Research now shows that Tire Sales drive your Service profit per customer up 2.5 times!
Tag Archives | QT_Svc
Are you making the most of your Service Sales Opportunities? Do you set your Service Advisors targets for when they should be contacting customers? If not, in this Quick Tip Andy explains why you should.
Andy Church (email@example.com) presents a great idea for in store sales promotion, for under $30! This silent sales device will put your latest deals and offers right in front of your customers eyes at the point of purchase.
Tire sales are not only important to your profitability, but also to your continued customer retention efforts. Do you look at tires in this way and are you making every effort to identify upsell opportunities at your dealership?
NADA data shows Absorption is only 56.2% Nationally and Andy Church has a Quick Tip to help you improve your Absorption %.
Do you know how many “lost customers” you have in your service department? This ProfitByAction.com Quick Tip is about the importance of Customer Retention to help improve your Service Absorption.
One of the most overlooked and underutilized sales areas of your business is the service lane and we have a Profit By Action Quick Tip to support your sales growth in that area. And, if done correctly, a robust up-selling strategy for the service lane can also have a positive impact in customer satisfaction and your CSI scores.
The Efficiency Triangle is a great visual guide to service statistics. The Profit By Action Triangle defines the types of hours and how they are used to calculate the relevant statistic. For example, Productivity is calculated as follows; Actual Hours/Available Hours, as shown in the diagram.
Effective Labor Rate (sometimes called Recovery Rate) is the KPI that identifies the actual labor rate achieved by the service department, either as a Total or by Customer, Internal and Warranty work. Your Dealership might have a posted labor rate, but this is never the actual labor rate you are achieving due to discounts, promotions or warranty paperwork hold-ups, for example. In order to maximize Service Department profitability you must know what your ELR is (for Total, Customer, Internal and Warranty) so you can identify where you are performing poorly and make appropriate changes.
Effective Labor Rate = Sales / Sold Hours
Benchmark: 90% of your posted labor rate.
Understanding Service statistics is essential if you want to maximize your service department profitability. The building blocks required to understand KPI’s such as Productivity and Efficiency are the Service Hours, yet these continue to be a source of confusion. Here are the fundamental definitions and rules:
- Available Hours – The total number of hours a technician is at work. So, if a technician is in the workshop from 9am to 5pm and they take 1 hour for lunch, then they are available to work for 8 hours. Available Hours are sometimes called Attended hours.
- Actual Hours – The total number of hours a technician spends working on a PAID job (either customer, warranty or internal). It is IMPOSSIBLE for a technician’s actual hours to be greater than their available hours. Actual Hours are sometimes called Productive Hours.
- Sold Hours – The total number of hours sold to the customer (either customer warranty or internal). For a profitable service department, this number will be great than their Actual hours and maybe even their Available hours – remember selling time is what service departments do. Sold Hours are sometimes called Flat Rate hours, but this really refers to a payment method and as such we prefer the term Sold Hours, after all, that’s what they are.