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Peruse A Batch Of Your Latest ROs, And Valuable Insights Await

Watch for negative trends with one-item jobs, older cars generating little work, skipping of menus and inspections. BY DON REED

shutterstock_197054210What can service department directors and managers learn from a repair order? Plenty.

More specifically, I’m referring to a customer pay RO. In this article, I’ll refer to it as a “retail” RO. I want to discuss how you can use an examination of retail ROs to effectively evaluate the performance of your dealership’s service operations team, while needing as little as 30 minutes per week to gather and present the data.

Where Sample Of 100 ROs Leads

To begin with, gather 100 of your recent retail ROs. Next, create an Excel spreadsheet and across the top, enter these headings. You will need to review each of those 100 ROs and make a check mark in the appropriate column, as I have done below:

RO#   LOF   CDM   Menu   1-Item   Multiple 0-25 26-50 51-75 76+ Est 27pt Sign

03214  x                                     x                                     x                                           x

Note, for example, that on RO #03214, a lube, oil and filter change (LOF) was performed but was the only item on the RO (1-Item). The mileage on the vehicle serviced was between 26,000 and 50,000 miles (26-50). The customer did sign the RO (Sign). Simple enough, right?

Now, once you have checked and recorded all 100 ROs, total the number of “X” entries in each column. Report that number at the bottom and calculate it as a percentage of the total ROs, as follows with my hypothetical example:

RO#   LOF   CDM   Menu   1-Item Multiple 0-25 26-50 51-75 76+ Est 27pt Sign

03214   x                                    x                                     x                                             x

03218   x                       x                         x                                 x                                 x

03220                                          x                                                           x     x               x

03225   x                                     x                           x                                                       n/a                                                       

03229                 x                                       x                                 x                         x       x

          3           1           1           3             2           1        1       2         1     1       1     4

               60%       20%       20%         60%         40%       20%     20%    40%   20%  20% 20%   80%     

As you can see, 60 percent of the ROs had a LOF performed. The customer declined maintenance (CDM) on 20% of the ROs, and on 20% bought a service that is recommended or required based on age and mileage (Menu). Sixty percent bought only one item while 40% purchased multiple items (Multiple). Twenty percent of the customers had less than 25,000 miles on their vehicles (0-25), another 20% had 26,000 to 50,000 miles, 40% had between 51,000 and 75,000 miles (51-75), and 20% had 76,000 or more miles (76+). Twenty percent of the customers received an estimate (Est), another 20% had a 27-point inspection completed (27pt), ad 80% signed the RO.

How Many 1-Item Customers?

Now, let’s analyze what this spreadsheet teaches us about the performance of our hypothetical service operations team.

The most glaring problem stems from 60% of repair customers buying only one item. If your dealership writes more than half of its ROs in the 1-Item column, that means you probably average about 1 to 1.2 hours per retail RO. This is the equivalent of terminal cancer for increasing service absorption and for long-term profits in fixed operations!

You must understand that 1-Item ROs fail to train your customers to pay attention to preventive maintenance needs. In the long run, their cost of ownership will increase, because clearly no one on your team is advising them about recommended and/or required services for a safe and reliable vehicle. Mechanical failures lead to mechanical repairs, which are costlier than preventive maintenance.

A high percentage of 1-Item ROs indicates your technicians are not inspecting all of the vehicles they service. (The same warning is sounded about the 20% of ROs with a completed 27-point inspection.) Plus, if your 1-Item ROs exceed 50% of the total, then your advisors are not advising. Your goal should be 15% of ROs or fewer.

Older Vehicles Must Drive Work

Another interesting trend to note in my table is that 60% of the ROs surveyed are for vehicles with more than 50,000 miles. Research shows that starting with the fourth year of ownership, the average customer will spend about $450 per year to service and/or repair their vehicle, or three times as much as during the first three years. In your dealership, you will probably find that about half of your customer pay ROs have more than 50,000 miles, with a high proportion of that group at more than 75,000 miles.

Common sense tells us that many of these vehicles are due for some form of maintenance or repair. How often should your team perform a 27-point inspection of a used vehicle with more than 50,000 miles on the odometer, yet your tech identifies only one item to repair or service? Never!

Compare your service department’s per-vehicle used car reconditioning costs you’re your average dollar sales per customer pay RO on vehicles with more than 50,000 miles. I’m guessing reconditioning will be $500 to $700 per vehicle and customer pay ROs will be $175 to $250. You need to wake up to the problem of these reconditioning jobs and dollars coming into your service department every day, but your service team not giving customers the option of saying, “Yes” to needed repairs or services.

I am not talking about a hard sell, not at all. Your team simply should inspect the vehicle and then advise the customer (just like you do with the used car manager) of the needed services. Then, let the customer decide whether he or she wants a safe and reliable vehicle.

Everyone Gets Menu Reviewed

When a customer declines “Menu” services, your people should note “customer declined maintenance” on the RO so that the decision becomes part of his or her service history. Your advisors should give a menu presentation to 100% of your customers in order to train them to pay attention to preventive maintenance. Again, this is not a hard sell but rather advising the customer about necessary maintenance.

A problem with many advisors is that they effectively make the customer’s decision by failing to give them the opportunity to say, “Yes.” In other words, many advisors never even present a menu to your customers! A recent survey from J.D. Power showed that only 27% of advisors even present maintenance menus, but when they do, customers respond affirmatively 46% of the time. How do you like that closing ratio?

Try RO Analysis For Each Advisor

So, what do you think? Is it worth 30 minutes of your time to perform this RO analysis? Obviously it is, because the exercise will cut through all of the excuses you’ve been hearing or offering as to why your sales per RO are so low.

How often should this analysis be done? Once a week. Who should conduct it? The service director/manager. Who should see the results: The dealer, GM, all service advisors, the service drive sales manager and the shop foreman should meet weekly to review the results. Additionally, it is a great idea to review the numbers with all of your techs in a shop meeting at least once a month.

If you are interested in total accountability for individual performance in your department, then try preparing this RO analysis for each advisor. You will be able to identify who is providing your customers with a high level of service, and who is not. Service advisors who do a great job both for their customers and their dealers unfortunately fall into a minority. Service directors should separate their top performers from the underachievers, so they can identify who needs training and who deserves a pat on the back for a job well done.

Source: Service Drive Magazine, December 2015 Issue

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