I have had several conversations with customers about how they struggle to reach their “number.” In these discussions, they showed how much they missed their monthly goal and expressed that the numbers on the bottom line were unexpected because they were busy.
It is very easy to stay busy and still not hit your target due to the many things that go into a monthly sales goal. When I work with a shop, I like to look at several pieces of the puzzle, beginning with Sales per Repair Order (RO). I believe if you put your focus on Sales per RO rather than the “number,” you will see the difference between being busy and reaching your goal.
The Sales per RO numbers I review are: Total Sales per RO, Labor Sales per RO, Parts Sales per RO, Materials Sales per RO, Body Labor per RO and Paint Hours per RO. These six puzzle pieces all play a part in reaching the monthly sales goal. Focusing on these individually will help you identify how you missed your target.
Reviewing those six pieces of the puzzle over the previous 90 to 180 days will help you see where you might have fallen short. If you notice fluctuations or a steady decline in one piece, you will need to drill down into the other five pieces of the puzzle to see why. Here are a few examples of how to review these puzzle pieces:
Labor Sales per RO
Labor Sales per RO is the first place I like to look. As a shop gets busy, it is easy to work too quickly and miss operations when developing a repair plan. Even a tenth or two per repair order with an average of 100 repairs per month adds up very quickly. If I see a decrease in labor hours, I look to see if it is in body or paint or a combination of both. Reviewing a random selection of 10 repair orders will give you some insight into missed operations.
Parts Sales per RO
In the world of $800 headlights and $1,000 bumpers, Parts Sales per RO could be higher than Labor Sales per RO. However, if there is a big disparity, I review the operations associated with those replaced parts. Many times when checking the non-included operations of a replaced part, I find the appraiser missed aligning the headlight, refinishing the backside of a panel, or repairing/refinishing adjacent panels. Using OEM repair procedures, estimating database procedure pages and consulting the SCRS Guide for Complete Repair Planning helps eliminate missed operations.
Material Sales per RO
When I see a decrease in Material Sales per RO, I look at Paint Hours per RO to see if the average dropped. This is a hint that refinish operations were missed, causing the reduced sale of materials. This is a critical check as materials might have been used even though there is not a documented procedure on the repair order. The second place I check is third-party payer material thresholds and clear coat caps. These thresholds can have a severe impact on the monthly sales goal if they are not caught. Overcoming them by billing for the actual paint materials consumed in the repair is the best option to maintain profitability.
Understanding the different puzzle pieces of a sales goal and realizing how they can individually affect reaching the “number” is the first step in improving your overall sales. Missed operations are the biggest culprit in completing the sales goal puzzle, and the most effective way to reach your sales goal is to improve your sales per RO, not more ROs. Using the tips I shared will give you an edge in meeting your sales goals and allow you to develop some habits to inspect what you expect to see on your bottom line.
