What Is The Value Of A Service Advisor To Our Dealerships?

mike stallings newsletterAfter being in the automotive business for over 40 years and a dealer 20 of those years and visiting many dealers in our great nation, I’m not sure everybody understands what our advisors are worth to our stores.

I believe that this position deserves our respect and is one of the most important in our stores. If CSI and customer retention is our goal, then certainly our advisors need to be on the front shelf. I know our salespeople sells the customers their initial vehicle, but our advisors keep them coming back, time and time again. Now let’s see if I can help answer what an advisor is worth. I’m going to use information from NADA guides:

  • Advisor writes 12 RO’S (repair orders) per day.
  • Average hours per repair order is 1.5
  • Average gross profit produced per day is $1637.00 (parts and labor)
  • Average gross profit per month is $36,016.00
  • Average gross profit per year is $432,194.00

NADA information is that the average dealer last year grossed an average of $1,190.00 per new unit sold retail based on a selling price of just over $32,000.00 with a margin of just over 3.5%. The comparison here is that a salesperson would have to sell 30 vehicles a month to equal the gross your advisor will generate. Now I know if we had a salesperson generating 30 new vehicle sales a month he would definitely have our attention. Yet our advisors consistently produced these numbers. Let’s ask ourselves a few questions:

  • Who handles the most incoming calls?
  • Who meets and greets more customers every day?
  • Who influences customer retention and CSI?
  • Who generates dealership loyalty?

Now let’s ask ourselves some obvious questions:

  • When is the last time I provided training on how to handle incoming calls?
  • When is the last time I provided sales training to my advisors?

Now let’s ask this question: what does an untrained advisor cost the dealership? Just reverse the numbers. Just a few tenths per RO can be thousands of dollars.

Now let’s do a little investigation. All DMS systems have a service advisor sales report. I would first look at lines per RO and then Average Hours per RO. If lines per RO is less than 2 items, it is a good bet nothing is being offered that your customer needs in addition to the item they asked for. (Everybody asks for one, and item many ask for 2 items.) If we have less than two items per RO average, we either have a training situation, a not-offering situation, or in many cases, a work flow situation. Many times we have only offered our advisor a desk, pen and OJT (On job training) only. A not-offering situation requires coaching, tracking, holding advisor accountable for production goals, and in some cases, if all else fails, separation from the company. Many times I have discovered the third situation is very common – Work Flow. The advisor’s attitude is, “Why should I sell any additional work, if the work that has been sold we cannot complete now?” Any one of these situations, or a combination of all three, could be happening in your service department. If you discover there is more than .3 hours per RO difference between your advisors all three of the items above will apply also.

Need help answering these questions and others you might have about your fixed operations? Then it might be time to have a complete evaluation done in your store.

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