Maximize Your Work Opportunity
SHOP STATS: Pape Automotive Location: Veneta, Ore. Owner: Jesy Pape Average Car Count: 115 Staff Size: 5 Shop Size: 3,600 square feet Number of Lifts/Bays: 4 Average Monthly Car Count: 115 ARO: $590 Annual Revenue: $800,000
When a customer walks into their local repair shop, they likely have a concern in mind that prompted their visit. Whether it’s a new set of brakes, a battery replacement, a check-engine light related repair or an oil change.
But nearly every car that rolls into a shop likely needs more work than the customer expects, says Bill Haas, owner of Haas Performance Consulting. So how can shop owners ensure that their team is making the most of every work opportunity? What strategies can turn an apprehensive customer into one willing to fix more than what they came into the shop to service?
Ratchet+Wrench spoke with Haas, and Jesy Pape, owner of Pape Automotive in Veneta, Ore., to determine the best ways to boost ARO while keeping a good relationship with customers.
It starts with an inspection.
The single most important aspect to ensuring every vehicle is being maximized for work is to do a thorough inspection, Haas says. Without a proper inspection, nothing else matters.
Haas sees too many inspections that are barely filled out, with technicians only writing the easy fixes and not diving into some of the more complex aspects of the vehicle. It’s often thought of as a “time-waste” by techs. That needs to be corrected, he says.
Estimate every issue.
Completing a proper inspection also includes estimating every issue found. Even if the customer only wants to service one part of the vehicle on a certain visit, an estimate should be given for everything you find. This not only lets the customer know there are other issues at hand, but it puts those issues on record to make it easier for their next visit and for the shop to recover those lost sales, Haas says. It also allows the shop to track conversion rate, which is the best function to determine if the shop is doing well at maximizing opportunity, Haas says. He finds the ideal conversion rate is likely just around 60 percent. It’s not feasible to expect or demand 100 percent, he says.
However, there are a couple things that should be considered when evaluating conversion rate. Most importantly, what work isn’t getting approved. If it’s just regular maintenance, like an oil or fluid change, that’s likely okay to defer. But shops shouldn’t ever be letting full brake jobs leave the store, Haas says.
Pape uses digital vehicle inspections (DVIs) in his shop, which has increased his average repair order by 25 percent. The system, which Pape’s had in place since the beginning of 2020, keeps his technicians accountable and creates a level of trust with the client. If the client is sent a copy of their inspection, that allows them to see the issues for themselves and makes it more likely to approve larger estimates.
Pape makes sure to note everything that is found in an inspection on an estimate. To him, it’s more than just a way to track the issues a car is having or a way to boost ARO. He wants the customer to know that the shop is competent and is finding everything wrong with the vehicle, without needing to go elsewhere.
“We don’t want to have something that isn’t found with me and is found at another shop,” he says. “Let the customer decipher what they want from there. If it doesn’t fit the budget, then we can slowly work backwards.”
Keep the customer informed.
Consistent communication is key in gaining approval on full work opportunities, Haas says.
Haas consistently sees shops doing a poor job explaining shop processes to the customer. It starts with the inspection. Too many shops don’t tell the customer they will be conducting an inspection. So when the inspection is completed and more work is found than the customer expected, they are often “blindsided,” Haas says.
For a shop, that means the service advisor needs to clearly outline the conversation they’re about to have with a customer. Explain that every car gets a full inspection and tell them why.
“If a customer is asking you, ‘why are you inspecting my car?’ It’s not to sell more work. Ultimately, yes, that’s what is in it for the shop’s bottom line, but the real answer to the customer is that it makes sure they have safe and reliable transportation.”
The reasons customers lose trust or become confused about a shop’s motives is because advisors don’t properly prepare them for what’s about to happen, Haas added.
After an inspection, first address the problem that the customer came in hoping to fix. Let them know they aren’t crazy and that the technicians found the problem that the customer was worried about. Then, reintroduce the full inspection, go through the other findings and continually emphasize that the inspection is being done to keep the vehicle safe, Haas says.
This remains the same for all customers. In a broad sense, every customer should receive much of the same treatment, Haas says. Everyone should have the inspection explained to them before and after it is conducted, and they should always be kept informed.
However, some of the messaging should change. That will help boost work opportunities, Haas says. For a new customer, inspections should be the driving force that advisors use to sell work. Point to the problems that are found and educate the customer on why it’s important to fix.
For first time customers, that also means not holding anything back from them. Haas sees too many shops not telling customers all the intricate details because they are worried the customer will say no to the entire estimate.
For returning customers, shops should shift from emphasizing inspections to emphasizing service history. Letting them know it’s been a year since they had their wheels aligned, for example. This takes some of the burden of technicians to find much of that maintenance work in the inspection, Haas says, and it builds a more personal, trust-based relationship with the customer.
“Our shop is located in a very small town. The car we service today is the same one we are standing in the grocery line with. Trust is everything,” Pape says.
Open your schedule.
It may sound counterintuitive, but one of the best ways to increase work opportunity, ARO and revenue is to service less vehicles, Haas says.
A shop only has so many work hours that they can complete. A 3-technician shop that works eight hours a day means there’s only 24 work hours available, and that’s assuming maximum productivity. The mistake Haas sees shops making is scheduling almost all of that out several days in advance.
When that happens, it is nearly impossible to maximize work opportunities on every car because they don’t have time to repair the extra things that are found on the inspection. It’s a mental hurdle that shops need to overcome, Haas says.
“You have to fix the issue with your scheduling. If I’ve got 24 hours available. I’m not going to have all hours committed to work. Maybe just 16. Now I built 8 hours of cushion into that day. It gives you the ability to sell that work and make that presentation,” Haas says.
It also saves time for emergencies that pop up from your most loyal customers and allows you to get them in quickly.
Each shop’s strategy is going to be slightly different based on the customers they see and the work they do most often. It might be six hours or eight or 12. And shop’s need to prepare for the odd, infrequent day when they don’t end up using all the extra hours they put aside.
“As you’re doing this, you’re going to find this sweet spot,” Haas says. “If that occasionally means I didn’t use all those eight hours. That’s fine. Don’t manage to outliers. And if it happens consistently, shift the amount of time you keep open.”