Information (Photo credit: heathbrandon)
It is not enough to measure.
That’s right, I said it.
Measuring your numbers is a waste of time if you don’t do anything with the numbers you measured. In order for the numbers to mean something, you must do something with the information they provide. It is not enough to just gather and store the information.
“You must measure what you need to manage”…..and….”you must inspect and evaluate the efforts of your people daily” says Don Reed, CEO of DealerPro Training Solutions.
So, what do you need to measure so you can manage the Service Department?
Lets look at the 5 Basic Daily Measurements.
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The Service Advisors HPRO from the day previous. (Hours Per Repair Order)
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The Service Advisors EFL from the day previous. (Effective Labor Rate)
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The Service Advisors Labor Gross Profit Margin from the day previous
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The Service Advisors Parts Gross Profit Margin from the day previous.
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The Service Departments overall results in HPRO, EFL, Labor and Parts GPM tracking for the month.
This is really all the information you need on a daily basis to see where you are for the month and what direction you are headed. Are there additional measurements?
Yes, of course.
Every Dealer Principal, General Manager and Service Director look at different numbers. And, you need to measure more than the Daily 5 to keep the Service Department on track.
Crunching the Daily 5 helps keep the focus on the big picture and points to areas that need attention. However, if you are just gathering information and not making adjustments based on the what the numbers are telling you, you got a problem.
It’s like standing in a darkened room with your hand on the light switch and complaining that you can’t see.
Of course, this does not make any sense at all. Yet, that is exactly what you are doing when you have the information available and then choose to do nothing with the information you have collected.
And you need to have a standard to measure against. For the record here are the standards for the previously stated Daily 5.
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HPRO should be at 1.5 or greater. Anything less requires immediate attention and intervention. In order to get to 2.0 and above you need to have daily interaction and repair order review with your Service Advisors.
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EFL should be at 90% of door rate. Anything below 75% requires immediate attention and intervention. In order to get above 75% you must inspect and review repair orders daily with your Service Advisors.
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Labor Gross Profit Margin at 75% of Labor Sales. Anything less than 60% requires immediate attention and intervention. In order to get above 60% you must inspect and review repair orders daily with your Service Advisors.
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Parts Gross Profit Margin at 45% of Parts Sales. Anything less than 30% requires immediate attention and intervention. In order to get above 30% you must inspect and review repair orders daily with your Service Advisors.
And of course for the overall picture, you must take a look a decide if you need to make adjustments based on what the entire picture is really saying. These measurements are really signposts along the path to increased Profitability.
Measuring and crunching your Service Numbers are not that difficult if you know what you are measuring, why you are measuring and more importantly what you are going to change to get to the numbers you need. Use these Daily 5 as a baseline. Interact and review daily and you’ll find yourself “crunching the numbers” for results.
If you are wondering how you “measure up”, send an email to info@dealerprotraining.com or call 888-553-0100 and schedule an evaluation of your Dealerships Fixed Operations and Profit Potential.
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