Pub. 14 2015-2016 Issue 3

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 17 new jersey auto retailer W W W . N J C A R . O R G Now suppose we made a significant por- tion of the Service Advisor’s compensation dependent upon being 90% compliant to the pricing objective. In other words take the number of “Dones” as a percentage of the “Repair ELR Opportunities”. This KPI is called “Percent Penetration” or “Percent Compliance”. Having a system that can give you this information without having to calculate it on your own is criti- cal to implementing this kind of pay plan. Let’s look at another result we would like to have… reducing the number of 1-Item repair orders to be 35% or less of the total customer pay repair orders. We know for a fact that 1-item repair orders are one of the biggest profit robbers in the shop. The difference in labor sold on a 1-item repair order and a two or more item repair order can be 2 or 3 or more times the labor of the 1-item repair order. While reducing the number of 1-item ROs is the desired result, the behavior that must be done is for the Service Advisor to sell more. That can happen by doing a Free Diagnostic Courtesy Inspection or Multi Point Inspection (MPI). Again, dealers must have a way to mea- sure and know when a car qualifies for an MPI. They should be based off the service history of the car. Aim to get 70% or more of the qualified opportunities inspected. If the dealership is documenting the RO properly, they should also be able to de- termine how much work was generated by the inspection. Using the inspection will find legitimate work that should be done on enough cars that the number of 1-line ROs will be reduced. If the technicians and the Service Consultants work as a team properly, the number of 1-line ROs can be reduced to 35% or less. Putting A Pay Plan Together Make the salary part of the Service Advisor’s plan nomore than 20% or 30%of the total compensation. The behavioral compensationwill be 70%, 80%or more. Let’s assume for the sake of this article that we make it 80%. If a Service Advisor is targeted to make $75,000 in a year, then only $15,000 will be salary. That works out to be $288.46 paid each week in salary. In closing, take the words of Dr. Thomas Munson, of the Harvard Business School, to heart: “When we deal in generalities, we will never succeed. When we deal in specifics, we rarely have a failure. Where performance is measured, performance improves. Where performance is measured AND reported, the rate of improvement DRAMATICALLY accelerates.” Ray Branch is founder and CEO and Don Helmey is Director of Internal Processes at The KEEPS Corporation. They can be reached at 919.881.9090. [NOTE: One of the authors, Ray Branch, conducted a 90-minute webinar with DealersEdge in July 2014 on the topic of KPI Behavioral Based Pay Plans. He has made arrangements for readers of this article to listen to the webinar for FREE. Simply send an email to Jim Muntz ( jim@dealersedge.com) , mention this article and ask for recording DHG3. You will receive an email with a link to access and listen to the recording.] The figure above shows how a pay plan might be set up based on five KPIs and a spiff for selling a certain service. The key is picking the behaviors that get the results the dealership desires and then making the compensation for that KPI significant enough that the person takes it seriously and focuses on the behavior.