Eric Coffey - Does your service department sell off of a service menu? If so, you’re probably already familiar with how effective it can be. If not, you should probably consider putting one together.
I once had a very successful colleague tell me that service menus are the foundation of all other service sales. But, when not structured properly, service menus can have the opposite effect. You can easily compromise gross profit or chase your customers to the aftermarket if you don’t put a lot of thought into an appropriate service menu.
The first step to writing an effective service menu is to determine exactly what it is you intend to do at each mileage interval. Start with the manufacturer’s recommended services. You’ll probably find that there is very little recommended by the factory, but you want to make sure whatever is in there is included in your menu. You may be surprised by some of the factory recommendations. Things like low mileage interval differential services and brake fluid flushes are now frequently recommended by some manufacturers. You may even find that your technicians and service advisors are not recommending services like these frequently enough. This accounts for a lot of missed opportunities for very easy service sales.
Next, you’ll need to determine what services would be appropriate to add to the factory recommendations. Things like tire balancing and alignments are rarely mentioned in your customers’ owners’ manuals, but should be done periodically at various intervals depending on what kind of vehicles you are working with. Other services that should be included in your menu are probably already being done in your shop. Consulting with your advisors and technicians will usually reveal a lot of commonly needed services that you may want to include in the menu. Don’t hesitate to spot-check these, though. Get out in the shop and look at some of these cars before they are serviced. If you have a technician who likes to rubber stamp every repair order with the same recommendations based on mileage, taking a look yourself may save you some grief later. Also, don’t forget little things like wiper blades and cabin filters. Those smaller ticket items can build a lot of value into your menu.
Once you have your recommended service intervals pretty well outlined, it will be time to look at cost. Price out the retail cost for all of the parts needed for each service. Then, figure out how much labor time would be fair to pay out for the amount of work involved. Determine your target effective labor rate for the services and do the math. This will give you a pretty good feel for the total cost your advisors will be presenting to customers. If you live in a market where there are other same make dealers, you may want to get a copy of their menu or at least find out how much they are charging for the same mileage services. If you are in a really busy market where there are several similar stores, you are probably already getting calls from customers asking how much your 30,000-mile service costs. With that in mind, it’s probably not a bad idea to try and keep the menu cost the same as, or a little lower than, your local competitors.
If you find that you are much higher than your competitors for similar services, you may want to consider adjusting your parts’ markup or revisiting the effective labor rate. But don’t compromise your gross profit too much. Since the whole idea is to make money, such compromises will not do. If you determine it is appropriate to include more services in your menu than your competitors, or that you have adjusted the pricing structure as low as it’s reasonable to go, you will need to get your advisors up to speed so they can explain the added value of your service over your competitors when asked.
Be careful of selling your soul to your chemical vendor. The guys that keep you into your transmission flush, induction service and other kinds of service kits are generally quick to offer to print you a really nice high dollar menu to hand out to customers at no charge to you. This is fine so long as the services are structured the way you want and the tradeoff does not include throwing in a bunch of stuff the cars either don’t need or that is too expensive to keep a profitable menu structure. Most of the chemical representatives I’ve encountered are pretty reasonable, but there are some overzealous representatives who will try to capitalize if you give them too much slack.
On the subject of menu printing, there are all kinds of options available. Of course, you can have something professionally done on super glossy paper or even bound into a booklet complete with areas for dealership staff signatures and logo stamps. These are really nice to have, but can set you back literally thousands of dollars to print enough to keep a reasonable supply on hand. If this is a new menu, you’ll certainly want to make absolutely sure this menu is here to stay for a while before going to that expense. If menus are new to you or if you have restructured your existing menu, there are other ways to go about putting something nice together on the cheap. It is not horribly difficult to layout something by using office software like Word or Excel. If you are handy enough to do that, you can make adjustments whenever necessary and reprint the menus whenever you want. For a couple of bucks more, you can even buy a box of heavy bonded paper so you are not handing out a flimsy menu printed on copy machine paper. When making any menus, it is important to include the dealership phone number, address and hours of operation. Also, if there were any services that didn’t make the cut for your final menu, but you’d still like to have out there, throw in a section for additional services for the customer to consider along with the pricing for these individually.
The idea here is to get these things sold. Set up performance standards for the advisors and make sure the menus are making it into every customer’s hands before the write up. If it is within your realm of control, a spiff incentive for each service sold or a tiered incentive for quantity sold may not be a bad way to get the advisors motivated.
No matter what, the right service menu in the right market with a good gross profit assigned to it will never fail.
Eric Coffey is currently the service manager of Russell Mazda in Clearwater, FL. Prior to that, he was the service director for a multi-line dealership for two years. He is an ASE certified technician and service consultant.
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Making the Most of your Service Menus