The most successful shops in our industry understand that to successfully grow a profitable business, they must closely measure the relationships of those they choose to do business with.
Notice the phrase “choose to do business with?”
Not everyone walking through the door qualifies as a potential client.
Successful shops highlight their underlying value proposition, so their clients truly understand the bigger picture, rather than focusing only on the cost of doing business.
These shops know who they are selling to, and because of that, they understand the importance of earning the clients’ trust. Capturing trust can lead to securing a future business transaction down the road.
These shops slow the process down dramatically and counsel the client on the vehicle’s maintenance requirements. They draw from the manufacturer’s interval recommendations, and tailor their advice to the client’s expectations for safety, reliability and efficiency based on “how” they use their vehicle. This value proposition requires in-depth conversations with each client to truly understand their unique situation.
The key to this process is for shops to recognize their front counter people are no longer service advisors but, rather, service consultants.
Understanding this transition is critical for our industry, as it’s important to remember that clients are never sold to; they are educated and counselled by service consultants to determine the best course of action for their particular needs.
Acknowledging this new terminology regarding the role of the service advisor, transitioning to a strategy that is more aligned with a consulting role, is a prime example of how the aftermarket itself is in a transitional phase.
Measuring the progress of your client relationships is something that can be tracked each month using a simple calculation.
Rather than measuring the average sales per invoice, figure out your shop’s productivity measurement by calculating the average labour hours billed per invoice.
To calculate average billed hours per RO, take the total labour dollars sold for the month and divide it by your current maintenance labour retail door rate. This will give you the total labour hours billed for that month.
Next, subtract the opening invoice number on the first day of the month, from the closing invoice number on the last day of the month. This gives you the total number of invoices/ROs written for the month. Take the total labour hours billed, and divide it by the number of invoices written. This will give you the average labour hours billed per invoice.
Unfortunately, the average shop in Canada is billing between 1.4 to 1.7 hours per invoice. The goal of an automotive maintenance and repair shop should be to average a minimum of 2.5 hours per invoice.
Given the amount of unperformed maintenance in Canada, it is the rare client vehicle that does not need additional work done. If you are not finding that work and suggesting it to the client, that work – justified by the vehicle manufacturer’s own service recommendations – will not be done. In other words, you will be releasing the vehicle back to the client in a less-than optimal condition.
When a shop is consistently averaging 2.5 hours or more per invoice for basic consumer vehicles, we find that they are getting all the maintenance and repair business from the client, and they have earned, and are maintaining, the trust of their client base.
Their clients do not shop around from one shop to another; the shop gets the full scope of the client’s potential vehicle business. These shops are not measuring their business on sales and car count alone.
Instead, they are measuring their shop based on the overall productivity, value, and quality that they offer every client. They ensure that they charge for their services at a fair price, not simply the cheapest price. These are the shops that will remain profitable as the aftermarket continues to evolve.
At the end of the day, remember to slow your processes down, measure your relationships, and continue to invest in their growth, as it is absolutely critical to your success.
Bob Greenwood is an Accredited Master Automotive Manager (AMAM) who offers personal business coaching and ongoing management training for aftermarket shops, focusing on building net income. He can be reached at 1-800-267-5497 or email@example.com.
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