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Wednesday, 20 August 2008 05:11

How to increase the “Sales” in your Service Department
Imagine if your service advisors asked every customer that came to your service department to do regular, needed maintenance on their vehicles. In numerous studies, more than half of the customers said yes!

How much potential gross profit is available? $20-$30 per repair order is conservative. What would this mean in a year? For example, monthly customer repair orders: 800 x $20 = $16,000 x 12months = $192,000 per year.

Measuring for Increased Sales
Compare sales department measurements with service department measurements and notice the differences. In sales, most dealerships carefully measure every customer contact from the moment the customer arrives through the entire selling process. Qualifying, information gathering, presentations, demonstration rides, write-ups, turnovers…the list goes on. After the deal is closed, additional items such as aftermarket sales, finance reserve, credit insurance and others are also closely measured for the results attained and how to motivate each employee to achieve the best possible result. Untold hours are spent analyzing this data to develop action plans to improve the weak areas. At the heart of all of this information is a comprehensive, multilevel pay program that puts incentives on all key areas of performance.

In service, we have access to volumes of information, but does this information really report on the “sales process?” Hours sold per repair order, effective labor rate, gross profit percentages are all closely monitored. But does this tell what level of sales effort is being performed? Is there a “closing percentage” on services sold? The relationship of actual vs. the “opportunity” to sell maintenance and needed repairs is seldom, if ever measured. Over the years, I have heard from many dealers who told me that if their people could just sell more than two hours per repair order, they would be satisfied. Unfortunately, I must argue that if those two hours sold were heavy repairs without any maintenance, a large opportunity would still be missed. In fact, many dealerships have high sales per repair order due to a low maintenance to repair mix. Dramatically increased profits can be found by implementing the measuring processes below:

1. Measure the “Ups” to sell maintenance. ROAMS that tells you how many customers had a mileage level close to each major service interval, then evaluate how many services were sold by each service consultant vs. how many opportunities there were to sell. Coach each employee based upon their individual “closing” percentage and you will see dramatic results.

2. Measure maintenance to repair ratios closely. If service consultant (A) sells regular, needed maintenance to most of his/her customers and is at 1.9 hours sold per repair order and service consultant (B) sells only heavy repairs with little maintenance but has a 2.5 hours per repair order average, who does a better job? If hours sold/RO is the only measurement, (B) is better. If you want your customers to return to the dealership on a regular basis and possibly have less major failures, (A) is better. Note that the technicians that work for (A) are probably more productive and efficient as maintenance work is always done in less time than the flat rate time allowed. In many cases, service consultant (A) will also have more total sales than (B). ROAMS shows how many labor operations were maintenance related and compare this with the repair operations. Compare this ratio among each service consultant. In many cases, what you thought was your best service consultant could be missing a lot of opportunities. Use this information to pinpoint the areas where items are not being presented, and or sold.


Last Updated on Saturday, 07 November 2009 22:02