Increase ARO, sales by improving courtesy checks
In 2020, many shop owners found themselves engineering methods they had never thought of to combat a loss of cars and sales. As a result, many of them rebounded, some overachieved, and others not so much. Whether or not your year ended at the level of success you had hoped for, it's not too late to create positive change in top-line sales.
Positive change in top-line sales often requires a positive change in thinking. But unfortunately, there are times when people accept defeat and mistake negative feelings for fact, such as it feels like there's a slowdown in cars coming in the door; the phones feel like they're not ringing as much as they used to; and the invoice stack feels lighter at the end of the day now. The problem with all these feelings is that you can't track them, nor are they something you can measure. The measurement that you should be tracking, which impacts sales directly, is total estimated sales dollars.
You can evaluate some aspects of business operation quickly. It is easy to count the number of invoices at the end of the day to see the actual car count. It is easy to have your phone-tracking software count incoming calls and compare it to how many appointments you're booking. What is not easy to track are all the items that impact the single line of total estimated sales dollars. What percent of vehicles coming in received a proper courtesy check? What percent of technician recommendations did the service advisor post to the work order? What percent of estimated dollars presented to the customer was sold? Were declined items prioritized properly and then reviewed when making a future appointment?
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Let's break down the importance of tracking the total estimated sales dollars. Without knowing how many dollars your customer could have purchased, there's no use looking at average repair order (ARO). Whether you feel proud or defeated by where your ARO stands, the estimated sales dollars will be your telltale sign as to where the breakdown is.
Inspect courtesy checks
The first item to look at is how effective courtesy checks are. Step one is an invoice audit each morning of the previous day's work orders. Look for COMPLETE courtesy checks with effective written notes and the established guideline for clear pictures of both good and bad items (if performing digital vehicle inspections). Next, implement a process for the service advisor to review the inspection results for missed areas, incomplete or unclear notes, or for a reason to put a second set of eyes on the vehicle. You never know what can be found by an advisor skimming the car looking at things the technician may have missed. This process isn't based on a lack of trust but rather a decision to improve inspection results.
Estimate findings
After the advisor questions the technician about the inspection findings, the next step is to create an estimate on all the items found. Correctly use the appropriate parts pricing matrix based on the part source to ensure a great parts margin. Don't shop for parts solely for the lowest price. Go with a vendor whose warranty is consistent with your own and strengthen your relationship with them through your dedication. Then, when there's a part failure down the road, they will be inclined to help you quickly, and process warranty claims without making excuses. Having a strong relationship with a specific supplier also makes it easier to approach them with non-parts-related transactions like funding for your company's outings, gifts, and other things. Make sure each job heading has an appropriate and correct labor time at the current labor rate to ensure proper labor billing. If the repair at hand involves a high-level skill such as a diagnostic, make sure the higher matrixed labor rate stays in effect throughout the estimate to ensure a profitable labor margin.
Prioritize estimate in order of importance
Once built, the advisor should prioritize the estimate based on the customer's initial need, safety, what can be postponed (if the customer decides to decline some of the work), and last, maintenance. We all know vehicles need fewer mechanical repairs these days than in the past, and the way to supplement your revenue is to increase maintenance sales. Your invoicing system or other software should have an exact copy of maintenance schedules provided directly by vehicle manufacturers. Following these schedules without engineering your own prevents that all-too-often question from your customer, "Why is your recommendation different from my owner's manual?" It's a well-known fact that miles driven by Americans dropped 15% in 2020 compared to 2019 due to COVID-19, so your focus should have already shifted to selling maintenance by time and not by mileage. Use Carfax reporting, your prior repair records, and the proper conversation with the customer to determine where they stand on up-to-date maintenance.
Prepare for your sales conversation
These steps put the advisor in a great, well-prepared position to approach the customer and have an effective sales-oriented conversation. Prior sales training to tackle hurdles the advisor may face, such as getting around the "NOs," makes for better preparation. Once the conversation is complete and the customer decides what to move forward with, properly approve and decline services within the invoicing system. Make sure you don't delete recommended services off the ticket. Keeping declined services on the ticket ensures the invoice system will track the declined job descriptions, the associated dollar amounts of those jobs, and, more importantly, what services you can use for future marketing. Depending on how sales have been going, you can have technicians professionally question the advisor why the customer declined certain items to set up a checks-and-balances scenario like the advisor's review of the technician's inspection results.
Help your technicians continually improve
Before this exercise, if you had a total estimated sales dollar value close to your ARO week after week, that doesn't mean your sales staff is doing spectacular. It most likely means that your inspections have holes in them, which you must address with your shop staff. Technicians will lean towards certain repairs when performing an inspection. For example, Tech A consistently recommends fluid leaks at intake manifolds, belts, and flushes, while Tech B recommends batteries, leaky rear shocks, and headlight restorations. To make them better technicians and well-rounded when it comes to inspections, the process of a service advisor looking over the car has value. You can also have each technician look at the vehicle behind the other. In a short period, the technicians should grow from their typical list of suggested repairs to looking at the vehicle in its entirety.
Next, through the daily invoice audit, confirm if all the technician's recommendations made it to the estimate. If they didn't, there's a disconnect, mostly likely because the service advisor filters what he posts to an invoice. You must have a conversation with the advisor to determine if there is a trust factor with a specific technician, if the value behind a suggested repair isn't considered "worth it" by the advisor, or if there's a case of pure laziness. In any of these scenarios, the breakdown is costing the shop money, which affects the advisor's and technician's pay depending on the compensation plan in place. When you overcome why the estimate was incomplete, associate the missing sales with lost revenue everyone will feel.
Evaluate estimated sales
Once inspection results improve, and the advisor performs at a high level, the next thing to look for is where your estimated sales land. As a rule of thumb, if all the processes discussed here are in place, estimated sales should be double your weekly total sales. A large gap in what isn't sold sets up future business that takes little effort to put into place. If you are always batting 1000, that can't and won't be a long-term solution for sales dollars coming in the door. You'll have year-over-year hills and valleys when it comes to sales dollars resulting in an inability to forecast sales improvement. This can be especially bad when you consider selling the business, and three years or more of revenue do not show consistent sales. It will be tough to explain the fluctuations to a potential buyer.
Keep customers coming back
The one proven marketing tactic to keep customers coming back for declined sales is making exit appointments. Nothing instills the thought of a necessary future repair more than a final conversation at invoice closing of what's needed and then creating a future appointment. The trick is to not ask for the appointment but state it as fact. "With those bad brakes we found sitting currently at 3mm, let's make an appointment for three weeks from now. How does Thursday the 17th sound?" This will cause a few different reactions from the customer, but your leading statement controls the conversation's direction. The customer might outright refuse to make the appointment, they might check their schedule to make sure that date works, or they'll say ok to appease you—and you still have a future date, name, and phone number to follow up. Exit appointments are a better marketing practice than referencing a stack of past invoices and calling on declined services. The problem doing it that way is you have no idea of the customer's commitment to bring the vehicle back to you. Roleplay with the sales team to develop successful ways to phrase the future appointment.
Finally, you must confirm appointments 24-48 hours before their scheduled time. When you confirm an appointment, you ween out customers who accepted your future appointment out of compliance versus those who have a vested interest in the future repair. In addition, when the schedule is accurate, your money-hungry technicians who look at booked appointments for the day won't be let down by no-shows.
Now that you maximized the courtesy check process, have "A" game service advisors, built a profit-based estimate, and had a productive conversation with the customer, what can you tackle next? How's that ARO looking?
Increase your sales and margins by starting with an effective courtesy check process. Use ATI's Courtesy Check Evaluation Checklist to track and evaluate your process. It will help you find areas for improvement and maximize every sales opportunity. For a limited time, get your copy of the checklist at www.ationlinetraining.com/2021-08.
