Car Dealer Insider Aug 1, 2010
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Car Dealer Insider Aug 1, 2010

Car Dealer Insider Case Study - One-price selling on the service drive

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Car Dealer Insider Case Study - One-price selling on the service drive

The subject of using grid or matrix pricing in the service department can make the hair on the back of a service manager's neck stand up straight. Grid pricing is controversial because it is seen by some as a way to gouge customers who need more complex repairs. Service advisors resist grid pricing because it restricts their impulse to offer discounts at the first sign of customer resistance. That was the case at a Chevrolet dealership in Southern California when fixed operations expert Ray Branch, president of Keeps Corp., was called in to help.

Unlike most of our dealership case studies, the store was not having trouble earning a profit. But the dealership owner felt the store could do even better in service if the shop could improve its effective labor rate (ELR).

Ray's objective was two-fold: Help the service manager get over his fear of the unknown about ELR improvement techniques and to raise the shop's ELR by $3 - $4/flat rate hour.

The situation

The service manager was a 30-year veteran of the business and a fixture at the dealership having survived multiple general management changes. The dealership installed Ray Branch's ROAMS system to help improve the service department's performance but the service manager refused to implement the pricing grid that is a key to ROAMS effectiveness. His reasoning was that, "We have ADP. The DMS handles service pricing and estimating."... (235 of 941 words)

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