– Don Reed, CEO
“If you would like to “Recession Proof” your RV Dealership …
“You should increase your ‘Service Absorption’ or ‘Fixed Coverage.’ That means your Service and Parts departments generates enough gross profit to pay for 100% of your Dealership’s total fixed overhead expenses. So, all your Sales department has to do is cover the Variable Selling expenses. Sound like ‘FANTASYLAND?’ Please read on …
The Back End Key
To begin with, most Dealers tend to be “front end” oriented since that is usually where they came from, as opposed to “back end” oriented, which is a place that they are unfamiliar with and possibly do not understand. That being said, let’s take a “front end” approach to making your Dealership “Recession Proof” through maximizing your profits in the “back end.”
Now ask yourself this question: “Do I employ Service Writers or Service Advisors in my Service Department?” What is the difference, you ask?
Well, a Writer simply writes the customer’s concerns on a repair order and then dispatches it to a technician.
An Advisor writes the customer’s concern on a repair order, walks around their car with them, advises them of any obvious service needs, makes recommendations for a maintenance program and advises the customer that a technician will perform a 27 point courtesy inspection of their unit at no charge. Simply put, a Writer is essentially a clerk. An Advisor is a salesperson.
In your Sales departments and F&I departments you are probably measuring the performance of your Salespeople and Managers on a DAILY, WEEKLY and MONHTLY basis, right? Do you do the same for your Technicians, Advisors (Writers) and Managers? Most Dealerships have sales goals for new and used RV’s and F&I products.
Do you have sales goals for customer pay repair orders, maintenance menus, and preventative maintenance? If your Sales department has goals for GROSS PROFIT PER RETAIL UNIT and F&I GROSS PROFIT PER RETAIL UNIT, then why not have goals for HOURS PER CUSTOMER PAY REPAIR ORDER, DOLLAR SALES PER REAPIR ORDER and GROSS PROFIT AS A % OF SALES for labor and parts sales.
Pay for Results
If you believe in PERFORMANCE BASED PAY PLANS for your Salespeople and Sales Managers then why not do the same for your Advisors (Writers), Service & Parts Managers and ALL Technicians? If you have minimum performance standards for your Salespeople, you should also have performance standards for your Advisors (Writers). Answer this question: “What would you do with a Salesperson who averages just 2 unit sales per month?” There are only two options. Train and show him or her how to sell 8+ units per month, depending on what type of RV’s your selling, or conduct an EXIT INTERVIEW!
Now answer another question: “What would you do with a Service Writer that only writes 2.5 hours per customer pay RO?” Your options remain the same. Train and show him or her how to sell 5.0 hours per customer pay RO or let them join the 2 unit per month salesperson in the EXIT INTERVIEW!
If you hold your Salespeople accountable for their sales performance, then why not do the same for your Service Advisors? By the way, you will most likely experience a higher customer satisfaction rating for your Advisors once they learn how to ADVISE.
Inspect what you expect by using Daily Performance Evaluations of your Service Advisors’ sales productivity. Set realistic goals for them, coach them daily and get them professionally trained on how to be a salesperson (Advisor). Now you are on your way to making your Dealership “Recession Proof.”
Call Don Reed toll free at 1-888-553-0100
Or email firstname.lastname@example.org.