Service generates profits beyond parts counter

Dave Koshollek
Publish Date: 
Apr 22, 2014
By Dave Koshollek

And with a great service reputation, the sales department doesn’t have to motivate the purchase by focusing on the discount amount. Sales can brag about their service department to close the deal on a better price with a bigger commission.

What is the marketing value of your service department, and how do you quantify it? Starting with customer surveys, you need to monitor scores related to service performance and capture customer testimonials that provide insight on what was delivered that made such a positive impact. Create a promotion that rewards current customers for referring friends and family for service work and track the new business. Count the page views on the service section of your dealership’s website and, in particular, the views of the customer testimonials that are posted. Track chatter on Facebook, Twitter and other social media. When it’s running well, you’ll see a consistent flow of positive accolades that shine brightly on all that your service department delivers.

Our ‘low pay’ reputation

If your service department has indeed created a reputation for superior service and is attracting new customers and helping to retain current ones, it’s time to look at the financials of this department differently.

Give a value to service for its attraction factor. Service is doing a large portion of your marketing efforts and should receive credit for it. I know this may contradict the opinions of some dealers and consultants who believe that service should be break-even, but I believe service revenue pays the expenses, and service “profit” is how it attracts and retains customers.

It’s time to stop holding service compensation hostage to profits based solely on service income received and expenses paid. No other department has the cost of doing business like service. I can sympathize: insurance, utilities, equipment, consumables and employee benefit costs have all increased over the years; however, I believe we may be penalizing service staff by keeping a thumb on their level of compensation and benefits.

Perhaps this is the reason why so many dealerships around the country are in serious need of service technicians, advisors and managers. We may have finally hit critical mass where the powersports industry has become widely known for its low pay. We are no longer attracting the numbers we used to. Passion for the sport is taking a back seat to pay for services rendered.  


Dave Koshollek teaches sales and service classes for dealers. Contact him at dakoenterprises@cs.com or editors@dealernews.com.