presented by brad lawson - home of nhada€¢review all pay plans an incentives to be sure they ......

Presented by Brad Lawson

Director NADA 20 Groups

NADA 20Group Service Best Practices 2011-12

For NADA 20Group information

[email protected]

[email protected]

www.nada.org www.nadauniversity.com www.nada20group.org

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http://www.nada.org/

http://www.nadauniversity.com/

http://www.nada20group.org/

Tell us something we don’t know!

What is six minutes worth to the average sized Service Department?

• 7.5 hours x 22 days x 9 techs = 1485 hours

• 1485 hours = 14850 tenths (6 minute intervals)

• $110,000 (Avg. Mo. Sales $ for avg. tech count= 9) x .69 Gross profit = $71,500 Gross profit.

• $71,500 Gross Profit divided by14850 (tenths)= $ 4.81 Gross profit earned every 6 minutes.

What is six minutes worth to the average sized Service Department?

• With a net profit % of Sales at 3% it is equivalent to about 22 cents per tenth of each hour.

• Even an outstanding service department at 10% net to sales only earns about .75 cents per hour.

• How much does a tenth unsold cost? About $4.70 for flat rate shop. More for an hourly paid tech staff.

So, what do you have to sell?

• All you really have to sell is hours or as we’ve just seen tenths of an hour according to labor operations guide.

• Improving processes that produce gross profit and controlling costs is management’s challenge.

• A shop will not run by itself! It requires constant oversight to be profitable.

Service Department Profiles

• Sales proficiency 120% of hours Available

(Total Hours Billed divided by Shop Hours Available)

In an 8 hour workday shop:

Number of Techs X 10 = Hours billed per day!

• Gross profit retention 73% Customer Labor (GP$ divided by sales$) 73% Internal Labor 73% Warranty Labor

Service Writer Guidelines

• Technician to Writer 5/6 : 1

• Repair orders Written per day 13-18

• Advisor Vehicle Walk Arounds 100%

• Productivity: (Hours scheduled divided by Hours

Available - Calculate Total per day and Per Advisor per

day )

100%

Technician Profile

• Technician Efficiency (Labor Op. Time guide hours divided by

actual time required )

125% Factory Warranty Manual Time

135% Flat rate Manuals

• Technician to Support Personnel Ratio

2 (techs) :1 (support)

Daily Calculations

• Effective labor rate

(Labor sales divided by the hours billed)

• Shop proficiency

• Advisor Productivity

• Technician Efficiency

Best Practices : Evaluating your Service Department Internally. Now!

• Review all pay plans an incentives to be sure they match your business plan for the Service Department

– Flat rate, hourly or salary, everyone in the service department should earn relative to the standards set for department profitability.

– Consider a joint incentive or % of earnings that is shared between the service and parts department management team.

– Be sure incentive bonuses accomplish only short term goals. Don’t allow them to become entitlement pay.


• Complete a thorough RO study (100 or more) to measure:

• Work Mix Percentages – Competitive, maintenance, repair, service contract/warranty

• Vehicle age – Percentage of older ( +6years)

• One line (labor operation) Repair Order - Percentage of total

• Look for proper documentation including customer/vehicle information and tech notes. Remember that they are considered legal documents.

• Break out your results by advisor and look for patterns.


• Review Warranty RO’s regularly.

• Is there a backup person who could take over warranty today?

• Late submission standards are changing. Don’t let a time lapse wipe out claim reimbursement.

• Warranty audits are not to be taken lightly. Check your compliance with OEM requirements.

• Missing or poorly written tech notes and the lack of full time documentation is a Warranty chargeback waiting to happen.

Best Practices : Evaluating your Service Department Digitally. Soon!

• Before you turn over the apple cart, find out where your digital opportunities are.

– Use Google business applications to measure the effectiveness of your online media for service and parts.

– Create a Google alert or similar for all digital ratings or evaluations of your Service and Parts Department. Find out where you are being criticized or praised and take appropriate action.

– Consider a satellite website for events and special interests your service customers might participate in.

– Be sure you understand how Facebook provides a forum for your customers. Create your own page if you can.

Best Practices : Marketing your Service Department Digitally. Very Soon!

• Create a Service, Parts and or Accessories stand alone website that has all the right pieces to get noticed by the web crawlers that establish your position on search pages.

– Create specials for customers that don’t conflict with your everyday pricing.

– Develop a fool proof communication link for scheduling service.

– Be sure you have mobile capability at some point.

– Present a commonly asked questions and answer page.

– Post descriptions and video (or links to You Tube) for common wear out item repair procedures.

Best Practices : Selling your Service Department

• Insure customer contact and familiarity with the Service and Parts staff before Vehicle delivery. Write up area meet and greet. – Best time to introduce new vehicle purchase

customers to your service department. Make it mandatory for all new car customers.

– Give them a special gift or discount coupon (accessories)

– Explain how to make digital appointments and be sure to get authorization for Email and Text messaging from the customer

After selling the vehicle and before F&I

Best Practices: Selling your Service Department

• Sell the value of competitive pricing, convenience, and experienced staffing every customer receives as a direct benefit of their vehicle purchase New Or Used.

Brochure, Video Production, Competitive pricing

sheets showing common wear out (Brakes, Tires, etc.) parts with labor costs.

Vehicle Inspections if appropriate

Important that this becomes part of the sales and or F&I process


• Owner Clinics have returned good results for many dealerships. (Requires solid planning and great execution by staff) – Offer a prize drawing at the completion of the

program.

– Send everyone home with something.

– Be sure they can interact with staff for questions.

– Some Techs make great hosts in the shop.

– Get evaluations from every attendee.


• Everywhere you can think that a customer might look to find your dealership’s phone number and website address.

• Suggest in your electronic communications that they should save your website as a favorite.

• What does your courtesy van look like? What does it tell the public?

• Do your rentals or loaner vehicle advertise your service department?

• What does your parts delivery or shop truck say about your service department.

Best Practices :Service Appointments

• All Service Calls to a BDC or Dedicated Staff during Rush Periods.

• Maintenance Appointments scheduled through grid available to others (trained) in the dealership

• Stagger Appointments to allow walk -rounds and customer interaction without creating waiting lines of cars or customers.

Best Practices: Service Customer Retention

• Prompt attention to arriving customers.

• Show concern for the customers allotted time.

• Insure vehicles are brought into the service bays on time if it is a scheduled appointment.

• Plan “B” for the unexpected.

Most customers insist that convenience and productive use of

their time is just as important, maybe more than price! For some

you only have one visit to prove their choice was correct.


• Use state safety inspection reminders for all customers even if the last was done elsewhere.

• Spiff or bonus for improving customer retention not just CSI.

• Insure customers waiting are aware of the progress or importantly lack of it.


• In house maintenance plans or warranties that can be administered through the dealership. (New or Used vehicles)

– More comprehensive than “Free Oil Changes”

– Huge benefit to the customer if properly explained and used.

– Provides additional service opportunities as the vehicle gains mileage

– Collect data to gauge results

• Consider an Dealership Points Program

– Establish a points earning program for in store purchases, referrals, active military, etc.

– Redeemable for service, parts, accessories, or whatever you feel appropriate.

– Remind them regularly of their points status with a well designed statement including achievement level benefits they may take advantage of.


Earning a reason to return!

Best Practice: Service Customer Retention

Tire sales is a proven best way to retain customers.

• Tire Display where customers can see them

• Good, Better, Best, tire wall.

• Fixed markup on tires : “All tires $5 over cost!”

• Specials: “Buy Three get One Free”

• Free alignment checks

• Tire rotations at every Oil change

• Tread Depth Check at Write up

• Dealership created Tire replacement, rotation and alignment plan.


• Retain and secure customer security lock pin numbers in the business office.

• Ask and record an identification question or two for access to information.

• Locate a vendor that has replacement smart key fobs for both your used vehicles and customer replacements.

• Dealership phone number decal on glass.

Conventional and Smart Key Replacements

Best Practices: Service Gross Profit

• Control the cost

– Variable labor rates equivalent to skill level of work.

– Track technician efficiency daily and match to labor operations.

– Grow your Technicians in house.

– Monitor Adjustment to Labor/Unapplied time

(Time paid to Technician but unable to bill.)

. Never take in the help wanted sign!


• Train advisors to sell, not just take the order.

– Regular sessions to review RO results

– Insure consistent communication with technicians regarding inspection items.

– Video, or pictures for transfer to customers off-site making additional work decisions. (Isn’t a picture worth a thousand words?)

– Use whatever technology is available and cost effective. (Tablets are beginning to replace

computer stations for advisors.)


• Track all declined additional work by Advisor.

– Determine the reason whenever possible and follow up to ask about a better time to schedule.

– Inspect RO’s for patterns. Coach advisors through the objections.

– Watch the “lost sales (parts) count” to be sure it is not a issue at the other counter.

When customers say no, they may just be saying not today!


• You can never get an unsold hour back, so don’t let any get away. Let me repeat…..

– Hold a mid morning stand up meeting each day to see what corrections need to be made before the afternoon catches everyone standing.

• Don’t put the drawing board away.

– What worked before may never work again.

presented by brad lawson - home of nhada€¢review all pay plans an incentives to be sure they ......

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