Five steps to increased efficiency and profitability
Manufacturers have been pushing dealers to get into the quick-service business for years but have failed to provide them with a business plan that works for all parties involved. Many stores have resisted this change and in doing so, have overlooked the potential to generate high gross profits on customer-pay labour and blow the socks off their maintenance sales!
Surprisingly enough, in stores that already have quick-service bays, we frequently hear dealers, general managers and service managers say they want to shut down the bays and send all the vehicles through the shop. If the focus of your quick-service staff is to push the vehicles through as fast as possible and see how many oil changes they can perform in a day, chances are these bays are costing you money. It doesn’t matter if it’s an import or domestic store, the technicians working in the quick service bays tell us the same thing: “We don’t have time to sell.”
Over and over we hear that, if the technicians slow down and perform a proper inspection and try to sell additional work, the manager comes out and complains that they are working too slowly and tells them to pick up the pace. When we ask the customers what they want – a fast oil change or an oil change with a proper inspection – they tell us they want both a fast oil change and a proper inspection. So, let’s get in the game!
Step 1: Add specific job codes to increase efficiency.
How long does it take for a technician to sell an air filter? The average time we’ve observed is 20 minutes; which is equal to the average time an oil change should take. To correct this issue, create a job code such as, “Change air filter if required.” Have your service advisors pre-sell the air filters at the time of write-up on the oil changes. Generally the air filter-to-oil change ratio runs from 4 to 7 percent, but incorporating the new code could bump that ratio to 14 to 24 percent. Creating the new job code is the easy part. Getting your staff to use it consistently will require someone to review the work orders on a regular basis to hold the service advisors accountable.
Step 2: Install a cabinet in the express bays to stock quick moving parts
One of the easiest ways to speed up productivity in the quick service bays is to stock parts such as wiper blades, oil filters, cabin filters, light bulbs and air filters there. Remember that these items must be accounted for at the end of each day to avoid shrinkage.
Step 3: Track the sales from the express service bays
To track the sales from the express service bays, have the staff fill out a tracking sheet for every vehicle they perform work on. The tracking sheet should include the advisor’s name, vehicle information, work-order number, recommended work including maintenance, and whether it was sold or not. This will take some work to get it into place and to get it to stick. It typically takes about 21 days to make or break a habit but if you have them submit the tracking sheets to the manager at the end of each shift, it will take no time to get things moving. Plus, when the advisors realize they are being tracked on sales from these bays, the hours per work order will immediately go up!
Step 4: Rethink the cost of additives for maintenance work
You are earning 70 percent (or higher) gross profit on maintenance but 70 percent of what is the question. In the current marketplace, the gross margins must be increased to generate a stronger bottom line. The first place to look for additional profits is in the maintenance items. Take a look at the prices you are paying for additives for services such as coolant flushes, power steering flushes, transmission services and brake flushes. Many additive companies sweeten the deal by giving away free machines to use as long as the dealership continues using their products. In some rare cases, this might be more cost-effective but for the majority of the time, once reviewed, it would be more profitable to purchase the machines and earn higher gross margins. With those increases, the machines have paid for themselves within a couple of months in most cases.
Step 5: Train a quick service specialist who works at a lower pay rate
Now that you have the basics down, it’s time to make some real gains. Most of the work going through your shop doesn’t need a licenced technician to perform it. Why not train quick-service specialists to perform work at a lower pay rate and thus generate a higher gross margin? Do the math for your maintenance work – most of the work done by quick-service specialists can earn 80 to 90 percent gross profit, which makes a huge impact on the bottom line.
If you’re willing to hold your service staff accountable for their performance, right down to the lube techs, and give them weekly feedback and coaching, you can turn a downward spiral into an upward curve overnight. But you can’t continue to do the same things you have always done and expect to get different results.
James G. Bell Jr. is filling in for his father in this issue. Jim Bell will be back in this spot in our next edition. James is a third-generation automotive guy, with experience on the bench, in sales, as a service advisor, and as a service manager. You can reach him by e-mail at fixedbygac@yahoo.ca.
