1. The best way to increase the value of each segment is to make sure you are charging the right amount for the work you are doing. The first thing I always do when I am working with a new dealer is encourage them to increase their posted labor rate. Even if it’s just a few dollars per hour, it automatically increases the value per segment and adds immediate profit to the bottom line.
I also encourage dealers to focus on flat rating more of the work they are doing. By moving more work away from actual time to flat rate time you can very easily increase the value of each segment by 25% or more. If you don’t have a flat rate system, create your own. Charge 30 minutes to install a new carburetor and one hour to rebuild one. Charge 30 minutes to install a deck belt and an hour to install a wheel motor. The more you flat rate, the more value each segment has and the more money you put toward the bottom line.
2. You can also get the service manager or service writer to focus on increasing the segment-to-work-order ratio by simply looking for additional opportunities to do service when equipment is in to be repaired.
Too often, the only work that is done on equipment is the work the customer requested. I encourage the service manager and service writers I work with to look for other things that might need to be serviced or repaired on equipment.
If a customer brings equipment in for repair, always ask them if they would like to have it serviced while it is in the shop. About 50% will say yes. You just added another segment to the work order.
If over the course of the season you move your segment ratio from 1.5 to 2.0 and you do 2,000 work orders, you will have added 1,000 segments with a value of $45 each for a total of new labor sales of $45,000. Not bad for a little extra effort.
Just as it is a little uncomfortable when you step on the scale at the beginning of a new year, it is also a little uncomfortable to pull the scales out for your business. If you are willing to take the measurements and resolve to make improvements, the payoff will put real dollars in your pocket.
Bob Clements is the president of Bob Clements International, a consulting firm that specializes in the development of high-performance dealerships. His organization works hands on with dealerships throughout North America, helping them attain the personal freedom and financial wealth all entrepreneurs strive to achieve. For more information, visit www.bobclements.com. Bob Clements is the president of Bob Clements International, a consulting firm that specializes in the development of high-performance dealerships. His organization works hands on with dealerships throughout North America, helping them attain the personal freedom and financial wealth all entrepreneurs strive to achieve. For more information, visit www.bobclements.com.