RV PRO

February '20

Issue link: https://nbm.uberflip.com/i/1203735

Contents of this Issue

Navigation

Page 96 of 104

90 • RV PRO • February 2020 rv-pro.com reliable RV. Plus, it allows you to maximize gross profit per retail unit. This company policy also has a positive impact on your consumer satisfaction index (CSI) and promotes a positive image of your dealership in the community. How much are you spending in reconditioning costs per retail unit? It's common to find dealers spending $600 PRU. Let's say $100 of that is for detailing, which leaves $500 PRU in mechan- ical/ coach repairs. If we take out $250 for parts, that leaves $250 in labor. With the average dealer earning $115 per hour in labor, that means the average hours per internal repair order (RO) in used RV reconditioning equals 2.2 ($250 divided by $115). Do this exercise in your own store by evaluating 50 internal repair orders and determine what your hours per RO (HPRO) actually are. Now ask yourself, "Who owned this RV before I did?" The answer, of course, is "a customer." So, whether the unit was a trade-in at your store, or you bought it at the auction, off the street, or from a wholesaler, it belonged to "a customer". Question: If you performed a complete and thorough inspection on that used RV when it still belonged to your retail customer, would you not find the exact same repairs and/or services? Of course you would! What are the benefits of performing thorough inspections on customer units in your service department? The reasons are exactly the same whether you're servicing a used unit (internal) for resale or servicing a customer's unit. Namely, to ensure your customer is leaving your dealership with a safe and reliable RV and to maximize your gross profit. Inspection Perfection Performing thorough multipoint inspections (MPI) on every RV that comes into your service shop has a positive impact on CSI, owner loyalty and net profits. If you're currently selling two HPRO on customer pay, and you establish a policy (i.e., a rule) of inspecting 100 percent of your customers' RVs every day, you will increase your hours per repair order by a minimum of one hour. What does that mean to a dealer writing 250 repair orders per month? Some quick math shows us that 250 repair orders – at one addi- tional hour per RO – equals an additional 250 hours. At a $115 per hour labor rate, that equals $28,750 in additional sales. At a 75 percent gross profit margin, you're looking at an additional $21,562 in gross profit per month. We know that the average parts to labor ratio is at least 80 percent, so we can also count on additional parts sales of $23,000 ($28,750 X 80 percent). With a parts gross profit margin of 45 percent, we generate $10,350 in additional parts gross profit per month. Combine the additional labor gross of $21,562 with the addi- tional parts gross of $10,350 and you come up with $31,912 in additional customer pay gross profit per month. Earn Big Dollars Annualize this and you put an additional $382,944 in your bank account. Some of you will get there in a matter of months, for others it might take longer. Why not make this inspection process a rule? If any of you have service managers/ directors telling you they're already doing thorough MPIs on every RV – and yet your hours per RO are hovering around the 2.0 range – please take a closer look. Two keys here: First, a thorough MPI, and second, every RV. Is it company policy to perform a thorough MPI on recalls? During your peak season? There are dealers experiencing increases in customer pay gross profits in the 60 percent to 70 percent range over the same period last year. How? By committing to holding employees to a higher standard by establishing "company policy" on MPIs. Why not do the same? No. 2: Recommend from a Menu I'll go out on a limb and assume you've eaten at a restaurant? Olive Garden? Red Lobster? How about Longhorn Steakhouse? When you were seated at your table, were you presented a menu? Of course you were! Did you have to ask for one? Of course not. It is not an option to receive or not receive a menu. It is com- pany policy that every customer gets a menu at these restaurants. Menus Empower Your Customers Not only does every customer get a menu, they get mul- tiple menus. Let me explain. Already on your table is a drink special menu and soon your waiter/ waitress also will be offering the appetizer menu. Next comes the main entrée menu and/or special of the day. Figure 1 Two-Point Fixed Ops Profit Improvement Plan No. 1: Inspect every vehicle for safety and reliability: $382,944 No. 2: Use maintenance menus to provide customer choice: $114,885 Total: $497,829 Per-month improvement: $ 41,485 Three months: $124,455

Articles in this issue

Links on this page

view archives of RV PRO - February '20