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Thursday, August 30, 2007

Biz Tips: Car Count, Repair Order Average & Marketing

Car Count, Repair Order Average & Marketing

by Mike Olson, WORLDPAC Director of Business Management Training

There are two basic sources of revenue for service centers:

Car Count; a marketing function (the number of vehicles that come in for service or repairs) and Repair Order Average; a selling function (the amount of dollars produced by each repair order).

Separately measuring these areas allows the owner or manager to effectively react to a decline in revenue and identify areas of the business that need to be adjusted to increase sales.

Reasons for Declining Car Count and Repair Order Average
Due to late model vehicles, many shops have experienced a decline in car count and repair order average. Advanced automotive technology stretches maintenance intervals, causing car count to drop. The frequencies of oil and maintenance services are also dropping because consumers are not required to bring their vehicles in as often as in the past. Repair order averages also suffer as vehicles need more diagnostic work, which usually does not require an equal amount of parts. Thus, car count and repair order averages may be lower than they used to be.

Identifying the exact source of reduced revenue allows you to react appropriately:

Problem: Lower car count
Solution: Increase marketing

Problem: Lower repair order average
Solution: Sell more service, conduct more inspections

Two Essential Types of Marketing
Service centers must be marketing at all times. Today, most centers need a higher car count and repair order average to maintain revenue levels from years prior. Since car count is a marketing function, increasing your marketing will boost your car count and ultimately raise revenue. Retention and Acquisition Marketing are two types of marketing activities your business should seek to increase, as explained below.

Retention Marketing
Retention marketing helps to retain and grow existing customers. You must keep your name in front of current customers by communicating at least 4 times a year. Newsletters, post cards, service reminders and holiday cards are just a few of the ways to accomplish this. You will get your greatest marketing return on investment (ROI) from this group because they already know you.

Acquisition Marketing
It is equally important to find new customers; this is acquisition marketing. Acquisition marketing is more difficult because these customers do not know you and are probably already using another facility for their car care needs. Your message must be compelling enough to allure the customer away from their current provider and into your shop.

How Acquisition Marketing Works
In order for a new customer to be responsive to your marketing material, they must have a need when they are first exposed to your communication. Secondly, they must also have a desire to change. The biggest problem most service centers find with acquisition marketing is patience. Sending out 1,000 mailers may only produce a couple of responses from customers who had a need and a desire to change at that particular moment. A typical response rate is 1%-2%. Acquisition marketing is a long-term strategy, so low initial response rates are just a part of the process. However, in order to achieve long-term results, you must have patience and persistence. Repetitive mailing has the ability to reach the customer at the time they have a repair issue or are in need of a service or want to change to a new provider; this is the point at which your acquisition marketing efforts become fruitful.

Tracking is Necessary
The final approach to good marketing is tracking. You’ll need to track each marketing activity as well as track the overall success of your marketing plan. Measure your success by tracking telephone response and jobs that come into the shop as compared to the dollars invested. Reinforce your presence with a creative message and try to avoid looking like everyone else. And for the best outcome, make your marketing efforts continuous, not just when business is slow.

To build a more profitable business, visit WORLDPAC Customer Marketing Services for marketing solutions and marketing management assistance.

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