Focusing on basics helps dealership improve service business

In February 2020, Greene set out on a path to turn around the service department’s business. The key? Going back to basics.

Greene moved his office into the service department, developed a competitive pricing matrix for parts and service, implemented word tracks similar to those used on the sales side, created an accountability system for daily sales and gross metrics and brought in a consultant to help implement all of the process changes.

The results? Customer-pay sales increased 28 percent from 2019 through October 2022, while average hours per repair order increased from 1.12 hours to 1.38 hours for the same time period, Greene said.

“I wish I could say there was some magic pill that we used,” he said. “It’s been a lot of little things and really just focusing on the basics and making sure that customer service is at the forefront of all of it.”

Greene’s desk sits between the service advisers and the parts counter, allowing him to hear what advisers say to customers. As someone who came up through the sales side of the business, Greene said he was surprised to discover that the service department didn’t use word tracks the way sales employees did when communicating with customers, so he crafted them.

One of the most significant changes was the pricing matrix for parts and labor, which Cole Chevrolet-Buick-GMC did not previously have. Greene said he worked with a consultant to survey other shops’ pricing in an effort to be more competitive in the local market. Parts and labor prices were too aggressive, to the point that customers were declining work.

“I noticed from sitting in my office, we were losing out on a lot of jobs that had great labor time on it because our parts were out of whack. And customers would just straight up say, ‘You have the most expensive parts,’ and it just didn’t make sense to me,” he said. “We were way out of whack on competitive stuff, whereas the specialty stuff we were grossly underpriced.”

The result is a set of prices better matched to the market on common maintenance parts, such as wiper blades or tires, and slightly higher on larger specialty jobs, such as transmission repairs, because of the value the dealership provides, Greene said. Average parts gross profit increased from 31 percent in 2019 to 43 percent as of the end of October 2022, Greene said.

Pay plans for advisers and managers also were revamped, moving from commission based on a job’s revenue to commission based on its gross profit. Additional earnings are possible based on performance, Greene said. The changes have helped employees focus more on overall department profitability and reduced the likelihood of discounting jobs to boost sales, he said.