2016 Outlook: Start 2016 in the Fast Lane
As a longtime automotive repair shop owner, I’ve experienced my fair share of ups and downs in the industry. As a result, I am always a little cautious about making predictions about where the auto repair market is headed. But as we look toward 2016, I have reason to be optimistic. While new car sales are strong, plenty of consumers are continuing to hold on to their existing cars, as evidenced by the fact that the average car on the road is now 11.5 years old – a record high. Because cars are better built, drivers don’t mind holding on to them longer. In fact, the number of vehicles that are older than 12 years is expected to rise by 15% over the next five years, according to IHS Automotive.
Of course, older cars require more maintenance, which means potentially more business for you and me. Why not increase your chance of success by ensuring that your shop is well positioned to take advantage of these favorable market conditions? Start your year by examining all aspects of your business and identifying areas ripe for improvement. Here are a few strategies to consider as you formulate a plan for 2016.
Review Your Roster
The start of the year is a great time to evaluate your team and determine whether you have the best talent helping you run your business. If you don’t have a system established to evaluate performance, the first step is to create a set of metrics to help you judge an employee’s work. With our managers and service writers, we use the the 3rd month rule of thumb. If a service writer or manager fails to meet their sales goals after three months, we consider making a change. If this is a consistent issue in your shop, it may signal that your training is falling short or that you need to change the requirements for the position so that it attracts a certain skill set, job history or personality trait that would result in a better, more productive employee.
When it comes to technicians, skills and efficiency are the key factors. You want techs who can easily gauge the problem and also have the knowledge to look for other issues that may offer opportunities for upselling. They should also be willing to set aside a big repair job to attend to an oil change because they understand that this will improve customer flow and allow your front desk to say yes to more business. Lastly, it is always easier to hire good technicians in the slow season, so always be looking for good talent at this time of the year.
Expand Your Marketing Efforts
Are you maximizing your market potential? When you opened, you may have flooded the market with messages because you were eager to build a customer base. Over time, it’s easy to get lazy and fail to take the time to connect with potential customers surrounding your shop. You may also start to take your existing customers for granted and just assume that your shop is the first one they’ll think of when a repair or maintenance service becomes necessary. But while you’re resting on your laurels, your competitors are waiting in the wings, marketing directly to your client base. To prevent a loss of market share, I suggest the following approach:
- Employ direct mail. I use a targeted postcard with a compelling message – typically a competitively-priced package of oil changes - targeted to the high income households closest to my shops. This strategy allows me to reach new customers and simply make them aware of my services. If I remain consistent, eventually my shop will come to mind when the need arises. This helps me stay on their radar and build continued goodwill.
- E-mail blasts. Send an email to promote a seasonal offer (an air conditioning check or winterizing package, for example); special event or even share car safety or maintenance tips. This can be a good way to supplement your other marketing efforts and stay front of mind.
- Maximize your website. Having an easy to navigate, mobile-friendly website is essential, particularly if you want to reach Millennial customers who tend to browse for services on their mobile devices at a higher rate than their older counterparts. You want a site that clearly displays your store hours, location and contact information to ensure easy access for potential customers.
- Utilize Search Engine Optimization and Pay Per Click services. Your goal should be to dominate your local market area. If you specialize in Toyota repair in your area, the first name that comes up when a person searches for Toyota auto repair should be yours.
- Monitor reviews. By now, it should be clear that Yelp and other consumer review sites are here to stay. Make the most of those sites by checking in frequently and responding to negative reviews. Offer to remedy any problems that a customer may have encountered. Encourage customers who have a good experience to leave a positive review – either on your site or another established review channel. Remember that Millennials, who will soon make up the majority of your customer base, consider reviews carefully. According to Adweek, 93 percent of Millennials usually read a review before making a purchase.
In addition, you need to be able to track the success of each marketing tactic you use. I use local call tracking numbers on every marketing piece I distribute, so I can measure the number of calls generated by each specific marketing channel. These calls are also recorded, allowing me to use them later for training purposes. If you cannot track the results of the marketing tactic, then you cannot determine if it is achieving the desired results.
Evaluate your Vendors
Are you overpaying for services or parts? Take the time review your relationships to ensure that you’re getting the best price. For parts, call around to see if the free market approach will yield additional savings. You’ll be shocked by how some vendors become more willing to negotiate if they know you’re shopping around. The same holds true for uniforms, credit card processing fees, insurance and even utilities.
Another area that could save you thousands of dollars is your inventory. Our stores keep a very low inventory of select items that we use daily for oil changes and basic common services. To avoid theft and ensure you do not “misplace” these items, we recommend that you don’t overstock your store. Watch your vendors like a hawk and try to move items to consignment where possible. Keep good records of the few items you do keep around the shop and review inventory logs on a regular basis. See a sample vendor audit checklist at the Mudlick Mail Automotive Learning Center website.
Write a Budget
Writing a budget forces you to take a hard look at your expenditures and evaluate their importance to your overall operation. Having a budget will also make it more difficult to spend freely without understanding how that expense might impact other parts of your business. If you’re unsure about where to start, consider using last year’s numbers to establish costs, then make adjustments based on whether you expect business to trend up or down. You may also need to make modifications based on inflation. Remember to inspect and track your costs daily. Evaluating your profit and loss sheets monthly will also help you stay on track.
While you might be tempted at times to abandon your budget, stick with your plan even in tough times. Hold yourself accountable. Review a sample budget worksheet on the Mudlick Mail Automotive Learning Center website.
As we move into 2016, it is important that we stay focused on these key elements daily so that we can capitalize on the growth the auto repair industry is expected to experience. If you assemble a high-quality staff, maintain your marketing, stay on top of your budget and push vendors to provide the best deal, you’ll be poised for success – not only in 2016, but for many years to come.