Automotive & HD Business Management Articles.
Bob Greenwood. November 14, 2013. ( over 3 years ago ) 527 views
The most successful shops in our industry understand that, in order to succeed in growing a profitable business especially with telematics and the ‘connected vehicle’ entering the aftermarket, they must pay attention to the relationships they develop with the clients they choose to do business with. These shops know to whom they are selling; they understand the mind-set 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 and counsel the client on the vehicle’s ‘service on need’ requirements, drawing from the manufacturer’s recommendations, and tailoring the advice to the client’s actual driving habits and expectations.
The progress of this relationship development can be measured each month. It’s tracked by calculating the average labour hours billed per invoice.
Take the total maintenance labour dollars sold for the month and divide it by your current maintenance labour retail door rate. Do the same with the diagnostic billings. 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 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.
As of June 30, 2013, the average shop, in our national survey, was billing 1.4 hours per invoice. The goal of an automotive service 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, 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 client’s do not shop around from one shop to another; the shop gets all the clients potential automotive business. These shops are not measuring their business just on ‘sales’ and their ‘bank account’, rather they are measuring their shop based on ‘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 over the next 10 years.
Make sure you slow your process down, measure your relationships, and then grow your relationships, as it is absolutely critical to your success.