklist is being employed to ensure that no repairs are missed. This reduces add-on sales opportunities.

There is no service menu and no place to display one. The service department was encouraged to do this to take the focus off hourly rates. Since they really should consider raising their labor rate, this would be a positive step.
Tech diplomas are posted in the main building. It is recommended that they move the service writing to the main building. This would help reduce customer traffic in the shop, and provide an area for a menu display and accessory displays that could stimulate additional sales.

The service manager wants to install the time clock and start getting accurate times for the jobs. This is really important to accurately track performance and profitability. They are only billing the set-ups at the OE rate. They were encouraged to bill the sales department for actual set-up time. They need to ensure that all tech time is accurately accounted for on ROs.

Neither the service manager nor the owners are familiar with the state laws that govern RO authorizations or warranty reimbursements. They are anxious to take action to resolve this situation.

Action Items
Ensure all ROs are signed and have good tech notes.

Ensure every tech working hour is accounted for on an RO.

Implement reception checklist for all units at write-up. This will increase sales and customer satisfaction.

Install and enforce the time clock for all time worked on ROs. Measure efficiency, productivity and proficiency on the spreadsheet provided. Share this with the techs weekly.

Complete satisfaction surveys with service customers within 72 hours of repairs.

Track all comebacks on the log supplied. Post it on the wall out of customer view. Peer pressure will generally provide the incentive for improvement.

Display a menu of common services. These will help take the focus off of the labor rate and trigger additional sales.

Track the percentage of first service returns. This is your best chance to make the customer a customer for life.

The write-up area would be better in the main building. This would allow for a service menu display and reduce customer traffic in the shop.

Inventory all special tools periodically. Provide a check-out sheet for tracking and accountability.

Shop looks old and tired. Fresh paint on walls and benches would help.

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 more than 30 years. For additional information on these services, visit www.gartsutton.com.

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