How to Increase Your Automotive Shop's Profitability

Increasing Profitability in Automotive Service by Improving Sales per Vehicle Serviced

• The net effect on profitability differs between servicing twenty cars at $50 each and servicing five cars at $200 each, even though the sales are the same, due to the cost of support services that go into every customer transaction.
• The nine support services provided for every customer are necessary activities for which the customer is not charged, and include greeting, write-up, inspection, diagnosis, pricing, selling, dispatching, delivery, and follow-up.
• The cost of support services and lost productive time for technicians to shuffle additional cars in and out of their work stall can be reduced by improving average sales per vehicle serviced.
• Selling service must begin when the customer first arrives, and the service consultant should collect all background information about the customer, their needs, the vehicle, its condition, and prior repair history.
• Effective techniques to increase service sales per visit include the service estimate, walk-around inspection, maintenance history review, and service pricing menu.
• The walk-around inspection is an effective method to move from the position of order-taker to that of service consultant, and involves letting the customer point out what they want to have done, and then doing a simple walk-around inspection to look for telltale signs of other needed repairs.
• The maintenance history review provides valuable information about previous repairs and services done to the vehicle, which can save time and money, and help establish the credibility of the shop.
• Recommending preventive maintenance is one of the easiest items to soft-sell to every customer, and can be done by reminding them of upcoming or overdue scheduled maintenance.
• A comprehensive service pricing menu is a valuable tool to help service personnel provide estimates quickly, accurately, and consistently, and reduce the chance of errors in pricing estimates.
• Other resources available in today's automotive shop include desktop computers or iPads, hand-held scanners or fault code readers, roll-over alignment checking equipment, and sales and merchandising aids.
• Using these resources can help improve the service consultant's ability to easily obtain customer approvals, send customers away with greater confidence in the shop, and contribute significantly to the bottom line through their efforts in working with every service customer.
• A service estimate is a preliminary idea of what the expected service costs will be before beginning repairs, but in most cases, vehicles arrive without a clear idea of the exact repairs needed, making it challenging to give an accurate and complete estimate.

Maximizing Service Sales Opportunities

• The service consultant should conduct a brief walk-around inspection, review the vehicle service history, and check on needed maintenance before presenting a repair estimate to the customer.

• The service consultant should act as a subject matter expert and prescribe for the customer what should be done based on their knowledge and expertise.

• An accurate estimate is key to obtaining or losing customer approvals to perform service work.

• In cases where the cause of the problem and needed repairs are to be determined, the consultant needs to provide the customer with a realistic estimate of the cost to evaluate the situation and make a complete and accurate diagnosis.

• The service technician should always be looking for opportunities to identify additional needed maintenance or repairs by performing a safety inspection and general physical inspection on every vehicle that comes into the shop.

• The technician needs to see themselves as a part of the departmental sales team to spot problems quickly and accurately.

• The service consultant must act as both an advisor and a translator and explain the details of what is needed to the customer in an easily understandable yet thorough explanation.

• The consultant should shift the thinking of this as a sales opportunity to being an educational opportunity to help the customer understand what needs to be done and why.

• The consultant can integrate visuals like failed components, new products, maintenance charts, and pricing specials on display to help the customer understand parts, repairs, and concepts that may be unfamiliar to them.

• The consultant can use newer technology like a cell phone to stream illustrations of the current state of the customer's vehicle directly to them and show them examples of what needs to be done.

• In cases where a vehicle needs extensive repairs, the consultant should prioritize those repairs into one of three major categories: repairs that must be done now, those that need to be done soon, and those that should be done in the future.

• Providing short-term incentives like a small bonus to each technician for additional work they identify that is then sold to the customer and performed by others in the shop can help instill new habits and values into the workforce.The Importance of Up-Selling in Automotive Service

• Price leaders are a common practice in the automotive service industry to attract attention and additional business.

• Price leaders are commonly used products or services that are significantly lowered in price to attract customers.

• Price leaders are typically priced at low profit margins or even at or below actual cost.

• Price leaders are only a good business decision if they consistently generate enough additional sales.

• Up-selling is the practice of offering additional services or repairs to customers.

• Up-selling can increase the efficiency of technicians and generate additional profits for the company.

• It is important to find ways to attract more customers or create a reason for current customers to visit more often.

• The best way to up-sell is by selling needed services and maintenance based on industry standards and a complete diagnosis by a qualified technician.

• Automotive service customers are skeptical and wary of being sold things they do not need or want.

• Unethical practices in the automotive service industry can attract negative attention and damage the reputation of a company.

• It is not worth jeopardizing a company's reputation over a few dollars.

• The key to successful up-selling is to offer needed services and repairs based on sound service practices.

Improving Customer Satisfaction and Communication in Auto Service Shops with New Technology

• Customer satisfaction is critical and shops must prioritize fixing the customer's primary concern before addressing any additional maintenance or service items.
• Failure to address the primary concern can be seen as a total failure to provide quality service and can strain the shop-customer relationship.
• The communication gap between shops and customers has historically been a source of stress and frustration for customers, leading to strained relationships.
• New technology tools are available to address this communication gap, including programs that track vehicles through the shop, electronic repair orders, and automated dispatching of work.
• These technology tools provide instant detailed intercommunication between all employees involved in the service operation, minimizing lost time and effort.
• They also provide management with the ability to track and explore all transactions in real-time, identify patterns and trends, and research areas for improvement.
• Electronic interactive systems also provide the opportunity to send more detailed information back and forth to customers in real-time, including live audio and streaming video of their vehicle.
• The greatest opportunity created by new technology tools is seen in forward-thinking shops that are actively striving to eliminate the service experience as a "black box" for customers.
• These shops are working to create a richly interactive and proactive communication channel with their customers, providing detailed information every step of the way through their service visit.
• This approach works to build a higher degree of customer trust in the process and results in greater owner acceptance and loyalty.
• These technology tools are available from a variety of vendors to everyone in the industry, and prices are becoming more affordable for mid to small-sized shops.
• The implementation of new technology tools requires a new attitude and approach toward the interaction with customers, and the most successful shops are actively working to foster this change.