HOW WELL IS YOUR
SERVICE ADVISOR
PERFORMING?
Maximizing production and profits in the auto repair business today
requires having service advisors who are adept at winning and
keeping customers, and executing profitable transactions!
O
BY BOB O’CONNOR
www.rloconnor.com
800-755-0988
38
May 2003
ur company has been telephone-shopping service advisors, auditing shop repair
orders and evaluating the financial statements of independent auto repair businesses for over 20 years. Our experience indicates that most independent repair shops
employ service advisors who could use some
immediate upgrading of their skills. This
would allow those shops to compete effectively and remain healthy and viable.
Let’s look at some of the service advisor’s skills and responsibilities that should
consistently be reviewed, with an eye toward making him more effective.
Our company places calls to independent repair shops daily, testing the skills
of the advisor who answers the phone.
The most common areas noted for improvement include the service advisor
taking control of the conversation by asking questions, demonstrating genuine
concern for the customer, qualifying the
customer, using the customer’s name, providing the customer with options and asking for the customer’s business. These elements are part of a systematic approach to
maximizing marketing efforts. In most
cases, improving a service advisor’s telephone sales skills could mean an increase
in a shop’s sales of 25% or more!
Telephone Sales Skills
Verbal & Written
Communication Skills
The telephone plays a major role in the
daily activities of the service advisor. The
service advisor’s sole objective with incoming calls from both existing and
prospective customers is to get the person
and his vehicle into the shop. Seemingly
an easy task, it actually requires proficient
telephone sales skills.
Once the customer arrives at the shop,
the service advisor also must possess excellent face-to-face verbal communication
skills. These include eliciting a detailed
description of the symptoms, obtaining
supporting information and documentation and determining the customer’s ex-
pectations, along with obtaining routine customer and vehicle information, of course.
This information should then be
noted on or attached to the repair order so the technician fully understands what work needs to be done.
Once all the service and repairs have
been performed, the service advisor
is responsible for providing the customer with a detailed written explanation of the work the technician did.
We’ve noticed that many comebacks are actually “service advisor
comebacks.” A service advisor comeback could be caused by any of the
following:
1. For one reason or another, the
service advisor confused the customer, the technician or both.
2. The service advisor inadvertently
led the customer, the technician or
both to believe something to be one
way, when actually the opposite was
the case.
3. The service advisor failed to provide enough information to the technician, causing him to approach the
service or repair incorrectly.
4. The service advisor failed to provide the customer with enough information to justify the customer’s expenditure.
If the service advisor were properly
trained in verbal and written communication skills leading to a systematic
approach to accumulating information, then providing detailed and concise explanations, to both the technician and the customer, would result
in fewer comebacks.
Scheduling & Dispatching Work
We’ve found that the majority of service advisors significantly overbook
(exceed technician capacity) their
shops on a consistent basis. This leads
to more comebacks, gross inefficiencies, burned out employees, low customer satisfaction and reduced profits. Today’s service advisor must master the skill of balancing customer demand (the number of vehicles) with
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May 2003
Diagnostic Labor Matrix
shop capacity (technician billable
hours) so as to maximize shop production. Proper scheduling leads directly to a happier staff, increased
customer satisfaction and a better
bottom line.
Dispatching of work to technicians
needs to be fair but, at the same time,
must maximize the use of such shop
resources as space, equipment, inventory, time and technician skills. A
skilled service advisor should dispatch
the work as it arrives, enabling technicians to monitor their work flow, so
they can complete the work in time to
get the vehicle back to the customer
when promised. Make sure your service advisor is taking in work your shop
can complete efficiently and profitably.
Sales Goals
Service advisors should be provided
with sales goals that are realistic and
achievable. Therefore, they must
have as many tools and resources
available to them as the business can
afford. Our experience suggests that
many shops function somewhat inefficiently and have been accomplishing monthly sales in the neighborhood of $12,000 per technician. Our
company’s sales benchmark for the
industry is $25,000 to $35,000 generated by each technician monthly.
Only the most efficient shops with
highly skilled service advisors accomplish these performance levels. Those
who have reached these levels of production have done so by mastering the
skills discussed thus far, along with the
skills of selling vehicle inspections,
scheduled maintenance services, diagnostic labor and hours-per-repair order (HPRO), as well as reaching
benchmark gross profit goals. Let’s
look at these items individually.
Vehicle Inspections
Shops need to focus on doing vehicle
inspections, and the responsibility for
selling inspections rests with the service advisor. Inspections generate
more sales than any other form of
marketing. The entire team—service
advisors and technicians—must be
committed to the process of inspecting each and every vehicle every time.
While that may not be a realistic goal,
at the very least they should establish
the habit and do all the inspections
that can be done. Without implementing this process, your shop will
never reach maximum production and
you’ll look to substantially increasing
car count to offset the shortfall.
During these economically challenging times, you may do better by
taking the few vehicles you are seeing
and increasing the amount of the invoice by finding more needed repairs
and service, then successfully selling
them. Service advisors in the most efficient shops make sure vehicle inspections are always routinely performed, busy shop or not.
Scheduled Maintenance Services
Our repair order audit experience has
shown that another area where service
advisors need to improve their skills is
the sale of scheduled maintenance
services, those listed in the owner’s or
vehicle maintenance guides. These
services should be close to the top of
the service advisor’s objectives because
they increase shop efficiency, generate
high gross profits and are reasonably
easy to sell. Establish a goal for your
team of service advisors and technicians to consistently increase the number and kinds of scheduled maintenance services offered.
Diagnostic Labor
The service advisor is also responsible
for the sale of diagnostic time. Today,
parts comprise about 45% of a shop’s
revenue per hour. That is, for every
$1 of labor sold, there’s usually approximately 80 cents in related parts.
Since diagnostics rarely includes
parts, the shop must recover the lost
parts revenue by increasing the
amount of labor dollars generated
when performing diagnostic tasks.
Shops often feel lucky when they
can collect for all of the time a technician invests in diagnostic work at their
established labor rate, let alone to try
to get double the rate to offset for lost
parts revenue. A highly skilled service
advisor must maintain a certain revenue-per-hour ratio regardless of what
type of task his techs are performing.
(There are exceptions, such as oil
changes, tire repairs and other lowrevenue tasks.) Make sure your service
advisor possesses the skills to sell diagnostic time, so your shop can maintain
its revenue-per-hour standard.
Hours-Per-Repair-Order (HPRO)
While the aftermarket auto repair industry is somewhat aware of the
billing of labor hours and HPRO,
there seems to be a significant disparity between what is needed and what
is actually being billed in the field. To
provide great customer service while
ensuring high levels of efficiency and
production, the desired target has
been shown to be 3.0 HPRO. Currently, the repair industry as a whole
is significantly below 2.0 HPRO. This
is because most shops are activitybased, meaning they take in more vehicles than they can handle.
For instance, if your technicians are
capable of producing 30 hours in a day
and you take in 30 cars, the staff will
be very busy, but the average HPRO
achieved will be 1.0, at best. If the labor inventory and shop capacity were
properly managed by the service advisor, you’d be looking to take in only 10
vehicles, achieving an average of 3.0
HPRO—right at the desired target.
Gross Profits
Yet another service advisor responsibility is to generate gross profits.
These pay overhead expenses, and
the difference between gross profits
and operating expenses is net operating income. To maximize gross profits, the service advisor needs to be
well-trained in the use of both parts
and labor matrixes.
A parts matrix provides a systematic method of consistent markup of
parts, supplies and materials to try to
achieve an overall parts gross profit
margin of at least 50%. To obtain specific gross profit percentages use the
following table:
For This % of
Multiply Cost
Gross Profit
By This Factor
10% . . . . . . . . . . 1.11
15% . . . . . . . . . . 1.18
20% . . . . . . . . . . 1.25
25% . . . . . . . . . . 1.33
30% . . . . . . . . . . 1.43
35% . . . . . . . . . . 1.54
40% . . . . . . . . . . 1.67
45% . . . . . . . . . . 1.82
50% . . . . . . . . . . 2.00
55% . . . . . . . . . . 2.24
60% . . . . . . . . . . 2.53
65% . . . . . . . . . . 2.89
70% . . . . . . . . . . 3.38
75% . . . . . . . . . . 4.00
A labor matrix provides a systematic method to consistently manage a
technician’s diagnostic time. The labor matrix must be used with a labor
inventory management system in an
attempt to achieve an overall labor
gross profit margin of at least 70%. In
the example shown on page 40, note
May 2003
41
that the diagnostic task description is
followed by a column indicating
Sold/Actual hours. You fill in the sold
hours as determined by your team,
then the number of hours you’ll allow
your technician to invest in the diagnosis (Actual). To the right of that
you would extend your labor rate
times the Sold hours to arrive at a
price quoted to the customer. For a
full-page downloadable matrix, log on
to www.motor.com.
Customer Satisfaction
Index (CSI)
Satisfied customers build businesses.
Because customers interact primarily
with the service advisor, it is he who
has the greatest influence on customer satisfaction. Our experience indicates that a large portion of the aftermarket auto repair industry does
not have a program in place to consistently monitor customer satisfaction.
Implementing a method of finding
out how many satisfied customers
your business generates would be of
great value to both you and your service advisor. You can do this with follow-up phone calls, post cards and independent survey workers, to name a
few techniques. Do not hesitate to
source and implement this type of
program immediately.
When Business Is Slow
Current economic conditions dictate
that repair shops become much more
aggressive about acquiring enough
business to not only sustain themselves but to grow, as well. Following
are some ideas for your service advisor to utilize on a daily basis to keep
business coming in the door:
•Review your workload and
reschedule future appointments for
today or tomorrow. Customers are often pleased to be able to get their vehicles in sooner.
•Call all customers the day before
they’re scheduled to bring their vehicles in to confirm their appointment.
•Review your database and call
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May 2003
those customers whose state inspection sticker or emissions certification
is due to expire.
•Review your “Estimates” file for
work that was never performed. Likewise, your “hot sheet” of customers
who would have had work done but
hadn’t found the time to come in.
•Deliver “we appreciate your business” donuts or cookies to new merchants for referrals.
•Call all customers with recommended repairs listed on previously
closed repair orders.
•Call customer “no-shows” from previous days. Often these customers simply forgot, or an important issue arose.
•Notify customers of special order
parts that have come in.
•Call those customers to whom direct mail advertisement pieces were
sent to determine if they have been
received, opening a conversation leading to sales.
•Offer pickup and/or delivery of
the customer and/or the vehicle.
•Make “thank you for your business” phone calls.
•Call customers regarding maintenance and repair of the second or
third (or more) vehicles in their
household.
•Review repair orders for factory
or shop warranties due to expire.
•Call all customers with vehicle
leases due to expire and recommend
an inspection prior to turning their
vehicles in.
•Walk to other businesses in your
immediate area and distribute a business card and a flyer describing your
current specials.
•Estimate current mileages on the
vehicles in your database to determine vehicles coming due for various
services such as oil changes and other
scheduled maintenance items. Then
call those customers.
•Use under-the-counter expired
mailers for up-sell on the vehicles you
do have in the shop.
•Request that your employees personally refer work to the shop.
In addition, call the following businesses and advise them you can provide them with priority service on any
day that’s not full on your appointment schedule:
•Vendors.
•Used car lots.
•Collision shops.
•Fleet customers.
•Fleet shops that occasionally subcontract work out.
•Merchant referrals (nonindustry).
•The AAA.
•Lifetime oil change customers.
•Towing companies.
Digital Camera
One tool that can lead to more sales
for your shop but which has not
caught on yet in a big way is a digital
camera. A technician can take a photo
of a failed part or of needed repairs or
service. The service advisor can e-mail
the color photo to the customer, then
discuss it over the phone. This technique has yielded several thousands of
dollars of additional repair work for
those few repair shops that have implemented the idea.
Your service advisor is one of the
major assets of your repair business.
Get started on improving your shop’s
sales and profits by reviewing the
skills of your service advisor today. If
he’s not at the top of his game, get
him trained!
Robert “Bob” O’Connor is President of
R.L. O’Connor & Associates, Inc., a
Seattle-based automotive operations
and management training and consulting firm. He is best known in the U.S.
and Canada for his highly effective automotive management training workshops and his continuous improvement Bottom-Line Impact Groups.
Bob is an Automotive Management Institute (AMI) approved instructor and
AMI EXCEL “Guarantor.”
Visit www.motor.com to
download a free copy of this article.