Five Steps to a More Profitable Service Center
James Jackson, service director at Napleton Northlake Auto Park Chrysler Dodge Jeep Ram in Lake Park, Fla., shares his biggest tips that allow his $9-million-per-year service department to push out 2,100 repair orders per month. Of those, 37 percent come from recall work (customer pay is roughly 40 percent with internal dealership work accounting for the final 25 percent) and Napleton averages a 65 percent gross profit on parts and labor—that’s compared to roughly 58 percent on customer-pay work, which includes the shop’s two express lanes.
1. Scheduling for Proficiency
Jackson wants his technician teams to focus on the work that makes Napleton CDJR as proficient and profitable as possible. That means avoiding small, low-margin items like internal used car work and PDI.
To do that, Jackson shifted the shop’s structure. The facility is open each day until 10 p.m., and while customers can drop off vehicles at any time for any job, the nightshift techs only perform used car and PDI work, leaving the main work for the day-time teams.
“I don’t want them bogged down by any of that,” he says. “They’re too valuable of an asset to waste on small work.”
2. Answering the Recall (Phone) Call
One of the largest frustrations for a dealership service center in regard to recalls is the letter sent out to consumers far before the parts related to the fix are available.
“We probably get 15 to 20 recall phone calls each day,” Jackson says, “and most we don’t have parts available yet.
In the past, Jackson would schedule appointments for down the road or create a “priority list” for customers that called ahead.
“But then you run into the problem of people not showing up or someone calling that wasn’t on the list; do you prioritize the person on the phone ready to come in, or the guy on the list you need to reach out and get in there?” he says. “It created far more problems than needed.”
Now, Jackson instructs his service advisors to simply inform the customer of when the parts are expected to be available and asks them to check back in at that time.
3. Don’t Forget the Upsell
One benefit of having a Level 3 tech perform a full diagnosis on each vehicle, Jackson says, is that it’s rare that the original recall issue is the only work needed on that vehicle.
Jackson says recalls present opportunities to transition jobs into customer-pay work. Starting at the very first customer contact (usually by phone call), Jackson says to inquire about maintenance needs and make those items part of the original appointment.
4. Charging for Diagnostics
Too many shops have gotten into a bad habit, Jackson says.
“The old way of doing it with diagnostics was to tell customers that there’s a fee, but if they elect to do the work, the fee is waived,” Jackson says. “We all know that isn’t true, though. That labor time gets worked back into the total bill. That’s not an honest way of doing it, in my opinion. We don’t need to lie to get paid for diagnostics.
Jackson prefers a straight-forward approach. Napleton charges $135.99 to diagnose a vehicle, and makes sure to sell the value of that.
“We explain that we have Chrysler trained technicians that will get to the bottom of the issue,” he says. “We let them know the value in that, and 90 percent of the time, it’s not an issue in selling that.”
5. Don’t Apologize for Cost—if the Value is There
Jackson doesn’t pretend that Napleton CDJR’s prices aren’t higher than competition. In most cases, they are, he says.
“We’re not going to apologize for costing more, though,” he says. “We know the value we provide and we make sure the customer sees that. Our promise is that, we might cost more, but you’re paying us once. We will get it done right. You’re never paying twice.”