Digging in the Warranty Gold Mine

As every RV Dealer recognizes, gross profits from the Service Department are a tremendous financial gain to the dealership. Many dealers charge retail customers an average of

$75.00 to $120.00 per hour labor rate and pay out technicians an hourly flag time rate of $15.00 or less. A person can’t help but to quickly recognize the importance of the service buck! In the above example, the bottom-line results in a high gross profit ratio for the Service Department. What a gold mine! I am constantly amazed at how dealers throughout the nation overlook this opportunity without even batting an eye. I have seen dealers tell customers that they simply don’t have time to perform service work on their unit. Instead, they refer the customer to another dealership or service center. My friends, with the arrival of the Internet, it doesn’t take a rocket scientist to realize that front-end profits are going to drop dramatically within the next few years while the demand for service will continue to increase substantially. Just look at the car industry; without F & I and the Service Department, most car dealerships would be bankrupt. RV dealers need to embrace this reality and take advantage of the opportunity at hand. The Service Department produces its revenue, generally speaking, from three major sources: retail customers, internal repairs, and manufacturer’s warranty repairs. In today’s issue, we will focus on manufacturer’s warranty repairs. Serving in past years   as   General   Manager   and   Vice President of a Class A manufacturing company, I want to share a reality with you. All manufacturers know that when units come off the production line, work still needs to be done to meet customer satisfaction demands. This becomes even more apparent the greater the delivery distance is between the manufacturer and the dealership, because things happen after the unit has been bouncing along the interstate for a couple of thousand miles. Cabinet doors may need adjusting, decals need attention, leaks may exists in plumbing areas, front caps and paint may get chipped, windshields may crack, front end alignments may be required, counter tops may need minor repairs, carpet or ceiling lining may have glue seeping out, and defects in appliances pop up out of nowhere. Remember, manufacturers expect warranty claims to be submitted by dealers, so why not take advantage of this opportunity? The one thing you must always remember when doing warranty repairs is to be fair with the manufacturer. Wanna learn more? Order my book today.