Definitive Guide of Service Center Revenue Drivers for Service Managers
There are 3 drivers of Service Center revenue: quality, sales, and capacity. These three drivers are interrelated, meaning if one area falls short, the other two will also be impacted. It is critical to keep all three “plates” spinning and balanced to truly maximize revenue.
- Part One: Quality
- Part Two: Sales
- Part Three: Capacity
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Part One: Quality
When thinking about quality, there are two different types that should be taken into consideration: the quality of the work your Advisors are performing, and the quality of the customer’s experience. Both of these aspects of “quality” serve as a baseline for setting your Service Center up for success and profitability.
Quality of Work
When we talk about quality of work, we specifically refer to technical quality. Something to consider is, “do my technicians fix the problem the first time, on time?”. This would depend on how skilled your technicians are and their ability to get the job done right. It is crucial to proactively manage every aspect of the quality of work your dealership provides, including the diagnosis and repair of their vehicles.
How to Increase Quality of Work
There are two main parts to increasing the quality of work performed within your service drive:
- Diagnose the problem correctly.
- Fix the problem without harming other parts of the vehicle or causing another issue.
The first part of increasing the quality of your work is to diagnose the problem correctly, as any misdiagnosis can lead to a negative reputation. Throughout the repair process, your Advisors should ensure that any diagnosis is accurate and communicated clearly to the customer.
During the actual service appointment, Advisors should be fixing the problem without harming other parts of the vehicle or causing any additional problems during the repair process. This ensures that the vehicle is fully repaired and in good condition.
There are certain metrics and reports managers can look at to determine the quality of their technician’s work. These insights will tell you if your technicians are making repairs the first time, on time. Ultimately you can increase the quality of work by enhancing the skills of your technicians and delivering to your customers expectations.
Quality of Customer Experience
The quality of customer experience is paramount for any Fixed Ops department. Customers often get frustrated when they have to wait for long periods without any status updates, leading to a ‘black hole’ experience where they are unsure of what’s going on.
Providing customers with clear timelines and promising clear and accurate work timelines can alleviate this frustration. Additionally, offering amenities like rental cars, drop off and pick up services, and quick services can go a long way in enhancing the customer experience. The people/staff and communication tools used during the process are also crucial to ensure that customers are kept informed and satisfied with the service. Follow-up communications are also important to ensure that the customer’s experience is complete. Third-party data can be utilized to look at current consumer trends and preferences for communication, which can be used to improve the overall customer experience.
How to Increase Quality of Customer Experience
Providing a high-quality customer experience is essential for any service advisory, particularly when it comes to vehicle repairs. Customers are often anxious about how long it will take to fix their vehicle, leading to feelings of uncertainty and frustration. Therefore, it is important to keep them informed throughout the process and avoid the “black hole” experience where customers are unsure of what’s going on.
Your dealership can enhance the quality of customer service with the following steps:
- Provide regular status updates and be transparent about work timelines, ensuring that customers know when their vehicle will be ready.
- Offer amenities like transportation, quick services, and comfortable facilities for customers.
- Utilize effective communication tools like text message updates to set clear expectations of the process from start to finish.
- Follow up with customers after the repair is complete can help to ensure their
Overall, prioritizing the quality of customer experience can help your dealership build strong relationships with your customers and drive long-term success.
Part Two: Sales
Before diving into the second driver of service center revenue, think about this analogy. A dentist was in the business of fixing teeth. He then changed his business model over time to be oriented towards preventive maintenance. In doing so, he customized his approach to dentistry based on the needs of his patients. When we relate that to our service department,
Service Invitation Process
The service invitation process is not just a one-time event but rather a continuous process of inviting customers to bring in their vehicles for service. It requires a “closed loop” approach where your dealership takes escalating action until the invitation is ultimately accepted or the customer declines. This ensures that no customer falls through the cracks and that every opportunity to provide service is maximized.
However, in order to encourage customers to bring their vehicles in for service, dealerships need to understand why customers choose to service their cars and why they choose a particular dealership. This information is often overlooked but can be crucial in designing an effective service invitation process that meets the needs of the customer.
Maximizing Return Customers
When customers leave a dealership, they often have misconceptions about returning for future services. This presents an opportunity for dealerships to educate their customers one-on-one and set expectations. However, this is often neglected, and many customers are left unaware of the services available to them. Some dealerships do offer clinics for new customers, but these tend to fizzle out over time. To address this issue, dealerships can adopt Carl Sewell’s “Customers for Life” approach, where new customers are educated about what is offered before they leave the dealership. This can help to build trust and establish a long-term relationship with the customer.
Increasing New Customers
In order to invite new customers, dealerships can target customers they have sold to in the past, customers who have moved into the market, and potential customers based on the make of the vehicle. Additionally, retaining existing customers and recapturing lost customers is crucial to building a strong customer base. Following up on declined services can also be an effective way to bring customers back into the dealership. By adopting a comprehensive service invitation process that covers all these areas, dealerships can ensure a steady flow of business and build lasting relationships with their customers.
The Service Sales Process
The dealership service sales process involves checking off things that a customer may need, based on the service history of the vehicle. This requires having access to historical knowledge of the vehicle, which can be a challenge if the dealership lacks this information. In order to be prepared for the service appointment, it is important to begin preparing the day or morning before, ensuring that all necessary information is available. This includes knowing what the customer came in for, what the walkthrough shows, what the vehicle history shows, and any declined services from previous visits. By keeping updated records and having these conversations with the customer, dealerships can provide a seamless service experience.
How to Optimize the Service Sales Process
One of the challenges in the dealership service sales process is optimizing the process for each customer. Different scenarios require different approaches, and it is important to tailor the sales process to meet the unique needs of each customer. For example, customers with a lease and a return require a different sales process than those with a lease and a buyout, or those who want to own the vehicle until it reaches 200,000 miles. Similarly, customers who own their vehicle and plan to turn it back soon require a different approach. While the overall process may stay the same, it is important to highlight and recommend different services based on each customer’s specific needs.
Ultimately, the success of the dealership service sales process depends on having an attitude of wanting to be prepared and providing a seamless service experience for each customer. By having access to historical knowledge of the vehicle, preparing in advance, and tailoring the sales process to meet each customer’s unique needs, dealerships can build trust and establish long-term relationships with their customers. This requires a commitment to ongoing training and development, as well as a willingness to adapt to changing customer needs and preferences.
Part Three: Capacity
Capacity can constrain revenue because it is impossible to have more customers, hours, and revenue without the capacity to support it. The best place to begin is to have a plan that outlines the capacity needed to enable the desired revenue as the year progresses. Leverage your current data of what you’ve been doing month to month for visibility of what steps are required to get to your goal.
Without available capacity, you cannot grow!
Capacity is best determined “bottom up”, technician by technician, based on individual recent prior performance. The goal is to end up with a month-by-month forecast of total labor and parts revenue and gross profit for the coming year with the highest degree of accuracy and minimum amount of effort.
In order to determine your capacity, begin by establishing a baseline of recent performance for each technician. Take the most recent 30-60 day period to determine work mix. From there, using your DMS or an analytics tool, you can determine how many hours were booked within your predetermined period broken down by each work mix category.
There are five different categories of work. Each of these categories should be forecasted independently.
- CP Competitive includes LOF or “the works” services that are nationally advertised and competitively priced.
- CP Maintenance includes routine services.
- CP Repairs are more complex, require a higher degree of skill, and often command a higher price in the marketplace.
- Warranty includes primarily work done for the OEM.
There are different types of technician time that should be considered when optimizing your existing staff. This is the first step you should take when beginning to maximize the capacity of the technicians already in your service drive.
- Scheduled Time: The time that each technician is scheduled to be working is their scheduled time. This excludes holidays, vacations, and training. Scheduled time is the starting point for creating a projection.
- Present Time: This type of time accounts for how long each technician is onsite and available for work. Considerations here include individuals who are late, leave early, call in sick, etc.
- Assigned Time: Assigned Time is the time that each technician is assigned to a job and is expected to be working. Time moving vehicles and time at the parts counter is included.
- Booked Time: Time each technician is paid for a job they performed is booked time. Oftentimes, booked time can exceed assigned times.
One of the key factors that can impact the success of a dealership’s service department is its capacity related to their facility. This includes the dealership’s ability to handle the demand for service, as well as how organized the shop is in making technicians efficient. This can involve a range of factors, from having the right equipment and tools to having a well-organized inventory of parts and supplies. Additionally, having an efficient process for pulling parts and finding cars on the lot can help to streamline the service process and ensure that customers are able to get their vehicles back as quickly as possible.
Ultimately, having a well-designed and well-organized facility can make a significant difference in the success of a dealership’s service department. This requires a commitment to ongoing improvement and investment in the tools, equipment, and processes that are necessary to meet the needs of customers. By focusing on capacity related to the facility and ensuring that the dealership is able to handle demand in an efficient and organized manner, service departments can build trust with their customers and establish long-term relationships that are essential to the success of the business.
Dynatron Software Makes Running Your Fixed Ops Easier and More Profitable!
By working with Dynatron Software, dealerships can benefit from our expertise and suite of solutions to help you maximize Fixed Ops revenue. While taking steps on your own to enhance each driver of revenue in your Service Department is possible, it’s much easier to do it with the help of a strategic partner.