Your goal is to be able to say “yes” to 6 out of the 8 questions. If you are having trouble answering “yes” to many of these questions, you may need to invest time to get your service department processes in place.
1. Do you maintain an accurate accounting of all your technicians’ time? We buy time by the hour, track it by the tenth hour and sell it by the half hour or hour. Making sure your technicians are always clocked onto a work order is critical to the success of your service department.
2. Do you file warranty claims at least on a weekly basis? Tens of thousands of dollars are lost by dealerships every year because warranty claims are not filed or not filed correctly to maximize the dollars available. If you are struggling with getting warranty claims either filed on time or making sure the maximum dollars available to be claimed are being file you might want to consider having a warranty processing company take care of this for you.
3. Do you understand what your warranty recovery rate is by vendor? If you look at every one of your manufacturers, you should be running a report that shows you what your warranty recovery rate is. For example, if you do warranty work for ABC manufacturer and ask for $1,000 but they only give you $800, then you know that your warranty recovery rate for that vendor is only 80%. Low warranty recovery rates may mean you need to move your posted labor rate up enough to offset the loss.
4. Do you use flat rate billing on the majority of the repairs that come through your service department? The United Equipment Dealers Assn. (UEDA) is working with software companies to create a flat rate system that essentially allows you to pull rates into work orders so you can see flat rates and that your techs will know exactly how much time they have to work on a project and to make it billable. The beauty of flat rating is that it also sets the customer expectations because when you bring the equipment in, you’re basically telling the customer, “Well this is how much it’s going to be.” Keep in mind that even though not everything can be flat rated you can flat rate 70-75% of all the work that comes into your service department.
5. Do you have a written process for equipment entering and leaving your service department? From the moment you either have a piece of equipment brought into your dealership or you pick it up, you communicate with the service department what is going on, either verbally or through a written procedure they can look at. It is also best practice to communicate with the customer within 24 hours on what you are seeing and some basic information. Your focus should be following through from beginning to end, from drop off to pick up, including communications on what complex repair may be taking place.
6. Does your compensation help drive both quality and speed of the equipment repair? If you have great technicians all they want to do is sit there all day long and turn wrenches because that’s how they maximize the money they make. Technician compensation should be tied into productivity. If a technician produces 10 hours of billable work in an 8-hour day, they should receive their base hourly pay plus incentive or bonus for the extra 2 billable hours of work. Why would anyone work hard to turn more work out of a shop when they get nothing extra for the effort? Make sure your compensation program drives both the quality and speed of equipment repair.
7. Do you require your technicians to attend manufacturer training? Manufacturer training is critical. If we want to get high performance in our shops, we’ve got to have technicians who are factory trained technicians. They’ve got to be passionate and want to go to that training. Are you making sure that you’re sending all your techs there? Or are you sending the service manager to all of them, so he can maintain the certification for the dealership, and the technicians are just hoping the service manager in some way can communicate all of the training knowledge back to them? Don’t do that. You’ve got young technicians; get them out there to training. That’s how they’re going to get better. That’s how they’re going to get faster.
8. Do you avoid pulling techs off their work orders to do non-billable tasks? You can’t pull your technicians off a job to go out and unload a truck, to sweep the floor or to empty the oil. Your technicians should be turning a wrench all day long. If I can make $90 an hour on a technician, the last thing I’m going to have him do is a job a $15 an hour person can do. They’re not going to sweep the floor. They’re not going to go out and get their own equipment. They’re not going to clean their equipment. All they’re going to do all day long is turn a wrench. That’s how they’re going to make their money, and that’s how they’re going to make money for the dealership.
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