A dealership’s service department is the backbone of the organization. No other department in the dealership, be it parts, wholegoods or rental, will have more impact — positive or negative — on a customer. That’s why I am so passionate about making sure they are profitable for the dealership and deliver a “wow” experience for customers.
I want to share strategies to help you transform an average service department into a high performance money machine. As a starting point, it’s important to understand the 6 positions that are critical to operating a successful shop:
Smaller shops may combine some of the positions.
The service manager is a role that is often misunderstood. In many dealerships, the service manager was a great tech who no longer wanted to do repairs, so was promoted. I understand the desire to not lose a good tech. However, seldom does a great tech become more than an average service manager. This is because most service technicians prefer machines to people, much less people who come in unhappy. Yet, everything about the key parts of their job have to do with dealing with customer issues.
When I think of a service manager, I don’t need someone with incredible diagnostic skills, but someone who can communicate to the technicians, the parts department, the manufacturers and, most importantly, to customers. I also need a service manager who can motivate technicians and sell 8 hours of time every day.
That measurement can take two forms: production, which is the measurement of time paid to a technician vs. the amount of time a tech was turning a wrench, or recovery, which is the measurement of time the technician billed vs. the amount of time they were paid. The service manager’s goal is to have a production level at 100% during the busy season and no less than 85% during off season and training time.
The service writer is one step away from the service manager’s role. They take over the customer contact role of the service manager and in smaller service departments, also handle warranty claims. There is nothing more important in a service department than good communication between the shop and its customers, internal or external.
“To reach the highest potential, a shop foreman is a must-have position…”
Much like the service manager, the service writer must have the ability to handle multiple tasks and personalities. The service writer is normally the first one in the shop and the last one to leave, along with the service manager. They make sure the technicians have jobs and parts ready each morning and check throughout the day on work-in-process. The service writer will also often handle warranty claims with the manufacturers.
In shops with less than 3 full-time techs, the service writer replaces the role of the service manager and works with the shop foreman. In most shops, once the service department has 3 full-time techs recovering at 100%, I would move the service writer to service manager and then hire a new service writer.
Many larger dealerships have taken warranty writing away from the service manager and service writer to free up time. Instead, they hire a warranty writer who builds a relationship with the manufacturers’ warranty departments to help ensure the dealership is paid for all the work they do. Some say that a manufacturer will only pay so much for a repair, but that is not true. If the warranty writer can explain why a job took longer, the manufacturer may pay 100% of what the dealership is asking.
The shop foreman is a position that has somewhat been abandoned and replaced with a service manager. The shop foreman works with either the service manager or service writer to assign work orders to techs. They are responsible for the workflow and the safety of those working on equipment or staging it to be worked on.
Most shops that have 3 or fewer technicians don’t have a service manager, but instead have a shop foreman who works with a service writer, who creates estimates, calls customers who have questions on complex repairs, along with coaching and mentoring the “B” level service techs. Because a shop foreman is normally a strong “A” technician, they are still expected to turn a wrench for at least 5 hours per day and handle the other aspects of their jobs during the other 3 hours.
In the dealerships we consult with, the shop foreman receives a bonus on each hour produced by each tech if the average efficiency of all techs is 85% or higher. For a shop to reach its highest potential, a shop foreman is a must-have position.
When it comes to putting real dollars on the balance sheet of the dealership, there is no one who can do it better than an “A” level tech with a good attitude.
In my opinion, there are two elements that are critical to making a great technician: their passion for their profession and their ability to be efficient — not fast, but efficient.
Great technicians don’t do work that wasn’t authorized by the customer, but they do make sure to let the shop foreman, service writer or service manager know if there are other issues that should be addressed to give the customer the best possible experience with their equipment. On the same side, they are investing in their education and tools so that they can be as efficient as possible when they are working their magic.
The service coordinator is one of the positions I find that few service departments have. Once I explain their role, almost every shop ends up with one.
In most shops, service techs are required to do things like sweep the floor, empty oil and old filters, find their equipment, wash their equipment, etc. In the service departments we consult with, we recommend that a service coordinator fill that role.
Why would I want to have a service tech who can make me $80 or more per hour do a job I can hire someone for $14 to do? In most shops, one service coordinator can support 5 techs and their cost is built into the service jobs. This means they are a cost-neutral hire.
Also, at some point, a service coordinator will have the ability to be the next low-level tech when the service departments needs to grow.
Originally published in 2015
6 Steps to Increase Service Department Profits
Don’t underestimate what good processes, flat rating and efficiency incentives can mean for service department revenues.