Efficient by design

400-2

Tom Kaiser, Senior Editor
February 1, 2014
Filed under Features, Top Stories

Think strategically for an organized, efficient and profitable service department

Service departments are their own beasts and, by nature, hard to corral. Compared with the cleanliness and order of other components of a marine dealership, the service operation is often messy, loud, chaotic, cramped for space and staffed by skilled technicians who know a lot more about the finer points of internal combustion than they do about org charts or customer service.

Making sense of this mysterious part of the dealership may be the biggest challenge to improving most marine dealerships, but the dividends of efficiency and organization are worth the effort. Loyal customers, happy technicians, better reviews, improved profit margins and less stress for managers are all within your reach.

Before diving in to the process, recognize that all dealerships have their own challenges, be it storage space, layout, personality types or dealership culture. What works remarkably well at one location might incite a revolt at another. With that disclaimer aside, don’t be afraid of change.

Using the Top 100 applications as a guide, we tapped two very different dealerships that are both doing things right — one big city, one small town — for their advice on righting your own service ship. We also spoke with industry trainer Valerie Ziebron of Yamaha Marine University for her take on making changes that result in profitability and happiness, wherever your department is currently at.

Fogarty’s Lake Flower Marina

On the shores of Lake Flower in Saranac Lake, N.Y., 15 minutes west of Lake Placid, Fogarty’s Lake Flower Marina stands out as a small-town dealership on the rise. Its service department has four full-time employees, exceptional efficiency numbers and an older facility that presents challenges and opportunities in equal measure.

Fogarty’s is located on Lake Flower along one of the main thoroughfares bisecting the town. The showroom is on one side of the street, while the service, storage and gelcoat repair facilities are in separate building across the road.

In its 12-year existence, owner Terence Fogarty has made piecemeal improvements to improve his dealership, make the shop a better place to work and also improve the appearance of the business in this small vacation community.

The physical improvements have been significant, but Fogarty is proudest of the service policies and organization that transformed the money-losing operation into a revenue producer at his store, along with making it a better place to work.

Terence Fogarty

Terence Fogarty

“It’s a forward-thinking service department compared to a lot of ones out there,” he said. “We model it after automotive and I think that we are, in the marine industry, quite a bit behind where automotive is at from a service systems standpoint.”

The beginning of the transformation came from a Correct Craft College course that told attendees to “Create exceptional systems so that you don’t need exceptional people to produce consistently good results.”

Soon after, Fogarty sent his service writer to shadow the process at Mercedes-Benz, Honda and Cadillac dealerships. Shadowing luxury auto stores highlighted the benefits to a service system based on a higher hourly (or flat) rate, putting customers in the driver’s seat and getting customer approvals up front.

The goal, he said, was to get away from his low-rate setup where techs would spend time on a project and report back to customers that, in some cases, decided against doing a project or would argue the bill at its completion. That created money-losing situations where the dealership would in effect pay some customers to fix their outboards.

“Now a customer comes in and we say OK we’re going to charge you $100 up front and we’re going to check this, this and this,” Fogarty said. “We [get] a baseline snapshot of the fundamental operation of the motor or boat or whatever it is. At that time if there’s something simple to fix that we notice — and we can do it during that diagnosis period — then we’ll certainly do it.”

Fogarty’s has leveraged the new pay plan to improve efficiency, reduce service returns and ensure that everybody is working toward bettering the department’s efficiency. Technicians are paid $15 to $17 an hour, which doubles to $30 to $34 an hour for any billable work — a selling tool for recruiting new techs.

Fogarty’s Lake Flower Marina’s current two-bay shop is constrained for space, leading the company to develop plans to upgrade an existing pole barn into a modern shop facility.

Fogarty’s Lake Flower Marina’s current two-bay shop is constrained for space, leading the company to develop plans to upgrade an existing pole barn into a modern shop facility.

“When we went to this system, the guys increased their productivity 25 percent,” he said. “Now that we’ve gone to this type of pay system and billing system, everybody is aimed at getting billable work done. Prior to this … if a job took six hours and it meant the guy was going to get overtime, then he could care less how efficient he was or the business was.”

Requiring service customers to commit to a $100 diagnosis before signing up for the whole project creates similar buy-in from the customers, with another benefit in telling people the financial scope of the project when they’re at home, rather than inside the showroom.

“People don’t look at servicing their boat as money that they want to spend,” said Fogarty, likening it to a mourning process. “When you tell them it’s going to cost $300 to fix this, they are going to go through some form of grief process for having to part with the money … so you want them to go through [that] prior to working on the boat so they’re willing to pay for the job when it’s done, and also you want them to go through the grief process off site so they’re not standing at your service counter [upset] about the cost of a repair while you’re trying to sell a $100,000 boat right next to it.”

To improve service logistics, Fogarty laid out his three properties on AutoCAD to improve the physical flow and develop future improvements. Feedback was gained from the service staff and his 20 group members that led to a master plan for the grounds that its owner hopes to coincide with a $15 million hotel and restaurant project going in next door.

Fogarty plans to convert a 40- by 80-foot pole barn into a nicer, larger service facility, which is currently housed in a former auto shop built in the early 1900s. He also plans to convert the current gelcoat room into a display showroom, as it will be more visible once the hotel is complete. Other changes, such as a sidewalk between the properties, will drastically transform the dealership’s curb appeal.

Seattle Boat Company

With four locations in the area, Seattle Boat Company has 17 full-time service employees with a full complement of additional support staff. Service makes up almost 30 percent of the company’s annual revenue, so it easily pulls its weight within the organization.

Depending on the location, its service efficiency scores meet or exceed 100 percent, and the company puts a significant focus on its CSI ratings, productivity and daily reporting that helps CEO Alan Bohling keep tabs on his sprawling service business.

Within the past year, Seattle Boat Company implemented daily service reporting through an in-house system created to be compatible with its DockMaster software. The reports, generated through Microsoft Excel, allow Bohling to monitor key metrics from the company’s locations including open work orders, daily shop goals, efficiency and productivity.

Seattle Boat Company is about to embark on a major redevelopment at its Bellevue, Wash., facility that will include a new SkyLaunch dry dock, showroom and service center.

Seattle Boat Company is about to embark on a major redevelopment at its Bellevue, Wash., facility that will include a new SkyLaunch dry dock, showroom and service center.

Monitoring the department’s data stream has the added benefit of motivating techs by showing service staff how the company’s other departments are doing.

“We want everybody to know we’re measuring it, we’re monitoring it, we’re managing it,” Bohling said. “You see all facilities on one sheet of paper very quickly, very easily.”

Beyond data, the company focuses on balancing duties and staffing to keep everybody moving at all times, while managers can focus on productivity from afar.

“An individual has the ability to be self-efficient managing their time all day long — that’s efficiency — but a manager has the ability to control productivity,” he said. “Productivity is the amount of work you have available and how well it’s scheduled, productivity means you have support staff making sure those boats are in the service bays without the technicians twiddling their thumbs waiting for the boat to arrive.”

Helping Bohling determine efficiency and productivity levels, as well as what type of staffing to add, he focuses on a “days in service” metric that tells him when a boat arrives, how long it’s been sitting on the lot and its repair status. Days in service reports have reduced the problem of a customer’s boat getting lost in the yard, overlooked by staff and management.

“Our goal is [to get] every single boat out within five days,” he added. “I don’t care if they had an appointment or not, they’re going to come in and be out, and in order to accomplish that in five days, a whole lot of [boats] have to be in and out on the same day and that’s the approach that we need to take.”

Being located in constrained, urban areas, physical organization of the company’s facilities is an ongoing challenge. A remodeling of its main Seattle service department was completed in 2000, and a major redevelopment of its Bellevue facility is set to begin this summer.

It will provide all technicians with covered work bays, and improve the organization of boats that have to flow through the grounds in a carefully orchestrated process.

Bohling said that even though its Seattle facility is located on just less than an acre of land — the smallest boat dealership out of his Cobalt 20 group, the facility produces as much work and unit sales as much larger facilities — a tribute to the organization’s carefully orchestrated efficiency.

Becoming more efficient in such a situation means building vertically, especially with boat storage. Seattle Boat Company gives its dry rack storage the sexier name of SkyLaunch Marina, which it will be adding to its Bellevue location in the coming year.

“There’s no glamour in rack storage, so we call it SkyLaunch Marinas,” Bohling said. “We know that on average a boat in our SkyLaunch Marina delivers over $1,400 annually to our service department. I’ve got it broken down to how much fuel will go to our fueling operation and, ultimately, even how many sales [will be generated]. We’ve got it broken down to where we know what the economic return is per boat slip.”

For service departments of all size, Bohling recommends managers include three items in their daily reporting: clocked-in hours, productive hours — how many of those hours are spent on a work order — and efficiency per job. Knowing if jobs were done on time will motivate technicians and give management something to follow to make incremental improvements within the department.

He also recommends focusing on the emotional side of service, remembering that return business is the key to future profitability.

“You’ve got to think: ‘Am I doing it fast enough?’ because everybody wants their boat in today and out tomorrow,” Bohling said. “Well, we’ve got to achieve that somehow, because if we’re going to be around tomorrow, we first have to figure out what does the customer need?”

After reporting is in place, he recommends attending a Spader Business Management five-day management seminars, which helped the company implement incentive-based pay and turn around its service department 15 years ago.

Lastly, the key to making sure the service department is profitable, is setting the correct hourly rate. The calculation, he said, should begin with the ideal profit margin. For Seattle Boat Company, that meant increasing its rate from $79 to $119 to achieve a 10-percent profit margin.

“You’ll never make it if you’re not charging enough per hour on your retail labor rate,” he said. “You’ll just keep on going backwards.”

Advice from a pro

Grounded in reality through her experience in the field, Valerie Ziebron is an industry trainer with a well-earned reputation through her independent work and also as a consultant for Yamaha Marine University.

Like Seattle’s Bohling, Ziebron urges business owners and managers to monitor key service metrics that provide a foundation for creating improvements that are customized to your staff and business. Such metrics include service efficiency, hours per work order and service absorption, which is the percentage of the entire dealership’s operating expenses that flow through the service department.

Valerie Ziebron

Valerie Ziebron

Part of her approach also focuses on accurate job descriptions, specifically making sure they reflect all of your staff’s recurring duties, which helps management create an organizational chart to make sure all duties are accounted for. Knowing what is expected of everyone can also help improve staff job satisfaction, and can act as a guidebook when it comes time to add additional service employees.

While some stores have the luxury of support staff to allow technicians to focus on turning wrenches, others have fewer bodies and need to delegate tasks as they come, such as shoveling snow in northern states. Ziebron says either approach is acceptable, as long as everybody knows what’s expected of him or her and is incentivized accordingly.

“Whenever someone isn’t turning wrenches none of us are making money, so it’s a natural desire for a lot of upper management to say we need more people to help keep that happening,” Ziebron said. “But that still might not give me 100 percent efficiency.”

Creating a simple organizational chart that shows everyone’s job duties — and including everything — often results in two simple scenarios in Ziebron’s eyes.

“It’s either we have too many chiefs and not enough Indians or we have so many Indians and technicians and not enough management,” she said. “Or we don’t have someone dedicated to service writing, and that is another one of those situations where you think, ‘Can I afford a service writer?’ but you really can’t not.”

Once an org chart is in place, pay plans can easily be created that reward service staff for their contributions to the business, not just service efficiency. If you have an experienced tech assisting newer wrenchers, for example, pay plans could be modified to focus on the overall shop efficiency, to incentivize based on the novice tech’s efficiency or any other method that works while encouraging them to focus on the efficiency on the department as a whole.

Valerie Ziebron suggests using visual information to put customers in the driver’s seat, as well as carefully tracking all work orders to make sure nothing is overlooked.

Valerie Ziebron suggests using visual information to put customers in the driver’s seat, as well as carefully tracking all work orders to make sure nothing is overlooked.

“The weird Holy Grail in service is coming up with that perfect pay plan, but as I’ve said, there is no such thing,” Ziebron said. “I’ve seen the exact same plan fail miserably or work miraculously, so it’s really knowing your team.”

While supporting service staff can be considered a luxury in mom and pop-style shops, Ziebron recommends all service departments add a service writer if possible, which she says is “the number one person in the dealership who is going to build your customer loyalty.”

The importance of the position, she says, comes from the amount of time a service writer spends with customers compared to other dealership personnel like sales people, parts staff and technicians.

Service Schedule Pad“You’re going to spend so much more time with your service writer than you will with any other person in that business,” she added. “And you’re coming to that service writer when, chances are, things aren’t always perfect. How this person is going to handle this is either going to make [customers] say, ‘I love this place, I wouldn’t go anywhere else,’ or ‘to hell with them, I’m out of here.”

While basic technological knowledge or sales training could be a benefit, Ziebron said too much technical knowhow could naturally lead to a service writer who seeks to diagnose problems, which can lead to work orders with incorrect or incomplete information. Instead, she advocates, service writers need the right personality to function like an excellent server when the phone is ringing, stressed customers are waiting and salesmen have questions — sometimes all at the same time.

“A service writer has to be someone who can juggle a million things in the sky with a smile on their face,” Ziebron said. “I think of it more like a really skilled waiter, someone who has sat 20 tables all at once but remembers the lemon for this table and the extra barbecue sauce for you and has a smile on their face the whole time and keeps their priorities straight.”

When it comes to the physical layout of your service facility, Ziebron says companies should focus on incremental improvements that involve the staff to tap into their knowledge and ideas, as well as creating a culture where people with ideas speak up.

“So many times when I listen to the ideas from a team member, they’re actually coming up with ideas that would make the place more money and make the place a better place to work,” she said. “But management has it stuck in their head that it should be a certain way. It really requires us letting go of some of those notions and saying we’re still getting the same end result.”

 

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