Busyness and productivity are not the same. Many service managers don’t understand this. They think that if the shop is full of customers, everything must be going according to plan and never realize that something is wrong. However, there is a simple metric that indicates whether a shop is truly productive: average hours per repair order (H/RO).
Measuring hours per repair order can directly indicate which employees need to improve and in what areas they must do so. In addition to pointing out productivity issues, a higher H/RO rate often indicates profit, according to Brett Coker, a consulting expert with over 40 years of experience and owner of Coker Consultants.
H/RO is a surprisingly simple metric to measure and subsequently improve. There are a variety of methods and techniques that can be used to maximize H/RO, and by extension, to maximize productivity, profit, and customer satisfaction.
What Is H/RO?
H/RO is calculated by dividing the number of hours an employee works in a period of time by the number of repair orders he or she completes in that time. This indicates that employee’s productivity level and, by extension, whether the shop is potentially capable of profiting.
Lee Harkins, president of M5 Management Services, believes that the goal of H/RO should merely be to continue increasing that number in any increment you can. This attitude of constant improvement demonstrates a successful approach.
However, there is a benchmark to which to work. Net Profit Inc. states that the national average ranges from 2.3–2.8 H/RO. If the H/RO is close to 1.0, “the assumption is [that] you are merely taking orders and potentially not providing the service the customer truly needs,” says Stephen Smith, a financial analyst with ConSept LLC.
How to Improve
1. Use menus and catalogs.
Coker, Harkins, and Smith all recommend the use of service menus or catalogs as a way of improving H/RO. These catalogs work best when used during a walkaround of the vehicle with the customer. That way, the service advisor can provide more in-depth information about how the car was repaired, and what other services may help.
“If we really want to improve our hours per ticket, we make sure that every customer gets a menu 100 percent of the time, no exceptions,” Harkins says.
Tracking additional service request (ASR) sales can help indicate the success of this approach.
2. Train service advisors.
In order for this method to be most effective, service advisors need to have some experience in sales.
“Advisors are salespeople; train them as such,” Smith says.
Sales training lets employees maximize the effectiveness of menus and catalogs, as well. Ensuring that employees make the best of their time starts with giving them the proper tools to do so.
Coker recommends that service advisors be continually trained. Instead of only going through an initial orientation, advisors should be trained on an almost weekly basis. This guarantees that the employee is on top of every facet of the services being offered, and therefore lets them maximize customer service. They will be able to give each customer their undivided attention, instead of just writing out the physical repair order.
3. Schedule appointments.
Instead of attempting to get as many customers into the shop in a day as possible, dealerships should have customers schedule appointments. If 10 customers suddenly showed up with no appointments scheduled in advance, the service advisors will be overwhelmed, especially if they are understaffed.
“[They would be] only able to take orders instead of providing the necessary service,” Smith says.
This practice damages customer retention more than almost anything else. Coker believes retention is much more important for maintaining a high H/RO than a huge quantity of customers. It is essential that advisors are able to “spend sufficient time with every single customer,” Coker says.
This can be avoided by simply scheduling appointments. Instead of trying to concentrate a majority of the customers into morning or afternoon windows, spread them out. This helps the customer get the service they deserve, and lets the advisor do their job properly and excellently.
Smith insists on the importance of avoiding overbooking and understaffing. Advisors should only write 10–12 ROs per day. If it gets any higher than 15 ROs, then the H/RO is almost certainly well below the benchmark.