RV PRO

July '20

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122 • RV PRO • July 2020 rv-pro.com metrics for managing a successful and prof- itable service operation that will enable any dealer to Reboot for a record year in fixed operations. Labor Profit Margin @ 75 Percent: This number is calculated by subtracting the total payroll cost for all technicians from the total labor sales – all pay types (retail, internal, and warranty) – to cal- culate labor gross profit. Divide the labor gross profit by the total labor sales to cal- culate labor profit margin. For example: Total labor sales = $100,000 Total tech payroll = $25,000 (cost of sale) Labor gross profit = $75,000 divided by $100,000 = 75 percent margin The reason I'm giving you this ele- mentary calculation is that I find far too many dealers are not charging all of their technicians' wages to cost of sale resulting in an incorrect margin on their financial statements. Parts Profit Margin @ 35 to 40 Per- cent: This number is calculated by sub- tracting the actual cost of the part from the selling price of the part, and do so separately for retail, warranty, internal given that this parts margin KPI is for retail and internal parts sales only, but not for warranty, which is usually controlled by the manufacturer. Hours Sold Per Retail Repair Order: Towables 3.0 and Motorized 5.0 plus, and these will vary upward based on the repair mix of gas, diesel and body work. Shop Supplies Charged as a Percent of Labor Sales: Ideally, these charges should be enough to cover the total cost of your monthly shop supplies. Performance-Based Pay Plans for Service Advisors: Do your current pay plans motivate your advisors to improve their sales performance? If they are com- pensated at an hourly rate for each hour worked or a weekly salary then the answer is an emphatic No. The simple rule is to Compensate to Motivate by allowing advisors to give themselves a pay raise if they improve their individual performance. Performance is defined as increasing sales per repair order and increasing technician productivity. All of your advisors have the ability to do both! Many of you need a Reboot here! Your advisors will thank you for it and the dealer gets a big pay raise! Performance-Based Pay Plans for Technicians: Do your current pay plans motivate your technicians to improve their productivity performance? If they are com- pensated at an hourly rate for each hour worked or a weekly salary, then the answer is an emphatic No. Again, just like your advisors, the simple rule is to Compensate to Motivate by allowing technicians to give themselves a pay raise if they improve their individual performance. Performance is defined as increasing the number of hours they bill out on repair orders as a per- centage of their total clock hours worked. When I started training with RV dealers 20 years ago, I found that most dealers were averaging about 50 percent techni- cian hours billed to hours actually worked. At last year's RVDA Convention, I met with many dealers, general managers, con- trollers and service managers, and when I asked about their technician productivity percentage, the most common answer was 50 percent. What a shame! I even had one controller tell me hers was a pathetic 25 percent! If you are cur- rently performing below 100 percent then you definitely need a Reboot! All across the country, I find the vast majority of technicians are good, hard- working people who will always perform at a higher level if they are given the proper training and support they need to do so. Other Fixed Ops Team Member Pay Plans: Let's not forget about the service and parts management team, as well as your parts counter people. Do you think your technician and service advisor per- formance would increase if these team members were paid a bonus each month based on the service and parts sales and/ or technician productivity? All of these team members have a direct impact on your service and parts opera- tions' performance, so why not give them all the opportunity to give themselves a pay raise by first giving the dealer one? Lastly, every day I read another article or headline stating that the RV industry is attracting record numbers of people in all age groups who are considering camping this year with their family instead of boarding an airplane and staying at a hotel or resort for their vacations. This will most definitely generate an increase in your ser vice, so don't be caught emptyhanded with the same old problems you had last year. Get your KPI's in order, start recruiting now and get ready to Reboot your oper- ating profits in 2020! Many dealers are helping put customers at ease during the coronavirus outbreak by using their website and other social media to communicate their enhanced safety protocols.

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