I had the privilege of attending the training program that was provided for the service managers of the various Visual Edge Technology companies.
Visual Edge Technology is interesting in that it buys successful dealerships, and then provides back-office support while allowing each company to continue to operate the way it did prior to being purchased.
Because of this, many of the service managers in the room had never met, and many had never even spoken to each other before this program. They had a variety of backgrounds, with a number of them never having had any formal training as a service manager—they had learned their craft the hard way. Additionally, the experience levels ranged from very recent promotions to managers with decades of experience.
The Event
The training program was co-located with the ITEX show in Las Vegas, May 16-17. In addition to the service managers, the sales managers and company presidents were also there for training. While each group received education tailored to their responsibilities, they all were shown a unified approach to becoming better dealers in all aspects.
The Training
The training was provided by the Pros Elite Group, and the service portion was tag teamed by Jerry Newberry and Jeff Kelley. They both have an extensive background in service management, with Newberry being a part of the Global organization from its inception until shortly before the Xerox acquisition. Prior to Global, both worked for Xerox as senior executives and had the responsibility to work with Xerox branches to resolve service profitability and other operational issues. The training covered the following topics:
Financial and Operational Benchmarks
This discussion included the financial model used by most dealerships, one which allows dealers to assess their performance compared to a standard. This model defines how service revenue and expenses should be allocated, and what the expected results should be.
Service should operate at a minimum of 52% profitability, with companies that are extremely efficient exceeding 56% profitability. This model also sets targets for revenue per technician, revenue per machine, salary costs, parts costs and miscellaneous costs. Meeting expectations results in a minimum of 14% operating profit for the companies, and many companies are generating a profit in excess of that.
From an operational standpoint, the session provided guidelines of a variety of parameters, including accountable time and first-call effectiveness. It also showed how these metrics tied directly into the financial performance of the service department and the company.
Specific Actions to Fix Opportunity Areas
After reviewing the metrics, the conversation turned to understanding the reasons why a company might not meet the minimum standards, and ways to create continuous improvement in the service department.
One of the messages stressed the importance of developing processes that result in consistent performance across the organization. These processes then work to resolve and prevent the issues that negatively affect profitability, while helping improve client’s perception of the company and the service department.
The instructors then reviewed the following 15 actions that are essential to achieving the benchmarks:
- Clearly define and document expectations at all services positions.
- Monitor industry benchmarks using correct industry parameters.
- Know your monthly budget for all COGS categories.
- Define minimum, acceptable performance standards.
- Use key reporting data to identify opportunities and monitor progress.
- Implement an effective stack-ranking process.
- Ensure you are proactive in addressing product-reliability issues and lower-than-acceptable profit margins.
- Understand how dispatch and parts functions should effectively support service.
- Develop the right incentive programs.
- Know how to control parts expense, reduce premature replacements, capture warranty credits and control inventory.
- Know your role in maintaining acceptable profit margins,
- Be in the right field structure
- Develop an effective work process designed to improve machine reliability.
- Drive your changes down to the tech level on a daily basis.
- Differentiate your Service Organization.
Assessing the Current Situation
During this section, service managers were divided into teams to review many of the standards that were outlined, and to develop a list reasons why a department might not be meeting those standards.
Creating an Action Plan to Improve the Service Organization
One of the final team exercises was designed to help managers understand the impact of changing behaviors in their departments. They were given a sample company that was having issues, and then asked to list the steps they would take to resolve the issue.
Each team had a different approach. After having the teams explain their thinking, Jeff revealed the order that he would take, and explained the impact of each decision on both the company and the clients and why they chose the order they did.
The Results
It was interesting to observe this process. What started as a room full of strangers turned into a room full of individuals who were learning from each other. Since each dealer operated differently, they had unique challenge. And as they discussed these with one another, there was a great deal of information that was passed back and forth to help each other.
In addition to the new relationships they formed, they all walked away with a wealth of information and an improved understanding of the process to improve their respective departments. I am confident that all of the Visual Edge Technology companies will become more efficient and profitable by applying the information they learned.
