Grow Your Service and Parts Business in 2012
Sunday, January 1st, 2012What was the biggest problem in 2010? Not enough people to take care of the Customers! This is the single biggest problem I see today in Dealerships. In 2010, I’ve visited Dealerships from Kentucky to Virginia to Texas to Minnesota to Georgia to Wisconsin to Florida. All but one have the same problem in common – not enough people to “cuddle” the Customers. Since 2008, almost every business cut its staff. It made sense. The future was uncertain; businesses needed to remain profitable and the logical place to start was the single largest expense every non-manufacturing business has – Personnel Expense. Several positives came from this. Dealerships were able to get rid of outrageous guarantees, “dead weight” and they were forced to improve and streamline processes. But if Dealers want to thrive in the coming years now that the economy is well-past “rock bottom” (March, 2009), they have to be prepared to grow their Service & Parts business by being able to handle the business professionally and properly.
The problem seems to be that Dealers are now “addicted” to very high Net Profits and Net Profit to Gross Profit ratios. What I am talking about is adding straight commissioned Service Advisors and Technicians to the Staff, not overhead “fat”. This will increase both Gross Profits and Net Profits. New Vehicle Sales will not “rebound” to previous levels for years; it’s called “the New Normal”. The “gold” is in Used, Service and Parts. Prepare for “the New-Normal” that we have been in and will be in for the next few years by staffing your Departments with the right number of Employees to take care of your current and prospective Customers. In the Service Department, to have enough time to take care of the Customers, your Service Advisors should NOT be handling more than 15 Customers a day on average (12 if you are a high-line Dealer). And if your Service Advisors have taken on the cashiering duties or warranty coding, the number of Customers they should handle should be less. Here’s a simple exercise; for the month take the number of Customer Pay and Warranty Repair Orders and add them together. Add in the Internal Repair Orders IF your Service Advisors also write those. Then divide the R.O. totals by the number of Service Advisors. If you answer exceeds 325, you need more Advisors.