Small deviations in price can add up to a major loss of revenue! If pricing compliance is an issue in your service department, follow these tips to get your technicians and profitability back on track.
1. Identify that Non-Compliance Exists Within Your Service Department
The first step in maximizing pricing compliance is to determine if the problem of non-compliance exists within your service department!
Doing so will ultimately increase your ELR and directly affect your bottom line.
Are your technicians compliant?
Chances are, your service department has some strategy in place for pricing repair labor. It is common practice for technicians to reduce prices to avoid losing a job. However, doing so is taking away from your net profitability!
What should you do to increase pricing compliance?
Consider running your service department the same way your sales department works. Management should set the prices and the technicians should adhere to them. In cases of discounts or negotiations, management should be involved to authorize any change in price!
2. Adopt a Pricing Policy to Maximize Compliance
Do you know how much money is being left on the table month after month from your technicians improperly discounting services? Now that you’ve identified that non-compliance exists in your service department, it’s time to do something about it!
Benefits of a Pricing Policy
A pricing policy gives management control over any discounts made because it cannot be done without their involvement. Doing so will increase your ELR, which directly translates into net profit!
3. Hold Technicians Accountable for Pricing Compliance
You’ve identified that non-compliance exists within your service department, and you’ve utilized a pricing strategy to prevent money from being left on the table. The third step is to ensure your technicians are following the policies set forth.
Encouraging Technician Accountability
Step 1: Meet with the service advisor team to reiterate the pricing strategy.
Step 2: Review individualized advisor performance for the previous day and month-to-date each morning. Non-compliance should be explained to management.
Step 3: Make a portion of advisor compensation based on compliance.
Step 4: Praise compliant advisors!
4. Enforce Proper Op-Code Usage
Op-codes play a critical role in improving shop management because they are like part numbers for a service department! If you don’t already have a robust set of op-codes regularly utilized by service advisors, now is the time to implement them!
Why do Op-Codes matter?
From the experiences of our expert Coaches, service departments that allow advisors to use “miscellaneous” op-codes, tend to become overused and make filing for warranty labor rate increases nearly impossible!
Having a strong set of op-codes for service advisors to properly document their work helps you to analyze sales in a more meaningful way.
Do it with the help of a Strategic Partner!
Once your pricing structure has been optimized, our team helps Service Management hold service advisors and technicians compliant. We provide daily data and reporting capabilities that illuminate hidden issues and provide visibility to every transaction. Schedule a meeting with us to learn more!