Spring and summer of 2020 brought uncertainty and fear for everyone’s physical health and wellbeing, as well as economic survival. The auto repair industry, in particular, faced a tremendous threat as the general population began to drive less and stay home more. With the ongoing and broadening pandemic, auto shop owners were left questioning everything – from how to keep their teams and customers safe, to whether customers could even afford car repairs during the economic downturn that accompanied the pandemic.
As a solution to offer auto repair shop owners comfort and knowledge, Tekmetric, a Houston-based auto repair technology company, developed the TM-500 Index (TM-500). The TM-500 is a public, online database of more than 500 auto repair shops across the U.S. that tracks key industry metrics such as average repair order and car count. This simple, intuitive interface allowed viewers to sort metrics by time and region to explore trends – and most importantly during COVID-19 – determine how best to adapt as the industry changed in response to the pandemic.
A catalyst for digital transformation
Before COVID-19, the auto repair industry struggled to keep up ”with the times” relative to digital transformation. For instance, anyone with a smartphone can order a pizza and track their order until it is delivered to their door. Meanwhile, a customer investing hundreds, or even thousands, of dollars into a new transmission still has to visit an auto repair shop in person and conduct business on outdated, server-based technology – if not pen and paper!
The digital revolution can be overwhelming and many times, business owners are reluctant to change. For many auto shop owners, however, the COVID-19 pandemic was the “now or never” moment to fully digitize their shops.
The TM-500 and the results it revealed fully encapsulated the importance of digital transformation as global lockdowns and contactless services were enforced. Viewers of the TM-500 could track when shops using digital processes bounced back after an early slump, while concurrently gathering other understandings about the industry’s future. Furthermore, Tekmetric conducted additional research to accompany the data in the TM-500 to determine what factors contributed to an auto repair shop’s survival and success despite the pandemic. Today, the TM-500 has expanded and continues to measure industry trends, including new metrics such as state-by-state Labor Margin, Parts Margin, Effective Labor Rate, and Car Count.
After a one-year analysis, the TM-500 revealed three key factors that led to auto repair shops’ survival – and in some cases even growth – during COVID-19. These factors included larger repair orders, clear customer communication, and complete digital transformation.
Selling larger repair orders
Based on the TM-500’s data from February 2020 to present day, shops are closing larger tickets with increases of approximately 14 percent. Two influences explain how shops have sold more repairs:
- Customers drive less, so when they do visit an auto repair shop, they are more inclined to address all the necessary repair work at once.
- Additional features accessible through a cloud-based shop management system – such as text-to-pay options, online messaging systems, and digital estimates for contactless approval – have streamlined the customer experience, resulting in happier, more trusting customers.
Both factors are undoubtedly at play across the U.S. The TM-500 data reflects increased ARO in shops that implemented integrated messaging and text-to-pay systems. At the same time, car count decreased compared to previous years, indicating that drivers were visiting shops less often. To make up for the decreased car count, transparency and efficient communications became key to an exceptional customer experience. Additionally, shops that were able to provide a more transparent experience yielded more approved work than their counterparts.
Fully digitized shops as the future
At a first glance, it might appear that all automotive repair shops took a hit due to COVID-19, particularly in the first few months. However, according to the data gathered in the TM-500, some shops actually improved during the pandemic. Despite the economic uncertainty, these shops expanded their businesses, increased major performance metrics, and added new locations.
Other shops across the U.S. saw similar effects even as the pandemic continued when they shifted toward digital processes, implemented cloud-based shop management systems, and adapted to COVID-19 regulations. One example of a successful shop in Tennessee noted they went paperless in February 2020, and the shop was able to streamline its processes and create more efficient communication processes internally and externally by digitalizing the shop’s systems.
Additionally, the team could create effective long- and short-term timelines for repairs or important maintenance. The shop team could also share information digitally with customers, breaking the information down to better explain the repairs. This inherently built trust with the customers who felt safer with these interactions and improved the odds of a return visit the next time their vehicles needed maintenance. As a result, the shop was able to open a second location by June 2020 and transfer its order history and customer database to the second location’s system without missing a beat.
Relative to internal efforts, the shops with a scalable cloud-based system could also easily onboard new team members, thereby reducing transition time. With all communication and vehicle information housed in one location in the cloud, new team members could jump into a repair process and be fully updated in minutes. Overall, this integrated system allowed shop owners to expand their teams and better capitalize on the new influx of customers willing to pay for more repair work.
Clear customer communications
Successful shop owners recognized that COVID-19 and its accompanying lockdowns and social distancing regulations would not mean communication had to stop. In fact, the opposite was true. Shops that emphasized their customers’ needs and ensured clear, frequent communication saw more positive customer responses and increased trust levels. The ability to communicate digitally more fully supported the customer relationship and built trust between the customers and the shop so customers were less wary of additional, yet necessary repairs.
In one instance, a shop located in Georgia successfully opened a second location entirely because the shop’s owner prioritized his customers and emphasized clear communication. “What I was trying to relate to my customers is that we care,” he stated. “We’re here for you no matter what.”
Lasting industry changes from COVID-19
While some lasting impacts of COVID-19 remain uncertain, there are many changes that appear to be here to stay. Digital customer experiences were already becoming popular before the pandemic, but after a year of living on Uber Eats and Amazon, it’s safe to say that consumers are going to expect more streamlined service experiences that leverage digital communications. Shops that maintain outdated methods will fall behind. Shops that adjust will be more likely to thrive.
Furthermore, while many people are eager to get back outside and spend time with others, the pandemic has increased awareness of personal space and how easily viruses and infections can spread. Many people remain cautious of public spaces, especially members of the older and immunocompromised communities and their families. Others may prefer to take measures such as contactless service and wearing a mask simply because of the health and mental security it provides them. They will also expect a seamless customer experience that allows them to handle most of their car’s repairs digitally.
Auto repair shops that continue to offer contactless service will be at an advantage when it comes to competing for business, particularly when it comes to building customer trust, increasing work orders, and inevitably increasing profit margin. Additionally, those that remain up-to-date on industry trends and explore new industry shifts to update their shops will also thrive as the industry dives more into a fully digitalized experience. To discover more about the industry trends through the TM-500 and explore options to digitize your shop, visit tekmetric.com.
Information provided by Tekmetric
