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By Joe Marconi in Joe's Blog0 commentsAuto shop owners are always looking for ways to improve production levels. They focus their attention on their technicians and require certain expectations of performance in billable labor hours. While technicians must know what is expected of them, they have a limited amount of control over production levels. When all factors are considered, the only thing a well-trained technician has control over is his or her actual efficiency.
As a review, technician efficiency is the amount of labor time it takes a technician to complete a job compared to the labor time being billed to the customer. Productivity is the time the technician is billing labor hours compared to the time the technician is physically at the shop. The reality is that a technician can be very efficient, but not productive if the technician has a lot of downtime waiting for parts, waiting too long between jobs, or poor workflow systems.
But let’s go deeper into what affects production in the typical auto repair shop. As a business coach, one of the biggest reasons for low shop production is not charging the correct labor time. Labor for extensive jobs is often not being billed accurately. Rust, seized bolts, and wrong published labor times are just a few reasons for lost labor dollars.
Another common problem is not understanding how to bill for jobs that require extensive diagnostic testing, and complicated procedures to arrive at the root cause for an onboard computer problem, electrical issue, or drivability issue. These jobs usually take time to analyze, using sophisticated tools, and by the shop’s top technician. Typically, these jobs are billed at a standard menu labor charge, instead of at a higher labor rate. This results in less billed labor hours than the actual labor time spent. The amount of lost labor hours here can cripple a shop’s overall profit.
Many shop owners do a great job at calculating their labor rate but may not understand what their true effective labor is, which is their labor sales divided by the total labor hours sold. In many cases, I have seen a shop that has a shop labor rate of over $150.00 per hour, but the actual effective labor rate is around $100. Not good.
Lastly, technician production can suffer when the service advisors are too busy or not motivated to build relationships with customers, which results in a low sales closing ratio. And let’s not forget that to be productive, a shop needs to have the right systems, the right tools and equipment, an extensive information system, and of course, great leadership.
The bottom line is this; many factors need to be considered when looking to increase production levels. While it does start with the technician, it doesn’t end there. Consider all the factors above when looking for ways to improve your shop’s labor production.
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By carmcapriotto
Tom Palermo discusses the importance of continuous training for technicians, the increasing average age of vehicles, and his strategies for fostering a positive company culture and building strong customer relationships. He also discusses the challenges and opportunities presented by electric vehicles and the importance of hands-on training.
Tom Palermo, Preferred Automotive Specialists in Philadelphia, PA. Tom's previous episodes HERE
Show Notes:
The current state of business at Palermo's (00:03:26) Tom Palermo discusses how busy his shop is and becoming the go-to shop for diagnostics. The increase in the average age of vehicles (00:04:07) Tom Palermo mentions that the average age of vehicles is still increasing due to inflationary times, as people are choosing to hold onto their cars longer to avoid car payments and increased insurance costs. Getting commitment from the team (00:05:08) Tom Palermo shares his strategy of leading from the front and actively participating in his own business to motivate his employees and create a family-like culture in the shop. Training and expanding services (00:06:28) Discussion on the benefits of cross-training technicians and expanding services to become a one-stop shop for customers. Creating a culture of learning and teamwork (00:08:03) Exploration of the importance of building a team environment, promoting culture, and providing training opportunities for technicians. Concerns and opportunities with electric vehicles (00:10:23) Conversation about consumer concerns and technician concerns regarding electric vehicles, as well as the need for businesses to adapt to the evolving automotive industry. The importance of continuous training (00:13:13) Discussion on the evolution of the automotive industry and the need for technicians and shop owners to continuously train and adapt to new technologies. The challenges of hands-on training (00:16:02) the need for hands-on training in the automotive industry and the effectiveness of learning through practical experience. Monitoring productivity and customer loyalty (00:18:16) Explanation of how monitoring productivity can be used as a training tool and the shift in customer behavior, from seeking diagnoses and getting repairs elsewhere to valuing a good shop. The value of relationships and trust (00:19:27) The importance of building relationships with customers and gaining their trust in the automotive industry. Customer relationship management strategies (00:20:28) Discussion about the various customer relationship management techniques used, including email blasts, follow-up phone calls, and special promotions for valued customers. Training for service advisors (00:25:04) The need for more training for service advisors in the automotive industry and the importance of standardized approaches to dealing with customers. Retention rate and treating employees like family (00:26:29) Conversation about the high retention rate of employees at Palermo's and their approach of treating employees like family. Creating a better work environment for technicians (00:28:34) Importance of providing a well-lit, air-conditioned, and well-equipped shop to improve technician productivity, safety, and job satisfaction. Thanks to our Partner, Dorman Products.
Dorman gives people greater freedom to fix vehicles by constantly developing new repair solutions that put owners and technicians first. Take the Dorman Virtual Tour at www.DormanProducts.com/Tour
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How Outreach & Conversation Can Transform Auto Professionals' Lives w/ Brett Kinsfather & Roy WragthBy Changing The Industry
How Outreach & Conversation Can Transform Auto Professionals' Lives w/ Brett Kinsfather & Roy Wragth
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By Joe Marconi
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By Joe Marconi
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