Well it’s that time of year again, when most of the country is starting to fire up their bikes to get the season started. It’s also the time of year when service departments get a mix of street, snow and off-road business. Watching a service department during the first few weeks of spring is fun because everyone is buzzing about like bees on crack.
Every year around this time I get the same phone call from a spun out manager. They always ask me how much they should charge for an oil change, a primary oil change or a tire change. I always answer the question the same way, too: does the price really matter? Then the awkward silence begins the kind where you know the other person on the phone did not get the answer they wanted and they think you’re trying to play some stupid mind game.
I guess I look at things a bit differently, so this seemingly simple question always turns into a philosophical discussion. I think there are two different philosophies to service work. Both ways will make you money, but they are just different approaches.
Service is work usually priced by what the local market will bear, right? Customers will shop you to save a penny on the oil change or tire change so you need to offer the lowest prices on the block, right? I mean after all, most people in this industry like racing so why not get into a race to the bottom?
This price scenario may work, but it requires a laser-like focus on the upsell opportunities that might be created. Your whole service and parts team need to be on board to make this a win for your dealership. This is probably the hardest way to go about getting true profitability, but it can be done. The dollars will be turned but the profit will be less than it could be. The drawbacks are every single misstep will have huge ramifications on your profits because your margins are so thin.
I used to sell paper to commercial printers throughout the southeast. The paper I was selling was white just like all my other competitors. There was nothing special about it and everyone had it. I had an old grumpy sales manager that would stand over my shoulder and listen to my sales calls and approve or deny my orders. It seemed like he controlled my paycheck by how much he drank the night before. However, he taught me something that has made me more money over the course of my life than anything else.
He said, “C.R., you have three things you can sell around here, best price, best delivery time and best quality of product. If you ever try to submit an order with all three of those I will fire you on the spot. You only need to have two of the three, and since you are paid on a gross profit commission structure pick the two you want.” Think about this when you buy something; if you want it right now do you really care if you can get it cheaper on Amazon? Why do you think some of the scooters that are sold under the tent outside the flea market are priced the way they are?
I think of the service department like my old paper company. The quality of product is based around the quality of work your tech does and the feeling your customers get when they deal with your service staff. Do they feel like they are treated like rock stars or cattle? Do you wash the unit when you are done or just send it out the back door and move onto the next one?
The delivery time is how fast you can get the bike serviced and the customer back down the road. Is your staff faster or slower than the competition? So if you concentrate on having the best service staff and the best delivery does the price really matter? Customers will pay more for fast, first-class service.
It all boils down to what your philosophy is. Making a quick, easy dollar or working the market and making the long, slow, bigger dollar. The second philosophy will take a while, but making a profit will be easier in the long run, and your customers will be more loyal and the upsell opportunities will be easier to capture.
C.R. Gittere and the Service Manager Pro team specialize in service department efficiency, elevating customer service and increasing department profitability. His monthly column focuses on best practices and unique ways to get the most out of your service department. More information about Service Manager Pro can be found at www.servicemanagerpro.com.