Can't decide which way to go on labor

[Gran Sasso]

Our service manager was just let go recently, and the GM is looking at suggestions to help build the business back.

I personally feel that reducing our labor rate would help. (We are a GM store currently at $92/hour) I think that we are driving more business away with our price... Independents in the area are around 70-75, and the other GM store in the area is about $85.

I think the past SM was just trying to milk every penny out of the ro's we were getting, rather than really trying to get more work in the door.

[robc]

$92 is posted, but what is the effective rate? Is it just the labor that is high or does parts have a 125% mark-up? I think before I would dream of cutting a labor rate I'd look at the competitive mix and pricing.

Let's put it this way, here in NJ the pricing is about the same. I took my daughters car out for some price shopping on a simple EGR failure (I just told the shops it failed emissions and asked them to check it out). In the end, every aftermarket shop quoted a higher priced job (on anverage an extra hour labor and often time more on the part) than the "expensive" $92/hour dealers.

Second look, I pay $75 for a LOF. To me it worth every bit of it to have it performed at my dealership - and believe me I am really tight with money and rarely ever pay for service. Why is it worth it - because the dealership is that good. If you think your dealership is worth less then charge less, but don't do it just because you are comparing door rates.

== Rob ==

[Old Irish]

Yeah, don't sell yourself short. Just make sure that the pricing of high profile competitive work looks good.....doesn't have to be the lowest in town, just in the ball park.

If the previous SM was running off customers it probably didn't have that much to do with pricing. Overselling? Treating customers poorly ? Those things will run 'em off, yes. I don't think pricing alone will do it.

Cheers
DD

[Gran Sasso]

Good points.. I think the true reason was that nothing was being done to bring more people in the door. At least nothing effective. And there was alot of overselling being done.. at least in my opinion.

Car comes in for an oil change, and customer leaves with a $4,000 quote for repairs. Rather than really focusing on the stuff that needed fixing, it seems at times there was a push to fix everything that needed it, stuff that could stand to be done, and stuff that might break...someday.

I know as a customer stuff like that leaves a bad taste in my mouth, and I doubt I would come back to a place that did it to me.

[btk]

Rarely is the labor rate a problem. I think everyone is giving you good advise. First thing to figure out is your retention-find out UIO(units in operation) or at least see how many active customers in your database-lets say you have 10,000 names in your database and only 2000 active customers- you can safely say that you have maybe 20 % retention-this is a rough way to figure it but usually pretty accurate relative to the big picture. If the average dealership for your make of car is at 40 % retention then you have a general idea what to shoot for.Then you might want to pull some inactive customer files and look at the customers last visit-is there something in that repair order that made that customer leave? Also talk to the advisors, find out if they were pushed to sell or had a bad work environment that caused them to give less then stellar service.
When all else fails, go with your gut-its always right.

[Old Irish]

"Car comes in for an oil change, and customer leaves with a $4,000 quote for repairs."

You can shave a sheep a hundred times but you can only skin it once

Heavy-handed sales approaches will drive off customers in a heartbeat.

Cheers
DD

[Sedanman]

It's deff not the labor rate. at just a $10
lower rate typical repair order labor @1.7
x 95.00 is 161.50. 1.7 x 85.00 is 144.50
PLUS PARTS! $17.00 is not losing anybody a customer or that job. Its all in the delivery. Be very competive on the maint work and hold your rate on the highly skilled work.

[Scott Nissan]

Yes, I agree also, the labor rate is not the issue. I am positive that there are many factors that have caused your customers not to return. It will take time to rebuild, years not months. It takes time to heal customers before they start returning. You will have to dig deep and do alot of investigating of the Service Department before changes can be made. There have been many great suggestions in this forum, use every one of them. One I would make is to speak with your customers and get thier feedback, plain and simple. I moved south 2 years ago( I am a Jersey Boy! ) and took over 4 lines. I spent the first 2 weeks in the waiting area, pouring coffee, introducing myself as the new Service Director. I asked every customer how I could help them and asked what would they like to see changed and what, if any issues that have had in the past. You will be shocked as to how much information they gave me! They really opened up and talked my ear off. One big reason was that they knew, that since I was taking the time to talk to them I cared what they had to say and that I listened. After the 2 weeks, the top 2 issues were; It seemed that nobody cared in the service department, LOF's taking 2 hours, cars not being done on time, no communication with customers etc.. And heavy handed sales from the technicians. We drove our own customers away by not taking care of them. After investigating, all of the heavy handed sales came from a couple of technicians, who of course are no longer with us. The key to business is repeat business. If the technicians run the shop and not the Service Manager, you are doomed. Good Luck!

[GMFXDOPSMGR]

Great Suggestions all,
All of these responses are right on target!!
If you think the heavy sales are one of the problems, retrain your advisors to "soft" sale the work...this is what you need now, this is what you will need in the next few weeks, plan on getting this repaired in the next 90-120 days. Keep a record of these RO's..file or Excell. This will soften the impact of needed repairs, help the customer plan their repairs, and also help them budget their dollars. Like Old Irish said, shave a sheep a hundred times, but skin it once...I like that one..(:

Gather info and let us know what you find.

[srvmanrick]

Great advise guy's. The key to repeat business is to the customer wnting to come back. The customer will return if you are honest with them & the soft sell seems to work for us. If yougive the customer some options they will be more loyal to you than go shopping. you also can qualify your labor rate with your dealership achievements, training ect.