Fixed Ops Magazine 2024 Vol 21-6 - 33

ingly small difference, like $4 per hour on one repair
order, can translate into tens of thousands over time.
Advisors often argue they need pricing flexibility. In
reality, they don't. Fleet customers and extended warranties
should have assigned labor types, and discounts
should be managed as such - not as price changes.
Labor types and discounts can be easily monitored
and controlled.
define ELR clearly, let alone explain how to influence
it positively. When asked about ELR, managers often
attribute it to tech rates, advisor sales skills, or shop
expenses - none of which directly impact ELR.
The first step is understanding how ELR is calculated:
labor sales divided by tech hours paid. This can be broken
down by customer pay, warranty, and internal work.
To influence ELR, you must change either the labor dollars
sold per hour or the tech hours paid per hour - a
delicate topic when it comes to technicians. However,
this shouldn't be the first approach in most dealerships.
Start by assessing if repair orders are billed according
to management policy. At 60-65% of dealerships,
they aren't. Often, service advisors control ELR. A
quick test? Mystery shop your store. Are prices consistent
across employees? Run simple reports to check
your work mix. If your actual door rate isn't charged
as often as your repair labor operations are used, your
ELR is being manipulated. Advisors typically aren't to
blame - they likely haven't received clear management
guidelines.
REGAINING CONTROL OF ELR
People naturally choose the path of least resistance.
If price manipulation is allowed once, it's likely to continue.
In an average dealership, only two variables
should affect ELR: management's pricing model and
the work mix. The more repairs billed at the door rate,
the higher your ELR. By eliminating the variability introduced
by advisor-driven pricing adjustments, management
regains control over ELR and pricing. A seemNOVEMBER
DECEMBER 2024 || FIXED OPS MAGAZINE
Implementing a comprehensive menu that covers 90%
of maintenance, combined with a policy that non-menu
items are billed at door rate x tech time, can resolve
many ELR issues. Even managers who understand ELR
and profitability and can program the DMS often lack
the time to focus on it fully. Service Managers are busy
troubleshooting tech issues, resolving disputes, running
reports, and handling customer concerns, leaving
little bandwidth for fine-tuning ELR structure.
By optimizing ELR, Service Departments can significantly
increase profitability without sacrificing customer
satisfaction. To succeed, service departments need the
right support, at the right time - now.
Joseph Minns is the
Head
of
Operations
at
FixedOps
FrogData
and is responsible
for the operations of
the FixedOps Platform,
Consulting, Warranty
Administration Services
and Performance Consulting.
He has 34 years
direct experience in Fixed Operations, with responsibilities
that have spanned from a single point dealer,
to over 800 employees in a single dealer group of 27
dealerships and 31 OEMs. Joseph holds multiple OEM
Master certifications in Service Management, Parts
Management, Body Shop Management, Commercial
Vehicle Management, and is a NADA Service Graduate.
In his free time, he is a leader in the Boy Scouts, a
lieutenant in the fire service, and certified underwater
rescue diver.
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Fixed Ops Magazine 2024 Vol 21-6

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