Experts offer tips for fine-tuning profitability, bottom line
Maximizing service employees’ performance has never been more critical, particularly in today’s market.
Stimulating dealership revenue streams often requires a deep dive into department operating practices to find lost dollars. Fine-tuning service profitability is an added outcome from such a process.
You might be surprised with how many hours your techs are busy working on things management has asked them to do, but those things don’t add a penny to profitability, said VRZ Consulting President Valerie Ziebron.
“Time control is the foundation of service profitability. We need to do everything we can to make our time as tangible as our parts inventory,” she said. “Anything that keeps techs from turning wrenches impacts efficiency.”
Ziebron said she carefully tracks missed opportunities for stimulating new service revenue when she visits with marine clients and dealers.
Customers who buy a new or pre-owned boat should feel welcomed by the entire dealership using a boating family approach. That means including team members in parts and accessories as well as the service advisor.
“You need to start a positive relationship right away,” Ziebron said. “Offering maintenance packages or VIP programs are great ways to tie customers to the other profit centers of the business.”
Selling proactively during the write-up is another way to stimulate new service revenue.
“The value that a good advisor can have to the profitability and customer loyalty of the entire dealership is huge – not to mention their role in keeping techs loyal,” she said.
Some dealers still undervalue the role of an advisor and see it as simply generating tickets or order taking – these are the same places that don’t make money with service, Ziebron said.
Maximize recalls to add value for your customers and additional sales for parts. Put together a promotional sheet explaining the recall and any “value adds” that can be performed for the cost of parts only during the recall period.
And, when closing out tickets, make a note of needs the customer must address on a future visit.
“Some dealer management systems allow you to easily look at the ‘notes’ section of past repair orders which can be used to create a ‘rainy-day’ list,” Ziebron said. “Some advisors prefer to use a spreadsheet. If you don’t currently have one, you can dig through past repair orders and ‘treasure hunt’ to find additional work.”
Ziebron points out dealers pay for 100 percent of a DMS that they purchase, but more often than not, most service managers and advisors report only 50 percent of any system gets effective use. Ziebron likes to challenge service advisors to answer the question “why” when additional work is suggested. It’s in everyone’s best interest to do everything that needs to be done while the boat is at the dealer.
“That means we have to slow ourselves down and that can be tough when you want to rush to the next ticket,” she said.
Great service advisors track each boat and keep good notes on things the customer should start thinking about. They let them know at each visit.
“Your dentist rarely asks you if you want do something about a cavity,” Ziebron said. “They confidently tell you it’s time. Planting the seed early and watering it at each visit makes harvesting the sale so much easier.”
A sales-focused service writer is just as beneficial to the customer as it is to the profitability of the department within the boating dealership, said Jordon Schoolmeester, a Garage Composites consultant.
The psychology of selling applies everywhere, even the service department, Schoolmeester contends.
“If you didn’t sell a boat on Friday, you can just try and sell it again on Monday. If you don’t sell every available service hour each day, they are gone,” he said, adding it’s extremely important to make the most of the information gleaned from service diagnostics.
“Hire more service writers,” Schoolmeester said. “Make sure they have the time to sell more hours and parts per invoice.” He also recommends adding parts porters to the service department. Visit mechanical and technical institutes and schools, and find young people who want summer work. “Give them a short job description and a list of things that they need to accomplish,” Schoolmeester said. “Or, assign them to one tech. One of the pushbacks I get it is, ‘I don’t want an 18-year-old kid pulling a $1 million boat out of the service department.’ I totally get that. There’s always variances. The idea is you don’t want the technician to stop making money because they have to stop and go get something.”
If technicians are on flat rate, that’s one thing, Schoolmeester said. But if a dealership’s technicians are hourly, they are being paying to stand in the shop, whether the dealership has filled that hour with labor or not.
“You are paying them for hours,” Schoolmeester said. “That’s why we always push flat rate techs. You are paying them hourly. If you aren’t giving them work, you are not getting the return on the hour you are paying your technical.”
Ziebron agrees. She suggests pre-pulling parts and pre-loading the shop the night prior. This one tip has been the biggest game-changer.
“If the techs come in and have everything they need to crank into work, we’ve set the pace for a productive day,” she said.
Ziebron said a master advisor thrives in being both a dealership and a customer advocate. They embrace the job being a sales position and genuinely care about their co-workers and customers.
“Simply put, a master advisor ties good customers to the dealership and has the respect of the shop workers,” Ziebron said.
Boating Industry Top 100 dealer Off Shore Marine in Branchville, New Jersey, uses an inspirational word to focus on an aspect of service that needs fine-tuning.
President Lou Cecchini and the staff at Off Shore Marine received a 2017 Top 100 Best Service Department Best in Class award for this approach and the ability to identify missed service opportunities that siphon off revenue.
“We have used words such as, ‘loyalty, ‘survive,’ ‘maintain’, ‘build’ and ‘flow,’ he said. “The word for 2018 is our very first theme word. The word is ‘yes.’ We are constantly identifying revenue-robbers. These are discussed at meetings and acted on as soon as possible,” Cecchini explained.
For example, during the past year, Off Shore technicians were sharing equipment items such as air hoses, water hoses and extension cords. “We re-plumbed our service shop with more airlines and added hose reels for each tech. All water lines were re-plumbed so that every tech now has two garden hoses each. We also added retractable extension cords in each bay,” he said.
Off Shore Marine’s service bays only had garage doors on one side, Cecchini said.
A garage door was added to the on the back side of the building, allowing boats to be moved through the building when needed.
“We can now take deliveries and supplies through this door without disrupting the workflow,” Cecchini said. “We purchased a second four-wheel drive yard tractor for moving boats in and out of the service area and around the grounds of the dealership. It is unbelievable how often both are being used at the same time,” Cecchini said. “This was a huge revenue robber.”
Off Shore Maine is currently in the process of hiring a service assistant who in time could become an apprentice. This person would work strictly in the service bays as an aid to technicians, Cecchini said. The assistant would move boats, get parts, provide another set of hands as needed, and keep the work area clean.
“Empowering our staff with the word ‘yes’ allows them to serve our customers at a much higher capacity than our competition,” Cecchini said. “The word is used with customers and among staff.”
Within the dealership, the service department must optimize each day with a schedule that’s consistently used to maximum effectiveness, Schoolmeester said.
“We need to get better at scheduling,” he said. “How many times do we run an inventory count through the entire dealership, but we don’t do an inventory of our daily hours?” Schoolmeester suggests having a spreadsheet that shows how many hours are available every day, so that the service writer can schedule accordingly.
“Have a properly managed schedule allows you to sell hours,” he said. “The best schedule is the one that you will use.”
Ziebron offered a timely seasonal tip for stimulating new service revenue: Don’t forget to market service and parts at events.
“Boat shows are mostly attended by people who own boats,” she said. “All of these boaters will need parts and accessories and service. Customers who grow to love your service department are far more likely to visit your sales department when it’s time for their next boat. Increase your service leads and the sales leads will follow.”