The service department is typically the largest revenue source for a dealership. In some cases, service departments carry the dealership and keep it in the black. Yet, no matter how much revenue a service department brings in, it would be hard to believe there is a single dealer out there that wouldn’t want to see it increase.
Manufacturers are certainly pushing dealers to expand their service facilities to increase shop capacity. But what about that dealer that simply can’t afford it, doesn’t have the real estate or simply doesn’t want to make that investment?
Well, there is a simple way to guarantee an increase in service revenue — and it doesn’t require any additional investment – only something that service managers should be doing already. And that is analyzing service declines.
The reality is that dealers and service managers both know that money is walking out the door with just about every service customer. You may have the best upsell percentage in the universe but I highly doubt every customer that drives through your service lane is accepting every recommendation you present. There’s always room for improvement and knowing how much service revenue is walking out the door, and which services are being declined, is something that can easily be fixed through a small process change and training of your service advisers.
Many dealerships don’t track their declined services at all. Yet just about every DMS has the ability to do it. Why aren’t more dealers and service managers doing it? Perhaps the managers don’t want their dealer to know exactly how much isn’t getting captured.
With every open RO, there are service recommendations. In most instances, after presentation to the customer, a service advisor will then proceed to input codes for accepted services to add them to the repair order. The problem is that at many dealerships declined services don’t get codes attached to them, thus erasing their existence.
Simply implementing and enforcing a process whereby all recommended services get coded appropriately – whether accepted or declined – will give you the data you need to get hard answers to the big picture of how much revenue is leaving and which services are being declined. This data can also be broken up by service advisor, for better accountability
Let’s look at a few ways in which this data can be useful.
- If you have a high decline rate on a specific repair, you now have the ability to analyze reasons. Perhaps you’re pricing yourself out of the market. Your customers have smartphones and can easily price shop your service costs — just as we know they do when buying a vehicle. Adjusting the price to be more competitive could help capture more of that specific repair work.
- In the same scenario, perhaps your overall acceptance rate is average, but you find that you have one specific advisor that has a very high decline rate. Now you can consult with the advisor and try to diagnose the problem. Perhaps that the advisor simply needs more knowledge of the repair and its importance so that they can more effectively relay that information to your customer.
- By contrast, maybe you have one service advisor who is spectacular at capturing a certain type of repair. Now you can talk with this employee, discover the secret to their success and then share those tactics or strategies with their fellow advisors, thus helping them all be more successful.
If you know how much total revenue is leaving your service department and can also break down those declined services by repair type and by advisor, you should be able to identify strengths and weaknesses of both the department and your team. With this knowledge you’ll be able to streamline your process, adjust pricing, analyze strengths and weaknesses of service advisors when it comes to recommendation upsells, and increase service revenue. All without expanding or hiring more technicians.
Author: Tim Clay
Tim Clay, Chief Revenue Officer, Confident Financial Solutions. Tim Clay is Chief Revenue Officer with Confident Financial Solutions, a consumer finance company that offers an auto repair financing program for service centers and their customers. Clay has more than twenty years of experience in the automotive retail space and is a graduate of NADA Dealer Candidate Academy. Previously, he was COO and Co-Founder of ClickMotive, an automotive technology company. He has instrumented one successful automotive startup exit and one successful medical company exit.