The $1,300 oil change
A few years ago I was at an account of mine, working in the drive lane when I watched an advisor write up an oil change without walking around the vehicle. I then went over to the car and performed a proper walk around that includes popping the hood. The customer noticed me and came over to the car asking what was going on. I explained that this was a quick visual inspection looking for issues he might have. I then stated there were some concerns to share with him. His tires were all bad as well as the rear brakes, right tie rod end, serpentine belt and the list went on!
There are many lessons in this that the customer shared with me. He purchased three new vehicles from this dealership and on his way in he was considering this would be his last visit due to the service department. He said after the professional way he was treated today he would be a lifelong customer! Isn’t it interesting he went from considering this would be his last visit to completely satisfied, and ended up spending $1,300 dollars? I have said many times the customer must see what they need. Seeing is believing and buying products and services. Now however, this thought goes even further with seeing is retaining the customer. This customer could have declined the recommendations and I would have been alright with that. The customer must be informed every time, every car what it needs to be in peak condition is our obligation and their expectation.
Stop backlogs in your shop
Many shop managers were first technicians and believe there is a since of security in having a waiting list for people to get in for a repair. This practice will always cause the customer to go somewhere else, never to return. If your service department has a backlog over two days it means you should look at staffing needs to correct. Body shop backlogs should not exceed a week. Technician staffing at this level will allow the maximum customer service and retention growing the shop every year. Don’t allow your customers to suffer from your lack of attention to their needs. The company will never lose by placing the focus on customer needs. If I made an appointment today, would it be for tomorrow in your shop? If so, have a wonderful growing year you deserve it.
Take a fresh look at your labor rates
It is time to review your labor rates to be sure you are receiving a good return for the company. Many managers are afraid to bill a fair rate believing the customer will leave and not return. This aged thinking is destructive to company profits and also proper customer care. If the company is not charging a proper rate how can we pay our staff? First let me explain your company might have around $10,000 in training a master technician. The company has also invested thousands of dollars in special tools to provide the customer with a fixed right repair. These items combined with staffing costs demand a fair labor rate is charged to get a return on the investment of the dealership. Look first at your gross profit as a percentage of sales. Is your shop in the 75% area? Next look at the average technician wage your shop has. If you are staffing all higher skilled technicians your gross profit as a percentage of sales will be a struggle. The best way to maximize gross is to have a mix of mid skill technicians to reduce your average technician wage to a more reasonable amount. After all it is likely that 60% of the shops work is maintenance and doesn’t require the higher skilled technician to perform.
Don’t forget in this review to look at your warranty and internal rates. Internal should be at retail rates to get the best return for the dealer. Why discount this rate? To give additional sales staff commissions. When is the last time you requested a warranty rate increase? Review the rates your local dealerships are receiving and notify your manufacture you need a onetime rate increase to better serve your customers. Fixed operations will only be a profit center when rates are reviewed and increased at least once per year.
Rob Gehring, President
Fixed Performance Inc.
Fixed Performance complete fixed operations coaching consulting