A person in his mid-20s walks in your dealership looking for a sales job. He is well-dressed, speaks well and gives a good first impression.
He also gives you a brief synopsis of his background, which includes jobs in outside sales and phone sales, with limited management experience. In addition, you discover that motorcycles have always been a hobby for this person. He has been riding and repairing motorcycles since he was a kid; motorcycling goes back three generations in his family.
Here’s the dilemma: You have an opening in your dealership for a unit salesperson and a service advisor. Which opening makes sense? From my experience, most dealers I know would pick the unit sales position. The thought is that more unit sales would result in more gross profit for the dealership. But I beg to differ.
From our 20-group statistics, I can tell you the average salesperson sells around 15-18 units a month. This is an average. The superstar salesperson may sell 25 or more every month, while some sales slackers can only sell single digits. The average gross profit on a unit sale is around $1,200. This is a blend of units that include motorcycle, PWC, ATV, UTV and snowmobile.
Here’s the math:
Let’s look at the service advisor position. A repair order consists of parts, accessories and labor. Our 20-group National Norm data shows the average P&A per repair order is $118. The average margin for P&A is 32%. This means the average gross profit on the P&A portion of the RO is $37.76.
The average labor on RO is currently at $140. With 30% of this dedicated to technician wages, this leaves a gross profit of $98.
We know from our data that the average service advisor is probably overworked. Average service advisors now write around 200 repair orders each month.
The gross profit math will show that a good performing service advisor can and will pull in more gross profit than a unit salesperson. Some dealer friends I know will say I did not include F&I. True, I did not. However, the results in F&I are generally attributable to the F&I person, not the salesperson. Of course, the unit sale will enable F&I to happen, but the salesperson isn’t the person responsible for F&I success.
Another way of looking at this is through customer service. If you have an applicant who is knowledgeable, has sales experience and communicates well, how could you maximize their potential? Wouldn’t you want them exposed to the most customers who could benefit from their customer service?
The average salesperson will greet five customers a day at the dealership. They would typically follow up with another 10 or more potential sales leads every day. The average service advisor does 10-15 repair orders a day. This doesn’t include the phone follow-ups from previous ROs, and also doesn’t include setting appointments for future work.
If you include all the service advisor “customer touches” in a day, it’s probably more than 25-30. The service advisors will almost double the “customer touches” of your average salesperson. This fact, along with the gross profit potential, makes you realize how important the service advisor position really is.