What is the Best Service Advisor Pay Plan?
What is the Best Service Advisor Pay Plan?
We get a lot of questions about proper pay for service advisors during our Fixed Operations classes at the NCM Institute (NCMi).
When you break it down, there are really just two key pieces of information that can help you determine the appropriate answer: budget and culture.
Budget
Whenever we give a key performance indicator or a benchmark, it's the budget. Depending on brand (domestic, importer, or luxury), the range is typically between 12-14% of labor gross profit for service advisors.
The problem? You don’t just pay your service advisors 12% of labor gross profit and call it good. That won’t necessarily drive the behavior you want out of your people.
Whether you want to pay on hours sold, sales dollars, gross profit dollars, effective labor rate, hours per RO, CSI or any other number of metrics, add up all of those wages. Does that stay within the 12 to 14% of labor gross profit budget? If so, then adjust everything in order to fit into that.
Culture
We all want to pay our people what we think will motivate them to do quality work. This can depend on your culture, your brand, and your expectations overall. Some other factors can also include the duties and responsibilities you’re having them perform. Are they also cashiering, or dispatching their work? What about Loaner Car duties or dispatching? All of these factors need to be considered when developing the right service advisor pay plan for your store.
There’s no one-size-fits-all pay plan for service advisors or any other position in the dealership. Use budget and culture to craft the ideal service advisor pay plan for your particular store, taking into consideration the value your organization places on these individuals…
What is the Value of a Service Advisor?
Consider the time and training you invest into every service advisor. A proper pay-plan paired with training and education can not only boost retention, but increase overall performance and job quality.
Service Advisor Value
Based on benchmark reporting, a typical service advisor generates roughly $49,000 per month in labor gross profit, which does not even account for the associated parts gross profit which is usually around half of the labor gross amount ($24,500). When you consider how much this contributes to the bottom line, how much time and training are you investing in your service advisors? Are you doing your best to set them up for success?
Training
How much time do you spend training? Most people would say they do daily training with their sales teams, but how much time do we invest into training service advisors? The fact is that most of all face-to-face interactions between an advisor and a customer are going to result in some type of transaction. Whether that's warranty, customer-pay, or internal. Would some sales and process training improve the quality of those transactions that are taking place in the service drive? Would this also increase customer satisfaction and influence increased retention? Of course it would.
If you have a resource in your dealership that could go back and spend some time with your advisors weekly, if not daily, on some simple sales training, this is a great place to start. Providing training opportunities leads to service advisors becoming more comfortable in selling situations and general customer interactions.
If you need some outside help with advisor training, NCMi does offer a Service Advisor Training Program, complete with two in-depth courses aligned 100% with our management training philosophy. This includes a road-to-sale proven process and industry best practice guides.
Learn more about NCMi’s Service Advisor Training Program here.