The most successful shops in our industry understand that in order to succeed in growing a profitable business, they must pay attention to the relationships they develop with the clients they choose to do business with. Notice the phrase “choose to do business with?” These shops are focused on the value proposition they want to bring to their client base and have defined the client base they want to attract and serve in growing their business.
Not everyone walking through their door qualifies as a potential client, usually because that “customer” perceives them too expensive rather than looking for the quality and value they get for what is paid in dealing with this shop. These shops know to whom they are selling; they understand the importance of earning the client’s trust, which leads to capturing the client’s business for life, not just for today. These shops slow the process down dramatically and council the client on the vehicle’s maintenance requirements, drawing from the manufacturer’s interval recommendations and tailoring their advice to the client’s expectations with their vehicle for safety, reliability and efficiency based on “how” they use their vehicle. This value proposition obviously requires in-depth conversations with each client to truly understand the client’s situation.
The key to this process is to recognize that their front counter people are no longer service advisors, but rather service consultants. This is a critical mind-set change for our industry, as they do not “sell” the client; they listen and then educate and counsel the client as to what is in the client’s best interest. This service consultant’s example is the old aftermarket in transition to the new aftermarket.
The progress of this relationship development can actually be measured each month. It is tracked by not measuring average sales per invoice but by calculating the average labor hours billed per invoice, which is a productivity measurement.
To calculate average billed hours per RO, take the total labor dollars sold for the month and divide it by your current maintenance labor retail door rate. If you have multiple labor rates (which you should) then calculate the total hours for each category then add together to give you the total labor 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 labor hours billed and divide it by the number of invoices written. This will give you the average labor hours billed per invoice.
Unfortunately, the average shop in North America is billing between 1.4 to 1.7 hours per invoice. The goal of an automotive maintenance/repair shop should be to average a minimum of 2.5 hours per invoice. 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/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 all the client’s potential vehicle business. These shops are not measuring their business just on sales and car count, which is an “activity” measurement. Rather, they are measuring their shop based on their productivity, quality and the value they bring to each individual client, and they ensure they charge their services out at the right price, not the cheapest price. These are the shops that will remain, grow and be financially successful in this new aftermarket and its future.
Make sure you slow your process down, measure your relationships and then grow your relationships, as it is absolutely critical to your success. Remember, if you can’t measure it, you can’t manage it.
