How to Eliminate Surprises from the Service DepartmentBy Steve Uible
Article Date: 06-01-2010
Copyright(C) 2010 Associated Equipment Distributors. All Rights Reserved.
Dealers can either make excuses or make money by developing standards for hard quoting on every job that comes in the shop.
Surprises in a dealership service department for a customer are seldom good. In fact, any surprise is usually bad news that can jeopardize the relationship that you worked so hard to develop with a customer. But dealers who have a policy of no surprises work hard in communicating with their customers so that potential confrontations are addressed up front. One of the keys of that relationship is giving the customer a firm quote and then making sure the invoice reflects that quote.
Being able to accurately give a hard quote or fixed price to a customer on an equipment repair is becoming more important all the time, and even more so during the current economic downturn. Most customers are expecting – no, demanding – a hard quote before they authorize a shop repair. And now more than ever they are leaving dealers who won’t or can’t give them a firm price before the job is started. Many dealers who have developed their skills in this area are seeing increased customer loyalty and gaining new customers.
In the April issue of CED magazine Richard Rogoski wrote an article titled, “It’s Not Easy Sticking To Your Quote.” In it, he discussed many of the reasons a service manager should quote jobs, and it is clear that it is becoming increasingly important if you want to operate a profitable and successful service department.
It is common in most industries to give an up-front price. Would you take your car in for a repair without asking how much it will cost? How about having your house painted without the painter giving you a firm price? Would you drop off a lawn mower for a spring inspection and service without knowing what the price is going to be? Of course not. Neither would I!
Some dealers have done an excellent job in this area and others have resisted it, saying that their customers don’t care about getting a price before the work is started. In my opinion, that is a cop out and an excuse. Those dealers just haven’t made the commitment yet to train their staff in the process of quoting. Given the choice, I have never met a customer who did not prefer a quote, even if they do not formally ask for one. From experience, I know that dealers who quote their jobs have fewer customer disputes and misunderstandings. Invoices are paid quicker, and there are fewer write-offs or service labor allowances. They are also growing their service departments.
And so the stage has been set in the April article as to why dealers should be doing more hard quoting; here, we are going to discuss some strategies and hints on how to be more effective in your hard quotes.
There are five groups of jobs that we should be able to quote accurately. Let’s start with the simple ones.
Periodic services like 250-hour or 1,000-hour services should be the easiest to quote. Almost every manufacturer offers at least labor guidelines for these jobs, and if they don’t you can make them up yourself based on your technicians’ experience on them. Make a list of all the models you will be likely to work on, determine the labor for each one at your retail labor rate, add the cost of parts including oil and shop supplies, then add tax and you’ve got a hard quote for maintenance jobs.
Second should be repeatable jobs that are common to your dealership and your market. Take an average of labor times in the past and make a list of them for future use. It never hurts to ask one of your techs to look them over for verification, as well. You will probably use many of these internally for your sales department. That is useful to them and helps you gain experience in quoting.
The third group will be the bulk of the repairs you do in your shop. If you are lucky, the manufacturer you represent can supply you with a rather complete file of standard labor times that you can use. Some manufacturers only have a list of what they pay for warranty, so you may have to add a percentage on to these labor standards for real day-to-day jobs. If your manufacturer does not offer these standards you have no choice except to start your own file of them. We know some dealers who are doing exactly this – and very successfully.
The next group consists of jobs that are unique in nature and there are no standard labor times available for them. For these you will have to create your own. These are actually not as hard to do as you might think. A job comes in that you have never done before and there is no published standard. Go out to the shop and talk to your experienced tech who will probably do the job. Explain to him what you know about it and ask him to estimate how long he thinks it will take to do the job. In my experience, he will often underestimate how long it will take so I add 10-30 percent to his estimate; you will now be able to quote the labor on the job. And be sure to add it to your ongoing list above, just in case you should ever do that job again.
The fifth and final group is the most difficult job to quote, and that is diagnostics. Some are easier than others. For example, to find an overheating problem, there might only be four or five things to test and check, so maybe an hour or two would be sufficient to diagnosis for an overheating problem. Or there might be an electronic problem that may or may not be easy to diagnose. That is where good old fashioned experience and judgment come in. Based on previous experience or technician ability and training you may be able to give an accurate quote.
Here are a few tips that might be helpful when giving hard quotes:
When you ask your technician to help you with a quote, remember that if he is one of your better techs, his quote will probably be as if he were doing the job. But a tech with less experience might actually be doing the job, so add some time to his estimate.
If the job becomes more complicated or unexpected problems arise, call the customer immediately and apprise him of these changes. If you wait until the job is over, it will be too late. Don’t surprise your customer.
Quotes should be based on your “average” technician’s time.
Don’t pad them too much to cover your mistakes and avoid losses. Customers will figure that out and think you are gouging them.
Quotes should be fair to all parties: the customer, the technician and the dealership.
When possible, try to quote labor only. It can take a lot of time looking up parts lists, and even then it can be only an educated guess. Invite the customer to come in to see his job in progress. Many times the parts can be looked up later and the customer called at that time.
Keep accurate records of all your quotes. It is important that the work order invoice that gets sent out exactly matches what the customer was quoted. That is the “hard” in hard quoting.
I once verbally quoted a customer $75 to $100 for a small job he called in about. When the preview hit my desk I was pleased because the total was $94, well within the range that I gave the customer. A few days later, the customer called complaining about the bill, saying it was higher than what he was quoted. He was expecting a bill for $75, not a penny more. The lesson from that was that he honestly heard one number, $75, whereas I also heard one number, but mine was $100 and I would be satisfied with any number less than $100. That is a lesson I never forgot. That is how sensitive this quoting business can be.
Quoting is not difficult, but it requires a dedication and discipline to be effective. It has many benefits, and if you aren’t quoting all or the majority of your work, you should be working on a plan to do so soon. It gives clarity and accuracy to your customer dealings. Your technicians will have a standard from which to work, plus it improves communications between the tech, the customer and the service manager.
If you keep your customers informed at all stages of a job in the shop, you will give them a real benefit of no surprises when dealing with your service department.
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