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26 | Boating Industry | March 2017 [ Service by the Numbers ] www.BoatingIndustry.com strives for 100 percent. The company achieves this by sending a survey to every customer after each contact for feedback. "If we get negative feedback, management will immediately contact the customer to see how we can make it right," said Olsen. "Our goal is to catch our mistakes before they hit Yelp, Google or any other review site to ensure we have done everything we can to make a happy, long-term customer." Major dollars and cents Using service department metrics will help a dealership turn the service department into a revenue-generating machine, whether it's through improved budgeting or finding new rev- enue opportunities. Seattle Boat Company uses a 10-year history, after having tracked its metrics for so long, to help build its service department annual budget. The company can look at a technician who has been with the company for several years, see what they have produced year over year and how that breaks down month by month, review their efficiency and create a budget accordingly. "We don't say we're going to make this much money this year and then go back to the tech and say, 'You need to do this.' We start with the tech and see the history, and see what can we do to improve year over year, what little changes do we need to make, make those corrections and then figure out [budget]," said Olsen. "And then we move that forward and that will eventu- ally tell us how much income we're going to have for the year per tech, and then you add them all together and you know what your service department is going to have total for the year." Properly tracked metrics also benefit the overall bottom line of the business. "A well-run service department can financially add minimum of two to three percent to the total company net profit," said Spader. "And so if you're a $10 million dealer, a good service department could add $200,000 to $300,000 to the net, if they've got a good net." Focusing on making the service department profitable can also combat the erosion of mar- gins in the sales department, as many dealers have experienced due to competitors undercutting TWO TYPES OF SERVICE, ONE HAPPY CUSTOMER Spader Business Management recommends tracking where labor in the service department is coming from — what percentage is prep and reconditioning, warranty or customer pay — to determine if the service department is a retail service business or a service support center for sales and customer needs. A service support center is bringing in about 15 to 20 percent of customer pay, while a retail service business is bringing in about 50 to 60 percent. "Somebody that's doing 50 to 60 percent of their total labor sales in customer pay, they're out there actively selling and marketing and really going after [that customer] and turning it into a business. In the other, it's really just a support function," said Spader. Either business model can be very profitable for a dealership; while some may believe that a low percentage of customer pay in the service department points to its lack of efficiency, there are high-performing dealers who take excellent care of customers with either model. "People think if they're not in the customer model, they're not a good dealer. I will show you hundreds of dealers with high CSI, high market share, consistently take good care of their customers but don't have the customer pay-driven model," Spader said. Whether or not the department will be profitable depends heavily on who is running it. Spader doesn't recommend aggressively targeting customer pay work for the service department unless an owner is ready to hire somebody who is incredibly skilled in service, because it's a different behavior characteristic and skill set than a sales manager. "If they want to make [the service department] a true customer business, it's very important that they get somebody that has that skill set," he said. "You show me somebody who's got a strong sales department and a strong service department that's doing 50 percent-plus in customer labor, and 99 out of 100 I'll show you that they've got two opposite skill sets that are managing those two [departments]." APPLES TO APPLES For dealers looking to find extra assistance tracking their service metrics, 20 groups provide an excellent opportunity for peer comparison and review. Seattle Boat Company belongs to two 20 groups, which Olsen said has provided the dealership long-lasting friendships as well as a wealth of new ideas and best practices. "We love to hear the fresh ideas from different dealerships and how we can bring that into our dealership, and either use that best practice or possibly even improve upon it, and then once we do that bring it back to the group [and] say 'We took your idea and we tried this and it worked great,'" he said. This true "apples to apples" comparison helps paint a clearer picture of just how well the business is doing and where it needs to improve. Many dealers who get involved with a 20 group find that while they thought their numbers were a home run, in truth they were low performance compared to other businesses. Spader sees the true value in being able to pick each other's brains and learn from each other's successes. "You can compare where you're at and then where you're low, go pick the top two or three dealers in that column and find out what they are doing. And you've got proven systems," he said. "And in those 20 group, those dealers will share anything with you, so you don't have to reinvent the wheel – just go talk to those top two or three, take the things that make sense for you and go implement them."