WHY PAYING ATTENTION TO THE LITTLE THINGS IS CRITICAL FOR AN EFFECTIVE — AND PROFITABLE —FIXED-OPS STRATEGY
There is a popular book called Don’t sweat the small stuff and it’s all small stuff. This might be considered good advice by many for living your personal life, but not if you expect to run a profitable service department and make any money doing it.
The challenge with modern vehicle technology is that all we are left with is the small stuff as major component failures are fast disappearing!
Why are we leaving legitimate money on the table?
True, it does not sound very exciting, but to survive in the service business these days you have to learn how to pick up the crumbs. You need to generate the point one and point two small labour jobs on each work order. The staff might try telling you that the biggest challenge is getting your customer to spend their money, but in reality it is getting both the service advisors and technicians to properly inspect the vehicles and ask for the business.
TAKING OFF THE BLINKERS
For a number of years we have been telling our own customers to think outside the box and become more creative if they want to stay profitable, while competing in our current marketplace.
Have you noticed how many independent detailing shops have opened recently? Additionally, these detail shops also appear to be doing a good job of getting into accessories and window tinting not to mention dent removal. This work is mostly being done on your customers’ vehicles, by the independents who are eating your lunch and doing a great job of it. We recently visited some detailing shops pre-appointing customers for their next visit. It appears that they get more money per customer from detailing than we do on yearly preventative maintenance schedules.
Can you remember the time of the minor and major tune ups? The four-barrel carburetor overhaul service has gone and it is not coming back. We work with technicians today who have never seen a carburetor let alone worked on one.
You may have also noticed that the distributor points and condenser have also disappeared. Some fuel filters are now in the gas tank and other vehicles have lifetime transmission fluid. Most manufacturers are gradually following Europe’s lead with extended service intervals, further drying up our traditional business. The big question is, are you smart enough at managing to replace this loss of business with items like fluid services?
It is not that unusual to see service departments with customer paid work orders decreasing along with the average hours per work order, warranty sales and poor parts to labour sales ratios. Unless you can sell 30 per cent to 40 per cent more vehicles each year, which is not likely, then this trend of less customers is obviously going to continue.
WHAT DO WE CALL THE SMALL STUFF?
The crumbs are the point one, point two and point four labour operations that we have a tendency not to ask for, for example light bulbs, belts and engine shampoos. Then there are the zero labour operation items like air filters and wiper blades. If you want to see how much business you are missing then go to your parts department and ask how many wiper blades you sold last year, or ask how many of your fastest selling air filters you sold last month compared to the ratio of oil changes.
DON’T BLAME THE TECHNICIANS
There are many jobs that some technicians do not want to do and who can really blame them! Here is an example; the vehicle requires an air filter which is no longer easy to check. The technician removes the filter and goes to the service advisor who has to then sell it to the customer. The problem, is that the advisor is busy so the flat rate technician has to stand, wait and lose money. How would you like to install a bulb for .2 hours when it takes .6 hours to get it sold? Can you imagine motivating a car salesperson by telling them that every time they sell a certain model vehicle it will actually cost them money — how many do you think they would sell?
WAYS TO IMPROVE BUISNESS
There are a number of ways in which you can improve business and one of them begins with identifying the weakest areas. We suggest logging onto www.fixedbygac.com then click onto “Download forms.” There are some great free management tools you can use.
Our suggestion is start with “Key ratio comparisons” and identify where your weakest areas are. You will also find a “Walk the vehicle and pop the hood” inspection sheet, to be completed by the service advisor at the time of write up. It is easy to complete and if used properly will pre-sell you more bulbs, wipers, belts, tires, alignments and a number of other items before the vehicle gets into the shop.
You do the mathematics: If walking the vehicle and popping the hood gets you an increase of .2 hours per order this could be the impact. Example, 750 work orders X .2 = 150 additional hours X $95.00 per hour effective rate = $14,250 more labour dollars in one month or $171,000 in a year plus parts.
IN CLOSING
There is a great quote from Abraham Lincoln, “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” Our advice is focus on staff training, process implementation and sharpening the axe before investing money in expensive equipment. By the way business has become a grind, so putting some fun back into it would not hurt.
