Dad said, “No, we are at capacity.”
“But it’s so quiet, and there are very few cars out front.”
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Dad showed him that, indeed, the shop was full of people with the rock and roll cranked up, repairing cars. Comparisons of gross sales, sales per tech and efficiency drew me into the conversation and resulted in Dad’s friend saying, “It sure is calm around here.”
If you read most of the management articles out there, you would believe that car count is king, or that if you are busy you are utilizing your staff well. There are a few considerations that I would like to add to the toolbox because being busy doesn’t mean you are efficient or making any money.
Hours per repair order is the most powerful KPI tonic to cure a habit for excessive car count on the shelf. I was reading an article about a shop owner who is a numbers junkie. He was rightly proud of his technician efficiency and car count, but when I did some quick math, it was clear that he needed 22 cars per day, 5 days a week, 20 days a month, 12 months a year — meaning 5,280 cars annually! When I took the 48 hours he can sell per day with 5 techs, I came up with an average hours per repair order of 2.18. That means that every tech is burning through 4.4 cars per day. Sound good? It is how most productive shops build their model. The problem with it is that you are almost certainly not providing good service to your customers. If you take the recommendation that you have a service advisor for every 2.5 techs, this shop’s advisors are handling 11 repair orders every day. That means 11 customers, 11 cars, 11 parts searches, 33 phone calls (appointment, estimate and completion), and a guy or gal who goes home completely exhausted.
The customer side of this equation is probably hearing a service advisor who is in a hurry and providing very little education for future maintenance needs. They simply don’t have the time. There is a better than average chance that the repeat customer rate is under 50 percent from surveys that we have conducted. Why? Because they don’t get attached to you. There is a high probability that when you are running the wheels off of your service advisors and techs by writing so many repair orders and racking so many cars per day, they miss a huge amount of unperformed maintenance and potential failures. In my experience, a shop with a 2-hour average per repair order is totally dependent on car count because they are not offering to partner with their customers in keeping their car ownership costs down. They are a fix-it shop, and they are tired and stressed most of the time.
So what happens if you slow everything down and take a little time to look at the cars and talk to the customers that visit your shop? Our average repair order is 4.3 hours. That does not include the hot rod work we do at our shop, but it does include tire and oil change tickets. Our techs need 2.09 cars per day to guarantee we sell our labor inventory every day. Without even picking up the calculator, you can see that we need about half the number of cars per year than the shop in my example. What does this do for your bottom line? Lower marketing costs, higher repeat customers (we are at 87 percent), more time to spend with your customers and a calmer and safer shop area. Hence, “It sure is calm around here.”
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