Measure your business
Tina is back, and is looking at how KPIs can help you gauge how successful your business is, and how this can help you
Published: 28 June, 2021
I often get asked what targets and KPIs I set and how often I check them. Being a bit of an analytical geek, this is something of great interest to me. First, let’s examine what KPIs actually are. The acronym is short for Key Performance Indicators, and these are are crucial measures on your business that can demonstrate how your business is performing.
Why do we measure our business?
Your KPIs will provide you with an analytical view of the current situation in your business. No made-up numbers, no hypothetical scenarios, just real historical data, bespoke to you. At CCM, they enable us to track our processes, workshop loading, efficiencies, productivity, compliance, customer quality and retention and assist with our growth and progress.
Where might you find your KPIs? It could be that you have recently carried out a marketing campaign. If so, measuring the resulting data will confirm whether the campaign has been successful, show what added value has been generated, and will assist you in making informed decisions in the future.
Every so often we make assumptions on what we believe and not on what the data tells us. We used to offer an early bird MOT at one of our depots for £25, but it had to be at 7:30am and the customer had to wait. We offered this as we had a technician who always started at 7:15am and often would be waiting around. This early bird slot was taken every day and was booked about two weeks ahead. Our assumption was that it was because of price. This was the wrong assumption however. I picked up a little gem on one of Andy Savva’s courses that made me think outside the box and question some of what we do and why.
So, we carried out a survey on those customers that took up that offer. The results were very revealing. The majority of customers wanted that slot as it enabled them to have their MOT done and still give them time to get to work by 9:00am. So, this was nothing to do with the price. What do you think we did then?
How do we know what to measure?
Like the sub-head says, how do we know what to measure? One way of working this out is by using the SMART acronym. If it is Specific, Measurable, Achievable, Realistic and Timed, then anything can be done. Identify where you think you may have an issue that is quantifiable. This is where the fun starts.
Do not be presumptuous. For example, one that a lot of people talk about is staff productivity and efficiency. “Your results of your analytical data research have identified that you have a technician who is under-performing.”
How many people would just take that at face value and assume the technician is slacking off. Dig deep, delve around and you may be surprised. Yes, the technician could be slacking off, or very often it could be related to issues out of their control, such as wrong parts, moving vehicles around, incorrect data from front-of-house. But it could also be that they are being given tasks that they are not competent in doing and this will highlight a training issue. It often takes time to get to the bottom of why.
When do we tackle these KPIs?
At CCM we have a dashboard spreadsheet which list all our KPIs in one place and these get updated monthly. This gives us the platform to compare each depot, not with each other but each on its own merit. It flags up any anomalies and allows us to investigate before a problem develops. Often there is a logical explanation, but it needs validating. These results are discussed as a team. If there is an issue, they normally have the solution. It educates them about what they do, how it effects the business overall and makes them accountable. It is a team effort after all.
One of my important KPIs which I like to discuss with the team is our recovery rate. Let’s say the labour rate that you charge your customers is £90 per hour. Then factor in all the scenarios where your labour rate gets discounted. Yes, we are all guilty of doing this at some point. At the end of the month, your total labour sales divided by your total hours sold gives you your true labour rate, known as recovery rate. Be aware of what will affect this. If you carry out MOTs at your garage, this will impact your recovery rate. Assuming you allow 45 minutes for a test, normal workshop labour for a 45-minute job, based on your rate of £90, will be £67.50 but your MOTs will be sold at £54.85 or even less. This is fine, we just need to have cognizant of the impact of low-cost MOTs have on our recovery rate. At CCM, we aim for 88%-90% which we often achieve.
Challenge yourself
The list of KPIs is endless. Find the balance where you have enough KPIs to give you a good overview of your business without it taking over everything you do. Focus on measuring things that are core to your business. Do not compare yourself with others, what results that one garage get will not necessary be the same for you which is why it is imperative that you look at your own data. Remember, data is powerful.
I have had an immense amount of guidance from Andy, his Financial Course is a mind-opener and the knowledge I have gained about our business from measuring is awesome.
Be warned, it is addictive. Once you start, you will find it hard to stop.
- Counting the cost?
Cars and vans that come off the production line in 2022 are jam packed with technology that is used for entertainment and safety. In the world of collision repair, Advanced Driver Assistance Systems (ADAS) are mission-critical technology that must be minded closely.
This technology has been designed to protect the driver and passengers as well as other road users. However, if the vehicle is involved in a collision, whether that be a minor ding or something bigger, these systems need to be recalibrated.
The recalibration of these systems has created a gap in the market that businesses are looking to fill. As we know though, to do the job there is a price that must be paid, and it comes in two distinct forms. The first is that of a one-off investment in the necessary tools, services and training for staff, which can be recouped over time. Recouping the initial financial outlay will come from each job, but what businesses must remember is that if the price being charged is too high, there is the possibility that customers might look somewhere else for the service.
The second is if the business does not have these tools on site, the vehicle will either need to be booked into a dealership to be recalibrated or employ a third party to do the work. This will lead to an increase in key-to-key times by an average of three days, as the business cannot guarantee the work will be done there and then, plus any additional costs will have to be passed onto the customer.
Pay-as-you-calibrate
The current economic climate, however, is leading many businesses to look at alternatives, and one of them is a pay-as-you-calibrate model, which Repairify launched at the end of 2021. This option has been developed to enable bodyshops to have access to digital ADAS equipment with no upfront cost. This, in turn, reduces the financial burden and allows repairers to pay as they use the equipment based on the number of calibrations they perform in a specific time period.
An example of the benefits businesses can reap are highlighted by Pete Sadler, Commercial Director of North East Accident Repair who told us: “Our business has gone from doing one or two calibrations a month to three or four a week, so it was clear we needed to invest in a solution that best suited our needs and requirements. The benefits of the pay-as-you-calibrate initiative are that it enables us to equip the group with the very latest digital technology without the need for a large capital investment upfront, which is crucial in the current environment we all find ourselves in. It has also meant we have increased our revenue, reduced our key-to-key times, and provided customers with the peace of mind to know that our technicians are doing the calibrations correctly.”
We know that the need for calibration services is here to stay, and this will lead to businesses needing to invest in the requisite tools and services to do the job. These costs can place an undue burden on a business, but we want to be in a position where we can provide a solution that allows all businesses to be able to offer cost-effective remote diagnostic services to their customers
- Communicating essentials
We all know customers are one of the key elements of any thriving garage business and if you do not keep them satisfied, they will simply go elsewhere for the services you provide. It is a simple fact, but one that is so often overlooked by businesses up and down the country and the people who work within them.
Everyone within your garage has a critical role to play in delivering excellent customer service. There are many distractions that get in the way of us providing a positive experience to customers, as I like to call it; ‘An Experience’.
I regularly witness employees not understanding customer perceptions, and people who are placed into reception roles who do not possess the necessary skills and ability to qualify and deal with a customer from start to finish. Worse than that the processes within the business are inadequate which does nothing to assist these poor folks.
We should all realise the importance of building long-term relationships with customers, understanding what many business commentators call the lifetime value of a customer, after all without them the business does not exist.
Motivation
If we are going to provide an exceptional service to our customers, we first need to understand what their motivation is in dealing with us in the first place. Some buy because they find your price to be the lowest, some because they find your services to be outstanding, while some purchase from you because of your reputation in the garage industry. By understanding our customers, we are better placed to deal with their needs in an effective manner that meets with their core requirements.
But most of all, customers buy your services because of the perception of value that it gives them. However, it’s much more difficult in our garage sector as most if not all purchases are distressed sales, they are needs rather than wants and that’s why I focused so much on giving my customers a positive unmatched experience they’ve never had before.
Journey
Aside from understanding the wants and needs of our customers, it is also useful to understand the journey they take. My skill-set allowed me to value stream the processes of the customer journey from phone call to handing back the keys examining the non-value time and processes which helped us identify the danger points and start to plan how best to serve the customer for their needs not ours.
Now to keep it simple, I focused on six parts of the customer journey:
- Coronavirus: The view from the workshop - part two
We continue to speak to garages right across the UK about how they are reacting to the COVID-19 situation
- Coronavirus causes 60% of garages to close
More than 60% of garages in the UK could have shut their doors since the COVID-19 lockdown began, a survey suggests.
- The safe operation of vehicle lifts: Part three
Here is a question we hear quite often: “I now have my new lift installed so I can start using it immediately, correct?” Actually, no. As a business you need to ensure you meet a number of conditions before handing it over to the mechanic to start using it for servicing vehicles.
The first thing you will need to do is have the lift inspected. This means a thorough examination by a ‘competent person’. This is a legal status, not just somebody who looks at the lift and says it looks okay to use.
This requirement comes under the Health & Safety Lifting Operation and Lifting Equipment Regulation (LOLER). The person who conducts the thorough examination must be independent of the installation process, so do not expect the installation engineer to complete this certification. You should check before buying your vehicle lift if the company supplying/installing your lift will be offering this service inclusive or if it is an optional extra. Otherwise, you will have to engage an independent inspector. Many business insurance policies for garages and workshops will include the thorough examination of lifting equipment by default. Again, check with your insurance provider before engaging an independent inspection.
Note: A thorough examination is not a one-time process. It needs to be conducted every six months to continue meeting LOLER requirements. This should not be confused with the maintenance of the lift that needs to be done/scheduled to meet the H&S Provision and Use of Workplace Equipment Regulation (PUWER). We suggest you think of it like the cars you work on for your customers. Service work is oil/filters/ adjustments etc, while a thorough examination is like an MOT. It is an inspection/certification that proves the lift is safe to continue being used.
Risk assessment
The next step before using the lift is to complete your risk assessment for the operation of the lift. This may sound basic, but you should fully review the operation of the lift and note any potential hazards that could occur. This includes any controls/steps required to ensure the safe operation of the lift from the person operating to anybody else in the vicinity. The next step is to ensure you formally go over the operation of the vehicle lift with all users of the lift. This includes reviewing the risk assessment specifically covering what to do in case of an emergency/problem with the lift. Finally record everything, names date time etc and keep it in a safe place.
Going back to the maintenance for a moment, PUWER sets a legal requirement of the equipment owner to have in place a formal maintenance schedule for workplace equipment. We strongly recommend you contract a GEA member company to conduct your lift maintenance at regular intervals on your behalf to ensure your meeting your H&S requirements.
Note: the vehicle lift operator manual may offer specific regular preventive inspections on a Daily/weekly/ monthly basis, always check the manual/supplier’s guideline for this information to keep your lift safe and in top condition.
For more information visit: www.gea.co.uk
