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I am in the process of starting to track important figures or 'key performance indicators'. Since I am a small growing shop, one of the easiest things to track is simply Gross Sales. I have been rewarding my employees (3) with going out to dinner at a restaurant of their choice any time we have a record month. My first question is, does anyone see a problem with this reward?

 

My second question is, how do you go about setting goals for KPIs? I know there will be different methods when comparing individual tech efficiency goals to gross sales goals, but how do you handle each one. How about shop productivity? Do you simply use industry bench marks or base your goals off your personal history?

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Joe, would you have any recommendations for a shop management course for shop owners. Most I see are 1 day workshops designed to get you to sign up for coaching which I don't think a lot of business are willing to do or can afford. WorldPac was putting on some nice classes for service advisors that touched some of those subjects. I rather liked the WP classes since there is not pitch for more sales.

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Joe, would you have any recommendations for a shop management course for shop owners. Most I see are 1 day workshops designed to get you to sign up for coaching which I don't think a lot of business are willing to do or can afford. WorldPac was putting on some nice classes for service advisors that touched some of those subjects. I rather liked the WP classes since there is not pitch for more sales.

I was wondering the same thing. I'm not sure I need or can afford the 1 on 1 training/coaching that some of these companies want to offer. I started another thread asking about RLO training. I'm also curious about WorldPac, AMI, Elite, and a few others. Any input would be appreciated.

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I was wondering the same thing. I'm not sure I need or can afford the 1 on 1 training/coaching that some of these companies want to offer. I started another thread asking about RLO training. I'm also curious about WorldPac, AMI, Elite, and a few others. Any input would be appreciated.

 

I can only comment on WP training. I ran through their Service Advisor Class years ago and it was great. It gave me a lot of insight on something I had no idea about. Even a seasoned service advisor/owner can get a lot of out refreshing on the material. IMO one of the best parts is the whole workshop/class is not meant to be a giant sales pitch on further services. I would love to go to some of their other offers however none ever seem to be in my area.

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I wouldn't put too much stock in gross sales. ARO and margins tell you more about how your business is performing. If your advisor's incentives are based solely on sales, you have to watch that they aren't discounting to make sales. A few years back, we saw our sales numbers increasing, but our margins stunk, so we started working on margins and ARO and sales actually dropped, but we ended up taking more home. Once we felt we had a handle on the fundamentals we started pushing car count.

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  • 1 year later...

I really have no clue what KPI's to chase. Absolutely clueless however, this is what I've done shooting from the hip and so far it's been working.

 

MARGINS

  • Advisor get's paid on part margins, inspections and diagnostic sales.
    • The retail price is pre-established by a 52% margin from napa prolink's pricing to us (they're the highest priced aftermarket vendor in our area).
    • We then call the other local vendors to ask them for there best price on product X and shop around amongst local vendors to beat it and we get dramatic price drops from online (sometimes finding the products for an additional 20-30% cheaper) so if the advisor takes the extra time to source it, he can dramatically increase his pay without becoming out of this world overpriced.

We've been doing this for the past 3 yrs and haven't burned any relationships as that's the first question I'm asked after I'm told that takes way to much time (do the #'s, 20-30% is huge).

  • Technicians get paid on hours (If the variance goes outside 10% of our estimating guide, we want to know why).

I don't know what else to really do.

CSI SCORE

  • Not really even a legitimate one, if the client is ecstatic with our service, we ask them to get online and write a review on FB and Google. 4.8 avg minimum or I get ornery.
  • Afraid of it becoming a leveraging system of clients over staff. Don't know how others have successfully approached that.

 

ARO

  • Without a minimum requirement or a push, we've always approached it with this mentality: Would you rather see 30 cars to make $3,000 or would you rather see 3? Which one would be less frustrating?

CAR COUNT

  • I've been afraid to chase this one as the immediate thought goes to "couponing" or something. Does anyone have any suggestions for this?

 

That probably sums up my KPI's because that's all I know. Any suggestions? (Please refrain from insults and negative insinuations, I'm being transparent hoping that I'm asking questions others have but are afraid to ask for fear of looking silly.)

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I really have no clue what KPI's to chase. Absolutely clueless however, this is what I've done shooting from the hip and so far it's been working.

 

MARGINS

  • Advisor get's paid on part margins, inspections and diagnostic sales.
    • The retail price is pre-established by a 52% margin from napa prolink's pricing to us (they're the highest priced aftermarket vendor in our area).
    • We then call the other local vendors to ask them for there best price on product X and shop around amongst local vendors to beat it and we get dramatic price drops from online (sometimes finding the products for an additional 20-30% cheaper) so if the advisor takes the extra time to source it, he can dramatically increase his pay without becoming out of this world overpriced.

We've been doing this for the past 3 yrs and haven't burned any relationships as that's the first question I'm asked after I'm told that takes way to much time (do the #'s, 20-30% is huge).

  • Technicians get paid on hours (If the variance goes outside 10% of our estimating guide, we want to know why).

I don't know what else to really do.

CSI SCORE

  • Not really even a legitimate one, if the client is ecstatic with our service, we ask them to get online and write a review on FB and Google. 4.8 avg minimum or I get ornery.
  • Afraid of it becoming a leveraging system of clients over staff. Don't know how others have successfully approached that.

 

ARO

  • Without a minimum requirement or a push, we've always approached it with this mentality: Would you rather see 30 cars to make $3,000 or would you rather see 3? Which one would be less frustrating?

CAR COUNT

  • I've been afraid to chase this one as the immediate thought goes to "couponing" or something. Does anyone have any suggestions for this?

 

That probably sums up my KPI's because that's all I know. Any suggestions? (Please refrain from insults and negative insinuations, I'm being transparent hoping that I'm asking questions others have but are afraid to ask for fear of looking silly.)

 

 

Margins:

 

Parts profit margin and labor profit margin is good to track. Seems like you have the parts profit margin down. Ultimately a total profit margin combining parts and labor is what you want to to see to get your GROSS profit margin. Industry target standard is 60% combined.

 

For technician labor hours you want to track productivity and efficiency. Productivity is the amount of time they spend actually working during the hours they are in the building/clocked in for. For instance a person that is very diligent in an 8 hour day might spend 7.2 hours out of that work day working being productive opposed to another person only being productive 4 hours our of 8. We have to count bathroom and personal breaks but what you want is a high productivity % from your techs. Efficiency is how fast a tech can get their work done as per how much they are getting paid for the job. If you are paying salary then dividing the hours turned vs their day will produce the efficiency %. If they are flat rate then substitute their day with all the hours of their job that day. Both are good metrics to track but you will have to have your techs clock in and out of jobs to do so effectively.

 

 

CSI Score:

 

Best way to track CSI is to actually poll your customers. We don't to be transparent.

 

We do solicit for reviews regularly. It is kind of an art in the way you communicate with customers and the feeling you get from them. Due to the damage reviews can do to your online reputation you have to tread carefully. If we provided a great service and or they are a returning customer and they have not given us a review we tell them how much we appreciate their trust in us and we would be so grateful for a 5 star review so we can attract more great clients like themselves. This is why reviews arent the greatest way to get a true CSI score.

 

 

ARO:

 

A high ARO is a great way to indicate if your service advisers are selling additional needed services and if they are selling more hours. Speaking of hours, Hours per RO is another good way to track if your service advisers are doing their job well. What also coincides with ARO/HPRO is technician discovered work. If you want to have high tickets you have to have a lot of discovered work to sell. If you track what your tech's are discovering you can then calculate other metrics such as closing ratio.

 

 

Car Count:

 

Car count is a good measure of how well your marketing and CRM are performing. Of course more importantly is getting the right customers through the door however if your car count is constantly in a state of flux, that would be a good indication on focusing on your retention marketing as well as new customer marketing. We all battle with the highs and low to get it to smooth out as much as possible when it comes to car count.

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  • Have you checked out Joe's Latest Blog?

         3 comments
      Got your attention? Good. The truth is, there is no such thing as the perfect technician pay plan. There are countless ways to create any pay plan. I’ve heard all the claims and opinions, and to be honest, it’s getting a little frustrating. Claims that an hourly paid pay plan cannot motivate. That flat rate is the only way to truly get the most production from your technicians. And then there’s the hybrid performance-based pay plan that many claim is the best.
      At a recent industry event, a shop owner from the Midwest boasted about his flat-rate techs and insisted that this pay plan should be adopted by all shops across the country. When I informed him that in states like New York, you cannot pay flat-rate, he was shocked. “Then how do you motivate your techs” he asked me.
      I remember the day in 1986 when I hired the best technician who ever worked for me in my 41 years as an automotive shop owner. We’ll call him Hal. When Hal reviewed my pay plan for him, and the incentive bonus document, he stared at it for a minute, looked up, and said, “Joe, this looks good, but here’s what I want.” He then wrote on top of the document the weekly salary he wanted. It was a BIG number. He went on to say, “Joe, I need to take home a certain amount of money. I have a home, a wife, two kids, and my Harly Davidson. I will work hard and produce for you. I don’t need an incentive bonus to do my work.” And he did, for the next 30 years, until the day he retired.
      Everyone is entitled to their opinion. So, here’s mine. Money is a motivator, but not the only motivator, and not the best motivator either. We have all heard this scenario, “She quit ABC Auto Center, to get a job at XYZ Auto Repair, and she’s making less money now at XYZ!” We all know that people don’t leave companies, they leave the people they work for or work with.
      With all this said, I do believe that an incentive-based pay plan can work. However, I also believe that a technician must be paid a very good base wage that is commensurate with their ability, experience, and certifications. I also believe that in addition to money, there needs to be a great benefits package. But the icing on the cake in any pay plan is the culture, mission, and vision of the company, which takes strong leadership. And let’s not forget that motivation also comes from praise, recognition, respect, and when technicians know that their work matters.
      Rather than looking for that elusive perfect pay plan, sit down with your technician. Find out what motivates them. What their goals are. Why do they get out of bed in the morning? When you tie their goals with your goals, you will have one powerful pay plan.
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