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.


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