Key performance indicators for the Service Department , according to international experts
To understand the performance of the Service Department of a vehicle dealership (whether cars, agricultural equipment, motorcycles, or trucks), international experts pay attention to several indicators:
• Hours per repair order
• Repair orders per
• Hours sold per Service Advisor
• Effective labor rate
• Parts to labor ratio
• Parts sales
Hours per Repair Order
This indicator is calculated by taking the total quantity of hours sold for a group of repair orders, and dividing by the quantity of repair orders. It’s useful to measure this indicator for the entire department, and also for each individual Service Advisor.
For example: If an advisor sells 200 hours in a month spread out among 100 repair orders, if we divide the 200 hours by the 100 repair orders we obtaine an average of 2 hours per repair order.
This happens to be the benchmark for the international automotive industry… each Service Advisor should average 2 hours per repair order.
If the Service Department average is below 2, there may be a performance issue somewhere, possibly in the sales efforts of Service Advisors. We can understand more by paying attention to 2 items:
1- Are there too few Service Advisors at peak hours?
Let’s suppose that 10 cars drive into the workshop at around the same time and there is only one Service Advisor available… The Service Advisor becomes a mere writer of repair orders, and loses their status as a service consultant. Without enough time, they won’t be able to make a correct presentation, detect problems in the vehicle, or discover a customer’s hidden needs.
Administrative tasks can also consume an advisor’s valuable time. Answering the phone to book service appointments or respond to basic queries are not activities that require their expertise.
This is easily fixable by the dealer and only requires:
- An analysis of workshop traffic for each day and hour
- Process improvements, so advisors can focus on their job
2. Do we have these key tools to sell services?
- A maintenance check list. A printed checklist helps us improve how we serve customers and increase sales. For example, some manufacturers indicate a change of fuel filter every 20,000 km. A checklist helps advisors remember these issues.
- An inspection form, that addresses a visual overview of 15, 20 or 25 points that we can perform at no charge for every vehicle that comes into the workshop. The Service Advisor can thus inform the customer about the condition of their vehicle, and offer them the opportunity to purchase more services.
According to specialists, 9 out of 10 dealers (automotive, motorcycle, truck, heavy equipment) around the world do not use the correct combination of a checklist and inspection form.
In our next article we will analyze other key indicators that help us evaluate the performance of the dealership Service Department.