May 2009 - Feature
Driving Profits Through the Service Lane
By Jorge Moas
Think about that example for a minute. You’re talking $96,000 in annual gross profit. And who couldn’t use the additional revenue right now? If your store generates more repair orders than the example above, or you think you can penetrate more than 1 percent of your customer, just run the same calculation. You’ll be surprised by your potential earnings.
Additionally, instituting processes for the service drive to present service contracts means the service advisor will have a long-term client. It also increases the possibility of the dealership selling that customer his or her next vehicle. So, why wouldn’t a dealership want to do this?
Creating the Selling Process
Before creating a selling process for the service department, it’s a good idea for the dealer and the general manager to get together to discuss the additional profit and retention opportunities. Next, get approval for an incentive plan for the service advisors and service manager. This is a critical component, because the only way to achieve better results is if both have skin in the game. JM&A Group recommends no less than $100 per contract sale.
Dealers will also have to establish a retail price. It is recommended that the price of the service contract sold in the service drive be the same as the one sold in the F&I department. Additionally, dealers should direct the office manager to set up an accounting process to record profits and collection of funds through a repair order. A payment plan for customers should also be developed.
Once the process is in place, the service manager should then explain profit opportunities to the service staff. He or she should also provide the service staff with a written process so everyone is on the same page. Dealers should also set up a labor operation code for ease of use during the selling process and for accurate accounting. It’s also recommended that a dealer introduce a weekly tracking report, which helps to create a competitive selling environment.
It is also a good idea to explain the additional profit opportunities for parts sales to the parts manager. The more support you can get from all of the managers the better.
Now it’s time to launch the program. JM&A Group recommends having an initial training/kickoff meeting, which should begin with a message from the dealer. This will generate enthusiasm and send the message that this is his or her program. The meeting should also be used to distribute the written policy, as well as samples of mistake-free contracts. This will help the service staff understand what a correct contract looks like.
As for training, the service staff should go through role playing using established word-tracks. This will help them get comfortable with the process before working with a customer.
There really is nothing to lose by implementing a selling system for the service department. Following the steps discussed in this article will not only result in increased profits, but better customer retention. And in times like today, customer retention is the name of the game.
Jorge Moas is the assistant vice president of field service for JM&A Group, a provider of F&I products in the automotive industry. He can be reached at jorge.moas@bobit.com.