If you want to stir up controversy, talking about pay plans is a great way to do it. The most common pay structure used in dealerships for both salespeople and service advisors is commission-based. It’s why these positions have such lucrative earning potential and high turnover rates.

The past few years have been trending another direction. Large dealer groups like AutoNation use a salary plus bonuses pay structure for their salespeople. The rise of no-haggle pricing sees many stores using salary-based product advisors. Yet, the vast majority of car dealerships use the standard commission-based pay plan for the sales floor.

In the service drive, it’s very much the same. Some dealers have opted for a healthy salary plus a bonus (from personal experience) while others pay a mere pittance of a salary plus highly-incentivized commission (also from experience). Only junior service advisors receive a flat salary, but that’s changed out as soon as they become productive.

The question isn’t about which structure is better than the other. I think we can all see pros and cons to both types of pay plans – commission and salary. However, there’s a valid concern about whether a dealership or dealer group should have similar pay plans across all departments.

Here’s an example of what I mean: a salesperson is paid a stair-step commission pay plan that rewards high-grossing sales as well as high volume. It’s not a stretch to assume that, in an effort to close every lead they receive, high-pressure sales tactics come into play once in a while. Customers that purchase visit the dealership’s service department later on, expecting the same high-pressure environment and are met with a customer satisfaction-focused advisor who is paid a salary plus CSI survey bonuses. The experience between departments is a stark comparison, almost like visiting two different stores.

Another contrasting example is this: a dealership has no-haggle pricing and does their best to offer a transparent sales process. The salesperson is strictly paid a salary, or perhaps a substantial salary plus small bonuses, ensuring that customers get the best sales experience without the high-pressure techniques. The customer that has bought in this environment now visits the service department, where a highly incentivized service advisor applies blitzkrieg-style pressure to sell the most at the desk. The customer leaves, wondering where the no-pressure sales experience came from.

One Isn’t Better than the Other

To be absolutely clear, I believe there is room in the industry for both commission-based and salary-based pay plans. The type of clientele, the area, and the inventory can all dictate which style is most effective.

The debate isn’t over whether commission or salary is better. It’s about a uniform approach storewide. The customer shouldn’t be more comfortable visiting one department than the other. The service department and sales floor shouldn’t seem like two different stores. If you use a traditional commission-based pay plan in the sales department, it makes sense to do the same in the service drive. If you use a customer-centric salary system in sales, do the same in the service department.

It isn’t that one structure is better than the other – it’s the cohesive culture and experience you’re giving your customers

Another satisfied car buyer drives away in their new Honda/Chevy/Ford/other make. They’ve just experienced the best car purchase in their life. They have the perfect vehicle with the right features. Their new car is within their budget. Best of all, they didn’t feel pressured nor did they get the feeling the salesperson was hiding anything. It was the ideal, transparent transaction, and their SSI survey reflects it.

Six months later, that same customer returns the lowest survey score ever from their first service visit. “There must be something wrong,” you think. “They love us! They would never trash our dealership on a survey.”

You’d be right. They didn’t trash your dealership.  The customer blasted your service department alone.

From years of auto retail experience, it happens more than you’d imagine (unless you’re in the service department – then you probably know it’s true). This type of two-faced feedback comes about when the sales and service departments aren’t operating on the same wavelength.

It’s About Culture

The service department in most dealerships is geared for an overriding purpose: generate income. With front-end sales gross dwindling, dealers lean on fixed operations to generate the bulk of the income for the store’s operations. The message service advisors and service managers get is to bring home the bacon.

The sales floor used to be the same. In recent years, with buzzwords like ‘transparency’ becoming more prevalent, the sales floor has undergone a reform. The focus on the sales floor isn’t to slam buyers into any car you can – it’s to help them find the right car for their needs, facilitate a no-nonsense test drive, and provide a no-pressure environment for the transaction. That’s the way it should be in today’s marketplace. It’s a culture change.

Discrepancies in Dealership Culture

But the culture hasn’t made its way into the service department in the same way. There’s no such thing as getting ‘just an oil change’. It’s an oil change and a wheel alignment. Or an oil change and a tire rotation. You can’t just fix the primary issue on the work order. You must fix that PLUS the three other add-ons the technician discovered.

The pressure is high in the service department, and it’s no wonder customers hate bringing their car in for service (that applies to dealerships and independents alike).

Culture Shift

Dealers need to align their culture across ALL departments. The customer bringing in a damaged car to the collision center should have the same experience as the one who just walked into the showroom. The new car buyer visiting the service department for the first time should get the same feelings as they did in the showroom.

To state it clearly, the culture must be a customer-centric one. There’s no room for pressure sales anymore; not with so many online avenues to vent and complain in today’s market. The customer-centric culture must be spread across all departments, and that’s to provide the highest level of care possible.

Shift the service culture away from high-pressure sales and towards transparent, manufacturer-aligned service recommendations. Give the customers a reason to trust you, not distrust you.

Look at your dealership today. What message are you conveying to your customers in each department? Is it the same across all of them? If it isn’t, you need to re-align your department cultures.

There is no shortage of bad online reviews, excruciating customer tales, and complaints to deal with about the service department. It’s easy to pass off one or two as keyboard warriors or ‘e-thugs’. But the fact is that front-line service staff aren’t perfect. They never will be.

It’s been drilled home about ‘Service Advisor 101’ – the basic tools service advisors need in their toolkit to do their job. Service Advisor 101 includes customer service skills, performing a vehicle walkaround (WITH) the customer, writing a repair order, selling an estimate, and cashing out the customer. These are the essential tools someone needs to do the job.

However, Service Advisor 101 only includes skills that keep your head above water. To swim powerfully in the automotive industry current, there’s another level of training required. It’s one that, sadly, many advisors never aspire to and are never pushed to pursue.

Service Advisor Training 102 Curriculum

In a nutshell, it’s the constant pursuit of improvement towards excellence. Service advisors should be coached to pursue more than just the status quo. It’s about doing better for yourself and, in turn, providing a higher level of service to the customers you deal with daily.

Ongoing Training

As I mentioned, it’s about doing more than keeping your head above water. The 2018 Olympics in Pyeongchang don’t have swimming as an event, but there is speedskating, skiing, and dozens of other sports. Each requires a daily commitment to training hard, honing skills, and developing a winning mindset.

What you’ll notice is that world-class athletes don’t always train within their sport. Hockey players spend hours in the gym, building muscle mass in all the right areas to optimize their on-ice performance. Ski jumpers spend much of their time working on reactionary skills and mental focus so they’ll stay composed on the hill.

The same goes for the best service advisors. They need time away from their desk on a regular basis – monthly, quarterly, or annually – so they can hone their skills from the beer league to major league.

Pursuing Advancement

There aren’t many employees who are content to spend the rest of their career in the same position. It’s hard to accept as a manager or employer, but you need to prepare your staff for the next thing in their journey. If you’re lucky, they want to move up in the chain of command and you have the responsibility to prepare them for it.

Service Advisor Training 102 involves training service advisors in aspects of the industry they don’t see on a normal basis. It’s management-type duties like reading and interpreting the daily DOC report, overseeing a small number of employees, or sitting in on management meetings. You’ll find service advisors involved in this type of atmosphere develop a sense for the business and are better prepared when the opportunity arises to take on a management role.

Addressing Changing Technology

A service advisor with 101 training can write a work order saying, “CHECK AND REPORT BLUETOOTH WILL NOT PAIR AS PER CUSTOMER”. That’s an acceptable way to write the concern on a work order, and it’s probably not going to bring the heat on the advisor.

Service Advisor Training 102 involves getting the team member involved in more technical knowledge. They complete all the OEM training programs online that are available for their position. Infotainment systems, maintenance requirements, mechanical understanding – it all gives an advisor next-level abilities to be the best advisor they can be.

So, instead of writing a work order about Bluetooth not pairing, the advisor says, ”Jane, let’s go to your car. You can show me what you mean… Oh, I see. Jane, that’s an easy mistake to make. If you do this instead, it should pair for you without a problem. Let’s try it…There, all done! By the way, did you know your Bluetooth connection can also stream music from your phone?”

When a service advisor learns the product extremely well, they can provide a higher level of customer service.

There’s no finish line for service advisor training. It’s an ongoing process and progressive training opportunities should not only be available but encouraged!

Parts departments, the service drive, the sales floor – everyone has a sales target every month of every year. There’s a clear expectation from upper management, which is a good thing. But that pressure to perform can cause good staff to run off the rails.

It isn’t always realistic to hit monthly goals, and some years it’s simply impossible. The economy affects how customers shop for cars and how tight they are with their parts and service dollars. And after a fantastic year or two of growth, the bubble is almost guaranteed to burst. It seems like a slump, but it’s just a correction, much like what happens in the stock market or the recent Bitcoin correction.

As a general manager, dealer principal, or department manager, you know this to be true in your head. But since everyone’s paycheck depends on sales, there’s a push to hit those elusive targets. When the pressure is on, now far will you go to make the sale?

Maintain Integrity…

It’s what everyone would like to believe they would do. When a customer shouldn’t be bought in the F&I office, the salesperson knows it’s not the right fit for the customer, or the fuel injector service isn’t really due but shows up on the recommended services, you’d like to think you’d have the integrity to take the high road.

Sometimes, it’s in everyone’s best interest to let a deal go. Despite the pressure to roll a unit or make a service upsell, the best way to serve some customers is to let the sale pass by and keep a loyal client.

For example, I have a rough older truck. It needed new tires, and the shop I chose to buy tires from knew it. I explained it was only a workhorse, yet the advisor had the option to try to upsell me services that weren’t of benefit. Had he pushed for fluid flushes, a transmission service, and brake services, I might’ve bought the tires but certainly would’ve gone elsewhere afterward. Instead, he knew my interests and made recommendations in passing, because he is a man of integrity.

…Or Get Greasy

The other option is to make the sale, no matter what the cost. It’s about the here and now – hitting this month’s target with no forethought of the damage it will do down the road. A few examples:

• Slamming a subprime customer into a car with payments you know they can’t afford at an obscene interest rate.
• Selling a trusting customer a brake job when a cleaning or adjustment would do instead.
• Playing a customer’s emotions, making them feel guilty, or causing undue worry about their current vehicle.
• Selling a part above retail list simply because you want to make up gross profit.

Especially at the end of the month when the pressure is on to hit the target, there’s a tendency to get greasy with sales. Instead of bowing to the pressure, maintain your integrity and only make the sales you know are honest. Your customers will love you for it.

As this new year starts, get back to the basics with your team. Make sure everyone is doing what they should be with every customer interaction. Ensure your team maintains their integrity with your customers and does right by them, and the sales growth will follow.

Overall, 2017 has been a success in the sales and fixed operations departments. We’ve seen a broader recognition of the service department’s importance, solid sales, and a surge in EV sales and developments. The new year, 2018, promises to offer incredible opportunities for success going forward.

Professionally, you might find yourself at a high point in your career. Things could be going really well – your staffing situation is perfect, you have customers flowing into your store, and you love what you do. Or, it could feel like it’s all unraveling. In-fighting or high turnover can be beyond stressful, you aren’t getting the leads or traffic you expected, and it’s a grind going to work every day.

Moving Forward Isn’t Always Easy

Whether you’re coming from a high point or you’re struggling with what to do next in your career, it’s important to keep taking strides. Staying still is the best way to grenade your career. You know how it works:

• If you’re doing well and are happy with the way both you and your department are doing, it won’t last. Your higher-ups expect growth – personal growth and sales increases. Without a growth strategy going forward, you’ll be at risk of being replaced with someone more driven than you.
• If you’re struggling and want to give up, don’t. Whether you get through the rough waters and into smooth sailing or you seek a change in your career, demonstrating a ‘never-say-die’ attitude will help you in the future.

With both trains of thought, there’s a sure-fire way to ignite your passion for what you do and to discover new or better ways of doing things.

Get Out from Behind Your Desk

If there is one thing you should do in the new year, it’s to get out from behind your desk. Your office is holding you back. It makes you inaccessible and unapproachable. It blocks you from seeing what’s going on around you in your department. It turns your eyes downward to the reports you’re reading or the screen you’re scrolling.

If You’re a Sales Manager…

You need to be present with your sales team. There are slow times when you can get your reports completed, and you’ll need to set time aside to watch the auctions and replenish stock. But your greatest impact is when you’re walking the showroom floor.

Customers appreciate when the sales manager is approachable. It feels like they care about the customer, not just about making the numbers work and closing a deal. Your salespeople will learn more from you and feel like they can trust you better when you talk with them in their space, not yours. Spend as little time as you can at the podium or in your office chair.

If You’re a Service Manager…

I’d encourage you to abandon your office. Use it only when you need a closed-door meeting with a customer or staff member, or for a short time each day when you complete the required documents. Instead, spend as much time as you can in the service drive and the shop.

You’ll see an immediate improvement in your staff morale – you’re showing that you care about what they’re doing. You’re helping when you can, you spend face time with the customers, and you’re seeing the problems and bottlenecks in real time, which means you can get them addressed sooner. A service manager out of their office can be much more effective.

If You’re a Dealer Principal or GSM…

The business side of a dealership gets in the way. Get back to what you love – the customer satisfaction business. When you spend less time at your desk, you’ll develop stronger relationships with your managers and employees, which improves staff loyalty and morale. Customers who see the owners, DPs, and GSMs enjoying time with customers and staff in their store feel like it’s a place they want to do business. And being outside of the office will certainly help top management to understand necessary changes and discover what their customers want.

Less time at your desk will absolutely have a positive impact on you, your department, and your store as a whole. If there’s just one change you can make for the new year, this should be it.

I can’t help but sense that most of the retail automotive world feels threatened by the push toward an online sales experience. It’s been coming for well over a decade in a mainstream fashion, not just as a flash-in-the-pan trend. It’s not a Tickle Me Elmo or a Slap Chop. Buying online is going to stay, and it’s going to become the crux of the retail automotive business. It didn’t come up out of thin air, so it shouldn’t be taking any manufacturers or dealers by surprise.

What it should have done by now is triggered opportunities in your head. There should be a list on your desk of ways your dealership or department can capitalize on the online automotive marketplace. It should be an ever-present thought in mind because it’s not ten years or even five years away. It could very well be the biggest news story of 2018.

If you’re stuck in the mindset that online sales and out-of-dealership sales experiences are doom and gloom, it will be. But for dealers who welcome a better customer experience, it offers ample opportunities to thrive and grow.

It Expands Your Sales Radius

It makes sense with a brick-and-mortar sales process to target the prospects closest to your home base. With online sales, you can advertise and extend your range effectively, so long as your inventory and staffing are sufficient.

Three-quarters of online car shoppers still want to drive before they buy. Extending your store’s sales range requires putting cars near them. It can be as easy as renting a secure compound or storefront as a satellite location, stocking it with common vehicles, then sending a product advisor to meet interested clients off-site.

It Minimizes Tire-Kickers

Every online lead is a serious sales opportunity that is only a click away. What previously needed to be filtered for quality leads is chock full of prospects who want you to help them finish their car buying experience on the spot (their spot, not yours).

It Provides More Opportunity for Your Service Department

Selling cars online is a starting point – soon, all your products will need to be offered remotely. The service department can begin offering at-home basic services to secure customer loyalty, and pick-up and delivery valet services obviously keep your customers’ attention and all but eliminate a wandering eye for service providers.

It sounds like more of an annoyance, more trouble than it’s worth, but it’s what the coming trend demands. It’s this or a steep drop-off in service traffic.

Prepare for It!

If you have a traditional store currently, it doesn’t take much at the store level to develop an online car buying experience. Only a few items need to be done to get your building and staffing in place:

• You’ll need more staff. Valets, product advisors, and service staff, specifically. Because you need to be increasingly mobile, you need to add personnel that can handle the influx of outbound traffic.
• Mobile service units. It’s quite basic, really, requiring a mobile lift, a set of mechanic’s tools, a mobile air compressor, and a parts department that can quickly equip the service unit with the right parts they need for the job they are going to.

The harder part isn’t at your store level. You need to implement changes that go beyond your four walls.

• Make online sales part of your brand image. You’ll want to consult an advertising expert for the best way to do so.
• Develop your online content. Your website must offer a seamless experience for the sale or the frustrated customer will simply click over to another dealer. Create valuable content, evergreen blogs, new model descriptions, and in-dealership product videos. Make it so the shopper doesn’t need to go elsewhere for information.
• Get your F&I department ready for the road. Armed with videos showing the benefits of the products they offer, a connected tablet or computer to serve the customer remotely, and a customer-centric focus, the F&I staff will need to become mobile to round out the complete out-of-dealership selling experience.

You might’ve had cause to be a skeptic at the beginning of 2017, but no longer. 2017 is the year Volkswagen committed to building an electric option in all 300 of their worldwide models by 2030. Volvo says every new model launched from 2019 onward will have an electric motor in some capacity. The Chevrolet Bolt is the 2017 North American Car of the Year, and the Tesla Model 3 finally (and slowly) began production.

Electric car technology is here to stay, and it’s going to change the way dealerships do business. That incudes the service department from tip to tail.

How Your Service Department Needs to Handle EVs

On average, your electric car customers will be much the same clientele; perhaps a little more environmentally conscious. How your staff relate to EV customers should remain constant with your other patrons. But how you deal with their vehicles will affect your service department structure.

You need a charging platform.

What you need will depend on the products your store sells, as well as the volume of EV sales. Have a minimum of one fast charging station outside your dealership to add a quick charge to depleted customer cars and inventory. Inside your store, have one Level 2 charging system per 4 to 6 service bays.

If this sounds like more of an investment than you’re ready to make, think about the repercussions. If a gas-powered car runs out of fuel in the shop, it only takes a moment to put gas in from a jerry can. If an electric car depletes its charge, how do you plan to ‘jump start’ it to move it? Besides, with electric car model releases ramping up, it’s better to be prepared ahead of time.

You’ll need EV techs.

The immense amount of electrical discharge from an EV can kill someone. It’s fundamental that the people working on electric cars know how to do so safely. All of your staff – from lot attendants and detailers to master technicians – should know how to be safe around an electric car.

Technicians, though, will need more thorough training. Begin the process of certifying your techs to work on not just your brand’s EVs but others that come through for service or used car reconditioning. Have at least two certified in short order; then add other techs consistently as time allows.

You’ll need dealer certification.

Get ahead of the dealers around you. Be the first to get EV certified in your area. Manufacturers will only sell their EV products through their certified dealers – the Chevrolet Bolt is one example and the Ford Focus Electric is another.

There may be geographical restrictions they impose as well, like just one EV dealer within 100 miles. If you aren’t the first, you may be waiting years before you can get your foot in the door. You need to find out your manufacturer’s requirements and implement them as soon as you physically can.

These three things should be at the top of your 2018 checklist. 2018 promises to be another big year for mainstream electric cars with the Honda Clarity Electric coming out, the new Nissan LEAF recently released, and other models kicking up production. Be prepared for the wave of EVs you’ll soon see on the streets.

You expect a certain amount of respect, and along with that, you expect to be listened to. Yet, every manager finds themselves in a place at some point where their words have no effect. It’s like speaking into the void of space: absolutely nothing is getting through, no matter how vocal you are.

It can seem like your team isn’t paying any attention, and that feels like a direct blow to you as their leader. It rings of disrespect for your authority, doesn’t it? It stings, and the lasting effect is that you begin to doubt your ability to manage.

Look for Proof

Before you get too crazy about it, do a bit of recon. It’s important to know whether your team has actually heard your previous directions, and that’s best done by observing. Take stock of their actions – are the directions you’ve given been put into action? Is there a direct contradiction to what you’ve said?

In my view, there are three possibilities:

• Your staff are following your instructions – you just didn’t hear a verbal confirmation that you were heard.
• Your words have fallen on deaf ears. There has been no proof that your input has been put into action.
• There’s direct contradiction to your instructions. This is the worst – someone thinks they know better.

How You Respond

Just because you’re a manager doesn’t mean it’s easy to respond, but it’s a must. If you don’t, you’re not just allowing out-of-line behavior – you’re approving of it.

If you feel like you weren’t heard but your instructions ultimately were followed, it tells you that your communication needs some fine-tuning. This is easy. All that’s you need to do is ask for your instruction to be paraphrased or repeated back to you.

If you’re the manager whose instructions don’t meet resistance but aren’t put into action, you have a challenge on your hands. What’s happened is that, over time, your team has gotten into a rut. They run on autopilot, and that makes diverting from the routine difficult. Hands-on coaching may be necessary for implementation. More likely, it requires less managing and more leading. Simply telling your team which way to go is less effective than showing them the way. And remember that changing a routine takes consistent effort for at least 3 weeks before it becomes the new routine.

If you have someone on staff that goes completely against your instructions, there’s an obvious issue. It’s a case of someone thinking you don’t know what you are doing and undermining you, or it’s a person who really doesn’t like their job or where they work. But before you put the issue squarely on the employee, you need to evaluate the environment. Is your request unfounded? Are you micromanaging? Is the workplace becoming toxic? Or is there something personal standing between you two? Try to resolve issues that may be affecting performance before coming to the decision to terminate, even though that might need to be the end result.

Evaluate Your Instruction

You’ve already said it, so you have to ensure its compliance. But if you’re noticing that you are ‘losing the crowd’, it might be a professional development issue within yourself.

The tendency as a manager is to want control of every facet of operations. You know what that means in your own store. You may be getting tuned out by some if you start micromanaging every process instead of letting service happen organically and personally. If that’s the case, you should find someone in your team – your ‘number two’, for example – that you can trust to bounce ideas off before implementation. You want someone who is willing to tell you that an idea is dumb, redundant, or unsustainable.

Often, you’ll just find that people are being people. Change is difficult. Making something new routine takes a long time. There’s other stuff going on in each person’s life. You should strive to be sensitive and gracious to these things. Knowing someone is understanding can build strength as a team, and you’ll find you’re being heard more often.

As I sit in the customer lounge, waiting for my vehicle to be serviced once again, it’s evident that most dealerships have a hard time being in the customer’s shoes. Being three years distant from the role as a service advisor, I’ve become overwhelmingly aware of how bad the true customer experience can be – without the dealer even knowing it.

As I’ve mentioned before, it’s all the little things that make a massive difference. What’s necessary is an honest, unfettered review of the complete service process FROM THE OUTSIDE. Allow me to give a few examples and ideas that are extremely fresh for me as I drink waiting room coffee and sit in a sterile lounge.

The Appointment Process

Look at your appointment process, and what it promises to do. Obviously, an online appointment schedule is much more common than it used to be, but there are many ways it can fall short.

For instance, in my appointment, there wasn’t an option for a basic oil change service, nor an option to simply enter the details of a concern I wanted addressed. And when I completed my appointment online, it told me I would receive a confirmation from the dealership shortly. That didn’t happen. The next contact I received was a text message an hour before the appointment. So, I enter the service visit already a little put off.

Check In

The flow to the service advisor must be logical. Is it obvious to a first-time customer, let alone a regular client, where they should go? I pulled into the service drive and found the check-in podiums unattended. Apparently, their check-in process has changed, and I needed to go through a door to see the advisor. There was no one to greet or direct me.

Write-Up

The details from my appointment did not translate from the online appointment to the in-dealership reservation. Where it falls short, I do not know. What I do know is, as a customer, I expect to need to input the details only once. If that doesn’t happen, why book anything other than the check-in time alone?

The advisor was warm and knowledgeable, which is a stark difference from the previous gentleman who held the role. And while he reviewed the required maintenance with me – something that didn’t happen before – it would be a nice touch if the benefits were reviewed as well.

The Wait…

There’s plain seating, newspapers, and a blank TV in the corner. I’m in for a wait that could take a few hours, and 30 minutes in I’m already fidgety. The waiting lounge has the ability to enhance or detract from the service visit, which I see now.

For tech-savvy dealers, an iPad station with apps, vehicle information, or simply browsers would be an inexpensive way to keep customer happy and occupied. A desk where I can use my computer would be wonderful, embracing the business-class customer. A TV screen that includes valuable vehicle information like the service from Ten Foot Wave would be an awesome touch. Anything to take the customer’s mind (aka. MY mind) off the wait.

Let’s Skip to the Cashier

If the past is any indication, there won’t be a description of the services performed today when I go to pay for my service. The customer absolutely must know what was done and if anything else requires attention next time. It provides reassurance that their vehicle is in good condition until the next service is required.

You’re Too Close

As a dealership employee, you’re most likely too close to see the customer’s POV. It’s your process, which you trust. It isn’t necessarily wrong, but it probably needs to be optimized.

Find someone to perform an audit of your service process, whether it’s a professional or a trusted layperson, to tell you where you can improve the customer experience.

Ratchet and Wrench released details of the 2017 Shop Performance Survey. There aren’t many reports that focus on the service industry instead of sales, so we pay attention to this one. In the 2017 Survey, there’s a marked decrease in respondents who claim to track KPIs consistently. Just two years ago in the 2015 survey, 82 percent of survey respondents claimed to track KPIs. This year, it’s just 68 percent.

We should all know what KPIs are at this point – Key Performance Indicators – and why they are so important. So then, why is there an alarming trend where KPIs are only watched by two-thirds of managers in the service industry? Is there something they know that we don’t?

Independent Versus Dealership

Personally, the first thing I checked was where the responses were generated from. Of the 200+ shops that completed the survey, 87 percent were independent repair shops, and 68 percent claim to be in the business of General Repair. This alone could be an interesting point to delve deeper into, as the remaining 13 percent are dealerships and franchised.

It would seem that independent repair shops are putting less stock into tracking KPIs, on average, yet they continue to steal away service customers from dealerships at an alarming rate. What are they doing that is more effective than the usual performance factors?

Even dealership service departments don’t track KPIs as reliably. The report shows that dealer-owned service departments dropped from 88 percent to 79 percent in KPI tracking. Even with the higher rate, their efficacy might still be lacking if they don’t fully understand how to implement them in the face of customer service.

Most Tracked KPIs

This provided some very interesting insight, in my opinion. In the summary, Ratchet and Wrench provides this list of KPIs and the percentage of shops that track them:

• Repair Sales Volume: 90%
• Gross Profit Margin on Parts Sales: 90%
• Maintenance Sales Volume: 89%
• Overall Gross Profit Margin: 86%
• Gross Profit Margin on Labor Sales: 83%
• Effective Labor Rate: 78%
• Technician Productivity: 76%
• Technician Efficiency: 75%
• Overall Net Profit Margin: 72%
• CSI: 43%

What seems to be the most important factors among repair shops of all kinds is still Gross Profit and Sales Volume. Only 43 percent of repair shops take CSI scores into consideration, and that could be because many independents have no way to track them at all.

What also stands out to me is Effective Labor Rate, with only 78 percent of shops keeping track of it. It’s a critical component in maintaining a healthy profit margin and helps reduce instances of unauthorized discounting. Why any shop would leave money on the table by NOT tracking ELR is beyond me.

How Do 32 Percent of Repair Shops Track Success?

There are still 32 percent of repair shops that responded who do not track KPIs. Yet, because they are still in business as either an independent, a dealership service department, or a franchised shop, it must be assumed that there’s some level of success.

In many cases, they simply don’t track progress. It’s an extremely loose way to lead, but it must work for at least a few. The major implication is that it’s difficult to move forward and grow when you don’t know where you’ve been or where you want to go.

An Untracked KPI??

Perhaps it has something to do with a factor that isn’t commonly tracked. Independent shops have a reputation for speedy service, and that’s an area dealerships have been sorely lacking. It’s been widely publicized that customers don’t want to spend so much time at the dealership, but little has been done to correct the issue.

Do we need to begin tracking a new KPI called TIS, or ‘Time In Service’? Reducing the minutes or hours a customer spends with their vehicle in the dealership could have the power to improve CSI and increase retention, as well as overall RO counts and repair sales volume.

Think about tracking TIS, the total time from writeup to completion, not just the technician’s efficiency. Reducing the total Time In Service might be a difference-maker for your store.