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Bob K

struggling to increased aro

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I am struggling to increase ARO. I have incentives in place for hours produced, let our techs help create the inspection check documents, hired someone to clean and organize the shop daily and assist techs as needed so the techs can be focused on work but cant seem to break out of the 230.00 range. Any suggestions?

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sounds like your techs may be managing you?

 

this is a hard issue in some cases and we had our share to. We had one guy that complained like no other that if he was going to look at something he should get diag time. Then i guess one day he wrote up something and the service writer sold it and now he is my best guy at looking for maintenance etc. He saw the hours it was producing him and he does good with it now.

 

My advice would be to write down what you would like to see.

Put it to paper in an easily understandable way.

Have weekly meetings explaining the importance of this to them, the customer and the shop. Notice i put "them" first?

Keep harping on it, dont be overbearing but be consistent.

 

If that fails to work then you will need to be more firm. It can even lead to replacing someone, as harsh as that may seem it sounds like the shop could be running down a road to a problem and you cant let your techs dictate how to steer it back. They can help but its you that is in charge.

The simply are NOT doing what you ask of them, you may have to make them.

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You'll have to look at where the problem is originating from. Techs working too slow? Techs missing valuable needed recommendations? Techs not wanting to recommend more difficult work? Or is the service advisor not selling the recommended work? Maybe its just the nature of the jobs you are doing. If your aro of $230 nets $200 profit from diags and your ro count is high that's not too shabby.

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Hi, Bob K!

 

The guys have given you pretty good answers in my view.

 

For my part, if you mean Average Revenue per Order as ARO, that metric for me does not hold very meaningful value. The reason being that on a weekly and monthly basis my ARO have gone from as low as $180 to $540, and on that peak ARO period I had the lowest profit marging. That left me scratching my head for a few days until I figured it out what happened.

 

As a metric, a low ARO to me signals that the guys may be running through oil changes just to get that service done and are not paying attention to the car's condition, but on the other hand I had months that the ARO was low just to jump up considerable the following months.

 

So like Imcca states, make sure you are running a plan that you have written down and can compare numbers from your metrics. Figure out the gross revenue you expect for the wholes shop, then break it down per bay and then work out the net marging you are looking for, that way from the big picture down to the details you can know what to demand down to the individual techs.

 

I have a shop where one tech runs two bays and is consistently the highest profit center I have, it seems to me that he runs his own business within my business (what I mean by this is that he is happy to be a mechanic and loves to leave the administrative and overhead to us, while all he takes care of fixing the cars and recommending to sell whatever the customer's car will need to stay reliable, he has been with me over 10 years and appears to be happy to keep working with me).

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I am struggling to increase ARO. I have incentives in place for hours produced, let our techs help create the inspection check documents, hired someone to clean and organize the shop daily and assist techs as needed so the techs can be focused on work but cant seem to break out of the 230.00 range. Any suggestions?

Bob,

 

From my perspective, everything you've mentioned seems to be focused on tech efficiency.

Can you clarify how that's related to increasing your ARO? Maybe I'm missing something.

What are you trying to do? Are you trying to increase your gross profit? Your tech efficiency?

Or something else different?

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Hi, Bob K!

 

The guys have given you pretty good answers in my view.

 

For my part, if you mean Average Revenue per Order as ARO, that metric for me does not hold very meaningful value. The reason being that on a weekly and monthly basis my ARO have gone from as low as $180 to $540, and on that peak ARO period I had the lowest profit marging. That left me scratching my head for a few days until I figured it out what happened.

 

As a metric, a low ARO to me signals that the guys may be running through oil changes just to get that service done and are not paying attention to the car's condition, but on the other hand I had months that the ARO was low just to jump up considerable the following months.

 

So like Imcca states, make sure you are running a plan that you have written down and can compare numbers from your metrics. Figure out the gross revenue you expect for the wholes shop, then break it down per bay and then work out the net marging you are looking for, that way from the big picture down to the details you can know what to demand down to the individual techs.

 

I have a shop where one tech runs two bays and is consistently the highest profit center I have, it seems to me that he runs his own business within my business (what I mean by this is that he is happy to be a mechanic and loves to leave the administrative and overhead to us, while all he takes care of fixing the cars and recommending to sell whatever the customer's car will need to stay reliable, he has been with me over 10 years and appears to be happy to keep working with me).

 

 

ARO should mean Average Repair Order. The gross sale for services rendered for a particular car or ticket or Repair Order.

 

If your ARO is low you have to look at a lot of different factors. There are so many but I will just highlight a few that make the most immediate impact for me.

 

1. Are you charging correctly for labor? Are you charging book time? Are you adding a multiple or do you have a labor matrix?

 

2. What are your Gross Profit Margins on parts? Are you getting enough for the parts you are selling?

 

3. Are your techs on flat or salary? Do they have incentives to perform a proper inspection so your service advisors have a quality list of repairs to up sell? are your service advisors qualified to sell and do you have a sales process?

 

 

If I was to generalize 3 big areas these are the ones I would say would have the biggest impact on your ARO. In a nut shell, charge properly, raise your prices to get better margins, have the right systems in place to sell the work.

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Hi Bob,

 

This may just be a matter of providing better proof. Plainly put, a large portion of customers feel their auto repair facility purposely suggests more services than necessary in order to generate more revenue for the shop.

 

To fix this, you should be adding photos specific to the vehicle’s needs to each inspection. This provides undeniable proof that there is indeed a need for service, and has proven to increase ARO.

 

Click here for a better explanation: http://www.autoshopowner.com/blog/7/entry-176-digital-inspections-drive-shops-225-higher-ro/

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