I don't know about you, but I have heard many people talk from a place of fear lately. Big-picture fears include the uncertainty of political outcomes, the potential for war, and the ever-present looming recession. Closer to home (or shop) fears include car count being down, bays being open, and interest rates being high.
I have been a shop owner for over 20 years, and it seems we have this happen every four years. Many forget that the economy is cyclical, and "slower" times allow us to refine processes. You have all heard the saying, "If you have time to lean, you have time to clean!" Well, this may be that time for you! It's time to examine your progress compared to your goals. A few KPIs (key performance indicators) you should calculate are:
- Shop/Technician Productivity
- Shop/Technician Efficiency
- Hours per Repair Order (HRO)
Shop/Technician Productivity can be easily calculated by taking the number of hours physically in the building and dividing it by the number of hours flagged. The goal for this number is 100% or greater.
Shop/Technician Efficiency is the number of hours flagged divided by the number of hours spent on the cars. This is challenging to measure without a time clock system where you track the technician's time of singular focus on the vehicle, not setting a machine and walking away, actual hands-on time. I use labor profit management for this, and I know many SMSs also offer a way to track within their system. The goal for efficiency is 125% or more.
Finally, calculating Hours per Repair Order is simple. Take your total flagged hours and divide by the number of repair orders. The goal for this KPI varies by the shop. Anything under two hours per car creates a hectic pace in any shop and can leave your staff exhausted or lead to burnout.
If you are not able to meet the percentages above, here are some things to consider:
Is your shop management system programmed with the proper hours for canned jobs like fluid changes, inspections, tire rotations, or alignments? No matter how you pay your staff, you will not see a clear picture if you are not correctly flagging hours in your system. Additionally, how do you measure the performance of team members without keeping track of their productivity?
Is your car count too low? Take a look at your marketing.
How are your phones being answered? Are you saying "yes" to business or scheduling too far out causing people to go elsewhere? What are your 911 services (bring in now!)?
Are your inspections thorough enough? Inspections are how we locate current and future repair and maintenance opportunities. Oil changes are opportunities, not burdens. It is crucial to create a thorough inspection process and ensure every technician follows it every time. Make every car count!
Estimate all findings. Clients look to us as their professional guide when caring for their vehicles. We do not need to sell everything today, but we do need to inform them of the current state of their cars. Putting declined work into future recommended services will allow your customer retention management system to remind them at a future date of the services they were not able to perform today and is a silent salesman for your shop.
Are you asking for the sale? Service advisors estimate all the findings and don't ask the client for the sale. Ensuring your staff isn't judging with their wallet is critical. You never know what a vehicle owner will invest in their car, so don't guess, ask!
The presentation is an excellent opportunity for the advisor to build value by creating a maintenance plan with your client that fits within their budget today and over the next year of service. Harvest, don't hunt!
Is your staff adequately equipped? Are all shop tools and equipment properly working, or do they need maintenance or repairs? Broken tools can't make you money and can be a safety risk.
Are your shop tools located in a convenient and efficient place? Ask your technicians. If dragging a flush machine to their bay is too tricky, they are less likely to recommend that service. Like water, we mostly follow the path of least resistance.
Do you offer to send your technicians and advisors to training? Our industry is advancing at lightning speed! If you do not keep your staff trained on the new technology, it will leave you behind. Your advisors need training as well!
Have you reviewed your spending to see if you can renegotiate any of your bills? Many things we leave on autopilot can be looked at to save costs, like telephone, internet, uniforms, rags, and cleaning supplies, to name a few. Many owners begin with advertising or payroll to cut costs, but these are not the places to start. These are the two places that bring in cars and profit.
Once you have turned the scope inward and done this analysis, the next thing to look at is “time wasters” in your shop. Stay tuned for a future column on those, as those production and profit killers warrant a column all to themselves.
