13 Ways to Improve a Service Department

Many dealers still have not figured out a way to make their service department a profit center.

Here are 13 tips to managing your service business efficiently.

Bill at 4x Your Internal Hourly Rate: Consultant Steve Firszt of Fast Forward Business Consulting says a billable rate that is 4X what you internally pay your staff will earn a 50 percent profit on labor.

Related: How to Calculate Key Labor Metrics

According to the results of the first-ever CE Pro Wage & Salary Survey, which will be presented in the March issue, the average skilled service technician is paid $21.50 per hour nationally. That means a billable rate of $86 an hour using Firszt’s 4-to-1 ratio guide. That’s seems realistic to me.

Go 24/7/365: If you are you willing to do it, you can charge a higher rate. Also, adding “mission critical” systems like alarms and networking will allow you to offer round-the-clock service.

Institute Remote Managed Services: Make a serious effort to sell and utilize these black boxes from companies like Nuage Nine, ihiji, Certified Cyber Solutions and Cytex One, not to mention built-in notification systems from companies like Crestron, Savant, Control4 and others. These units avoid numerous calls because you can identify and fi x the problems remotely. And when you do have to dispatch, the call is quicker because you already know where the problems lies.

Set Geographic Boundaries: Some dealers won’t service systems more than 100 miles away, instead opting to outsource it to a local dealer.

Don’t Handle Firmware Updates for Clients: Unless it’s under warranty, charge for firmware updates.

Provide Two-Hour Service Windows: Then have your technician call the customer if he misses the time window to reschedule.

Set a 20-minute “Decision Time” Policy: Have the technician make a determination in the first 20 minutes whether or not he is going to be able to make the repair within the two-hour window. If not, stop at 20 minutes and reschedule with a longer window for another day.

Cross-train Technicians: How does it sound to the client if you can’t make the service appointment because “Jimmy called in sick”?

Incentivize Technicians to Upsell/Upgrade: Pay commission to service technicians for upselling while on site, including service agreements.

Prioritize Calls by “Emergencies” First: Then, send the closest technician.

Establish a “Floating” Technician: This extra helper position can be available for two-man service calls, like taking down fl at panels from a wall.

Stock Replacement Parts on All Vehicles: Seems like a no-brainer, but also make sure to anticipate necessary replacement parts based on the systems type.

Always Document: Make sure the technician writes down exactly, “What you found, what you did, time on call, parts used/replaced.” Never get caught sending a blank invoice that just says “service.”

Did I miss anything? Let me know in the comments.