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Last week, Automotive News highlighted Redlands Auto Plaza, a Southern California dealership that is doing some pretty creative things within their service department to increase absorption. General Manager, Loren Campbell, recognized that becoming more efficient within the service department was key to increased profitability and a better customer experience. “Time is the only thing we have to sell. The process is the key: quicker and simpler. That’s what customers want,” Campbell stated in the article. To achieve this, he paired up service advisors to work in teams so that there was always an advisor available to answer questions about any customer’s specific vehicle. Campbell also has the advisors serve as cashiers. This speeds up the process and prevents customers from asking a regular cashier questions that they can’t answer. The dealership changed the physical flow of vehicles by creating incoming and outgoing lanes and has added an appointment board, which, according to Campbell, builds credibility for the appointments in the customer’s eyes. These changes have resulted in an 18 percent increase in service absorption (from 56 to 74 percent).
Creating a more efficient service department will absolutely increase revenue. In my opinion, Campbell is absolutely correct when he says that time is a dealership service department’s commodity. Increased service efficiency will create more time and that will allow service departments to handle a higher volume of service business. The 18 percent increase in service absorption is especially impressive as the dealership was able to achieve this with no additional technology.
This forward-thinking General Manager recognized that a simple change in workflow would increase efficiency and generate a better customer experience. However, I am pretty sure that there will still be challenges to reach his stated goal of 90 percent absorption. Technicians face time-consuming tasks when confronted with an issue they have not encountered before and have to correctly diagnose the problem. And then there is the time spent acquiring parts when a diagnosis is finally made. All of these tasks extend the time it takes to complete a repair order.
Mr. Campbell has done an excellent job in increasing his service absorption through process changes on the front-end. It would be really interesting to see the further expansion possibility through the use of technology and more efficient communication and processes. My bet is that shifting their focus now from the front-end processes to the back-end will allow them to achieve the next 16 percent needed to reach their goal.
What do you think?