In any arena, business or sport, top performers are identified through constant, ongoing performance evaluations. If you can’t evaluate their performance, then how can you identify their status as a top performer?
Service advisors are no different, in the fast-paced world of the service drive, lack of performance tracking can definitely impact everyone’s bottom line, and quick!
A key performance indicator (KPI) is a business metric used to gauge aspects that are crucial to the accomplishment of an organization. KPIs differ according to the business goals that are specific to each enterprise. KPIs are applied in business to identify business trends and advise on the best strategic actions.
In the service drive, before KPIs can be identified, the following requirements must be met:
- A defined service drive process.
- Clear goals for each advisor.
- An EASY way to measure the KPI and consistency in reporting performance.
- Willingness from management to fix and amend inconsistencies IN KPI’S AND MEASURING THEM, as to not demotivate
KPIs are a set of standards to compare actual results against. For advisors AND managers, it’s kind of like a “Service Drive Success Gauge”… Ultimately, KPIs help the service manager, and the advisors themselves, assess progress towards their shared goals.
So What Should We Measure?
Advisor KPI’s need to be a stretch but still attainable. It is critical that an advisor can see at any given time, how they are scoring compared to the established standard KPI. Most KPIs are measured on a month by month, month-to-date basis and show what end of the month value the advisor is going to attain if they keep the same pace as currently reported. Here are the main customer pay metrics for improving service advisor retail performance.
Service Advisors Retail Performance KPI’s
Repair orders are written by advisors and the department as a whole. The number of Repair orders your advisors write is a data metric that is very revealing for the department as a whole and for your individual advisors. Here are a few things to deliberate when measuring this KPI.
As a department, are we tracking to exceed our car counts versus historical data? Are we going to have more customers this month than last and more than the same month last year?
As an advisor, am I writing enough repair orders per day, or too many to really do a quality job for the customer and the dealership’s interest? (Industry standard typically 12 to 15 per day)
Advisors not writing enough repair orders, especially in conjunction with other underperforming KPI’s like low labor dollars per RO deserves your attention and training. advisors who cannot pick up the pace AND quality of the repair orders they write over a period of time should be replaced or repositioned within the dealership.
If you are slack on car count, short term, advisors and managers should ramp up activities to follow up with customers and recruit new ones.
Activities of value are things like setting the customer’s next appointment, following up with previously declined work, contacting by email and calling recall notice customers and reaching out to defecting customers and those in danger of defecting just to name a few good ones.
Substantial increases in repair order counts for sustained periods indicate the real need for additional help. Keep the guideline of 12 to 15 Repair Orders a day per advisor in mind, and don’t wait too long to act!
Customer Pay Labor per Repair Order
Customer pay labor per repair order is a metric that is likely to be a bit specific to your carline, demographics of your location and a few other factors. This metric actually breaks down for further analysis so if your advisor is lacking in this area examine these components.
Customer pay effective labor rate MULTIPLIED by the customer pay flat rate hours per repair order EQUALS the labor per repair order (example ELR = $100.00 X 1.0 FRH’s = $100 labor per Ro, right?)
If the investigation reveals the ELR is low, look for excessive discounts or mishandling the estimating process.
If the investigation reveals the ELR is OK but the FRH is low, investigate repair orders to see if legitimate additional service needs are being presented.
Train and counsel advisors in sales strategies and estimating skills accordingly to improve this metric
Customer Pay Parts per Repair Order
This metric is also variable according to a few different elements. As a rule, the parts to labor ratio should be anywhere from 1:1 up to 1:1.6 in some cases. While it is true the parts follow the labor there are actions you can take to improve this number.
Low parts per RO compared to labor may indicate “parts heavy” jobs are being undersold.
Parts heavy operations include, tires, batteries, filters, wipers and pour in additives. Investigate the percentages of these commodity sales by the advisor if they are underperforming.
Train and coach advisors to watch and affect their performance on this metric.
Low parts per RO may indicate low margins on the parts themselves check your gross margins on repair order parts on a regular basis.
Commodities sales per repair order as a percentage of repair orders written.
Tires, brakes, filters and flushes and other commodities as compared to the number of customer pay repair orders written.
To troubleshoot observe if your advisors are asking for the additional business at write up and also when presenting additional service needs.
Equip advisors and techs with information on how, what, when and the benefits the customer will receive if the services are performed.
Instruct advisors to offer these services based on mileage if there is no history of them being done in your records.
Make sure your techs are on the same page and recommending based on condition, as well as mileage interval.
Multi-point vehicle check-up inspections and postponed services coding results (how many MPIs and condition codes booked vs. customers waited on).
This is actually a legal and ethical issue as well, you don’t want a customer to leave your store not knowing of a potential safety concern. Related to retail success, the bigger picture is, are we leaving money on the table by not inspecting certain cars?
Review repair orders daily, coach and counsel individuals as needed. This is such a critical issue consider it being a mandatory and non-negotiable issue.
Use dealership historical data as well as industry and group benchmarks established to establish these targets. Managers should supply their team with up-to-date metrics, in conspicuous places with regular updates. Results should be posted in areas of the dealership that are easily noticed by advisors. E-mail distribution of KPI performance is another way to keep everyone informed.
The visibility of your metrics scoreboard will strengthen accountability and spawn competitive ambitions amongst your crew. Make sure you include both comments of praise and action items in areas that need attention.