Service departments have been busier across the United States this year, driven by a lack of inventory to switch out an aging vehicle for a new one. At the same time, record prices for new and used purchases along with a stumbling economy could put vehicle purchases on hold for some. With the American fleet creeping up in age to 12.2 years, more repairs are going to be due.
Dollars per repair order, or $/RO, is a metric used to track customer-pay service department productivity, and while it can be misleading, it continues to be a benchmark many OEMs and dealers strive to improve upon. Often, bonuses for service managers and advisors are tied to boosting or maintaining this target. As the potential for car buyers to put the brakes on a purchase and hold onto their old car increases, it represents an opportunity for dealer service departments to strengthen their numbers, including $/RO.
If you use this metric, here are four tips to bump that number a little higher.
Adjust menu prices
In every industry, not just automotive, costs are increasing – transportation costs, parts, fluids and shop supplies, and labor expenses. Now is a good time to audit your service menu and adjust for profitability. Loss leaders like oil changes might be better left at attractive pricing, especially if other shops in your area haven’t adjusted their prices yet.
Take care to stay within the price range for local competitors for your menu pricing or you risk turning some loyal customers away in search of a new shop to deal with.
Give flexibility with low-cost services
This tip might be a little controversial, but it’s effective in helping achieve higher $/RO. For low-cost services that would drastically affect your average, give service advisors the flexibility to comp the customer.
For example, a one-line oil change to replace a taillight bulb results in maybe $20 revenue, parts and labor. On a day that averages $200 per RO across 19 invoices, a 20th invoice at $20 drops the average by $9. For the minimal cost, allow the advisor to charge that invoice internally as an advertising charge. The customer will be tickled that they aren’t being nickeled-and-dimed, plus it doesn’t drastically affect the target average.
Double down on the walkaround
Walkarounds in the service drive have long been proven to be profit generators, finding concerns that customers either didn’t recognize or had forgotten about that turn into sales. It’s easy for this process – which obviously takes time – to fall by the wayside, and $/RO tends to be an area you notice the slip.
Simply by returning to and enforcing a policy of performing a walkaround on every service vehicle, you’ll see a bump in this metric. It might be only a few dollars, but it reaps rewards in customer satisfaction and loyalty also.
Dig into declined services
Whether due to trust issues or affordability, repairs and maintenance items are frequently declined by the vehicle owner. These can fall off the radar if they aren’t documented, but they’re a great source of revenue, not to mention the best way to take care of the customer and their vehicle.
Use your tech to list previously declined services prominently during the service check-in, giving the advisor an opportunity to remind the owner of items that are still outstanding.
Dollars per RO needs to be used carefully as a metric. It can identify individuals who aren’t performing to their potential, but it can also promote predatory behavior among service advisors. These tips can help achieve an increase without pushing unnecessary or premature maintenance or repairs.
Did you enjoy this article from Jason Unrau? Read other articles on CBT News here. Please share your thoughts, comments, or questions regarding this topic by submitting a letter to the editor here, or connect with us at email@example.com.