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Feb. 8, 2010: Generating more income from a good service shop

February 8, 2010
Filed under Uncategorized

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.

Dealership
This 30-plus year-old, single-line dealership recently moved to a new, professionally designed facility. They sold just under 500 new and used units this past year. The owners have worked in most of the positions, so they have an intimate knowledge of dealership operations.
They are located in a rural town with a population of 40,000. However, their surrounding market area contains more than 200,000 people. They are located on a main road less than a mile from a major freeway, but they have no freeway visibility. It was suggested they use billboards to build awareness and attract more of the passing traffic.
Previously this series has examined the store’s sales, F&I and parts and accessories departments as well as an analysis of the total dealership. In this fourth part, GSA?consultants report on the service department.

analysis
One of the owners works in the position of service manager. While he has the skills, he does not have a lot of time available to run the department. The techs felt it worked better when he spent more time in the shop.
The service department is generally pretty clean and well organized. The layout is not as efficient as it could be, since the work stations are perpendicular to the entrance. In addition, the work area is limited. This leads to some staging and traffic issues. They have one lift per tech, but there is room for two. The techs understand the value and would like to have the additional lifts.
Most service work is being written at the parts counter. There is no indication of a service counter or even a service entrance, inside or outside. They have a menu book, but no menu board. They need to visually promote the menu items and decrease emphasis on the hourly rate. They used to turn away service work for brands they didn’t carry, but they will take anything now.
Internal labor is not always credited on installs or reconditioning. This needs to be addressed in order to get accuracy in the numbers.
There is no time clock, so there is no time tracking. There is no monitoring of tech efficiency or productivity, so they really can’t manage this.
They have a reception checklist, but the service writer seldom uses it. They are missing a lot of opportunities to up-sell the customers on services or accessories.
There is little promotion of the service department. We discussed the significance of this, and some ideas were provided. The service department should be mentioned in all ads. Service promotions should be mailed or
e-mailed on a regular basis. They have a good shop with good techs. It can generate more income than it has been.

Action Items
Install a time clock. Clock time arrived, time on/off any RO, time for lunch/breaks and end of the tech’s day.
Develop written “non-negotiable”
standards lists for department personnel. Each employee signs the original held by the manager and receives a copy. Hold staff accountable to these standards.
Develop a menu board or use a TV with a PowerPoint version for the customers. You have the product — make it obvious to the
customers.
Move the service write-up area to the showroom away from the parts counter.
Provide adequate signage inside the showroom and at the outside entrance.
Use a reception checklist for all units coming in for service. Use a digital camera to document their condition. Use this to increase customer satisfaction, service and P&A sales, and reduce damage claims.
Restrict customer access to the service area. There are liability issues as well as efficiency issues to consider.
Monitor department GP on a monthly basis.
Verify that all labor is accounted for — warranty, internal or customer. If a tech is used to do the job, there needs to be an RO for the time.
Install two lifts per tech — at least add two more lifts.
Begin daily tracking of technician hours on the spreadsheet provided. Track available hours as the hours techs are scheduled to work. Monitor their efficiency, productivity and proficiency. Post printouts for each tech on a weekly basis.
Develop goals and incentives for technician performance.
Improve first service returns by scheduling during the sales delivery and make follow-up calls.

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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