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Welcome to NCM's Up to Speed Blog

Key Processes that Drive Profitability

Chip Maher
Written By: Chip Maher
Posted on November 19, 2018

Every dealer, GM, and manager I speak with on a regular basis have questions about improving their operation. While their individual circumstances differ, the common goal between them all is searching for additional ways to drive profitability. In my experience, the first few places I look to for profitability are the Service and Pre-Owned Departments. You can drive the most profits when those two departments are performing optimally. Here are several ways that every dealer can make a big impact on their performance in both the Service and Pre-Owned Departments

Service Department

Appointment Scheduling: Setting appointments and loading the shop is key to a profitable Service Department because it starts at the appointment scheduling process. Whether you use a BDC, or service advisors, to schedule customer appointments, effectively leveraging the total available hours in the shop is critical. It is not unusual to find Service Departments that under book appointments and therefore run out of work in the afternoon. Loading the shop all day, especially late in the afternoon, is essential for a profitable shop. 

MPI (Multi Point Inspection): The MPI process is probably the most critical to the profitability of the shop. A well-executed MPI process will increase CSI and customer retention while realizing the maximum sales and gross per repair order. The key to a successful MPI process is this: 100% of the customers are presented the MPI results 100% of the time. No exceptions! A well-executed follow-up on declined repairs will add additional gross, sales, and customer retention.

Pre-Owned Department

Appraisal Process: A well-executed appraisal process will generate additional sales and gross for both the New and Used Departments. In addition to increasing your closing ratio, it will enable you to reduce the cost to market on the trades you take in.
Reconditioning Process: Reducing the cycle time of reconditioning pre-owned vehicles is key to a profitable department. A consistent and timely recon process will enable dealers to be more competitive and profitable. At an estimated boarding cost of $45 to $55 a day, reducing turn around time by just two days can add up to big savings! Many dealer groups have already centralized their reconditioning process for a quick turnaround.

Other Best Practices:

  • Meet with all employees involved in each process, to review and revise as needed. Getting their feedback and input will assist to make the process effective.

  • Publish a written process that is distributed to all employees. Keep it short (one page) and include word tracks that can be used by employees to provide a consistent customer experience.

  • Monitor and track performance. For each process, select metrics that can be tracked and posted.

Profitability is attainable at every dealership, and in every department. The key to achieving it, is having all your team do things the right way, every single time. This consistency is what will allow your store to grow sales and gross, and if these processes are followed by everyone, will also increase both your CSI and Customer Retention scores as well.

Are you wanting to learn more about driving more profits in your dealership? Our automotive experts are here to help! We help dealers across North America find profits with our industry-leading 20 Groups, automotive training in the NCM Institute, and with our suite of Benchmarking Software designed to gauge your performance against the best.
 

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