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Track These KPIs To Measure Your Service Advisors’ Performance

The number of ROs written isn’t the only vital stat; various sales per RO are important ratios. BY JOHN FAIRCHILD

shutterstock_335585585In any arena, business as well as sport, top performers are identified through constant, ongoing performance evaluations. Service advisors are no different. Amid the frantic pace of a service drive, the absence of performance-tracking definitely can affect the bottom line, and quickly.

A key performance indicator (KPI) is a business metric used to gauge activities that are crucial to the business’ success. KPIs differ based on the individual enterprise’s goals, but they are alike in that they are applied in order to identify trends and suggest a strategic response.

Before KPIs can be identified for service advisors, the following conditions must be met:

  • A defined service drive process
  • Clear goals for each advisor
  • An easy method of measuring each KPI, and consistency in reporting performance
  • Willingness from management to fix and amend inconsistencies in setting and measuring KPIs, so as to avoid de-motivating the staff

Looked at another way, KPIs are a set of standards against which to compare actual results. For both service advisors and their managers, KPIs are a success gage for the service drive. Ultimately, they help the manager and the advisors assess toward their shared goals.

Now that we’ve established a foundation for KPIs, what should we measure with service advisors?

Advisor KPIs need to be a stretch but still attainable. It is critical that advisors can view at any given time how their scores compare with established standards for each KPI. Most KPIs are measured on a comparable month basis, or month-to-date along with a projection for the end of the month if the advisor continues at the current pace.

At this point, let me discuss the main customer pay metrics for improving advisor retail performance.

ROs Written By Advisor And Department

The number of repair orders that your advisors write is a metric that is very revealing, both for the individual advisor and the service department as a whole. Here are a few things to deliberate when measuring this KPI:

  • Ÿ As a department, are we tracking to exceed our car counts vs. historical data? Are we going to have more customers this month than last, and more than the same month last year?
  • Ÿ As an advisor, am I writing enough ROs per day, or too many to truly do a quality job for the customer’s and dealership’s interests? (The industry standard is typically 12 to 15 ROs per advisor per day.)
  • Ÿ Advisors who are not writing enough ROs, especially in conjunction with underperformance with other KPIs (such as low labor dollars per RO), should get the service manager’s attention and training. Advisors who cannot pick up the pace AND quality of the ROs they write over a period of time should be replaced or repositioned within the dealership.
  • Ÿ If your service department is slack on car count, in the short term service managers and advisors should ramp up their follow-up with existing customers and recruitment of new ones.
  • Ÿ Examples of activities to value are setting the customer’s next appointment, following up with previously declined work, e-mailing or calling customers who have received recall notices, and reaching out to customers who recently have defected or seem likely to go elsewhere.
  • Ÿ Substantial increases in RO counts over sustained periods indicate a pressing need for additional manpower. Stick to the guideline of 12 to 15 ROs a day per advisor, and don’t wait too long to act.

Customer Pay Labor Per RO

Customer pay labor per RO is a metric that is likely to be a bit specific to your dealership’s car lines, demographics of your location and a few other factors. This metric actually breaks down for further analysis, so if your advisors are lagging in this metric, examine the following components:

  • Ÿ Customer pay effective labor rate MULTIPLIED by the customer pay flat rate hours per RO EQUALS the labor per RO. For example, ELR = $100.00 X 1.0 FRH = $100 labor per RO.
  • Ÿ If a service manager’s investigation concludes the ELR is low, then look for excessive discounts or mishandling of the estimating process.
  • Ÿ If the investigation reveals the ELR is OK but the FRHs are low, then analyze ROs to learn whether legitimate additional service needs are being presented to the customer.
  • Ÿ Train and counsel advisors accordingly on sales strategies and estimating skills, in order to improve this metric.

Customer Pay Parts Per RO

This metric also will vary based on a few different elements. As a rule, the parts-to-labor ratio should range from 1:1 to 1:1.6. While parts do follow the labor, you can take certain actions to improve this ratio.

  • Ÿ If the parts per RO metric seems low compared with labor, it may mean “parts-heavy” jobs are being undersold.
  • Ÿ Parts-heavy operations include tires, batteries, filters, wipers and pour-in additives. Investigate the percentages of these commodity sales by advisor, to learn if an advisor is underperforming.
  • Ÿ Train and coach advisors to watch and affect own performances on this metric.
  • Ÿ Low parts per RO may indicate low margins on the parts themselves. Service departments should check their gross margins on RO parts regularly.

Commodities Sales/RO, As % Of ROS Written

Tires, brakes, filters and flushes are considered commodity sales and should be compared to the number of customer pay ROs written.

  • Ÿ To troubleshoot, watch and see whether advisors are asking for the additional business at write-up and when presenting additional service needs.
  • Ÿ Equip your advisors and techs with information about what, how and when regarding benefits a customer will receive if the services are performed.
  • Ÿ Instruct advisors to offer these services based on mileage, if your records show no history of their being performed.
  • Ÿ Make sure your techs are on the same page and recommending the services based on vehicle condition as well as mileage intervals.

MPIs And Postponed Services-Coding

More specifically, I am talking here about how many multi-point inspections and condition codes are booked vs. the number of customers getting assistance. This actually presents legal and ethical issues as well. You don’t want a customer to leave your store not knowing about a potential safety concern.

However, regarding retail success, the bigger issue is whether the service departments are leaving money on the table by not inspecting certain cars. They should review ROs daily, and coach and counsel employees as needed. It is such a critical issue that service managers should consider performance as mandatory and non-negotiable.

Use the dealership’s historical data as well as established industry and group benchmarks to set your targets. Managers should supply their teams with up-to-date metrics, posted in conspicuous places with regular updates. E-mail distribution of KPI performance is another way to keep everyone informed.

The visibility of your metrics scoreboard will strengthen accountability and spawn competitive ambitions among your crew members. Make sure you include both comments of praise and action items in areas that need attention.

Finally, some additional service advisor retail KPIs to consider are 1) Tech flat-rate hours produced, 2) The numbers of appointments scheduled and of customers who show, and 3) The numbers of carryovers and open ROs older than 10 days.

Source: Service Drive Magazine, December 2015 Issue

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