|Consider Your Options (continued)
Fixed Operations Expert
Moving on, consider the closing ratio of ups to sales in variable
operations. It’s about 30 percent. (For every 100 people in the
front door, you sell about 30 cars.) But, in fixed operations the
closing rate is 100 percent. Nearly every person that walks
through the service door produces revenue for the dealership.
If a truckload of prospective clients showed up on your
sales floor every morning to shop your inventory we are certain
that you would take the appropriate action to capture their
attention. Why not take the same action on your service sales floor.
It’s the backbone of your business!
The fixed operations department typically is the most profitable area
in the dealership. Many dealer successors grew up on the variable
operations side of the business. Quite frankly; they just aren’t as comfortable
with parts and service as they are in new and used car sales. Their strength is
Many service managers, on the other hand, have spent their entire careers
working on cars, writing up repair orders, and dealing with irate or irrational
customers, not to mention CSI scores and technician productivity concerns.
Yet many service managers are lacking in sales techniques and overall selling
Fixed and variable operations are located under the same roof; yet, they are often worlds apart. Eliminate the
idea of your dealership as the sales department and the service department. Rather, it’s time to view your
business as the sales department (variable operations) and the other sales department (fixed operations).
Make sure you have enough personnel on the service drive during peak traffic hours. If your advisors are
dealing with more than 15 customers per day, it’s costing you money. We have found that the right mixture is
approx 15 customer pay repair orders per day per advisor. (This does not include Internal & Warranty write ups).
The more time they spend with each customer, the greater the sales penetration and the higher the CSI. For
service advisors to reach their true sales potential, you have to make sure they have enough support personnel
to assist them. This includes porters to move cars, thus keeping the traffic moving. After all, the service lane is
really our service sales floor and we must keep it uncluttered and presentable. You also need a lane
manager/spotter, or fluid checker to pull the vehicle’s vital fluids, check batteries, belts, and hoses. This person
serves as a facilitator to the advisor in the sale, thus opening the door to additional sales in maintenance
Don’t forget the phones. Most incoming calls (like appointments, status calls, or parts arrival status) can be
handled by someone/thing other than the advisor, thus giving them more time with live customers on the drive. I
recommend a true profit generator such as a DMS Solution based company to handle those calls, not just for
Parts & Service but also for your Sales/Leasing Department. A lost sale is gone forever. If your advisors say
they don’t up-sell maintenance for fear they can’t get all the work out, then it’s time to increase your production
staff. Capacity issues are problems that can create great opportunities for growth. If necessary, hire additional
technician support staff. You don’t have to hire an A technician. Technicians at a C or D level can perform most
maintenance services and they are much easier to recruit.
Many dealers suffer economical harm due to poor processes & lack of accountability. When you recalculate the
above figures, there will be much more money left on the table then imagined, thus: will be added to you bottom
line or Net Operating Profit.
We suggest that as part of your business plan incorporate a very structured
& aggressive campaign to target all avenues of growth & opportunities.
In our next article we will focus on the long term plan rather than the short
President /AutoPro Training Solutions
|Assume the following:
- Your Service Department writes approx 900 CP repair orders per month
- Your door rate is $89
- Your ELR is 90% of your door rate
- You average 2.0 HPRO
- You average 45% parts gross profit margin & 75% labor gross profit margin
- Your true parts to labor ratio is in the 90% & higher range
- You average 33 percent in up-sells ratio
This will be equivalent to $75,735 in additional selling revenue. Another quick calculation will reveal that
you have retained $80.10 of the door rate.
|SUPERIOR DEALER SOLUTIONSsm
Copyright© 2008-2009 Automotive Dealers Network. All rights reserved.
|Jim Bernardi has held such positions as; Dealer,