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When Performance is Measured, Performance Improves.

How much is a Service Advisor Worth?

How much is a good service advisor worth? It seems this question rarely comes up when hiring, determining an appropriate pay plan, and developing this position. The results may surprise you. Perhaps we should step back and ease the more sale-minded dealers and GMs into this topic. Here’s an easier question: How much is a good salesperson worth? If you had someone, let’s call him Gill, averaging 15 units every month at $1500 gross each, you would be pretty happy. Sure there are superstars (and salespeople at understaffed stores) that will have better numbers than Gill, but $22,500 a month is at least average for an individual salesperson in most markets. If we include $1200 per unit in the business office (again, at least average in most markets), we get $40,500 combined gross per month or $486,000 of gross a year. How much would Gill make in your dealership when he brings in half a million dollars of gross each month? My guess is he would be doing just fine….

Yep, life is pretty good for ole Glenn

Yep, life is pretty good for ole Gill

Now, let’s do the same number crunching for a service advisor, we’ll go with Jen. I will start with a handicap to emphasize my point; we’ll only look at Jen’s retail gross, though she will be responsible for warranty, internal and other customers as well. The industry standard for a service advisor is 10 retail repair orders per day. Most months have at least 21 working days, making 210 retail customers working with Jen on an average month. We’ll say Jen writes two hours per repair order, and the shop has an effective labor rate of $95 per hour and 72% gross margins (all well within the average for well-run shops). That’s $28,728 dollars of labor gross each month. Of course, since we included the business office in the previous example, we need to include parts to Jen’s numbers as well. At a .85 parts to labor ratio and with 40% gross margins, that’s an additional $13,566 in parts gross or $42,294 combined. Thus, Jen brings in over $500K a year in gross dollars ONLY FROM RETAIL CUSTOMERS!

For now, ignore the fact that sales customers are retained in the Service department (especially with a proper Sales to Service Handoff and After Service Delivery Process). Your best service advisor will almost always generate more gross for the dealership than your best salesperson. Whether in terms of earning potential, training focus, selling aides, or general support and oversight, the service advisor position gets far less attention than their counterparts on the sales floor. Maybe it’s because Dealers and GMs were often brought into the business as salespeople; maybe selling a $45,000 truck is more fun than selling a $79 alignment. Regardless of the excuse, you may want to put some more focus on your service advisor when recruiting, retaining and developing for the position. Your bank account will thank you!

 

 

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