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.
- 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.
- Investors in People – a recruitment tool?
After running a successful repair centre for 20 years, it was clear that finding quality staff to grow and improve our business was becoming more problematic. A respected friend who runs a communications company locally had posted on Facebook that he had recently joined the Investors in People Standard and had transformed his business through it. After a short conversation with him, I got in touch with IIP (Investors in People), and our journey began.
The Investors in People Standard is a business improvement tool designed to advance an organisation’s performance through its employees. It provides an expert overview of the organisation, offering valuable insight and pointing the way to improvements from an independent and objective perspective. One of the claims made by IIP is as a “benchmark for any well-run organisation, signalling to customers and employees your commitment to good business and people management excellence.”
Humbled and horrified
What difference has it made to us? Well, firstly, the biggest change has been me. As a very hands-on Managing Director and co-owner of our family-run business, I had always assumed that if the staff had a problem, they would tell me. However, when I conducted my first staff appraisal (on the recommendation of IIP) I was both humbled and horrified when I learned of issues in the workplace and in employees private lives. It became clear that there had to be opportunities for more one-on-one conversations and also Toolbox Talks, a short meeting in the workshop to keep staff up-to-date with any changes or issues cropping up in the workplace. This keeps staff more connected with the success and progress of the business and, hopefully, more involved with the day to day concerns as well as providing opportunities to share any issues.
Aims and retention
Through working with IIP we also now have a company profile which states the following:
Overarching Aim: To build a loyal clientele and a company that will experience longevity and fane a trustworthy reputation, with client recommendations at the heart of what the business stands for.
Mission: To deliver optimum customer service at a fair price, and the promise to customers is we will Cut Costs - Not Corners. We deliver on this promise by providing a professional service to every customer, ensuring work is completed right the first time and to budget.
Values: Loyalty to staff and customers; Good workmanship; Quality customer care; Investment in staff development (personal and professional).
Our employee contracts have been updated and we have company handbooks for each member of staff. As part of the ongoing IIP involvement each member of staff has an interview with an IIP representative who then gives anonymous feedback to me along with any recommendations for implementation.
We began this journey with IIP in 2015 along with Investors in Young People (IYP) for our staff under 28 and became the only organisation of our type in Britain to attain both awards at the same time.
Has this helped us recruit staff? Probably not. Has it helped us retain staff? Absolutely! Being in a situation where we’re about to appoint a new member of staff we find ourselves in a position of not having to advertise. The new employee about to start with us is coming because of a recommendation from another member of staff. Just as our business grows with customers recommending customers, maybe our staff will continue to grow with employees recommending other potential employees.
Graham Clark is the owner at Anderson Clark Motor Repairs, an award-winning independent garage based in Inverness.
- Additive advantage
For any garage, finding new revenue streams is a key priority. Being able to increase your profit per vehicle makes business sense. But with so many products out there, how does a workshop owner know which way to turn? Which product is a genuine business opportunity that works for both your garage and your customers and which could turn out to be a waste of money, or worse?
According to Fortune Business Insights, the global fuel additives market is set to reach $12,117.8 million by 2028. Fuel additives can help vehicles perform better, reduce carbon emissions and increase fuel efficiency. Oil additives can help to reduce friction and wear within the vehicle, as well well as keep engines clean by flushing through deposits such as sludge. Both types of additives and cleaners can also create a valuable additional revenue stream for garages. What motorist wouldn’t want to give their vehicle a deep clean from the inside out, leaving it in tip-top condition and delivering improved fuel economy?
But according to Andrew Goddard, Chairman of the independent trade body for lubricants, the Verification of Lubricant Specifications (VLS), it’s not quite that simple. Andrew urges caution when it comes to oil additives: “The latest generation of highly sophisticated lubricants is formulated with advanced chemistry, using the latest synthetic technology. They strike a delicate balance of meeting manufacturer specifications within exacting tolerances. The tiniest change in a formulation can have a real impact on the performance of the finished product. “Aftermarket additives could mean that the performance of the lubricant to cool, clean or protect moving parts is not as effective as it was, as well as causing an unnecessary expense to consumers.”
That’s certainly an outcome no garage owner would want. Andrew continues: “Lubricants are working harder than ever before, catering to the strive for reduced emissions, demand for greater performance and better fuel economy. Smaller engines are running at higher temperatures to maximise efficiency, power output and fuel economy. Longer oil drain intervals, taken together with smaller sumps, have created the need for less viscous, synthetic oils to provide the lubrication required in these challenging conditions while meeting customer’s demands for performance and economy. Added to that, lubricants must be able to cope with temperature changes, increased bio-content in fuels, hybrid vehicle technology, challenges like start-stop functionality and overcoming problems arising from LSPI.”
So it sounds like it pays to do your homework when it comes to additives. Garage owners should make sure they really research any stand-alone additive packages they are recommending or using, and understand how they might impact the consumables already in customers’ vehicles. That way, you can be confident that you are making the right choices for your business and your customers in both the short and long term, balancing short term profit with long term business sense.
