Creating a Service Menu That Increases Profits

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How to create a service menu that increases profits

These days, Matt Johnson’s sales pitch is smooth and fine tuned.

When a maintenance customer arrives at Acura of Johnston (Iowa), the service manager confidently presents them with a laminated menu. Johnson might mention that the customer’s vehicle recently reached 30,000 miles, and note suggested maintenance work.

“‘I know you weren’t planning on doing this, but we do have loaner cars,’” he tells clients. “‘Or, if you don’t have much time, maybe we can just knock out one or two [suggested items] while you’re here.’”

“Nine times out of 10,” Johnson explains, “they’ll pick something.”

The approach is rather simple, really: toss customers the ball, and let them decide where they’ll run with it.

A few years ago, though, Acura of Johnston’s customers felt rather encumbered, with all-or-nothing maintenance options. The facility’s fluids and maintenance financial figures were sluggish as a result.

In 2017, as Johnson approached his third year leading the service department, he decided to make a rather bold move: he would overhaul his dealership’s maintenance menu.

The Problem

For quite some time, K services (factory-recommended maintenance plans that come with every vehicle) carried Acura of Johnston’s service department.

Johnson’s predecessor wanted the service department pushing maintenance packages for vehicles that had reached 7,500 miles, or 15,000, and so on. But that grew problematic over time.

“Yes, you would sell some,” Johnson said of the K service plans. “But, at the same time, a lot of people come in for an oil change and they just want an oil change; they don’t want the whole ‘K service.’ And, if they said ‘no,’ they were saying no to the whole thing.

“So, we were missing the boat there.”

Customers also seemed unsure about the exact cost of individual maintenance items. Johnson, who took over the service department in 2015, wanted to offer greater transparency, to avoid such confusion.

That way, he explained, “it doesn’t look like you’re hiding anything” from customers.

The Solution

Years ago, Acura of Johnston’s service department concentrated on selling rather antiquated bulk maintenance plans. Perhaps a customer’s vehicle had reached 45,000 on the odometer, so he or she would be sold a package that included items like an oil change, tire rotation, and fuel-injection service.

In Johnson’s view, however, such a strategy created inefficiencies. He wanted to see the

service department crank out more of the “quicker maintenances,” like batteries and wipers, that entry-level technicians can handle.

After nearly 20 years in the auto industry, Johnson learned that, if a service department does frequent, small maintenance jobs, “your time goes down, along with your parts. But, you can still keep your additional labor time, because you’ve got additional room in the service, and you’re not paying as much, and you’re not having to compensate for other parts.”

Starting in 2017, the dealership’s service menu included lots of a la carte items, which could be purchased independent of any package. Hourly technicians addressed those maintenance jobs—like transfer case fluid services—and the facility’s effective labor rate improved as a result.

These days, the dealership’s entry-level technicians get a spiff on service jobs, typically of $2–$3; the facility simply builds that into the price that customers pay for the service.  

Now, Johnson explains, “my menus are broken down for the individual pricing for each [maintenance item]. It gives a client an option to single things out. Maybe they just want to do this today and bring it back [later] for other stuff.

“My advisors hand those menus to clients, and if they’re balking at that overall price and it

seems like too much, well, they can go a la carte.”  

Johnson makes sure to comparison shop no less than six competitors in central Iowa to help

determine his menu prices, and offers discounts when his price is bested by a rival. Another trick he discovered recently: leaving service menus in new vehicles after they’re prepped for delivery.

Doing all those seemingly small maintenance jobs has added up to big results.

“As little as it costs to do those repairs, it brings that customer back—they’re locked in with you,” Johnson said of quick maintenance jobs. “And, if you do [a job like that] 10, 15 times per day, it really adds up come the end of the month. That’s a nice little effective labor rate builder.”

The Results

In recent months, Acura of Johnston’s service department has garnered plenty of repeat business. The facility currently has an average monthly car count of 450, and boasts a CSI score of 97. Additionally, the service department’s effective labor rate, which was $97.89 in 2016, has increased to $127.01. Customers seem to appreciate the fact they can get their batteries or wipers replaced in less than 30 minutes, along with the fact they have freedom to choose individual maintenance items.

Providing “convenience is everything, because people nowadays have so many options,” Johnson says.

Above all else, though, he credits increased transparency for the fact his department has roughly doubled its maintenance and fluid sales over the past year. The way Johnson sees it, his customers appreciate the fact every maintenance job’s price is clearly noted on those laminated menus.

“Before, when it wasn’t transparent, I would get so many people that would say, ‘What’s all included in this?’” he explains. “And you’d tell them, and they’d be like, ‘Eh, I don’t think I need all that.

“By breaking [individual prices] down, they can already see it. And that has really helped me—it’s not a big secret; being transparent is what has helped me the most.”

 

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