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5 Tips to Stop Service Department Profit Leaks

stop-service-department-profit-leaks

Is your service department inadvertently hampering your car dealership’s profitability? Here’s how to stop service department profit leaks.

Key Takeaways:

  • If your service department performs ongoing evaluations of its auto recon process, it can uncover new ways to maximize performance and profitability.
  • If managed properly, a service department can help your dealership optimize its operations for profit. 
  • How your service department tracks and analyzes data is crucial, as this information can help the department drive continuous improvement across everyday tasks.  
  • Your service department must prioritize customer satisfaction, and it must constantly explore new ways to align operations with customer expectations. 

Your service department can make or break your dealership. If the department provides fast, efficient support, it will improve the customer experience, which drives brand loyalty and revenue growth. On the other hand, if your service department is poorly managed, it may do more harm than good.

The bottom line: You need a high-performing service department that supports your dealership to maximize dealership profitability. 

5 ways to identify and prevent service department profit leaks

You face immense pressure to continuously improve your service department. But, if you know how to identify where it’s leaking profits, you can address these issues before they hinder your long-term profitability. 

Now, let’s look at five tips to help you detect and resolve service department profit leaks.

1. Analyze how your technicians use their time

Track how your technicians allocate their time during the day. This lets you see where the techs spend their time and identify ways to get the most value out of the time at their disposal. 

Wasted time represents wasted opportunities for your service department. Fortunately, tools are available that let you analyze the time your techs spend on the auto recon process and other aspects of their day-to-day operations. These insights help keep your service department performing at top levels to generate revenues for your dealership.

2. Track cars as they go through the recon process

Assess the amount of time it takes from the moment your dealership acquires a car to the instant the vehicle reaches your showroom floor. Remember, you start incurring additional costs on a car as soon as it arrives at your dealership. At the same time, the car’s value will continue to depreciate each day it goes unsold. As such, you need to analyze your recon management workflows to make sure your service department is minimizing the time it takes to get new cars retail-ready. 

A thorough analysis of your dealership’s inventory turn rate and daily holding costs can help you understand the profitability of your service department. With these insights in hand, you can estimate the amount of gross and selling days lost on cars in recon. Then, you can establish workflows designed to help your service department quickly get cars through each step of the recon process.

3. Extend your service hours

Offer service hours that align with your customers’ expectations. Today’s consumers want convenient service, and your service department’s ability to meet these requests is paramount. If your service department can provide support outside of traditional business hours, it can perform repairs for customers without requiring them to rework their daily schedules. The result: Customers enjoy exceptional repairs, and your service department can foster trust and loyalty that drives profitability. 

It can be helpful to conduct customer surveys to identify which hours work best for them, too. Online questionnaires let you ask past and current customers about your service department and which times work best for repairs. You can also use these questionnaires to obtain feedback about your service department and uncover new ways to improve its performance.

4. Conduct a car walk-around

Require service technicians to perform walk-arounds following any repairs. A walk-around takes only about a minute to complete and lets a tech ensure that all repairs were completed as planned. Also, the walk-around is a final opportunity to identify any other issues to share with the vehicle’s owner. 

The benefits of walk-arounds are two-fold. First, it lets the tech evaluate the car and ensure the work meets customer expectations. It also provides an opportunity to foster trust with the customer.

5. Perform audits

Evaluate your recon process regularly. Audits let you identify any recon issues hindering your service department’s profitability and eliminate complex procedures that hamper its efficiency. 

The service department plays a key role in your dealership’s success, so you should evaluate its performance often. That way, you can help your service department reach its full potential and ensure it’s contributing to revenue, customer loyalty, and dealership growth.

Improve service department and recon performance 

Along with the aforementioned tips, ReconVelocity offers software that can help eliminate profit leaks in your service department. Our recon software offers real-time notifications and approvals, so stakeholders across your dealership can see exactly where a car stands in the service or recon process. 

To learn more, speak with a recon expert by calling us at (850) 616-6294 or contact us online to request a product demo

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