Andy Church shares a Quick Tip on understanding total Dealership Expense Management.

In this series, Andy Church shares how to increase the profitability in a dealership's service department.

Of the $350B Service business in NA, franchise Dealers only capture 27% of it. In this Quick Tip, Andy Church asks what are you doing to increase your service business?

Andy Church shares the importance of the proper inspection of tires in front of the customer during the walkaround to dealership revenue in this Quick Tip.

Do you know how many "lost customers" you have in your service department? This ProfitByAction.com Quick Tip is about the importance of Customer Retention to help improve your Service Absorption.

Take a look at the most current version of your local business directory, and count the number of NEW mechanical repair shops which have opened up in your community recently.

I’ll bet you can count more than three; some being sole proprietors, while others are national chains.
Ask yourself: “Why?"
 

"What is going on in my market that justifies an additional repair shop?" It could be your area has seen increased growth, so a larger vehicle population demands an increase in service providers. But ask yourself:
 

1. If my shop is not completely stuffed to the gills every day, how could I allow a competitor to open his doors and steal work from me?
2. How did I drop the ball so he could eat my lunch?

The answer can be broken down into four basic categories:

1. Wishful self-limitation: You are a franchised dealer. You specialize in your franchise’s brand. You market solely to your brand audience, hope they will do business with you, and reach no further. After all, your only competition is other dealer franchises selling your brand…not the aftermarket; You additionally dislike the complication which comes with setting up and using different vendors, pricing, accounting, and pay plans required to be both competitive and profitable – it’s too much work for such a limited market share opportunity.

2. You didn’t see it coming: While development in your area has increased, you are hoping for “converts” to purchase new or used vehicles from your brand at your place of business, and crossing your fingers that service customers find you.

3. Fear of misdiagnosis: Your techs are brand specialists. They might misdiagnose another manufacturer’s product simply because they don’t know it well.

4. Poor return – on – investment perception: “I won’t do general repairs on other brands that much, so why should I invest in the tools and technology required to capture that market share?
 

But the world is different now.

• If it has lug nuts and some sort of propulsion system (be it diesel, gas, hybrid, or all-electric) you’d better be able to fix it if you want to keep your business and make it grow

• Few clients are concurrently product-loyal; ask any client about the other vehicles in their driveway…there’s a high probability they don’t carry the same name badge as the one they brought to you for service today. The other vehicles will still need maintenance and repair. Why can’t your shop do this? Or at least facilitate and manage the repair for the customer as sublet?
 

• Your techs all learned the same mechanical principles during their trade school training. They simply need the infrastructure (read: information and occasional tool resources) to effect a proper repair. There is no excuse…a good tech can fix anything.
 

• Clients open their wallets where they are well-treated. In this economy, clients will spend a thousand dollars today to avoid a three – to – five year car payment;
 

• You don’t just want your client’s branded vehicle in your shop. You want ALL of their vehicles…and their family’s…and their neighbors.
 

• The shop that sells tires (meaning, gets the wheels up in the air, off the vehicle, and performs a free safety inspection) wins. All of it-Everything, Sales, gross profit, client loyalty and retention. The whole bag. Don’t want to sell tires? Your client will go somewhere else to get them…along with their brakes, shocks, exhaust work, and oil changes. Let one thing go, and you are letting it all go.
 

• It’s time for “empire building” to end between your service and parts departments regarding aftermarket repairs and “who gets what” as far as profit margins are concerned. Adopt weighted-cost average pricing models for aftermarket work, structure your pricing to be competitive in the marketplace, and go after your “unfair share” of the pie.
 

• You must be profitable, but consider your investment in “all makes service” to be just that – an investment in building your store as a brand in the community while capturing and keeping clients away from your competitors.

It’s now 3pm on a Wednesday night, and your service bays are empty…what are you doing to fill them for tomorrow, next week and next month?

Missed Shots in your Service Department

How many times have you heard: “How many (fill in the blank) did we sell this month?

We’re always pushing our service advisors to sell every possible opportunity they can find, be it from a walk around, factory maintenance, or what the technician finds.

We need to examine one specific word: “find”.  In this context, “find” is a verb, indicating some form of action. In our industry, action is an essential element of everyday life, and at ASE, we translate that into the simple word “do”.

For this discussion, and to start your thinking process in the right direction, ask yourself this one question: In terms of finding immediate service sales opportunities, who, in your dealership, is responsible for performing the action we call “find”?

• Service Advisors find work every day through walk arounds and visual inspections at vehicle drop off.
• Technicians find work through diagnosis and in-depth vehicle examinations.
• Service Managers find opportunities in terms of new revenue generation ideas, efficiency improvements, and expense controls.

Problem is…human nature only compels us to look for things that are of interest to us which might prove beneficial to our work skills or paycheck…and sometimes, work needed on a customer’s vehicle is simply overlooked because it is not advantageous to the Technician to do it, or for the Advisor to sell it, or for the Manager to ensure said work is being “found”.

Sure, you may have a “21-point inspection sheet”…if a vehicle comes in needing work (a necessary job which is excessively complicated and/or time consumptive), what’s the likelihood that item will make its way onto the inspection sheet, and then be sold? Moreover, what auditing tools do you have in place to ensure this process happens with every customer every time?

I’ll provide a simple example…your battery vendor probably has a tester which they will provide you basically free of charge which provides a complete battery test in thirty seconds, provides a printed battery health report as a customer sales tool, and also keeps track of total battery tests performed per week/month, and by whom. Obtain this device, and require 100% battery testing in your shop. Match your monthly car count against battery test count and determine how many opportunities were missed.

You will be astounded how many “shots” you are missing!

People like to do what comes easily to them…unfortunately, not all opportunities in vehicle repair offer this luxury. All professionals are compelled to “do the right thing” which may not be the easiest, or most interesting act of our day. However, we discipline ourselves to ensure our area responsibility is covered, and we demonstrate an awareness to ensure repeat business and profit. This awareness must become a “culture” within your shop to ensure 100 per cent of the “shots”…good and bad…easy and complicated, are taken.