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Jason Unrau

Jason Unrau Freelance Contributor

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[Podcast] Effort vs Performance Metrics: Get a Better Understanding of Your Team's Success

[Podcast] Effort vs Performance Metrics: Get a Better Understanding of Your Team's Success

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Knowledge is Power, so Track Important Service Stats

J.D. Power and TrueCar have struck a deal for the sale of ALG, so it’s headed to a new home. Absorbing a company for $135 million that does much the same type of work they do, J.D. Power is showing exactly how important data, research, reports, and analytics are for the auto industry. So the $135-million-dollar question is… are you putting that much weight into tracking your service stats?

Service managers are already held accountable for their department’s performance. Rather, I’m speaking to service advisors. As a sales-heavy role, there is much to learn from the numbers.

Why Bother Tracking Performance?

As a service advisor alum, I would routinely ask myself (and murmur my complaint to others) why I should be held accountable to sales targets when I was supposed to serve the customer. I can promise that the question usually arose when I wasn’t hitting targets and didn’t care to try harder.

Advisors, the cold, hard truth is that selling equals serving. NADA Data 2019 shows that the average customer-pay invoice is $311 parts and labor combined. That accounts for the whole range of services and repairs, from wiper blade changes to complete engine replacements, and everything in between. Maintaining a car is not cheap for customers. If you’re not achieving your targets, your customers are probably missing out on necessary services. Or maybe you’re discounting…

Regardless your excuse why you aren’t achieving target, the better question is how you can get it back on track. I promise you, tracking your numbers will do it.

RO Count

If you seem to be lagging behind on payday compared to your compadres, it could be that you aren’t writing as many repair orders. Compare notes on the RO count between advisors. A seasoned service advisor should be able to write and track 15 ROs in a day, very likely more. I recall busy days with 30-plus ROs, but that’s extremely hard to do well. Find a sweet spot where you can write as many ROs as possible without losing ground in other areas.

Dollars per RO

Whether you track labor and parts together for a target or labor alone, determine where you stand compared to the national average ($311) combined. This should give you a good idea if you’re an average, below average, or above average performer.

Increasing $/RO simply comes down to selling more. More volume. Find out if there’s a way they might agree to a service they declined. Or, more importantly, begin to do a thorough job of explaining the features and benefits rather than just the cost. You’ll see your $/RO go up in no time flat.

Effective Labor Rate

If your ELR is less than the average in the dealership, it should be a red flag. Are you struggling to upsell to one-line ROs? Are you stuck in a rut and can’t sell anything more than discount-rate maintenance? Lifting the effective labor rate is as simple as selling as much labor at door rate as you can. Most services – oil changes, transmission services, coolant flushes, etc., will destroy an ELR but door-rate work will boost it.

The other option is that you’re applying discounts rather than selling at full rate. If that describes you, it’s only a matter of time until your manager discovers it, so fix it now.

Gross Profit

Retaining GP should be relatively easy. However, if you’re consistently needing to offer discounts – poor communication, dissatisfied clients, forgot to send the shuttle for them, and so on – then gross profit will suffer immediately.

 

There’s more data to track as an advisor, but you get the drift by now. Targets are set for good reason. Rather than fight against them, determine to improve your performance by striving to hit your targets. You’re actually doing your customers a service by doing so.

Morgan Hardy

Has the labor rate changed for anyone during this time?

Jason Unrau

Morgan, I haven't personally heard of any dealers who have increased or decreased labor rates due to COVID.

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