Proper Absorption Habits in the Service Department call for the right techs on the right trucks at the right time in the right bays at the right price.
 
This month we’ll take you through three areas of best practices in the Service Department: Hours & Rate, Customer Communication, and Work Flow. Mark and Casey will go more in depth during our webinar at the end of the month, on Friday, January 31 at noon central time.

 
We’ll begin by talking about some proper habits in the area of Hours & Rate. 

1.       Proper tech punching
  • First, know when a tech is available. Payroll clockings and available clocking must be reconciled daily.
  • When a tech is not on a job, they should be shown as “available time” or clocked on to a specific internal task (shop clean-up etc).
 
2.       Use and communicate consistent SRT times
  • Charge for what we’re doing and stop selling the job to ourselves.
  • Always be consistent with SRT times. Many dealerships ask a lead technician or estimate the time based upon experience. Take the time and give it some thought. The SRT time should reflect the time it takes to complete the work with an average technician who possesses the skill. Don’t base pricing on anything other than your upfront pricing from your estimating system.
 
3.       Use market-based pricing
  • To enhance perceived value, it is important that your pricing is market driven. To ensure this, start by conducting some research. Call your competition as a customer. When your research is completed, compare your pricing. Start by comparing labor rates and pricing on highly visible service, oil service, brakes, overhead, etc.  
  • Do you want to be in the middle of the pack, the lowest in town, or maybe the highest, but still competitively priced? There is no right answer. Pricing is your choice. Once you decide, however, develop your pricing for competitive specials.
  • Now you can set your labor rate for most other jobs. Don’t set this rate based on what warranty will pay. Labor rates should be based on your market. You can even try stepping outside the box by setting two or three labor rates, each based on the technical skills needed to perform the job.
  • Effective labor rate is calculated as labor sales dollars divided by sold hours for a specific time period. Take the time to inspect what you expect with a felt tip review daily.
 
4.       Perform a felt tip review for consistent repair order write up and pricing
  • Service advisors need to be held accountable for providing technicians with correct detailed information and management needs to have a way to confirm correct use of tiered labor rates and to verify that accurate SRT times have been estimated and communicated to the customer.
  • The only way to do this is to measure your expectations. “Inspect what you expect.”
  • On a daily basis review repair orders for quality and clarity
                                               i.       Are the written customer complains clearly detailed?
                                               ii.       Accuracy of pricing: Was the order priced on time?
                                               iii.       Timeliness: Was the repair order closed on time?
  • Attention to these details will improve the customer experience, show value to the customer and allow management of departmental profit. 
KEA Advisors
785-842-6498
PO Box 1229
Lawrence, KS 66044