By Mike Haley, ATI executive coach
We have all been told that tracking sales and key performance indicators (KPIs) is the best way to determine how well our business is doing. While that statement is true, I've found that the most common KPIs tracked rarely include conversion rate. The problem with excluding conversion rate is that this KPI plays a key role in gauging sales performance. Keep reading to discover why you should track conversion rate and its role in tracking sales performance.
The goal of courtesy checks
Let's go back a decade or so. Do you remember when courtesy checks were introduced as a process that would help grow our business? Back then, it was a paper checklist of safety and maintenance items that a technician should inspect while the vehicle was in for service. It has evolved into a picture/video inspection, but the original intent remains intact. So, what was the reason for introducing the courtesy inspection? There are a few. First, vehicles were becoming more complex, and the "do-it-yourselfers" could not work under the hood like they used to. Second, checking the engine when the light came on required a scan tool to pull the code to help diagnose the problem. Third, the tune-up went away along with other parts that required adjusting or replacing. All these changes put auto repair professionals at the forefront—making it our responsibility to inspect vehicles for the convenience and safety of our customers.
There was also a business reason for courtesy checks. Back in the day, car count was not an issue. The car manufacturers were not building the highest quality product. Between breakdowns, tune-ups, brake replacements, and rebuilt carburetors, shops had no shortage of vehicles to work on. Then things started to change. Car manufacturers began to put in technology and improve reliability to compete with the Japanese manufacturers. As vehicles became more reliable, the number of yearly service visits was reduced. With fewer visits per year on each vehicle, we had limited opportunities to sell. The courtesy check helped ensure we inspected the correct items and systems on a vehicle to avoid missing a sales opportunity.
To that end, we worked hard to do a great job inspecting the vehicles' safety items and systems that required maintenance. Many of us have also become proficient in tracking related KPIs to gauge performance, including car count, sales, and average repair order. But, if we really want to measure the total success of our business, we also need to track the missed opportunities.
Why missed opportunities are important
Why track the missed opportunities, you ask? As we know, we very rarely sell everything we recommend to the customer. Taking our recommended total versus what we actually sell is the conversion rate. Sales companies measure this KPI to determine their sales team's performance. I like to use a baseball analogy to help explain this. Baseball tracks players' performance by taking their at- bats versus their actual hits to determine their batting average. No baseball players get a hit at every at bat; most professionals average around .300. A .300 batting average means a player earned three hits for every ten times at bat and missed seven opportunities to make a hit.
How do we apply this to our industry? Hopefully, you have a courtesy check program in your shop, and your technicians are doing a great job inspecting vehicles so your service writers can have more opportunities to sell estimates. This now becomes a measurable KPI.
Let's use simple numbers as an example. Let's say our technicians are averaging $1,000 estimates. The service writers are averaging $300 work orders. Our conversion rate is 30%. We can also help diagnose our business by measuring our technicians on the average estimate they turn in versus the other technicians. We can do the same for the service writers by measuring what each one is averaging. This can become a quick way to determine if you have a training, process, or another type of issue with a technician or service writer. It may also lead you to work on sales skills at the counter and possibly product knowledge for the technicians.
A strong conversion rate
So, what is a good conversion rate? The national average fluctuates between 33% and 36%. Being an optimist and wanting to be the best, I see these numbers as big opportunities. What if you work with your technicians to improve the courtesy checklist to help build taller estimates? What if you help the service writers sell features and benefits along with value? How much could you move the conversion rate?
A strong conversion rate will help you increase sales even if car count is off. Looking at your business from the perspective of "What could I have done versus what I actually did?" can help you diagnose opportunities you have.
To measure your service writer's conversion rate and your shop’s rate overall, get ATI's Conversion Rate Tracker at http://www.ationlinetraining.com/2022-02 for a limited time.
