Fixedops

[RPMGeorge]

Hi, more questions.
How do you Guys generate fixedops? How to get them in profit alignment as well as time? What tasks do qualify for fixedops? Except for oilchanges we charge everything on Booktime, which seems to be not competitive enough. Any ideas on how to restructure without Techs are getting mad?

[David Henson]

George, I assume you are speaking of maintenance/menu items (I've never heard the term fixedops used in this context). From time to time I will help a store build or modify a menu and run into the same thing.

It's funny to see how some managers will build pricing for "specials." They first determine how much to cut the labor sale price then go to the parts manager and see how "cheap" he/she will sell the part. All the while leaving one person out of the loop--the technician.

Can't tell you how many times I've seen advisors happy about how many 30K's they've sold only to see that they were reducing the labor to $30.00 an hour (often paying a tech $17 of that) to make the sale price "match" the menu price.

In most cases this is due to a store not using "price averaging" for filters, spark plugs, trans kits, etc. and the service department taking the hit on labor sales to make up the difference.

I also find service departments that load up 15k, 30K services with alignments, tire balances, trans services that aren't really required or suggested by the manufacturer. Those items should be listed as "a la carte" items and sold on an as needed basis. This will also reduce the tech labor time and total sale price to a more competitive rate in most cases.

The fact is that you can't be competitive or profitable using Chilton or Motor Manual labor time to compete with aftermarket shops on competitive items. Core competitive items are, of course LOF, tire rotation, align/balance, transmission service, tune ups, cooling system service, fuel system service.

I find it best to get the guys one-on-one and convince them that "we can't sell a brake job to a car driving past the dealership on his way to Firestone for a cheap tire rotation." On this they will usually agree. In fact, the Firestones and Goodyears have figured this out a long time ago and "steal" our work on a regular basis.

From there I try to get them on my side as to what we can "sell" the labor for to build a competitive menu. They will usually (still run into some hard-heads) come around to your side when they decide they would rather do 4 brake jobs a week at 1.5 hrs rather than 1 a week at 2.5 hrs.

Sometimes you may need to start off suggesting that you do this on a short-term basis to get cars into the shop. Once they are able to see they are doing easier work (not that any of it is easy--it's all work) they tend to come around.

Good luck.

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[robc]

Dave is absolutely right about getting the techs involved in the process. Especially considering my background of warranty and being able to support a high effective rate. If shops start pricing things in the traditional flat-rate manner with a low labor rate, then they are destorying their effective labor rate.

The only way I know to combat this impact is to price competitive items out as piece work vs. flat rate. For example, I shop I worked at decided to be very competitive on LOF's so instead of paying the techs 0.3 hours we paid them $4. Then the labor was priced out accordingly. (In our case, we just priced $4 for labor, the filter was $5 and the oil was $5 for a total of $14 - with no profit margin) Of course, this does nothing to impact your gross, but it does skate around the effective retail rate calculation.

I agree that if a tech is used to making $35 (say 2.0 hours x $17.50 FRH) on a brake relining and you're selling it for only $60, then it's time to work with the techs. Instead tell them they'll make a flat $25 for the brake work, but maybe an incentive on upsold work.



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** Rob, Editor WD&S **
Help is only a message post away!
robc@dealersedge.com

[Results]

Hi George,
It is impossible to cut your rate from flagged time to be competitive.
Here is a thought.
Pick three specials that your techs will by into, that they to are will to lower their time for on the same percentage basis.
Now have a contest between your two stores. Winners get to take their significant other out to dinner on you. Or cheaper yet, winners get lunch catered in.
Use the numbers from that to get buy ins on all future specials.
David and robc are right on the pencil marks.
It seems that most service mangers complain about the chunk of money that was pulled from their gross for advertising the special before they even think about labor+overhead+cost of goods.

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Results
Mike Stinson
results@rintuit.com
www.rintuit.com

[gizmo]

Mike,

As a tech I find it insulting that you would expect us to accept less pay for a given job in order to increase your gross.

Does walmart reduce their salesperson's hourly rate when they have a sale? Of course not. Why should I take a pay cut to fund your promos?

Oh, and the notion that I would work harder for a catered lunch is a joke. Lunch is cheap...my time is NOT. I'll work for full rate and buy my own lunch thank you.

[David Henson]

Gizmo, as a technician what do you think (in terms of flat rate hours) a tech should be paid to perform a tire rotation, LOF, brake job, transmission service, wiper inserts, cooling system service, tune-up, fuel system service?

Do you really think tech time for these services should come from Chilton or Mitchell's Manuals or, as you refer, "full rate"?

What do you think a manager should expect to pay a technician (per hour) that performs these type repairs (i.e. $10, $12, $17, $25, etc.)?

When you say "Why should I take a pay cut to fund your promos?" would you rather not have any promos and just be satisfied with what comes in the door (i.e. warranty work)? (Now, there's a pay cut.)

These are not rhetorical questions. I would like to hear your thoughts.

Promos are just that, a means to get a customer in the door so you will have the opportunity to sell the only thing you have to sell--labor.

Rob made an excellent point about having an effective labor rate that would support a higher warranty labor rate. Without this in place, there is often little room for technician pay increases. It also deminishes a dealerships ability to retain and pay qualified technicians $17 to $25 per hour.

Would you at least agree their has to be a happy medium in there somewhere?

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[gizmo]

David,

I'm happy to respond to your questions. I think this is the first time a manager has acutally CARED about my opinion in years.


Gizmo, as a technician what do you think (in terms of flat rate hours) a tech should be paid to perform a tire rotation, LOF, brake job, transmission service, wiper inserts, cooling system service, tune-up, fuel system service?

I feel that mundane tasks such as LOF, wiper inserts & tire rotation should be left to lube techs. This is the most cost effective way to handle these jobs for both the technician and the SM.

Perhaps a tech should inspect each car for potential work while it's on the rack (with no hrs. flagged for inspection) or the LOF tech should be trained to spot needed work and spiffed accordingly when such work is sold based on his/her inspection. The LOF tech's spiff should come out of the tech's labor time...the tech owes the job to the LOF guy.

For example, assume the LOF guy notices worn brakes and informs the SA. The SA calls the customer and sells a 2.0hr. brake job. My feelings wouldn't be hurt if you took .3 hrs from the 2.0 to spiff the LOF tech. The LOF tech would be paid .3 hrs @ the LOF tech pay rate & the tech would be paid 1.7hrs @ his pay rate. The shop would actually profit using this system vs. paying the tech the full 2.0 hrs. @ a technician's labor rate.

Notice the above example used a 15% spiff rate. I used that rate because that's the standard rate for tipping a waiter or waitress in a restaurant. It's admittedly arbitrary and should be adjusted to whatever will fly in your shop. The idea is to keep everyone happy, which I'm sure you know is impossible.

The same would apply to trans service, cooling system service, whatever the LOF tech notices and the SA can sell.

Do you really think tech time for these services should come from Chilton or Mitchell's Manuals or, as you refer, "full rate"?

What do you think a manager should expect to pay a technician (per hour) that performs these type repairs (i.e. $10, $12, $17, $25, etc.)?



As a manager your commitment is to the dealer principle, not the technician. You should pay as little as you can possibly get away with while still keeping the techs in question satisfied.

Here in DE, $8.00-9.00/hr. is about going rate for a lube tech. A techs earn $21-$25 hr. I don't think it's unreasonable for a SM to dole out work based on ability. That is, I think it would be foolish for a SA or SM or dispatcher to give a LOF/tire rotation to a tech earning $25/flat rate hr. when there's a lube tech available earning 1/3 the A-tech's rate.

Do you really think tech time for these services should come from Chilton or Mitchell's Manuals or, as you refer, "full rate"?

With the exception of tune-ups which can vary greatly from model to model, no. Standard services should have standardized labor times across the board whenever possible. As long as the tech knows that this is the deal ahead of time he has no right to complain.


When you say "Why should I take a pay cut to fund your promos?" would you rather not have any promos and just be satisfied with what comes in the door (i.e. warranty work)? (Now, there's a pay cut.)

I say that because it frosts my cookies when someone makes a grab at my paycheck. It's bad enough that the OEMs are cutting their already stingy warranty times. Techs don't need their employers snatching tenths too.

As a tech, it's my job to note any potential work that comes in the door. For example, if a car comes in for warranty repair, I should inspect it thoroughly (again w/no hrs. flagged) for any potential work and notify my SA if any needed work is found. I'll probably lose out on 8/10 of the cars that pass through my bay, but I'll score big on the 2 customers who buy the recommended services. Inspection might take a tenth or two, but I'll make it up on the customer who buys the recommended repairs/services.

Promos are just that, a means to get a customer in the door so you will have the opportunity to sell the only thing you have to sell--labor.

Ideally customers should be beating our doors down. We have the information and skills that the independent shops and chain stores don't. We have all the special tools, factory training (though that's become a joke lately), etc. Our un-competitive labor rates seem to be the biggest hurdle, but it's not a problem for the import dealers. They seemed to have mastered the art of customer satisfaction and have no trouble keeping a full schedule although their labor rates are higher than everyone else.

I think a number of factors contribute to the success of the import (esp. japanese and german) shop's success. Number one would be the fact that their customers are more service conscious...and they're willing to pay for it. Number two would be that the import OEMs have convinced the customer that the dealer is the best place to have their car serviced. Domestic OEMs have failed miserably in this regard. Number three would be the way we treat our customers. In my experience, a dealer service dept. is more likely to look down on a low-end buyer as a cheap@ss rather than view them as a potential future high-end buyer.

The Japanese mastered the art of customer service in the 1970s and '80s...that's why Toyota Corolla buyers are more prone to having their low-end Toyota serviced at the dealer than Neon, Cavalier or Focus buyers.

A friend of mine consistently services his Corolla at the Toyota dealer. Why? Because they treat him like he bought a $50K Lexus rather than a $18K Corolla and they always fix his car right the first time. On the off chance they don't fix it right the first time, they are extremely contrite & do whatever is necessary to satisfy him. He's a Toyota lover and longtime buyer because he gets good service from his service department. We need to emulate Toyota's practices as much as is practicable and make our customers loyal to us.

Rob made an excellent point about having an effective labor rate that would support a higher warranty labor rate. Without this in place, there is often little room for technician pay increases. It also deminishes a dealerships ability to retain and pay qualified technicians $17 to $25 per hour.

I'm not sure what you mean by "effective labor rate". I re-read RobC's post and I'm still not clear on it. Please clarify and I'll be happy to chime in with my 3 cents.

Retaining qualified techs would be relatively easy (and cheap)if the working environment were improved or certain priveleges were available to the techs.

For example, does your shop allow techs to work on their own cars (not sidework) on their off hours?

Do you offer paid training or tuition reimbursement? Sure, it sucks getting paid 8 hrs. straight time when you could be clocking 12 FRH, but we all need to keep current and no one wants to sacrifice 100% of a day's pay to do so. You can never over-train a tech. Ever.

Is your attendance/tardiness policy unnecessarily harsh? Many of us have families and young children. Sh!t happens and we can't control WHEN it happens. It helps to have an understanding employer. Of course common sense would have to be applied here.

Do you ( or the Dealer Principle) take suggestions from your employees? We're the guys in the trenches and we usually know the fastest/best/easiest way to get the job done. It's a great feeling when you've been recognized for pointing out a better way to achieve a goal. Recognition doesn't necessarily mean compensation. It could be as simple as a "wow, thank you!" from the SM or a paper award from the DP, or being mentioned in a shop meeting, etc. These are all free, but they go a long way toward keeping your employees.

I admit that this idea is similar to your "free lunch" promo idea but in the eyes of a tech or other employee, recognition from the boss, especially the GM or DP, is much better than a free lunch. Lunch is cheap. You can't buy recognition regardless of how much money you have.

The above along with the general attitude of the Dealer Principle towards his/her employees goes a long way toward retaining technicians (or cashiers, SMs, SAs, whatever). That is, if the DP is a jerk everyone in the store will hate him/her & hate his/her job because of the miserable working conditions.

Bottom line:

Employee retention starts at the top. The DP needs to be (sorry, I hate this word...) *sensitive* to the needs of his/her employees, yet still enforce the policies necessary to run a successful business. All other managers will follow the DP's lead.

Finally, please accept my apologies for the tone of my last post. I came off as a disgruntled grouch and I'm sorry for it.

The fact that you guys take the time to post here shows me that you actually care about what goes on in your shops. That's more than I can say for the vast majority of dealers here in Delaware.

Have a great day. I look forward to your replies.

[Farfinator]

Gizmo,
First let met say that I am very impressed with your inciteful and well thought out issues and concerns. I think, however, its necessary to point out a couple of "bugs" that might impact your proposal with regard to the lube tech.
1. No arguement:Having the low dollar man take care of the mundane stuff is good business for all. However, this "low man" is looking for growth potential. You can't expect this person to give away his gravy forever. Eventually, 4,6,8 months down the line, he/she is gonna demand the opportunity to capitalize on their upsell. And lets face it, its a lot cheaper to let the C-tech grow. After all 30k's and pads slaps aren't rocket science. What happens now?
2. I agree it sucks to take from anyone's pocket to bolster sales. But, it is very narrowminded to consider the compromises made on menu/competitive services as a sacrifice by the tech alone. Most fixed ops personnel are paid on commission and concessions are made, generally, on both parts and service. EVERONE IS AFFECTED. And nobody much enjoys it when it is found necessary, but it is hardly an attack on the technician staff alone.
I've worked in many smaller import shops. Very often the option of an exclusive lube tech can't be justified..What then? I've tryed to work around aggressive menu pricing and tried to entice customers through quarterly "Customer Appreciation Days". Thats 4 days out of 365 I asked the techs to participate and get paid for participating in these "FREE" diag clinics...I met a SH!T pile of resistance. Evidently the option to sacrifice large chunks of their pay check to discounts was more appealing. Please excuse the sarcasm.
The obvious conclusion is there's no perfect answer that satisfies all parties completely. It would be a heck of a lot easier if everone "TRIED" to have the incites you do..Tried to understand the big picture.
Few managers go to their dealership daily and try to figure out how they can benefit by screwing some other body of employees...Most of us managers are simply trying to steer G.P. and C.S.I. in a positive direction in the best way we can figure out.

[mayotte]

Gizmo,
I didn't see anyone answer your question about effective labor rate, so I thought I would chime in. The posted labor rate is usually only collected on low productive repair work that you couldn't drive away with a stick of dynamite. The high productive maintenence work is the stuff that everyone in the world is trying to steal away from the dealer. Remember, unless the customer bought the vehicle at a used car lot, that is our customer to start with. The price wars are on those desirable jobs that everyone wants in their shop. If the dealer is to compete he/she must lower the price on the jobs to be at least in the ballpark with the prices advertised everywhere you look. Once you start doing that, the posted labor rate doesn't mean much. The effective labor rate which is calculated by dividing the customer pay labor sales by the customer pay flat rate hours is the only way to see how you are doing. Any service manager SHOULD be able to tell you what the breakeven rate is at their shop(ie: above this rate we make money and below it we lose money) When a manager can't price a job low enough to be competitive and still turn a profit is when you see him/her turn to the techs for a concession on time. If everyone involved sucks it in a little and manages to retain work that was escaping then everyone wins, or the opposite if you don't.

Mark

[gizmo]

Mark,
Thanks for clearing up the "effective labor rate" for me.

I have mixed feelings about competing with tire dealers and other chains like Precision Tune. Most of their customers would never consider taking their car to the dealership for repair anyway, so I think it's somewhat *optimistic* to hope to get these customers in the door. Assuming you doget them in, chances are they'll be back tomorrow to bitch that they now have a mysterious vibration that wasn't there before the dealer tech worked on the car, etc. You know the type of customer I'm talking about.

On the other hand, competitively pricing *standard* maintenance services can increase traffic in the bays & everyone wins when that happens.

FARFINATOR,

. Eventually, 4,6,8 months down the line, he/she is gonna demand the opportunity to capitalize on their upsell. And lets face it, its a lot cheaper to let the C-tech grow. After all 30k's and pads slaps aren't rocket science. What happens now?

My response would be that the C-tech is capitalizing on each upsell since he is spiffed from the tech's labor time. I hadn't considered tech growth, mainly because the C-level techs I work with are older guys who have ALWAYS been C-techs and have little or no desire to educate themselves and advance in position.

If you have a C-tech who shows desire & a willingness to learn, by all means help him learn & promote him when he's ready.

But, it is very narrowminded to consider the compromises made on menu/competitive services as a sacrifice by the tech alone.

True. But my point was the OEMs are already cutting warranty times to the bone. The SM & SAs take a hit on their commision %, but the parts guy still gets his full % regardless of how many tenths the OEMs shave. Gravy 30 & 60Ks used to make up for the sh!tty evaporator jobs & other money losers. When the gravy gets menu priced the tech takes the biggest hit, especially if your retail parts are competitively priced to begin with.

I've tryed to work around aggressive menu pricing and tried to entice customers through quarterly "Customer Appreciation Days". Thats 4 days out of 365 I asked the techs to participate and get paid for participating in these "FREE" diag clinics...I met a SH!T pile of resistance. Evidently the option to sacrifice large chunks of their pay check to discounts was more appealing. Please excuse the sarcasm.


I can't imagine why a tech would turn down that opportunity? Perhaps you could present it on a trial basis...Post a graph of your prior year service sales somewhere where the techs see it daily. Then hold a clinic on the condition that the program will be discontinued if service sales don't increase after 2 clinics. Hold a second clinic 3 or 6 months later. Continue tracking the sales & posting your results.
If the techs are doing their jobs correctly & the clinics are working, everyone will be able to see the results on a monthly basis. I know this sounds facile, but people react to visual input. They see that chart & they'll do their best to boost the sales figures. Of course if the program fails the techs will think you don't know what you're doing.

By way, I LOVE sarcasm! no excuses needed! LOL

The obvious conclusion is there's no perfect answer that satisfies all parties completely. It would be a heck of a lot easier if everone "TRIED" to have the incites you do..Tried to understand the big picture.


I don't understand how a person could not be concerned with the big picture. If the sales dept. is not doing well, the techs should be concerned. After all, who's cars are they going to be working on next year if the front end isn't getting the metal over the curb?

Few managers go to their dealership daily and try to figure out how they can benefit by screwing some other body of employees...Most of us managers are simply trying to steer G.P. and C.S.I. in a positive direction in the best way we can figure out.

Every dealership I've worked in has had at least one manager who was all about himself. The service manager was screwing the parts & used car manager, the used car manager was screwing the recon guy, you name it. One parts manager had figured out a way to bill all his 'lost' inventory to the used car dept!!! He made out like a bandit & the used car manager never had a clue.

I guess we'll always have this infighting until all departments work together as a team for the success of the store.

Actually implementing this teamwork is your job. I feel for you.