When someone asks me about the importance of a quality service department, I always like to show off this metric.
Service departments on average will retain 55-60% of their gross profit generated before other overhead and fixed expenses. By comparison, sales departments retain on average just 35-40%.
That is a 20% difference in potential profit!
Knowing this, it’s sometimes baffling that dealers don’t spend more time working with and training their salespeople in fixed operations.
How to Find More Service Opportunities:
Step 1: Ask the Right Questions
Finding opportunities can, at first, seem a bit of a daunting challenge. If you have a service department that is operating well, then you may not have obvious areas of opportunity.
Some Questions to Ask Yourself:
What if our service department increased its selling price?
How would this happen and what would need to change in our service lane and on the parts counter?
What if we changed some of our marketing strategies and got away from using discounts as a percent off of labor and parts and switched to a flat dollar amount? Would this make a difference?
As an industry we are now measuring transactional discounts on the sale of a vehicle, therefore maybe we should start measuring the discount from the door rate to the ELR and set a standard. What is the acceptable variance between your ELR and door rate in your store?
Step 2: Improve Service Selling Skills
Next, I would advise my dealers to spend more time, daily and weekly, working with your people in fixed departments to improve their selling skills. This will improve both your customer service and your staff’s ability to capture more sales dollars therefore allowing you to reduce your unapplied labor. By the way, you may want to add up your unapplied from last month. You may be surprised what you find!
Step 3: Look at Your Presentation
This is an exercise I constantly suggest to dealers, and one that you can do as you are reading this article. Open a new window on your web browser and head to the home page of your website. Next, ask yourself this question, “If I were a customer looking to get service work performed on my vehicle, would I do it at your store?” Take detailed notes about why you would or would not choose your dealership based on what you are seeing online.
Then, take a look at the websites for your competition. This includes dealerships, yes, but make sure you are also aware of the Jiffy Lubes in your market as well! What is their Google score compared to yours? How easily can customers find their hours of operation? Is there an option to book an appointment online? How are other customers rating you online vs. your competition?
These are a few of the things customer are looking for when they are ready to get their vehicle serviced. They are certainly not seeking out your CSI score or photos of your techs! They want to know how soon they can get it fixed and do you have a car for them! Make sure they know you have what they need better than everybody else.
Backed by this information and implementation, I am sure your service department will have a great finish to 2018!
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