When managing a Service Department, it’s not just the obvious metrics that matter; there are hidden key performance indicators (KPIs) that can make or break your success AND profitability. This blog explores four of these less-discussed but vital indicators that Service Managers might not be paying enough attention to. From understanding the delicate balance between technician efficiency and productivity to unlocking the mysteries of unapplied time, we’ll shed light on why these hidden KPIs can have a profound impact on your bottom line. Plus, discover how upselling LOF (Oil Change with Tire Rotation) and identifying selling opportunities for high-mileage vehicles can transform your service department’s performance.
Hidden KPI 1: Managing Technician Productivity
The concept of technician productivity is a KPI for Service Managers that can hugely impact expected labor hour goals. Productivity is the relationship between the amount of time a tech spends producing hours within the time they are scheduled to work.
For example, a technician could be 150% efficient, however, if roadblocks and obstacles only allow this tech to work 75% of the time they are scheduled, they will not achieve the amount of flat rate hours expected. Conversely, if a technician is able to generate their flat rate hours 100% of the time they are scheduled but is only 80% efficient, they will not achieve the amount of the flat rate hours that are expected. Therefore, Service Managers must pay attention to both the technician’s efficiency and productivity in order to identify opportunities for growth.
Hidden KPI 2: Categorizing Unapplied Time
Often overlooked is the importance of uncovering the concept of unapplied time in financial statements and how Service Managers can influence and control this factor. Every financial statement has a line for unapplied time. However, this number is often misunderstood. It is simply this: money paid to the technicians not collected on a repair order. It is driven by many factors that Service Managers can control.
Because of the common misunderstanding of unapplied time, other teams like payroll can add items to this line that do not belong there. This directly affects the profitability of the Service Department! When you can establish an accurate understanding and ensure the proper categorization of items in unapplied time, your Service Department will reap the reward of more dollars to your bottom line.
Hidden KPI 3: Upselling LOF
It can be easy for your Service Advisors to get in the habit of performing only the work a customer came in for without thinking like the sales team. When your Advisors begin to learn how to upsell, especially LOF customers, it not only benefits the shop’s profitability but also allows them to provide customer education, build trust, and create long-term customer retention.
An example of an important upsell opportunity is an oil change with a tire rotation. This is one of the easiest ways for a Service Advisor to move beyond being an “order taker” and to become an actual advisor or advocate for the customer. Additionally, it builds the habit of asking the customer for the business. Think of it as the service drive equivalent of “do you want fries with that?”.
Hidden KPI 4: Selling Opportunities for High Mileage Vehicles
A common occurrence in many Service Departments is seasoned Technicians in the “main” service department primarily doing recalls and warranty work, while the less experienced technicians are performing “express” services. While it may make sense to many Service Managers, the problem with this is the less experienced technicians are writing up high-mileage vehicles that come in for basic services without recommending additional preventative or diagnostic services.
Instead, the Service Manager should be determining which Service Advisors and Technicians should be handling certain vehicles based on their mileage, instead of customers determining who writes up their vehicle based on the door they drive through.
Once a Service Manager recognizes the missed opportunities, the entire department can get on the same page regarding the significance of the different mileage bands. From there, a process can be developed and implemented to route cars in various mileage bands to certain technician talent.
While Service Managers often focus on the well-known KPIs, these four hidden indicators are the secret sauce that can drive your service department’s success. Paying attention to technician productivity, mastering unapplied time, unleashing the power of upselling, and identifying selling opportunities for high-mileage vehicles can lead to substantial growth and profitability. By harnessing these hidden KPIs, you’ll not only optimize your service operations but also enhance customer trust and long-term retention, ultimately fueling your service department’s success.
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