Which would you prefer? A good stable relationship or a one-time fling? Okay, so I’m not talking about dating, I’m talking about auto shop customers. While some businesses can survive with one-and-done customers, the most profitable ones build a foundation of trust and respect that keeps customers coming back.
Some years ago, I chose a particular auto shop out of convenience. It was minutes from my job, and I wanted an oil change during my lunch break. The owner was one of the most cordial people I had ever met. Also, a couple in the waiting area sang the praises of the owner and his shop. I later returned for other repairs, and he became my go-to whenever I needed any work done on my vehicle. After having a baby, I left that job but continued to go to this auto shop (with an infant in-tow) outside the vicinity of my neighborhood. I trusted them with the care of my car. I remained a loyal customer for years because reliable transportation was more important to me now than ever.
Quality customers are what make an auto shop successful. However, many owners focus more on increasing their car count instead. This can lead to low-margin repairs from customers that are only looking for a discount. We’ll show you how to improve your auto shop’s profit by increasing your average repair order using customers you already have.
5 Ways You Can Increase Your Average Repair Order
- Schedule Services in Advance
- Communicate Effectively
- Offer Digital Inspections
- Remember the Little Things
- Email Marketing
What is an Average Repair Order?
An Average Repair Order (ARO) is the total dollar amount for products and services sold to each customer that visits your auto shop. This number gives you insight into what your customers are purchasing most frequently and how your business can increase profits.
Knowing your ARO is a great way to track how you are capitalizing on the customers already coming to your auto shop, rather than trying to pull new customers away from your competitors.
Why Should I Focus on ARO?
Increasing your average repair order is more profitable than increasing your car count.
A busy shop is not necessarily a profitable one. More vehicles running through your bays doesn’t always equate to more money. Let’s say that you work on 100 cars a week. Each customer spends $50, resulting in $5,000 revenue for your business.
100 Cars x $50 Repair Order = $5,000 Revenue
However, if your average customer spends $200 on repairs, you would only need 75 cars to reach $15,000 in revenue!
75 Cars x $200 Repair Order = $15,000 Revenue
This because more profitable because you are spending less money on labor. More cars mean more technicians needed to keep up with the demand for service. A higher average repair order simply capitalizes on the vehicles already at your shop, which means more profit without adding to your overhead.
Another reason to focus on your average repair order is that it reduces the sting of customer attrition. Even the best auto shops will lose customers to competitors, customers moving away, new car sales, and even the great gig in the sky. A typical shop will lose 18% of their clients per year, much of which might be out of your control. Increasing your ARO can help offset any losses of clientele and help minimize the stress on you and your staff to recover profit.
How Can I Increase my ARO?
Increasing your shop’s ARO is one of the most effective ways to maximize profits and run a more sustainable business. Most auto shop owners struggle to find ways to increase their ARO, but here are some things you can do:
Schedule Services in Advance
If you schedule in advance, you can control how many customers come in on any given day. This will allow you to spend more time with your customers and their vehicle’s needs because you’re not trying to move on to the next car in line.
Because more time is spent inspecting vehicles, you can make better recommendations for service, give the customer more face time, and document their concerns. Customers will feel that their cars are being cared for and not just serviced.
Communicate Effectively
Auto shop owners should train their technicians to be excellent communicators. A bulk of a technician’s work is diagnosing and fixing vehicles. Once they’ve assessed the problem, they must communicate the job to the service advisor at the front desk.
Information like what’s required, why it’s necessary, parts needed, and how long it will take must be communicated immediately and clearly. If the service writer can relay these details to the customer, it could result in more sales of parts and services per vehicle.
Offer Digital Inspections
Inspections should be performed consistently, even during routine services like oil changes. This allows you to diagnose any potential issues with vehicles.
If you offer a full vehicle inspection to customers, they’ll usually pass, thinking you’re trying to take them for a ride. Use the assessment as a way to educate the customer on the importance of preventative maintenance. It’s a great way to build trust with them.
Digital Inspections are a great tool to help educate customers because you can show the customer exactly why the vehicle needs certain services through pictures and videos.
Remember the Little Things
Whether a light bulb or battery for a keyless remote, small add-on items add up over a year.
These items are inexpensive, so most customers agree to have them replaced. Adding those few extra dollars per thousands of cars will go directly to your bottom line.
Email Marketing
Email marketing can help increase your ARO because it gives you direct access to your customers’ inboxes. We’re not talking about sending emails to stay top of mind. You should provide something of value every time you reach out to them.
When used correctly, email marketing is a great tool that can resonate with your customers. We’ve written a blog called “How to Use Auto Repair Email Marketing to Increase Your Shop’s Profits,” which will provide a strategy on how to increase the profitability of your auto shop through email marketing.
Look at each customer visit as an opportunity to provide the best service possible and build relationships. Customers will reward you with their loyalty, and you’ll reap the benefits of quality repair orders with increased profit.
For more ideas on how to market and increase business at your auto shop, visit our blogs on Automotive Advertising.
By Eric Shafer