Generally, service managers only measure the tangible metrics such as; hours per repair order, effective labor rates, sold hours, productivity, efficiency and proficiency. Often, these indices tell a great story about the performance of the department. One of the challenges of any service facility is managing the opportunities.
Each metric is finely tuned to provide insight into the sales performance of the service department. In analytics its common practice to measure sales, the challenge is coming up with an accurate measurement tool for those unsold opportunities. What happens to those customers who do not purchase service items with you? Is there a measurement to determine the effectiveness of those lost sales?
Here is a review outline:
How many customers leave the service drive without buying the services offered? What if the customer was leaving the facility only to drive four miles down the road to a competitor? Highly successful service departments keep very tight reigns on repair order opportunities.
- Do we know why the customer said “no”? Customers come into service because they have a concern (mechanical related or maintenance related). Customers are researching prices in the beginning stages of their process. Yes, price is an issue just as getting a “deal” is to a purchase. Service must deliver value with a compelling enough “why”. If the cost alone were the issue, customers would never come into a factory trained facility. The perception that services cost more at a factory trained facility than the independents is alive and thriving. Service manager’s need to find out why the customer is saying “no” to their offerings.
The only inventory the Service managers are responsible for is time and time is the one inventory that cannot be replaced. Manage and measure the unsold hours based on the total hours available.
- Leverage the analytics. Do we know how many dollars are leaving the shop? Determine the number of lost sales or the number of customers who said no to the service offering. Take the lost sales and divide them into the average sales per repair order. That number will be the total revenue lost per month.
- Is there a final eye reviewer in the service drive? The reviewer would make the final presentation and deliver the value proposition. While it’s accurate to say that the service drive is a different sale, the goal remains the same.
All repair orders involving declined safety related repairs require service managers involvement. No customer should leave a facility without the service managers review of the safety concerns and thorough documentation on the repair order including but not limited to; a customer declination statement.
In our follow-up article we will outline 3 simple steps to help capture those potential lost hours/dollars in the service department.