|
|
INCREASE SALES
|
 |
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.
Paying
for Performance
Many
successful sales operations use a comprehensive commission plan
that pays for selling the vehicle but also pays for selling related
products associated with purchasing a vehicle. Similar to sales
department pay plans, service consultant plans should be based upon
minimum sales objectives for many items. Major services sold,
flat rate hours sold, upsold items, and a significant dollar amount
for CSI attainment is just a starting point. To create the plan,
establish a percentage of last year’s total income that you
will allocate to each of the above components. Divide the anticipated
“units” sold or attained into the component dollars to
create individual dollars per unit (see example in item (c) below.)
Be sure your pay plans include at least the following:
a.
Eliminate or limit salary. Most powerful and effective compensation
plans include the need to accomplish a minimum standard. If there
is a salary involved your sales efforts and motivation will be limited
by the income level desired above the salary level. While full commission
plans can initially be intimidating to employees, incorporating
a small dollar amount for flat rate hours turned by the shop will
help with the anxiety.
b.
Pay weekly.
If you pay a draw or salary and then settle up at the end of a month,
the motivation to do something this week is limited. With a weekly
plan, there is more motivation to limit the nagging, end of month,
“work in process” or “open repair orders.
c.
Pay strongly for major services sold.
Determine how much money should be devoted to this portion of the
plan (example: $40,000 annual income x 20% for menu component =
$8,000 annually for menus sold. If there are 21 working days each
month and the standard is one major service sold per day, this would
result in 21 services sold per month x12 months = 252 services sold
divided into $8000 = $31.74 per major service sold.)
Summary
If
you are looking to improve your service department profits, carefully
measuring the sales processes and emphasizing the maintenance portion
of the work mix will dramatically increase sales and gross profits.
If the pay structure is directly related to maintenance items, the
rate of improvement will accelerate.
|
