Service Advisor Standards

New year, new goals 0:00

Steve Shaw: Dave, good to see you. What's going on?

Dave Rogers: Hey, what's going on, partner? How you been, man? Everything good?

Steve Shaw: We started a new year. We're only as good as our last sale or our last month, but things are great. I'm looking forward to an exciting 2026.

Dave Rogers: I think it's going to be a great year. I really do. I was reading a little bit: tax rates go down, people have more money in their pocket. It's going to be larger than expected tax returns this April, because they didn't change their withholding last year. I anticipate some lower interest rates. I think we'll have a good year, in my personal opinion.

Steve Shaw: That sounds good to me. I've got a little bit of travel coming up as well, like we talked about the other day. It's exciting to get on the road, exciting for the convention coming up, and exciting for the new year. Everybody's starting their plans. Last time we talked about technician objectives, technician standards and setting goals. What do you want to talk about today? Advisors might be a good next step.

Dave Rogers: Absolutely, I think it's a great next step. It's probably lacking in a lot of businesses. We don't sit down and talk to our advisors at the beginning of the year or the beginning of the month and lay out goals. I think it's an important topic.

Steve Shaw: I think it's great. I actually took my Wagoneer in for service today and was watching everybody run around. Yes, my Wagoneer goes in for service all the time. I was watching and thinking about that: I wonder what their plan is, and has the fixed ops guy sat down with his team and talked about next year? It was definitely on my mind. It's kind of funny watching everybody. It's the holiday season, so people are still running a little bit ragged right after the first.

Dave Rogers: Right, a little hungover, a little broke, spending all the money trying to finish the year because the boss says he needs a number in the last five days. That's kind of how I got through it. In December, at the beginning of the month when I was looking at it, it wasn't an easy month to forecast. A lot of the stores closed down early on Christmas Eve, so you had a half a day that day, then the Friday afterwards, which was hangover day, and then people away for the weekend, travel days, whatever the case may be. What started out as a 26-day month turned into a 23-and-a-half-day month really quick. We were talking about it all month long. It was just a tough month to forecast.

Production doesn't lie 2:59

Steve Shaw: I think that ties back into our last conversation. I am such an advocate of doing it day by day. You were talking about 200 hours. I'm an advocate of day by day by day, each technician's individual objectives. If you're off on Friday, or half the team is off, we can multiply our flat rate hours times our ELR times our gross and really dial that in. It doesn't look good at the beginning of the month, but it's really what's going to be. Sometimes we lie to ourselves and think we're going to overcome that. Production's production. They're going to produce the hours they're going to produce while they're in the store. I guess I would say production doesn't lie.

Dave Rogers: No. Unfortunately, too many people look at it in the rear-view mirror. It's the first of the month, I look at the hours, and I'm like, "We stunk with the gross, and we didn't finish out as strong as we wanted." So hand in hand, you take the techs, come up with a goal for however many hours you're going to turn, and then you've got to back into it with the advisors too. You've got to see if it all blends out.

Steve Shaw: Absolutely. Are your stores on groups, or is it pretty much an individual type of system?

Dave Rogers: Most of them are individual. With some of the groups, it really is all personality, and the manager wants to do it. We have some informal groups, where we know these four guys work for this one service advisor. One of my Mercedes stores has pretty defined groups, but for the most part it's pretty loose and straight central dispatch.

Advisor numbers vary by brand and market 4:46

Steve Shaw: So you set goals with your advisors individually?

Dave Rogers: Right. And again, it varies. When I was looking at the range, you have a Mazda or a Hyundai service advisor, and you look at what they're producing, and then you take a good Honda one or a decent Acura service advisor, and the variation between the monthly gross, the ROs and the dollars per RO. Then you jump into the premium stores with Mercedes and BMW, and it's such a diverse set of numbers that these advisors put up. I have a hard time compiling reports with all the stores, even putting them on the same report, because it's not fair to compare a Mazda or a Hyundai service advisor to a JLR advisor.

Steve Shaw: Oh, absolutely. And it's not fair to compare even Mercedes in your neighborhood to Mercedes in Indiana or Ohio, or even here. The marketplace is so different. What are you guys getting per hour now? You've got to be getting a couple hundred.

Dave Rogers: Oh yeah, we're north of 200 as a base door rate average for the whole group. Some of my stores are 229, 239, and I've still got some stores in the 180s, 190s, depending on the area they're in. Reading, Pennsylvania is a little different than Philadelphia or West Chester, PA.

Steve Shaw: I know down here in Florida there are high one hundreds, if not low two hundreds, even here in the Tampa area. Get down to Miami, Katie bar the door. It's huge money. And I would guess going a little bit north of you, into New York, it's probably ridiculous.

Dave Rogers: I've heard stories of dealers in Florida and New York in the $400 range. I think it's a little excessive, but the market will bear what the market will bear. Everything is a little different. West Chester, Pennsylvania is a pretty well-to-do area. The Main Line is a pretty well-to-do area. But not all pockets are the same.

Work backwards from the technicians 7:04

Steve Shaw: How do you look at your forecasting, then? Is it per store, and then you give your guys a goal dollars-wise or hours-wise? I know we don't pay on hours anymore.

Dave Rogers: It's always dollars. We're always trying to beat last year. Obviously you want to back into it with hours, back into it with ROs, whatever your gross profit percentages are. It starts with a goal at the top end, but you've got to work backwards from the tech up to get those numbers. I can tell you I want to have a million dollars, but if you have five techs, it's going to be tough to get there.

It's case by case, store by store, group by group. Some of my JLR stores, these guys are getting $1,500, $1,800 a repair order in sales. That's a nice dollar. They have to touch fewer ROs to make the numbers. But when we back into it, sometimes you're like, "Okay, this is how many ROs you need," and then it becomes a challenge if you don't have the techs to turn the wrenches or you don't have the loaner cars. So you really have to be careful about what kind of goals you set for the individuals too.

Set goals before the month starts 8:20

Steve Shaw: Oh yeah, absolutely. That's a tough thing. Sometimes we bag on other managers, and I don't think it's a lack of caring. Most people care. They're really out there trying. It could be a lack of education or time. The store I was at today, I applauded the service director. He was out working the drive. It was super busy, and the driveway manager and the service director were all working the drive. That certainly takes away from their planning time and their coaching time. That's a tough deal right now in the personnel world, and of course we're all watching our budgets as well.

So I applaud the manager for being out in the drive and doing what he needed to do. But then when do we sit down and set those goals with the team? Shouldn't it have been last week? It should have been prior to. And I've seen stores where on the 10th, they're sitting there talking about goals, because they finished up last month and are starting this month, and I don't really have time to sit down with my guys until about the second week of the month. Now you're two weeks in, and you've already lost 10 days of traction before you set that goal.

Dave Rogers: Well, that's why I think, like with the technicians, you have to have some kind of baseline. Mine's always been 200 hours per month, and at some stores it was higher. People will make the argument it should be 160. That's break-even. But I think 200 hours for a technician, 240, 250, depending on the brand. You've got to have a floor, so you can start the month out with that same objective. I know I'm working 20 days this month and he wants 200 hours from me, so I know I need at least 10 the first day. If we want to tweak it because there are more work days, we set the goal.

That's why I think it's important with technicians. And then I look at the advisors. I have some advisors that put up some big numbers. When you're at 100, 125, 150,000 a month in gross profit, they're humming, they're earning good money. And then we've got to start tweaking their objectives for next year. Everyone says there's a limit. There's no limit. I have some advisors that do 3 million a year in gross.

No plateau, and not every cup is the same size 11:02

Steve Shaw: That's amazing. I have one manager who always says, "When will it ever stop?" And I have to say, it never stops. If we do good, we have to do better the next time. We have to continue to do better. Sometimes guys think we should get to this plateau and that should be good enough, but our dealers are never going to let it be enough.

Dave Rogers: If you cap out your people, then you've got to get more people. There probably is a level. I use the example, and I don't mean to be rude in any way, shape or form, but not everybody has the same size cup. The 12-ounce, 16, 18, 24, Big Gulp. Don't try to put 32 ounces in somebody that's got a 12-ounce cup. That goes with knowledge, and it goes with my expectations. If you have somebody who's the number four or five advisor on a team and they're only going to do 60,000 a month in gross, unless you find somebody to replace them with, you're going to have to walk lightly with those objectives. You're not going to get that person to do a hundred. That's not what they do. Baseball teams have five pitchers, and they're not all number one pitchers.

Steve Shaw: I'm so into baseball strategy right now, and that is true. They've got their ace and their number two, and then they've got these guys down at four and five. I guess you'd feel like, "At least I'm in the bigs, but I'm the number five guy on the team. That means I'm the worst of the starters."

Dave Rogers: You would be hard pressed to find a service department anywhere where all five advisors are equal. It's just not going to happen. I have a Mercedes store in Wilmington where we had a guy doing about 3.4, 3.5 million in gross a year. He was the number one guy. And then I have another guy at another Mercedes store doing about the same, and he was hogging up all the work. He was a glutton for the work. There were four other advisors doing a buck and a quarter, a buck fifty. And that guy left, and everyone said, "Oh my God, we're going to go broke." Everybody picked up their pace, we added another advisor, that same money was spread out, and we're doing better than we were.

I used to laugh. How do you set an objective for this guy? "You've got to hit four million this year"? How does that happen? It's tough. You're just not going to get five and five and five.

Steve Shaw: No, you're right. Everybody's not going to be equal, by no stretch of the imagination. You're either forming, storming or norming. You form your team, something happens, you've got to bring somebody else on, you grow that person, then you're forming again, then you're storming, then you finally normalize, and then it changes again. It's a vicious cycle, whether it's attrition or whatever happens. People come and go. So I don't think we'll ever be on that page, like you said, with five guys doing exceptional.

Talk to advisors in sales dollars 14:16

Dave Rogers: Right. When you sit with your advisors and you're talking to them, sometimes you might be better off starting with sales, because when they sell work, that's the language they're talking. "Hey Steve, did you sell that job today?" "Oh yeah, I sold a $3,000 job. I sold a $2,000 job. I sold a $1,000 job." Then at the end of the day, we ask them how much gross they did, and they know they sold a bunch of $500 jobs, but they really don't know how much gross it is at that point in time. Some of the reporting is daily, some of it only when the RO is closed, maybe you can pull it out of your DMS.

I used to like to talk to my advisors and say, "Okay, what's your goal today in selling? Is it 5,000? Is it 8,000? Is it 10,000?" It's something you might have to do with your advisors individually to get a baseline and see what they're used to doing. "All right, you're working 22 days this month," I'm just throwing a number out, "you're going to do 10,000 in sales today. What's that going to equate to? There's my number." Because they don't know. We talked about this one time: a lot of times they don't even know how gross profit is calculated.

And I don't agree with the people that pay them by the hour. There are all these experts out there, and they pay the advisors by the hour. To me, it's just too much to manage. The service manager's got to be managing the hours sold, he's got to be managing the effective labor rate, and all of that is done in the rear-view mirror. So what do you do if a guy sold a four-hour job yesterday and discounted it 50 bucks an hour? It's too late. That happened yesterday. He got his four hours flat rate on that ticket.

Should advisors be paid on sales? 16:02

Steve Shaw: Of course he did. That kind of begs the question. I think we've gone full cycle. We went from sales to gross, and then we went to this convoluted pay plan over the last 20 years, and now we're getting back to just gross. But quite frankly, why aren't we just paying on sales? Why fool around with it? We as managers should be setting the gross. Your job is to sell it at whatever price we have set up. How would even a new service advisor know how to control that gross? Why don't we just pay on sales, let these guys go out and sell everything, and then we can do our jobs as managers and control that gross?

Simplicity is the easiest way, and it's the best way. I get it: I sold that. My percentage is going to be a lot less. Certainly now, we probably couldn't pay 5% of sales anymore at $299 an hour. That was the good old days when Steve was writing service. The percentages may be different, but I would be a fan of that. I'm sure people would chastise me for saying pay on sales versus gross.

Dave Rogers: No, I think it's a great conversation. You've got to factor in discounts, because of the way the DMS records the discount afterwards. In a lot of cases, the discounts actually reduce sale dollars instead of increasing cost of sale. So there is a way of doing that. But it's probably the most simplistic way of doing it. They know they sell $500 jobs. They don't know they sell $250 gross jobs. They just don't know that.

Steve Shaw: Right. When I ask in class, "Do you get paid on gross?" "Yes." "What does that mean?" "Well, I'm not exactly sure." I think that's demoralizing, or deflating, to the advisor. "I don't know how I get paid. I've been told a million times. I have no idea. I just get a check. It's usually around what I need to make, and as long as it's close, I'm pretty happy." I think that's a terrible way of going about it.

Dave Rogers: It's one of the reasons why it's hard to keep good advisors. It's hard to maintain and retain good advisors in this industry. I've seen some crazy pay plans. They look like a menu: pick one from column A, one from column B. "Wait a second. What?" I had an advisor in a store who was promoted to service manager before I got to this group, and he was a month or two into the job. The general manager and I were talking to him. He'd been there 19 years, and he didn't know how gross profit was calculated. Had no idea. He'd been paid on gross all those years as an advisor. I applauded his honesty, but I was like, "Wow, how would you not know?" "I was making 80 grand a year. I was happy. I didn't care."

Steve Shaw: That's pretty nuts. That's probably a good place to leave this one. We're so new to this. We've got a lot of things to explore. We started out with technician hours, and now we're talking about advisor goals. I know one of your goals for podcasting was bringing GMs into fixed operations, and my goal would be on the opposite side: those guys that are new, giving them some tools. I love sharing stories and talking about the business. We'll bring up the young guy and get that GM involved. So what would you say to a GM today?

What a GM should look at first 19:59

Dave Rogers: When it comes to objectives, most GMs come from the front of the business, so they understand. A salesman needs to sell 15 cars a month. F&I needs to be at this dollar per copy. The same rules apply in service and parts. Sit down, run some reports, see what we're doing in the shop. Load your brain and your lips with a little bit of information and see what history shows you. Then just do some simple math. What is the store doing in parts and labor gross profit per repair order? What are our sale dollars?

Then start looking at that. You have four advisors, let's compare them. Let's not drive hours per RO or effective labor rate right this second. Let's look at how many ROs they're writing and what the dollars per RO are. Then maybe you see you've got an advisor who's just picking off the express oil changes and the new car customers. Maybe they're not running to the bathroom every time a brand new car pulls into the drive, as I would say to the GMs, like your F&I guys do when the cash deal comes through the box, or the lease deal. So my tip is: look around, don't assume, let's see what we've got, and let's start picking away at these things like you would logically in the showroom. What do we need to do to help them get better? Write more ROs, write more dollars per RO. Then we'll get into the nuts and bolts, hours per RO and effective labor rate, later on down the road. They are good metrics, but I don't think they should be everyone's mentality.

Steve Shaw: Absolutely. Well, let's call it on this one, and Dave, I'll talk to you again soon.