What is a Technician Worth?

In Fixed Ops Toolbox by Don Reed

“Have you ever taken the time to sit down and actually calculate the real value of an average Technician? The value I’m referring to is Gross Profit Production and Customer Loyalty, which I would hope are on your radar screen every day of your dealership life. If they are not, then they need to be … starting today!”
— Don Reed, CEO
DealerPRO Training

Let’s look at Gross Profit Production first …
Gross Profit Production is defined as the sale value less the cost of sale, or the technician’s wages in this case.

An average technician in an RV Dealership is currently averaging about 55% productivity, or about 4.4 hours per 8 hour day. That equates to about $8,640 in gross profit per month. A good technician can average 100% productivity, or 8 hours per day, which equates to about $15,700 in gross profit per month. That’s a difference of $7,060 per month. If your store is a typical one with 6 technicians, than that totals $42,360 per month in additional gross profit.

Annualize that out, and the number increases to $508,320, which is the same as selling over 8 new RV’s per month, 96 a year, at an average gross PRU of $5000.00, which is pretty close to what your average Salesperson produced last year.

If an average Technician produces about the same gross profit as an average Salesperson, one would naturally assume that each of these people deserve to share equally in the attention received from the General Manager and/or Dealer, right?

Let’s look at some examples of how much these two actually have in common.

Let’s start with Performance …
If you maintain a Performance Board for Salespeople where you post their sales daily for all in the Sales Department to see then I would hope you also maintain a Performance Board for Technicians to measure and post their flat rate productivity daily. Additionally, if you set goals for all Sales people, daily, weekly and monthly then surely you are doing the same for Technicians since it is a fundamental part of measuring daily the success of all productive employees both in Sales and Service.

How about Support?
In the Sales Department you need to have a solid, customer oriented Finance Department to provide the financing support for putting the RV’s over the curb. A weak Finance Department will most assuredly have a negative effect on the performance of your Salespeople.

In the Service Department you need to have a solid, customer oriented Parts Department to provide the replacement parts for getting your customers back on the road. A weak Parts Department will most assuredly have a negative effect on the performance of your Technicians.

Why is it that the Parts Department in most dealerships will send a driver in a truck across town to deliver a part to a competitor (wholesale) but they won’t walk 50 feet to deliver a part to their own Technicians (retail)?

Since the Technicians are the number ONE customer of the Parts Department it would seem obvious that providing Technicians the highest level of service possible ought to be PRIORITY ONE.

Measuring = Managing for Success …
Now, back to the Salesperson who’s selling 5 Units a month and producing about $25,000 in Gross profit, I bet you have processes in place to measure their individual sales opportunities such as the number of UPS, Demos, Write Ups and T.O. to management and maybe even closing ratios? You’re probably thinking “how can any of these processes possible apply to Technicians?”

To begin with, measure the number of repair orders dispatched to each Technician. (UPS) Every repair order, with the exception of New Preps, should have an Inspection Sheet completed by the Technician to insure every customer is driving a safe and reliable RV. (Demo) Of course, any needed repairs and/or services found should be itemized on an Estimate Sheet and presented to the Service Advisor for review with the customer. (Write Up).

Any customer who declines a Technician’s recommendation for these needed repairs and/or services should be turned over to the Service Manager for a second review with the customer so they understand we are just trying to make sure they are driving a safe and reliable RV. (T.O.)

Achieving 100% Productivity or More …
If you implement these processes and measure them daily (like you do in Sales) you will immediately realize an increase in Retail Sales because your Technicians’ productivity will go up. It’s not uncommon for a good Technician to reach 100% productivity or more.

At this level of productivity your Technician is now worth about $16,000 per month, Customer Satisfaction and Customer Retention are on the rise and Service Absorption just took a big leap forward, which sounds to me like the dealer just got a pay raise!

By measuring the efforts of your Technicians daily, several things will happen with your entire service team starting with day one.
• First, you send a strong message that you care about Service.
•Second, you are looking at their performance daily and comparing that to their goals.
• Third, they will be held accountable for their individual performance-daily.
• Fourth, productivity will increase significantly and so will your Net Profits.
• Last but not least, your service customers will like doing business with you again and again.

So don’t you think it’s about time you crossed over that demarcation line separating Sales from Service and give your service team the attention they deserve?

Call me toll free at 1-888-553-0100
Or email dreed@dealerprotraining.com.

Don Reed, CEO
DealerPRO Training