Customer Pay Repair Orders (CP ROs) are the lifeblood of your dealership’s service department. It’s where customer trust, operational efficiency, and profitability meet. From routine oil changes to major engine repairs, Customer ROs capture every customer-funded service, making them a vital revenue source and an opportunity to deliver value to your customers.
In this article, we’ll explain what makes Customer Pay ROs unique amongst the other automotive ROs. We'll look at how they get created, how they drive dealership revenue, and why every department—from service advisors to accounting—has a stake in their success.
In dealership settings, a Customer Pay RO might go by other names, including:
- Customer Pay RO
- CP RO
The Basics Behind a Customer Pay RO
A Customer Pay RO is the official record of any repair, diagnostic, or maintenance service a customer pays for. Unlike warranty or internal ROs, writing Customer Pay service is entirely customer-funded. Services covered include a spectrum of things like:
Routine maintenance: Oil changes, tire rotations, brake checks.
Diagnostics: Engine light troubleshooting, strange noises, or performance issues.
Upgrades or elective repairs: New tires, accessory installations, or enhancements.
What makes these particular ROs critical?
It isn’t just their role in daily operations—it’s that these jobs deliver immediate revenue while fostering long-term customer loyalty. This category of repairs makes up the majority of dealership service revenue.
What's the Customer Repair Order (RO) Lifecycle?
The lifecycle of a Customer Pay RO goes something like this:
1. Customer Request: The customer identifies their service need, such as maintenance or repair.
2. Vehicle Check-In: Service Advisors gather basic vehicle details and inspect for additional issues.
3. Service Advisor Documentation: Customer concerns are logged, and a preliminary cost estimate is provided.
4. Diagnosis (If Needed): Technicians diagnose complex issues and provide detailed input.
5. Customer Approval: The customer approves the proposed services and costs, finalizing the RO.
6. RO Assignment: Technicians and the Parts Department receive the approved RO for execution.
7. Quality Assurance: Completed work is inspected to ensure quality and accuracy.
8. Billing and Checkout: Accounting finalizes charges, and the customer reviews and pays to close the RO.
Who Pays for Customer ROs?
The customer. It’s in the name. They cover:
1. Labor: Paying for the technician’s expertise.
2. Parts: Replacement items and consumables.
3. Shop Fees: Think environmental or waste disposal charges.
Transparency is key here—no surprises when the invoice arrives. A Service History Type Report from your DMS ensures customers see the work done in the context of their vehicle’s past services.
How Customer Pay ROs Contribute to Dealership Financials
Customer Repair Orders are a key driver of dealership profitability. Here's how they contribute to financial success:
High Margins on Labor and Parts
- Labor Profitability: Labor charges typically carry high profit margins, particularly for skilled diagnostic or repair work. Efficient technicians can complete tasks quickly, increasing profitability.
- Parts Markup: Dealerships mark up parts used in Customer Pay ROs, adding another significant revenue stream. Effective inventory management ensures parts are readily available, enhancing customer satisfaction.
Volume and Upselling Opportunities
- Routine Service Revenue: Regular maintenance jobs provide consistent, predictable income for the dealership.
- Upselling Potential: During inspections or diagnostics, service advisors often identify additional repair or maintenance needs. These upselling opportunities can significantly boost RO value and customer satisfaction.
Key Metrics to Monitor for Customer ROs
High-performing dealerships monitor metrics like:
- Average RO Value: A higher average RO value indicates effective upselling and customer engagement.
- Customer Retention Rate: Strong service experiences lead to repeat business, boosting long-term revenue.
- Labor Utilization Rate: Maximizing technician efficiency ensures the dealership earns more from its labor pool.
Customer RO, commissions, who cares?!
Closing out a Customer Pay RO is a team effort. Let's imagine cases where departments earn their share of the pie (and the recipe for it!)
Meet the The Players of Customer RO Commissions
Those who earn on a Customer Pay RO:
Service Advisors
Compensation: Often commission-based, tied to RO totals.
Technicians
Compensation: Paid per flagged hour. Efficiency is king—finish ahead of schedule, and the clock still pays full.
Parts Department
Compensation: Earns margins on parts sold. Coordinating parts availability keeps everything running smoothly.
Accounting & Cashiers
Compensation: None. But they don’t just process payments; they close the loop, reconciling ROs against payments.
Why Do Customer ROs Matter to You and Your Dealership?
Customer Pay work reflects the trust customers have in a dealership, as they bring their vehicles in for service and pay for the work. Building strong relationships with customers in the service department leads to repeat business and steady revenue.
Dealerships are struggling to compete with independent shops in this area. That's why most service advisor PayPlans focus on customer-paid repairs.
You're paid based on what matters most to your dealership. If we can help you understand what drives their priorities, you could see an increase in your earnings.
Customer ROs Are Everyone’s Business.
At the end of the day, a Customer Pay RO isn’t just a transaction. It’s this revolving touchpoint executing service, driving revenue, getting paid, and building relationships. Let us hope yours is not paper.
When you align your departments and explore your CP ROs for areas of improvement, you'll uncover a wealth of opportunities for growth for you and your team.
Stay tuned for examples of CP ROs in Pay Plans!
