After a recent conversation with a big fish in the Canadian automotive fixed ops industry, Walter Schirrmeister, VP of Fixed Operations at The Dilawri Group, I was struck with how seldom the basics are actually discussed in detail. I mean, they’re basics, right? That means a quick overview means you can execute the basics without fail, day in and day out…can’t you?

If that were the case, there would be no need for fixed operations managers, and rarely a need for service managers either. Unfortunately, the basic principles of the service department, in particular, are set aside for the newest trend coming down the pipe. The newest wave of marketing, social media presence, and customer satisfaction indexes – they all take our priority and attention while the “basics” are given lower importance.

As Walter reminded me, there are three basic principles for the service department:

• How many work orders you write
• How many hours per work order you sell
• How much money you keep per work order

While customer satisfaction is critical and reaching our customers is crucial, how we maximize the results every time they visit is what it all boils down to.

I’m sure you’d agree your service department is not a charity. Every staff member, from the cashier up to the dealer principal, depend on your service department to generate a profit. Your customers expect to spend money when they come through your door albeit in exchange for a valuable service. It’s up to you to make those basic principles come to life.

We’re going to review the basics here, if for nothing else than to keep them fresh in your mind. As ideas spring up for how to improve, jot them down, then act on them.

Write Work Orders

Are you aware of how many work orders each of your service advisors are writing? It’s going to vary depending on the size of your store and any additional roles or expectations you ask of your advisors, but an experienced one should be able to comfortably handle 12 to 15 customers per day. In that range, your service advisor should have plenty of time to attentively write up each work order, track them throughout the day, sell any required estimates, and assist in the vehicle pickup and cash-out.

If it’s 8 to 10 that your advisors are handling, you need to ask why. Are your appointment numbers dwindling, requiring additional marketing on your part? Is your advisor not working to their capacity and expecting someone else to pick up the slack?

If your advisors are writing 20 or more work orders in a day consistently, you might want to consider easing their burden somehow. Can you hold back a few appointments per day? Do you need to hire another advisor? Writing 20 or more work orders in a day is a recipe for burn-out and will likely start exhibiting diminished customer care. You may see hours per work order drop off or a higher number of customer complaints and bad CSI surveys. You may just have yourself a rockstar service advisor, so keep an eye out for that as well…

Sell Work on Those Work Orders

You obviously track your hours per RO. You didn’t get to where you are by neglecting that number. Each store is vastly different on what they consider an appropriate hours per RO, so you’ll have to be your own judge on how you stack up in this category.

What you can do is keep track of your improvements. Have you implemented a target for your service advisors and a way to achieve it? How are they doing with achieving that goal? Do you have someone that isn’t pulling their weight and needs either encouragement or additional training or support?

One suggestion: calculate how much additional gross and net profit you’d see by improving your hours per RO by just a tenth of an hour, then see if it’s achievable for your store’s performance.

Keep your Service Sales

This number, friends, is your Effective Labor Rate, or ELR. It’s what you’re effectively selling every hour of your department’s work. You want this number as high as possible because it has a very direct correlation to your gross profit.

There are only two ways to improve your gross profit. You can either raise your labor rate or you can improve your effective labor rate. Raising your labor rate costs your customers more money and is by far the more difficult route to take.

Improving your ELR is the most straightforward way of improving your gross. About ELR, Walter Schirrmeister says, “It’s found money. You’re not charging anyone any more. You’re just taking care of the problems, the crap that shouldn’t happen.”

What crap is that exactly? There are two main issues.

• Discounting. Every service manager has had that conversation with their service advisors about giving unauthorized discounts, so it shouldn’t be an issue anymore, right? Guess again. You’ll be surprised how often your disappointing ELR is because a service advisor is giving discounts. An easy way of tracing the issue is to pull every work order that has less than 70 percent gross profit and determine precisely why it is that way.

If you can stem the flow of discounting, you’ll see the results in your ELR immediately. And, when your service advisors know you’re watching for discounts, they will come to a grinding halt.

• Paying more than you should. In a service department, things get messy when you want to pay less for a service than before, but in some instances, it’s a necessity. With today’s modern alignment technology, it no longer takes a technician 1.5 hours to complete a four-wheel alignment. Most can be completed well within 45 minutes or less, so why pay more than twice that time? And does a full-rate technician need to perform the alignment, or can an apprentice complete the task just as well? By paying a lower rate technician to complete the job in a reasonable time frame, you can improve your ELR by several dollars.

It’s not an easy conversation to have, truth be told. You will likely experience a push back from the technicians who are losing out on gravy work. As a manager, it’s your job to make the tough calls that are primarily best for the business while caring for the needs of your staff. Your full-rate technicians will have time for other full-rate work that they are qualified to perform instead, and a technician that’s a team player will understand…just maybe not right away.

As a service manager, you’ve got a hard role to perform. You have to balance a happy and productive staff with the business side of your department. If you’ve gotten away from the basics, you may have a difficult task ahead to correct the course, but ultimately, what is your priority? Running a profitable department.