Fifty thousand dollars.
It’s not a huge sum. In fact, let’s be honest, if you heard yesterday’s state lottery was at $50,000, you wouldn’t even bother looking to see if your “lucky” numbers were in fact, lucky. But how about adding an additional $50,000 to your service department revenue in 2015? Worth considering? For most of us still waiting for new unit sales to rebound to anywhere close to pre-recession numbers, you bet.
The good news is your chance at earning that additional $50,000 is a heck of a lot better than your odds of winning the lottery. And you don’t have to be the biggest shop in the county to make that extra dough.
Here’s how you do it: You commit (today, not tomorrow) to tracking your service technicians’ efficiency rates.
With modern dealership management platforms, this exercise should not only be easy, but more impactful than ever before.
But let me prove this additional $50,000 is actually obtainable for you.
First, let’s be sure we have our terminology down. The efficiency of a service department technician can be measured by taking the number of possible billable hours and dividing that by the actual hours it took to do the work. Full-time technicians work 40 hours a week for 52 weeks a year. That’s 2,080 possible billable hours a year. Take the number of hours the tech took to do the work that year, and you’ll have your tech’s efficiency rate.
Ultimately, you’re seeking at least 100 percent efficiency. If you’re above that, you’re doing well. If you’re below that, you have work to do. And just so you know, most of the dealers we’ve talked with over the past several weeks are routinely below that 100 percent mark.
And that’s where this extra $50,000 can come into play in 2015.
[pullquote]Our recent dealer conversations revealed that 90 percent efficiency rates are fairly common. If you can get those techs’ efficiency rates up to 100 percent and your labor rate is $80 an hour, then an additional $50,000 in revenue is very reachable. Let me prove the math to you.[/pullquote]
One tech working at 90 percent efficiency is going to bill $149,760 a year, assuming the $80/hour labor rate and the 2,080 billable hours (that’s 40 hours x 52 weeks = 2,080 hours).
If you get that tech up to 100 percent efficiency under the same labor rates, their billable total will rise an additional $16,600 for the year. Multiply that by three techs, and you’ll be darn close to that $50,000 increase.
In other words, make your techs 10 percent better and you can earn $50,000 more. Not a bad deal. But it starts with that commitment to track your efficiency – something not all of us do. The reasons we don’t track that potentially lucrative statistic are numerous, but they shouldn’t have anything to do with your dealer management system. New dealership business platforms, like Dominion Powersports’ DX1, provide not only easy service technician efficiency reporting, but also more in-depth ways of looking at this number.
Of course, the reason we track this number is to spot potential problem areas. If one tech is consistently lagging behind, his efficiency number will be an impartial and decisive judge of that.
Even better, more advanced levels of dealer platform reporting can tell us why some technicians might be lagging behind in their efficiency rating. For instance, in a new dealer business platform, you can identify a technician’s efficiency by vehicle type, learning whether one of your techs is better at two wheels vs. four wheels. Also, using new dealer business platforms, you can determine efficiency by type of work done. Is one tech great on mechanical jobs but falling behind on electrical ROs?
The answer is easily obtainable. And better yet, potentially very valuable.
