New Important Measurable In Your Service Department

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In this video, Lola and I want to share something with you that's immeasurable you should be looking at in your service department that can make you a lot of money. And it'll change your whole approach to how you think about your numbers in your department. Now, I do a lot of strategy sessions for dealers all the time, and I'm talking to service managers and one of the comments I get is, well, you know, Chris, if I grew a beard like you, I could hit the numbers that you hit. And I'm telling you, you probably can't grow a beard like me. But if you do grow a beard, I want to give a plug to my boy Homer and homer cuts. And if you grow a beard like this, you're going to need beard oil. It's a very important beard oil. And you need good stuff. And so you want beard oil from Homer cuts. I'm giving you a little plug Homer, because I love you. You do a great job. So beard oil from Homer cuts if you want to increase your labor sales and you want to look good.

So the most common thing that I get from service managers, when we talk about their financials and they can be losing money in their service department, and the thing that they will say to me is, I just need more customers. And most of the time I can show them the math that just more customers equals more losses because you're losing so much money per customer that comes through because your pricing strategies are wrong and your whole approach is wrong. And everybody in the old school part of our industry still are chasing hours per ro. And if anybody tells you that they can increase your hours per ro by half an hour, they don't understand profitability in a service department and what today's market is all about. Because today it's about selling a lot of little maintenance because we don't have the big repair jobs like we had before. And we don't want our advisors walking away from tire rotations and the little stuff. And if you put too much emphasis on hours per row, that's what you're going to get. So we need to focus on the customer experience and we need to focus on selling a lot of the little stuff because that's where we're going to win. And that's how we here at Chris Collins Inc. Take service departments from breaking even or losing a little bit of money to 30% net to gross. And amazing CSI is we fix the system and the measurables and how you look at it. So I want you to forget about hours per o For a minute. And I want you to replace that with a measurable called conversion ratio. And what conversion ratio is simply is it's your warranty RO count divided by your customer pay RO account. And I'm going to write that up here. So we have conversion.

And there's no spell check up here, but so we have conversion ratio. And what the measurable is is it's warranty RO count divided by CP RO count. Now what we've seen the last couple years is with all of these recalls that have happened, the Chevy stores and GM stores, Ford, Honda, a lot of the stores that had a lot of recalls, their warranty RO accounts have gone, but their customer pay RO accounts have stayed the same or gone down. And the way that we look at warranty RO accounts is opportunity. So all of those cars coming in, even if they have maintenance. And we learned this years ago with BMW. We came up with this when BMWs and Audis and Mercedes had maintenance. We were trying to figure out what can we sell while the customer is under maintenance. And there's only a couple things you can sell and that's tires and alignments and maybe fuel services, and that's it. Everything else is covered under maintenance. So we looked at our ROS count to see how much we were converting. Now if I look at a Chevy store and let's say for example, a thousand customer pay repair orders in your dealership and let's say you're riding a thousand warranty repair orders, your conversion ratio is going to be one to one. So if you divide the warranty RO account into the customer payro account, you're going to get one. This number should be below.

And so what that tells me every time I see that is the next question I'll ask is, well, how many alignments did you sell last month? And most of the time they'll say I don't know, which means not very many, or the answer is 25 or 30 or something like that. Well, on this RO account you should be selling close to 300 alignments. So you want to have the right pricing strategy because you want to sell your alignments for a profit. So you want to make sure that those items have a high effective labor rate. But you want to make sure that your advisors have a system in place to convert in order to sell alignments and rotations and things like that. And one little fun interesting fact is an increase of 0.1 in conversion is usually equal to the same amount of labor as an increase of 0.3 in hours per O so conversion moves a lot faster when you're talking about increasing your sales than hours prior odu. And it's a lot more relevant and it's the new stuff and the new measurable that you want to talk about in your service department. So look at these numbers on your financial or your advisor performance report and then get with us and let us help you fix this. We're really good at putting systems in place to help you convert customers into sales and training your advisors how they can connect with customers and do a better job of selling more of this. And I know some of you, when I said you should be selling 300 alignments on that number, you know we're in shock, but really that's what you should be doing on that kind of an RO account. So I hope that's something to kind of tickle your thoughts and really make you think about things a little bit different. Be wary of the bad wolf just talking about hours per RO and really think about it a little bit different. Thanks and I'll talk to you again soon.