Several times over the years, attendees of our Dealership Minds Summit (DMS) extended high praise to our editors in foreseeing key challenges 6-9 months in advance and hosting a networking venue to prep them before that topic hit code-red. Among them was our “Succession Planning & Next-Generation Management” for the 2015 DMS and “Used Equipment Remarketing” for 2017.
Admittedly, it didn’t take a genius to predict 2022 would be the “Year of the Service Manager.” We tabled other topics when it was clear there’d be a dearth of new and used wholegoods to stock in 2022.
Busy shops, thanks to farmers stretching their machinery for another season and the ever-heightening need to keep the golden-goose techs motivated and functioning at optimum levels, presented a perfect storm for a deep dive into service.
Thus, the 2022 DMS will examine “Next-Level Service Management”. It’s the first time we’ve dedicated a DMS to this subject, and we’re already attracting the service manager in addition to the top-level execs and managers who typically attend.
Planning for a first-ever DMS requires a quick study, perspective and a realization of how fast the industry is changing. Our process included reviews of the service operations performance of our Dealerships of the Year Alumni Group. We noticed it wasn’t all that long ago that our judges awarded the industry’s top honor to a dealer whose parts/service absorption rate was below 75%.
Dealers can have different objectives at different times, but the fact that 6 of the last 10 large-store recipients achieved 90% or higher aftermarket absorption levels (with 3 above 100%) means this metric is now endemic to our industry’s benchmark-worthy dealers. More than ever, parts/service is what’s feeding payrolls and keeping the lights on. If ever your shop needed respect from the sales crew, this year should do it.
Our DMS research also culminated in a first-ever dealer quiz on the subject, gleaned from our extensive library of service operations content. We distributed the quiz a couple of weeks ago as a new way to teach principles and get bragging rights going in your stores about who most knows their stuff.
I personally got a lot of mileage out of the analysis behind the true cost of a work order error. In fact, we went through the exercise at a management meeting with real-life examples that showed the margin’s impact on errors, waste and lost sales. While we can’t measure the labor hours inventory the same way you can, we can apply the lesson. Just like your tech’s labor hour sales are finite, so are our unfilled inventories of a digital position or event title sponsorship. Once lost, it’s lost forever.
Accompanying our quiz to dealers was a teaser: “Everyone wins when your team fully understands what drives the business.” But here’s a little secret from your exam proctor … you’ll be surprised to know how many of your staff don’t “get” what your service operations are all about.
Granted, 21 dealer personnel earned perfect scores on the quiz (though I’m tempted to disqualify 2 ringers in service trainers George Keen and Wayne Brozek). But after 160 completed tests, the average score is a D+. I was most taken by the level of misunderstanding in gross margins for service and the proper mix of service-hour billings (customer, internal and warranty). The networking with the industry’s best minds — across all colors — in Iowa City is certain to bring an unparalleled education on farm equipment service management.
Don’t assume that everyone knows what is obvious to you about service operations and the keys to its profitability. Ignorance of how the dollars are earned that your dealership gets to “keep” (not just handle) is a costly expense in itself.