Similar to a Farmers Insurance tagline, DealerPRO RV founder and CEO Don Reed knows a thing or two about RV sales because he’s seen a thing or two in RV sales.
Before starting DealerPRO, Reed was an award-winning dealer for 25 years. Now, his company visits dealerships nationwide to present strategies and processes that Reed says can help dealerships run more efficiently and more profitably.
His presentation at the RVDA Convention included tips he said dealers should take back to their dealerships and implement immediately.
Reed said, “None of the topics are so complex that you cannot go back to your dealership and start implementing next week.”
Reed outlined eight factors wholly controlled by the dealership owner. He said the factors could create nearly instant net profit increases.
The eight factors were working days, calendar utilization, available hours, number of technicians, technician productivity, effective labor rate, gross profit margins and controlling expenses.
Reed said scheduling plays a major role in dealership profitability. Reed said that having more technicians working on a rotating four-day schedule would enable the dealership to be open for more days during the year.
“How can we implement more working days?” Reed asked the audience. “Well, No. 1, we can go to a four-day work week at 10 hours per day.”
He said technicians are more likely to volunteer to work holidays and weekends if working those days earns them more time off.
A member of Reed’s team outlined a rotating schedule where each employee would get five consecutive days off every three weeks.
“I am telling you, you put that place, it is hard to take it out,” Reed said, “because the employees love it. They do not ever want to go back to working eight-hour days. So, you’ve got to think outside the box, folks.”
Reed said implementing that schedule would likely require dealerships to shift their available hours and employ more technicians. He said more technicians means more workers available to cover vacations and sick days.
Reed said technicians’ productivity can be measured by the hours they worked versus the hours they billed.
A technician working 40 hours a week and billing 30 hours a week is 75% efficient. He said technician productivity is the most important factor.
“If you get a handle on this, you are getting a big pay raise,” he said. “Your technicians are getting a big pay raise.”
Reed listed three ways to increase productivity: provide performance-based pay plans, measure productivity daily and fire technicians who do not meet performance standards.
Reed also discussed gross profit margins and controlling expenses.
“We want to see a 75% margin on labor and no less than a 35% margin on parts,” Reed said. “We have other expenses that we can control, like shop supplies. You should be charging out shop supplies on your repair orders, and it should be about 7% of labor.”
Reed said foundational day-to-day changes can seem like a tall task. He said dealers who want something they have never had must try things they have never done.
