Danger Ahead: Too Busy to Make Net Income?

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If you’re not focused on making money and this happens too often, it can be deadly!

Management seems to often concentrate on attracting more customers rather than making “profit” from current clients. It’s a sure signal the business is heading into or already in trouble.

The most important profit comes from billed hours. Ensuring the correct number of labour hours billed per vehicle service (based on manufacturer recommendations) is critical to the bottom line.

You’re in the “knowledge” business, not the “commodity/volume” business—your responsibilities to clients go further than just “selling them a job.” Most clients are not well informed about vehicle service and maintenance. To properly advise and educate the client, the counterperson should be aware of how many kilometres are driven yearly, how the vehicle is used (highway, city, off-road), whether the client owns or leases, what the client’s expectations are regarding the vehicle, and its complete service history.

Communicate with the client

Consider how many yearly billed labour hours a vehicle needs to ensure it’s always in a safe, reliable condition. The counterperson should clearly communicate to the client the vehicle’s needs based on manufacturer’s recommendations. Your shop is the messenger, not the newsmaker. When the shop is “too busy,” everyone says “there’s no time for this.” It sounds like the shop is working hard, not necessarily smart!

How do you fare? Do this test

1- Take a random 5 to 10 clients you’ve had for at least three years who still have the same vehicle. Examine the past two year’s work on each vehicle. Add up the total labour hours billed on each vehicle during those two years.

2- Calculate total kilometres driven by each client over that service period (ie. 35,000 km or 17,500 per year). Record what interval the vehicle was at when it came into the shop (ie. 60,000 km or 130,000 km).

3- For that same period, look up the recommended manufacturer’s service requirements for the same kilometres driven and service intervals. Add up the total minimum labour hours recommended ensuring that vehicle was properly looked after.

Counsel versus sell

How did you make out? If you’re in the ballpark (five percent difference), well done—it looks like your system’s working and you have a good relationship with your clients. However, if you’re severely short in billed time, it may be time to examine your internal vehicle inspection and reporting process and how you’re dealing with your client base. Do you counsel them or sell them? Do you have a trustworthy relationship? Are all client recommendations in writing? Is there room for improvement?

Move on to the test’s second phase. Take the same vehicles and see what the manufacturer recommends for the next two years based on kilometres to be driven. Calculate the available labour hours to be billed. Be very aware of your progress with these clients. Based on your expertise and understanding of the client, are these service recommendations a good investment? If so, point out how the small maintenance investment makes sound financial sense rather than spending a substantial amount of money or increasing debt load for a new vehicle. If it’s not a good investment, counsel the client that it’s time to replace the vehicle.

Your clients are usually too busy to look after their own vehicle properly. Set up the system to manage these high-tech machines. Take the responsibility to ensure your client base gets an excellent ROI. When you do, I’m confident you’ll see the bottom line grow.

Categories : Mechanical


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