2 Strategies For Improving Profits In Your Service Department
Every dealership wants to be profitable. But if there’s a weak area for most owners, it’s going to be the service department. Between managing techs, managing parts, and overseeing billing, there are plenty of places costs can spiral out of control, and opportunities for increasing profit margins can get overlooked.
The good news is that there are plenty of ways you can ensure efficiency and stay on top of your billing and techs in your service department.
Strategy #1: Know Where You’re At
Profitable dealerships always know where they’re at financially. Not knowing where you stand is just like setting out on a long journey with no map, and no idea where you’re starting from. It’s just not a smart way to move forward!
Quality OPE office management software allows you to see within seconds exactly where your dealership, and your shop specifically, stand financially. You can keep track of parts inventory, your techs’ billable hours, and how much work you have scheduled in the days and weeks to come.
Staying on top of these metrics gives you, as an owner, a feeling of control that you simply don’t have without a smart system in place. Plus, having a complete picture of your shop, and where you stand, allows you to spot opportunities for growth, or areas where you could trim costs.
Strategy #2: Stop Real Time Billing
Another smart strategy you can use to make your shop more profitable is to stop real-time billing.
Real-time billing is when you work on a piece of equipment for ½ hour, and then you charge your customer for ½ hour’s worth of work. The problem with real-time billing is that it eats away at your profits.
For instance, you may know that a certain job is going to take your A-level techs half an hour to complete, so that’s what you quote your customer. But what happens when you only have a B-level tech available, and it takes them ¾ hour to do the job? Well, you just lost that ¼ hour.
Dealers that have profitable service departments operate more like car dealerships. They have an extensive list of menus and flat-rate pricing on the bulk of the work they do.
Think about this example: if you’re replacing the center spindle on a zero-turn mower, you know your A-level tech can get this done in about ¼ hour if he’s using a lift. But, you would bill this at ¾ hour. Why? Because there’s a good chance that one of your B-level techs
will be doing this job, and it’s going to take them almost ¾ hour to get it finished.
This not only improves your profits when an A-level tech does this job, but it ensures you’re not losing money when a B-level tech gets involved.
You can manage this by making sure every piece of equipment that’s brought into your shop is looked at by a qualified technician. This way a time and a price has been put on that equipment before it’s processed for service. The advantage to this “triage system” is that technicians know beforehand how much time has been allocated to complete that particular job.
Your technicians should also be keeping track of their time with outdoor power equipment technician software or at least some kind of time log. Many dealers will use these time logs to spur efficiency and motivation in their techs.
Your service department can be an incredibly profitable part of your dealership. By using quality outdoor power equipment office management software to stay on top of key metrics and by setting up a flat rate pricing system, you’ll ensure that your service department carries its weight in the years to come.