“In order to know where you are going, you have to know where you are.”

“In order to grow, you have to know.”

“What you treasure, you measure.”

No matter how you say it, automotive industry experts all agree that you have to track the numbers if you expect to take your service department to the next level.

I don’t know anyone who disagrees with this statement, but converting data into dollars — well, that’s a different story. What numbers should be monitored? What do the numbers mean? What are the benchmarks and goals? And, most importantly, how do you change the numbers?

Your DMS system is loaded with more information than most managers can get their minds around. The computer gives up some of its data pretty easily. But some of the more elusive numbers require users to write time-consuming reports…and nobody has that kind of time.

On the opposite end of the spectrum is an overabundance of reporting that results in input overload, causing most folks to just shut down. My friend Dave Anderson says it’s very easy to get “dumbed by the data and numbed by the numbers.”

I am a simple man. Give me eight key pieces of information and I’ll have a pretty good idea about the health of your service department. This essential information will quickly identify strengths and weaknesses. Most importantly, though, it will identify opportunities for growth, success, customer retention, and profitability.

See the inset for the eight essentials and how to calculate them. Let’s take a look at the value of each one and why you need to keep track of it:

The customer penetration rate is sometimes called maintenance penetration. It measures the health of your service “sales” staff. A low number means your advisors are order takers.

Are your customer-pay hours being generated by fate or salesmanship? The customer-pay work mix will tell you. If most of your customer-pay work comes from fixing broken cars, then you have a problem.

Shop efficiency is just what it says. The only thing your shop sells is time. Are you keeping your time bank filled?

One-line item ROs are a killer in your service department. This is a measure of advisor selling skills. Warning: an LOF with a multipoint inspection is not a two-line-item RO — don’t let your advisors deceive you.

Many service managers I visit with have never calculated the average mileage of their customer-pay vehicles. This shows you how well you are retaining older cars and it is one measure of post-warranty opportunities.

Every service department tracks customer-pay hours per RO. Many believe the higher the number, the better. I disagree. I believe we need to spread maintenance work out over the life of the vehicle; otherwise, customers are paying $500 – $700 every time they see you, and that creates some negative energy.

Service gross profit is a good tool to make sure your advisors aren’t discounting. It also gives insight into your dispatching… you don’t want to pay “A” tech prices for “D” tech jobs.

Effective labor rate measures the real value of your shop time. If you are doing hundreds of oil changes monthly, but no upselling, then this number will drop fast. Warning: be sure and include LOFs when figuring overall ELR… it gives a more truthful picture.

These eight essentials are all within your control. You can improve your numbers. You can reach the goals you set. You can do it.

There is no simplistic one-size-fits-all process to move the numbers. But, generally speaking, every one of the processes revolves around inspecting vehicles and selling needed services. You can’t “save” your way to prosperity, you must “sell” your way to prosperity!

I’d be happy to e-mail you my personal benchmarks on each of the eight essentials…just let me know.

Also, if you need help evaluating your numbers and formulating a process to change your numbers, simply email me. I’ll arrange for a free evaluation of your service department anywhere in North America.

In October 2007, Alan Mulally, Ford Motor Company’s then-new CEO was speaking at the BG Products, Inc. International Sales Convention in Chesapeake Bay, Maryland. Mr. Mulally put it best when he said, “the data will set you free!” Yes, it will!