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Finding a profit boost

Learn new ways to get immediate increases to sales and profits
Monday, April 18, 2016 - 07:00
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All of us have been in a position where sales or profits need an immediate boost, and we look for anything that we might be missing in our processes to get back on track.

It doesn’t matter whether you have been doing maintenance and repairs for 40 years or four years; it happens to all shop owners at one point in their lives. Some shop owners work on it and are motivated by being the best shop in their market by focusing on their processes daily. Some owners work in their business and only get to look at their business processes once a month. If you are looking for a quick fix that you might have done in your past, which you have stopped doing for a host of reasons, consider this article your wake-up call! Let’s listen to a former shop owner from Arizona and current ATI coach, Kim Hickey, explain how she increases sales and profits immediately for her clients.

It goes without saying that you should be auditing your repair orders daily and then having meetings to discuss any problems, missing items, etc. Most shop owners perform their audits at the end of the day or first thing the next morning. The only problem with that is by the time you perform the audits, the vehicle is already gone.

The 100:10 Rule
One of the things you can do throughout the day is pay attention to the 100:10 rule. Surveys done by both for-profit and not-for-profit automotive organizations are conducted annually to determine how much in repairs or maintenance is needed on the average vehicle. Some of the surveys have been carried out by pulling over random vehicles on the road and performing a complete inspection. It doesn’t seem to matter who performs the studies and surveys, the results are relatively the same. The average vehicle needs about $100 worth of repairs or maintenance for every 10,000 miles the vehicle has on it. Studies and surveys have also shown that the average vehicle in the U.S. has 120,000 miles on it. What that means is that the average vehicle mileage for your customers is 120,000 and the vehicle should need about $1,200 worth of repairs or maintenance.

"What do you think is more important to shop owners: knowledge or taking action? Many of us know what to do; we simply fail to consistently take action!"

So now we have the rule of thumb you should be using to audit your repair orders throughout the day and on the fly. So what do we do with that information? For this example, let’s pretend that your customer brought in a vehicle with 80,000 miles on it. After your service advisor completes the intake process and the walk-around with your customer, your service advisor will have gotten the mileage. Once your advisor gets the complete and thorough courtesy check back from your technician and types up the estimate, it should come in at roughly $100 worth of repairs/maintenance needed for every 10,000 miles on the vehicle. This is, of course, assuming the following:

  • Your technician performed a complete and thorough courtesy check.
  • The history was reviewed and any declined work is included in the estimate.
  • The history was reviewed and any maintenance that was due but not yet performed is included in the estimate.
  • Your advisor — being the gatekeeper — notices if the technician didn’t note any items that should be due for the current mileage and adds the items to the estimate (after conferring with the tech as to why the items were not mentioned).
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