2020 plans – Service Department
In this issue I want to discuss ideas for both budgeting and planning service department performance. The goal here is to look at this process from a new vantage point, and use this opportunity to truly engineer initiatives and improvements. No simple formulas – no “box checking”.
Once again, any meaningful planning session will include an assessment of our current (S)trengths, (W)eaknesses, (O)pportunities, and (T)hreats. Once identified, we must formulate strategies consistent with these categories to heighten our advantages and minimize our risks.
Forecasts are an educated guess at a desired result. Achieving these results requires action. These actions (behaviors), must be strategic, specific, and understood by the entire team. Every process and SOP that we adopt should be tied to these specific objectives.
In October, I suggested the adoption of some specific initiatives and accountability programs that would help to create desired results within the parts department. This month I will add some methods to help us achieve SERVICE our department objectives.
Let’s start with the assumption that all forecasted targets are going to be consistent with three generally accepted norms:
- Forecasted service sales are going to INCREASE. We want to sell more labor.
- Forecasted service expenses are going to INCREASE. We want to mitigate this expense if we can.
- Forecasted profitability is going to either IMPROVE or MAINTAIN its current level.
Suggestions for initiatives and behaviors that will help us meet these goals:
- “Pre-capturing” maintenance services
Every piece of equipment that the dealerships puts into service (new or used), comes with a specific list of maintenance requirements published by the manufacturer. As an industry, many forklift dealers ROUTINELY miss opportunities that are afforded for us by the OEM. It seems that our goals and thought processes when preparing for the sale of maintenance, are fixated on PM service programs.
I don’t have an issue with the sale of a PM. I do however believe that as dealers, it’s our job to EDUCATE the customer on ALL of the maintenance needs required. PM Programs are structured around the needs of the equipment at a 250- or 500-hour service interval. Replacement of the engine oil, lubrication of high wear components, as well as replacement of oil and air filters are normally the salient tasks required at these intervals.
Other systems however require maintenance as well.
- Transmission / Torque converter
- Differential / Final Drive
- Cooling System
- Brake System
- Wheel Bearings
- Ignition System
- Fuel system
These systems have much longer service intervals, and are not generally incorporated into a standard dealer PM offering. Most dealer service scheduling and quoting systems are not well formatted to alert the dealer as to when these additional services become due. In addition, we do not normally use the hour meter reading reported by the technician as a tool to “drive” the proposal of additional maintenance services to the customer.
There are dealer organizations that have addressed the differing levels of PM maintenance inclusions by representing a tiered PM system. (Silver/Gold/Platinum). These systems are a good start to addressing maintenance items that are routinely missed. Many of these programs however simply offer these services at prevailing rates when they are due, and the customer is invoiced for them (or declines them) on an individual basis. Budgets being what they are, the sticker shock that can result from one PM invoicing at $130, and the next one at $950 actually deters customers from approving the “Gold or Platinum” maintenance offerings.
I much prefer the idea of “pre-calendaring” a maintenance proposal to include ALL of the OEM specified maintenance over a 5-year period, and amalgamating the pricing for all these items into one static monthly rate, which is invoiced much like a Long-Term Lease with Full Maintenance and Repair (LTRFMR) program. This calendared program however addresses MAINTENANCE only. The price point should fall between a standard PM and a LTRFMR program. This serves to widen our offerings, and allows us to offer our regular PM as a “fallback” proposition. The calendar program “pre-captures” long term maintenance. These services are now always addressed, because they are “on the calendar” and INCLUDED. No more excuses, forgetting, or having the service declined because it “too expensive”.
Service menus and strategic van inventory
If you are a regular reader of my columns, you already understand my penchant for having the RIGHT inventory on board the service van. You will also expect me to once again harp on the need for dealers to provide the tools necessary for the technician to quote, close and complete repair items on the spot.
This can’t happen without a regularly updated van inventory. The correct inventory will mirror the makes and models that the individual technicians are likely to be working on. Broad brush inventories I regularly see are cursory, inadequate, and ineffective. We have to connect the dots manually. Our technician should be a partner with us in determining the right inventory, so that they can complete same-day repairs.
- Leveraging telematics data
Telematics functionality is already available for most makes and models of forklift and industrial equipment. These devices are game-changers. They wirelessly broadcast the status of the equipment to both the dealer and customer. This data can be used to manage the maintenance needs we talked about earlier. It also gives your CSSR reporting data that can lead to high-value customer visits, where real time needs can be evaluated. We can now truly help the customer actively manage his fleet.
The question is…. ARE WE DOING THAT? New technology is great, but in order to wring the value out of the system we have to actually format the reports, and have a dialog with the customer. If we don’t have an “in the field” battle plan to leverage that data, we need to develop one.
- Incentives that motivate
The one place that incentives can really drive additional revenue and profitability is field service. I have seen dozens of incentive programs in my travels, and to be honest…. most of them are simplistic, boring, and rote.
Paying a dollar for every tire sale is NOT a program. It’s an “attempt”, and a weak one at that. During the MHW One-Day Dealer Conference held in September, I introduced dealers to the ideas of rotating incentive programs with limited time frames and graduated rewards. These are programs that actually get the employees attention, and “call them up” by increasing rewards when they reach the “next level”.
I’d be happy to chat with you about how to structure such a program. Suffice it to say that if we want to GROW our service revenues, we have to equip, educate and motivate the employees that have the greatest opportunity to interface with the buying public. Our service techs are our greatest asset in this regard.
The bottom line to growing our service business in 2020 will be doing things ON PURPOSE. No more “automatic” or “by default” practices. Plan, execute, then measure the results of the initiatives. If we do this, we will find new opportunities and growing rewards.
Dave Baiocchi is the president of Resonant Dealer Services LLC. He has spent 37 years in the equipment business as a sales manager, aftermarket director and dealer principal. Dave now consults with dealerships nationwide to establish and enhance best practices, especially in the area of aftermarket development and performance. E-mail email@example.com to contact Dave.