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Labour efficiencies boost workshop profits - In association with Bluefin

AM aims to support dealers in increasing the profitability of their workshops and has joined with Bluefin to offer businesses advice and support on a one-to-one basis, offering specific advice tailored to your workshop needs.

Bluefin is offering 10 dealers a discounted 12 months of its C3 programme allowing dealers to undertake all the measures outlined here in a simple, fast software solution.

The only proviso that Automotive Management would stipulate to those interested in getting involved in the programme would be AM’s ability to report, anonymously of course, the results of your actions at various points throughout the year.

To find out more, email jeremy.bennett@bauermedia.co.uk.

Dealers admit they are failing to maximise their workshops’ profit opportunities. And all too often they attempt to improve financial performance by cutting back on technician numbers.

In June, AM carried out a survey on workshop efficiency with aftersales consultancy Bluefin, receiving responses from 198 businesses. 
The feedback enables a number of judgements on the state of the market and recommendations on how to improve the efficiency and profitability of repair work through marketing, customer care and changes to working practices.

The main findings:

  • 84% could and/or should improve their labour utilisation (productive hours as a proportion of attended hours) as they fall below the 95% benchmark for this ratio.
  • 69% had a productive efficiency below 100% with only
  • 11% of respondents achieving the benchmark 105%.
  • 45% felt it was difficult or were not focused on influencing customers’ buying habits
  • 51% had databases with between 25% and 35% lapsed customers.


Bluefin director John Howell said: “The mix of utilisation and productivity performance is disturbing. The vast majority of workshops are under-performing with regard to attracting and efficiently processing work.

“Coupled with this is a lower-than- desired productivity performance. The critical point is that dealers recognise utilisation needs to be improved, but the under-performing productivity – time booked on to jobs – is making utilisation look better than it really is.”

Utilisation

Productivity


Job expansion makes up for fewer jobs

Research appears to demonstrate that fewer jobs are being spread around the technician team, leading to the classic phenomenon of a job expanding to fill the time available: when there’s not enough work to do – technicians’ performance slows.

The volume of work is being affected by the reduction in warranty work, the reduction in new and used car sales and the extra reliance on retail work in a highly-competitive market.

Dealerships’ typical response to this has been to reduce the number of technicians. 71% of respondents said they had laid off a technician or were planning to. None planned to recruit. And yet only 14% of dealers monitored productivity per job.
Most (33%) looked at it daily, 46% monthly or weekly and 8% did not monitor it at all.

“Dealers are missing out on an opportunity to reward a job well done and completed promptly and will not be aware of the ‘time stealers’ – the seemingly insignificant elements of a technicians’ day that is spent moving cars, waiting for parts, asking advice and waiting for their next job to be allocated. These can easily amount to between 90 and 120 minutes of an average day,” Howell said.

“The high level of dealers reducing technician headcount means the lack of ability to attract work is a real concern,” Howell said.

Solutions

One of the keys to attacking the market is the use of the customer data that is held on dealer management systems.
Howell said: “The retail automotive industry is certainly not short of pertinent data. What it lacks is the ability to take that data and turn it into activity generating information. 

This allows the dealer to fire out marketing messages to specific targets rather than the current haphazard, scattergun approach that doesn’t give a decent return for the effort and costs involved.”

When was the last time you assessed your customer database with a medium to long-term view of marketing?

Overall View

Steps to take:

  • Breakdown your database into two part: your live customers and your lapsed customers (this breakpoint will vary by individual dealers’ lapsed criteria on their DMS).
  • Look to your “live customers”. These are the most cost-effective group to gain additional work from. You should have a two-pronged marketing approach at this point – firstly, to protect your existing level of business and then secondly, to grow it.
  • Breakdown the database into more activity generating information (AGI) specific areas – such as model type, age, mileage, proximity to the business – and then communicate with them with relevant, hard-hitting facts about the services and products that you can offer – particularly those that will give the best return on effort; namely servicing, brake pads and discs, tyres, exhausts and batteries that meet their individual needs by the most effective means: telephone, email, SMS, letter or face-to-face. 

The more you target specific approaches to specific customers the greater the level of success.

Pre-lapsed customers

The area ignored by most dealers, Howell refers to as the “pre-lapsed customer”. 

This is the twilight zone where the DMS says the customer is still live on the system until the date when the system automatically posts that same customer into the lapsed file. 

Have your system alert you to prelapsing customers: take, as an example, all the customers that in 12 weeks time the system is likely to move from live to lapsed. 

You now have another set of focused AGI’s for the team to target, either attracting that customer back into the business or at very least gathering some information as to why they haven’t returned. 

Howell said: “This is a key area where the dealer can influence a customer’s buying habits. It may well be that a little nudge is all that is needed to get the customer back through your door.”

 

 

Lapsed and potential customers

Lapsed customers can be attracted back to the business, but the potential cost can be expensive. 

Equally, potential customers fall into the same cost category and are covered more by the dealer’s overall marketing messages. 

However, sell more to existing customers, keep customers longer and keep on top of your pre-lapsing customers will have a word-of-mouth effect on those other groups. 

Using this approach of breaking down your database into manageable chunks will identify opportunities and, at the same time, will allow you to cleanse your database of historical and obsolete customer information.

One word of warning, however

“The best activity generating information in the world is only as good as its application. Why have the bullets that can make a difference if you don’t take aim and fire them effectively at the targets? – it’s not what you know that makes a difference – it’s what you do that counts” said Howell. 

“Attracting additional business and the right type of business takes us full circle back to labour utilisation and productive efficiency, both will see a marked improvement as the business grows.”

AM offer:

  • AM aims to support dealers in increasing the profitability of their workshops and has joined with Bluefin to offer businesses advice and support on a one-to-one basis, offering specific advice tailored to your workshop needs.
  • Bluefin is offering 10 dealers a discounted 12 months of its C3 programme allowing dealers to undertake all the measures outlined here in a simple, fast software solution. The only proviso that Automotive Management would stipulate to those interested in getting involved in the programme would be AM’s ability to report, anonymously of course, the results of your actions at various points throughout the year.

To find out more, email jeremy.bennett@bauermedia.co.uk.

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