Is Your Service Advisor Selling Everything They Can?
Last week, we talked about the most important skills and abilities of a Service Advisor. This week, join us as we cover the facets of the job that are most important for a Service Advisor to master.
All shops should be focusing on performing vehicle inspections, and the responsibility for selling those inspections rests with the service advisor. Inspections generate more sales than any other form of marketing. The entire team — service advisors and technicians — must be committed to the process of inspecting each and every vehicle every time. Without implementing this process, your shop will never reach maximum production, and you’ll wind up trying to substantially increase your car count to offset the shortfall.
Performing an inspection on every vehicle will increase the amount of the invoice by finding more needed repairs and service. It is then the service advisor’s job to successfully sell those needed repairs. Service advisors in the most efficient shops make sure vehicle inspections are always routinely performed, whether the shop is busy or not.
For this % of Gross Profit
Multiply Cost by this Factor
Our repair order audit experience has shown that another area where service advisors need to improve their skills is the sale of scheduled maintenance services, which are listed in the owner’s or vehicle maintenance guides. These services should be close to the top of the service advisor’s objectives because they increase shop efficiency, generate high gross profits, and are reasonably easy to sell. Establish a goal for your team of service advisors and technicians to consistently increase the number and kinds of scheduled maintenance services offered.
The service advisor is also responsible for the sale of diagnostic time. Today, parts comprise about 45% of a shop’s revenue per hour. That is, for every $1 of labor sold, there’s usually approximately 80 cents in related parts. Since diagnostics rarely includes parts, the shop must recover the lost parts revenue by increasing the amount of labor dollars generated when performing diagnostic tasks.
Shops often feel lucky when they can collect all of the time a technician invests in diagnostic work at their established labor rate, let alone to try to get double the rate to offset for lost parts revenue. A highly skilled service advisor must maintain a certain revenue-per-hour ratio regardless of what type of task his techs are performing. (There are exceptions, such as oil changes, tire repairs, and other low-revenue tasks.) Make sure your service advisor possesses the skills to sell diagnostic time, so your shop can maintain its revenue-per-hour standard.
While the aftermarket auto repair industry is somewhat aware of the billing of labor hours and HPRO, there seems to be a significant disparity between what is needed and what is actually being billed in the field. To provide great customer service while ensuring high levels of efficiency and production, the desired target has been shown to be 3.0 HPRO. Currently, the repair industry as a whole is significantly below 2.0 HPRO. This is because most shops are activity-based, meaning they take in more vehicles than they can handle.
For instance, if your technicians are capable of producing 30 hours in a day and you take in 30 cars, the staff will be very busy, but the average HPRO achieved will be 1.0, at best. If the labor inventory and shop capacity were properly managed by the service advisor, you’d be looking to take in only 10 vehicles, achieving an average of 3.0 HPRO — right at the desired target.
Yet another service advisor responsibility is to generate gross profits. These pay overhead expenses, and the difference between gross profits and operating expenses is net operating income. To maximize gross profits, the service advisor needs to be well-trained in the use of both parts and labor matrixes.
A parts matrix provides a systematic method of consistent markup of parts, supplies, and materials to try to achieve an overall parts gross profit margin of at least 50%. To obtain specific gross profit percentages, use the table to the right.
A labor matrix provides a systematic method to consistently manage a technician’s diagnostic time. The labor matrix must be used with a labor inventory management system in an attempt to achieve an overall labor gross profit margin of at least 70%. In the example shown below, note that the diagnostic task description is followed by a column indicating Sold/Actual hours. You fill in the sold hours as determined by your team, then the number of hours you’ll allow your technician to invest in the diagnosis (Actual). To the right of that, you would extend your labor rate multiplied by the Sold hours to arrive at a price quoted to the customer.
Diagnostic Labor Matrix
Level One: Customer states the driveability problem is constant and can be reproduced consistently during a normal road rest or while in the service bay.
Level Two: Customer states the driveability problem is intermittent, but states the exact conditions under which is occurs. The symptom(s) can be reproduced with a high level of consistency by following the customer’s instructions. The symptom(s) can be reproduced by a normal or extended road test or while in the service bay.
Level Three: Customer states the driveability problem is intermittent and random. Customer cannot state any specific conditions or time of occurrence. The symptom(s) cannot be reproduced with any consistency. Symptom(s) may require extensive road testing to reproduce. Customer must be willing to leave vehicle for a minimum of three days.
Diagnosis: Electrical System
Device Failure: Computer systems; Power window(s), door lock(s), or seat(s); blower motor, wiper motor, cruise control; etc
Fuse(s): Customer states that circuit fuse continuously blows. Condition under which fuse blows is easily reproduced.
Diagnosis: Battery / Alternator / Starter
Diagnosis — A/C: Customer states that A/C system is not performing properly; no cooling or insufficient cooling
Diagnosis — Fluid Leak(s): when engine requires steam cleaning and use of tracing dye.
Diagnosis — Noise(s): Customer states noise in constant and can be reproduced consistently during a normal road test or while in the service bay.
Diagnosis — Noise(s): Customer states that the noise is intermittent, but states the exact conditions under which it occurs. The symptom(s) can be reproduced with a high level of consistency by following the customer’s instructions. The symptom(s) can be reproduced by a normal or extended road test or while in the service bay.
Inspection — Brakes: No additional repairs performed.
Customer Satisfaction Index (CSI)
Satisfied customers build businesses. Because customers interact primarily with the service advisor, it is the service advisor who has the greatest influence on customer satisfaction. Our experience has indicated that a large portion of the aftermarket auto repair industry does not have a program in place to consistently monitor customer satisfaction.
Implementing a method of finding out how many satisfied customers your business generates would be of great value to both you and your service advisor. You can do this with emailed surveys or follow-up phone calls, or requests/reminders to post reviews on Yelp or Google, just to name a few techniques. Do not hesitate to source and implement this type of program immediately.
We hope this overview of Service Advisor performance tips has been helpful! Does your Service Advisor do all of this, and do it well? If not, enroll them now in Service Advisor Skills, which begins Wednesday, May 22nd at 10am PT. Click here or call us now at 800-755-0988 to enroll!