Retail Observer

RETAILOBSERVER.COM SEPTEMBER 2023 56 "The price of inaction is far greater than the cost of making a mistake." – Meister Eckhart T here are three key elements that are critical to a profitable service operation: service rates, skilled technicians, and COD- to-warranty ratio. While I stress these areas in my presentations to self-servicing BrandSource members, I often wonder how many dealers actually act on them. Changes in your business aren't going to happen by themselves. Owners/managers must move beyond the fear of making business changes. I hope that sharing my knowledge and experience in the service sector will give you the confidence to change your way of doing business. Let's review those three topics: • Service Rates Although the rate of inflation is coming down, operating costs for every business in America are still higher than they were last year, and if you haven't raised your service rates since then, you will lose even more money this year than last. With today's volatile economy, dealers must reevaluate and adjust their service rates as frequently as they do their retail pricing for appliances on the floor. To remain profitable, dealers must review their service department's cost of doing business (CODB) every six months and set service rates accordingly. BrandSource helps its members by providing an exclusive CODB calculator online. If you need help calculating your service rates, feel free to contact me at paul.m.macdonald@brandsource.com and I will be happy to guide you. • Hiring Technicians Finding technicians during this historically low unemployment time is as challenging as setting profitable service rates. Consequently employers must show applicants an inviting workplace to win them over. In addition to the standard Indeed posting, employers should consider local community and industry job boards, employee referrals, and adding a link to their website career page in their email signatures. Last but far from least, employers should take advantage of their social media feeds on Facebook, Instagram, and LinkedIn. The point is, don't stop at just a job posting. In today's market you must sell candidates on the benefits of working for you. Pictures, videos, and employee testimonials are powerful ways to tell your story and improve your search engine results significantly. Visit Cate Bloom's impressive career page for Chicago's AAA-Appliance Service Center at appliance-aaa.com/jobs. Now, that's outside-the- box thinking! • COD to Warranty Ratio The pandemic's lingering effects will take years to correct. The demand for appliances and service caused much chaos during Covid, with overwhelmed dealers limiting repairs to warranty service. Running a service operation at 100% warranty will drain all the profits from the best service operations. The corrective action is to sustain the warranty business while growing the COD business, although returning to a healthy 30:70 warranty-to-COD ratio will take time. Once achieved, profits will return. To get there, dealers must allocate funds to service in their marketing budgets. It may sound cliché, but you must spend money to make money. Delegate this activity and hold that person accountable for designing and executing your service marketing plan for this year. I guarantee you this: If you do nothing, there will be no change in your service business and you'll continue to lose money on repairs. Paul MacDonald Appliance Service Trends RO Paul MacDonald is senior lead of ServiceSource, the appliance service arm of the AVB BrandSource buying organization for independent dealers. Paul ran his own 38-tech service business and is a past president of the UASA. He currently operates The Expert Service Program. You can reach Paul at paul.m.macdonald@brandsource.com or at (647) 500-7785. THE PRICE OF INACTION Do nothing and face the consequences

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