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Why Your Service Manager Fails at Driving Profit

Far too often Dealership Principals ask me – why can’t my Service Manager optimize shop profitability? They handle the day-to-day fine enough, keep customers happy and techs busy. Yet our bottom line never seems to improve. What gives?

I’ve been fielding this question for years but there’s a reality you may not want to hear, but need to address…

Most Service Managers don’t get adequate financial training to successfully manage a highly profitable shop. Running a large Service Department with 25+ employees pulling in millions of dollars in revenue is incredibly complex. 

But typical training programs fail to build key financial analysis skills that Managers desperately need. So even longtime Service Managers often lack the expertise to make data-driven decisions that truly drive the bottom line.

This was glaringly apparent with one dealer client. Despite overhauling shop processes and operations, their profit remained stagnant month after month. They were clearly frustrated when asking why they were still not seeing more money dropping to profit. “It doesn’t make sense…there’s nothing left to fix!” were their words.

So I asked who led implementing each growth initiative – their Service Manager or an outside consultant? They advised that the Service Manager executes everything 

since he knows how they operate. What he didn’t realize?

attracting new customers

The Issue Starts at the Top

Before feeling too sympathetic, let’s level-set on reality. Whose responsibility is the Manager’s training and ongoing development? The manufacturer? Some industry group? An outside expert?

While those entities can provide generalized support, the buck stops with leadership at the individual dealership.

So if Managers lack core capabilities expected from upper level executives, Dealership Principals and GMs must reflect inward.

Do your education, training and coaching systems set Managers up for success? Or are you inadvertently stunting their growth potential by not prioritizing financial literacy?

This self-examination proves difficult for many executives, especially entrepreneurs who built an empire trusting their gut. They expect Managers to determine profitable decisions instinctually.

But Service Departments nowadays need strategic thinkers fully capable of steering a financially thriving business.

The question becomes…how can you spark transformative growth without that revenue-driving foundation in place on day one?

Managers Leaning On Tribal Knowledge

Here’s why so many Service Managers struggle optimizing the financials…

While they gradually gain hands-on operations experience, most rely on intuition versus structured training. Things like:

  • Mimicking approaches they’ve seen at other shops
  • Sticking to what their predecessor did since “it worked for them”
  • Making gut decisions based more on department morale than financial prudence
  • Learning via trial and error instead of best practice training

Without financial literacy formally built into the typical training blueprint, Service Managers get promoted to leadership lacking core capabilities.

Again, they handle daily tasks fine and maintain shop operations. But strategic vision to pilot budgets, analyze data, address profit gaps? That skill-set remains underdeveloped.

And over time Managers become victims of tribal knowledge, continuing the cycle.

Bridging the Financial Literacy Gap

The good news is this spells a stellar growth opportunity for those dealerships willing to invest in their team.

With visionary leadership, funding and consistent training methods in place, you can rapidly transform Managers into financially astute leaders able to turn profits.

Consider building financial literacy similar to other strategic priorities:

  1. Set Clear Profitability Targets & Reporting: Set definite revenue goals and key performance indicators to guide level-set expectations and tracking. Provide regular transparent financial reporting so the numbers tell an accurate, real-time story.
  2. Supply Scalable Financial Education: Make fiscal training resources available – videos, analysis tools, online courses, etc. Cater learning approaches to different styles. Bring in experts to educate through dynamic workshops.
  3. Schedule Ongoing Small Group Coaching: Apply structured coaching to convert financial theory into practice. Review custom profit optimization tactics. Unpack analysis as a team. Brainstorm challenges. Accountability to commitments accelerates growth.
  4. Incentivize Achievements: Praise training engagement visible to peers. Recognize revenue milestones publicly. Attach bonuses towards concrete monetary goals met. Positive progress earns increasing responsibilities.

While implementing this, keep listening, monitoring data trails and chemistry. With the proper literacy plan catered to your Manager’s needs, you’ll gain confidence collaborating as leaders who can drive profitability to new heights.

Invest in Financial Literacy Now

Even accomplished Managers still need specialized training to expertly guide a financially thriving service department in today’s landscape. But instead of tolerating capability gaps, I urge you to pursue growth. 

Your loyalty to elevating your Service Manager’s professional proficiency will earn you their respect and dedication. And your entire team will thrive under empowered leadership focused squarely on your fiscal health and shared success.

Don’t just stay the course, churn through more managers, and tolerate yo-yoing revenue. Boldly invest in the incredible potential already on your team. 

My team and I partner with Dealerships to launch highly customized training programs tailored to each Manager’s knowledge gaps and learning style. We help transform Service leaders into powerhouse profit drivers.

If you want to breathe life into your bottom line, book a free discovery call today. Let’s diagnose key needs, devise targeted solutions, and secure your profit potential together.

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