Understanding Roles

In any team there will be role players and playmakers. There’s no denying that talent is a significant factor in success but talent without teamwork is a waste. Every member of the team must understand their role within the team. It’s the responsibility of management to clearly define these roles and communicate them to the team members. If a team member understands their role within the group they will be able to execute their responsibilities more effectively. Understanding the roles of others within the group will enable  them to be even more effective. Successful team building is inherent upon successful communication between team leaders and team members.

The System or the Individual

The most successful managers are effective at adapting the system to make the most of team member’s skills. And at the same time they’re able to teach the team members how to adapt to the system. Systems can be rigid and so can people. To make the most of them adaptability is necessary for both. Management must make the determination as to the best choice. This requires knowing the full system and business process cycles in detail as well as the best attributes and skills of team members. This way the correct modification can be identified. If modifying the system to adapt to a key competency of an individual will bring the best results then the system should be altered. If the best results can be achieved by teaching the individual to adapt to the system then the person should learn to work within the system. This is where the most significant results can be achieved.

Striving for Excellence

Change is the only constant in life. People change, circumstances change and life moves on. Team building is a continuous process. Teamwork should be ingrained in the culture of the organization. Ideas for improving the ability of the team can come from various sources and every opportunity should be explored. Many small improvements when put together can make a big difference. The success of teams and members are codependent. Individual success supports team success and team success equates to success for the individual. As the team improves the organization will become more successful. If the team continuously improves the organization will continuously become more successful.

Organizing the Presentation

There are probably as many different ways to present an estimate as there are stars in the sky. So this is something for which each company or individual will develop their own style. But the primary objective should be to present the information in a way that the customer can understand it and the person presenting it can explain the reasons for the recommended repairs and earn the business. The key point is to present the estimate in an organized fashion that works for the sales person and the customer. This goes beyond ‘this is what is wrong with your car and this is what we need to do to fix it’. It involves providing the customer with the information necessary to make an informed decision and assisting them in the process. It requires a consultative approach to solving the customer’s problems.

People Buy Benefits

When a person spends money on auto repair they’re actually seeking a benefit. At the simplest level this can be a vehicle that runs or a mechanical function that works. But there can be much more to it than that and presenting the potential benefits of different alternatives can result in the best decision for both parties. So it’s important to point out the benefits of different repair options such as safety, reliability, better performance, smoother ride, quieter engine, etc. The benefit is the real reason for having the repair performed. So each recommended repair should have a benefit when explained to the consumer.

Completing the Agreement

People like to make their own decisions and like to feel in control. When purchasing services this is extremely important. The word ‘Advisor’ is the most important part of a service advisor’s job title. Offering guidance and advice on making repair decisions and helping the customer draw the best conclusions for their situation will result in the customer feeling happy with the outcome. So present the estimate with a positive attitude in an organized fashion. Explain the benefits of repair alternatives. Guide the customer to make the decision that’s best for them and positive results will be achieved.

Calculating the Customer Attrition Rate

The standard calculation for customer attrition rate is to calculate the customer count at the end of the period minus customers added during the period divided by the number of customers at the start of the period. The period of time is generally one year. However in the tire and auto repair industry customer and vehicle records are retained for several years due to the importance of repair history. It’s important to have access to repair records for several years after the fact. Also maintaining customer contact information is beneficial for marketing purposes. So a slightly modified approach to calculating this factor should be applied. When calculating the customer count at the start and end of a period a good practice is to filter this count by excluding customers that haven’t had activity within the specified period of time prior to the start date and the end date. Otherwise the attrition rate will be overstated.

Calculating the Customer Retention and Acquisition Rates

The customer retention rate is the inverse of the Attrition rate. So if the customer attrition rate is 30% the retention rate is 70%. The acquisition rate is the rate at which new customers are added. This is calculated by dividing the number of new customers gained during the period by the number of customers at the start of the period. So if the number of customers at the start of the period was 100 and 10 new customers were added then the acquisition rate would be 10%.

Planning for Improved Customer Retention

Customer attrition rates can be lessened thereby increasing retention rates. One factor to consider is the reason customers don’t return. Some reasons can be dealt with and some can’t be helped. For example a customer leaving the area is not something the shop can control. But quality and service issues can be dealt with and improved. The only way these things can be measured is to follow up with customers and survey their feelings about the service they were given. If reasons for lost business are recorded, they can be a powerful tool in making improvements and improving customer retention rates. In addition, customers who are happy with service may leave because someone else attracted them through marketing efforts. So marketing to existing customers and offering incentives to return can do a great deal to improve retention rates. Not doing so can result in lower retention rates. So measuring reasons for customer attrition and making improvements in areas where weaknesses are identified as well as directing marketing efforts at existing customers can contribute to higher retention rates.

Planning for Greater Customer Acquisition Rates

Knowing customer acquisition rates can help in planning for marketing programs. If past customer acquisition rates and the referral source of new customers during that period are known then the effectiveness of marketing efforts can be measured. So knowing the percentage of customers acquired through a certain marketing campaign during a given time period will provide valuable information in developing future marketing campaigns.

The Cost of Retention vs. Acquisition

There are those that espouse the theory that it’s X times more expensive to acquire a new customer than to retain an existing one. This relationship can vary from business to business. Dividing the total cost of marketing to existing customers by the number of customers retained will determine the cost of retaining an existing customer. Likewise dividing the cost of marketing to new customers by the number of new customers acquired will be the cost of acquiring a new customer. Knowing this will allow the most effective allocation of marketing resources going forward.

Conclusion

The effective use of customer attrition, retention and acquisition rates involves applying them in the successful allocation of marketing resources. If the cost of customer retention is less than acquisition then it will be advantageous to direct more marketing resources toward retention. If new customer acquisition is less expensive the reverse would hold true. Utilizing knowledge of these rates can result in the most effective use of marketing resources. The quality of business plans, sales projections and marketing plans are much improved when knowledge of customer attrition, retention and acquisition rates are included in the planning process.

The Initial Startup Phase

The initial startup phase of a system implementation should leave existing business processes intact. Changes should only be made if absolutely necessary. The path by which information flows through the business should remain completely unchanged if possible. This way the initial change to be absorbed is limited to the use of the new system. Old habits die hard and leaving old methods behind is sometimes difficult especially when business is moving at a rapid pace. So limiting the initial change to only the use of the new software is the best way to ensure success.

Follow on Phases

Once the initial phase has been completed steps can be taken to achieve full implementation. Just as in the initial phase this should be done in the smallest increments possible. Changes should be initiated and absorbed one at a time. Procedural changes that impact multiple areas within the business should be planned at a detail level involving the people that will be impacted by the change. The new process should be clearly defined and the path from the old to the new should be mapped out as well. The more complex the process the more detailed the migration path should be. The gradual implementation of these phases should be taken as slowly as possible while allowing for time in between each so people can settle into the new procedures.

Business Partners and Change Implementation

Often implementing a new system affects the way business is done with customers or suppliers. These changes should be initiated using the same phased methodology as internal changes. Since these types of changes involve people outside the business it is often advantageous to use a pilot approach to making these changes. This is done by performing a trial run with a small group before full implementation. When using the pilot approach helpful information can be gained while change is made at a smaller scale allowing the full institution of the new process to be much easier.

Achieving Full Implementation

According to the objectives identified when the new system was acquired full implementation is achieved when all desired benefits of the new system have been realized. At this point all the process improvements and projected sales improvements and cost reductions have been brought to fruition. The things the company set out to do have been completed. At this point, it’s always a good practice to take another look at the system and determine whether or not there are more benefits to be recognized that weren’t identified at the outset. The long term goal should be to get the maximum benefit possible from the system. As always changes should be implemented gradually.

Stating Your Vision

Every successful business owner has a vision of what they want their business to become. And they strive to achieve that vision in what they do. In other words, their actions support their goals. So the first step in business planning is to state what will be achieved. This may include multiple objectives and goals. Some may be long range and some short term. But the clearer the statement of vision, objectives and goals the more effective the overall plan will be.

Defining How Your Goals will be Accomplished

Once the objectives and goals of the business have been identified, it is necessary to clearly define how each of them will be accomplished. These plans should include the time and resources required for each goal. There are three major components to a plan and they’re all interdependent. They’re time, resources and features. Time indicates the projected date that the goal will be reached. Resources are the things that are needed to reach goals including money and people’s time. And features are the definition of what is to be accomplished. For example a goal may be to earn 10 new customers in a specified geographic area within 12 weeks. Any of these can be adjusted in order to find the correct mix. The features (size of geographic area, number of customers) can be reduced in order to make the goal achievable. Time (number of weeks) to accomplish the goal can be increased or decreased. Resources (people, money) can be increased or decreased. In other words plans can be made more aggressive or scaled back depending on the circumstances. When multiple goals are being pursued simultaneously there can be competition for resources that will impact the planning process. Creating an integrated plan that allows all goals to be accomplished without resource conflicts is the key to bringing a company’s vision to fruition.

Plan to Re-Plan

It has been said that the only constant in life is change. A business plan is not permanent and should be updated on an ongoing basis. As time goes on circumstances change and plans are impacted. The frequency of revising plans is something that varies from business to business. Time, availability and impact of change can affect this decision. The need for revision should be evaluated at least every quarter. It is also a good practice to develop a detailed plan at the start of each quarter that projects one year into the future. The key point is that business plans are never static. They must be revised and kept current. Well thought out business plans allow for accomplishing objectives the most efficient and effective way possible.

Historical Data

Incorporating historical data into the plan is the best starting point. Just using sales dollars by month for the previous year is a good start but segregating sales by labor, parts and tires is even better. Also, looking at the monthly number of repair orders processed, quantity of labor hours and number of tires sold are good indicators that can be used to forecast future sales.

Customer Attrition and Retention Rates

Customer attrition rate is a measurement of how many customers were lost during the previous period (usually a year). The customer retention rate is a measure of the percentage of customers that were active at the start of the period and had activity within the period. Customer attrition rates are an important part of sales forecasting. Every business loses customers. Knowing the rate at which they’re lost will indicate the rate at which they must be added to achieve any level of growth or to maintain status quo.

Cost and Price Changes

As costs increase so do prices. So planning for parts and labor cost increases will determine the need for price increases. So if parts suppliers will be instituting price increases causing the cost of parts to go up then corresponding sales prices will go up. The impact of these increases should be included in sales projections. If the cost of labor increases due to raises or cost of benefits then labor rates may be increased accordingly. This increase also should be factored into sales projections.

Marketing Programs

Marketing programs are generally directed at retaining customers, increasing business from existing customers and attracting new customers. An effective marketing program focused on customer retention will cause retention rates to go up and attrition rates to go down. So knowing the potential impact of these programs is an important part of developing sales projections. Marketing programs aimed at increasing sales to existing customers focus on increasing the number of visits and/or purchasing new services or higher priced services will also impact sales projections. The anticipated impact of these programs should be included in the sales projections. Finally, estimating the sales volume resulting from marketing programs focused on attracting new business should be included.

Economic Factors

Various economic factors can contribute to future sales volume. At the broadest level, economic forecasts for growth in Gross Domestic Product (GDP) can be considered. Using the information for the entire US economy is readily available and can be used but if GDP growth for the local economy is available it will be much more accurate. Also growth projections that are industry specific are much more effective than general projections. Economic projections for the tire and auto repair business are sometimes available through industry associations. Also knowing specific local information such as new businesses opening up, existing businesses expanding or new housing that will result in population growth are important factors to consider. The objective is to obtain the best information available and assimilate it into the sales projections.

Developing the Projections

The process of developing the sales projections involves starting with historical sales data, making adjustments for customer attrition rates, applying increases in sales prices then factoring in the effects of marketing programs and economic conditions. The end result should be a reasonable projection of sales dollars for the upcoming year. Sales projections are an indispensable part of building a good business plan and their importance cannot be overstated.

Develop the Schedule

The most important part of the marketing plan is the schedule. The schedule establishes when events will occur, when expenses will be incurred and when anticipated results will be recognized. Any particular marketing program will have different factors that will determine these things. For example a trade show or auto show will require a number of things leading up to the actual event such as paying for your spot or booth, signage, etc. The actual event may include travel expenses. And there may be an impact on sales at the event as well as after. Lead times for all items must be considered and added to the schedule for the plan.

Include the Costs of Marketing Programs

It is essential that all costs that will be incurred as part of each particular marketing program are identified and added to the plan. The projected costs must be as accurate as possible but often they must be developed using estimates. The time period in which the cost will be incurred should be identified as accurately as possible. Then each expense item should be posted to the marketing plan in the month in which it will occur. Expenses could be onetime costs or they may be recurring.

Projecting the Results of Marketing Programs

The projected return on invested marketing capital is the reason for developing and executing marketing programs. So sales generated by the marketing effort and the period in which they will occur should be identified and added to the marketing plan. Projecting sales that result from marketing programs can be based on different kinds of information. Basing these figures on historical data is one option if the marketing program or a similar one has been employed in the past. However if the marketing program is something new and there is no historical data from the business to utilize then industry averages can be a good source for the projections. General averages that span all businesses will not be as reliable as information that is specific to the Tire and Auto Repair business. Also geographic and seasonal factors should be taken into consideration if possible. This can be one of the areas where association memberships and social networking can be very helpful.

Finalizing the Plan

The marketing plan is tightly linked to the overall business plan as both impact each other. So some knowledge of the current status and future plans of the business is necessary to completing the marketing plan. Finalizing the plan involves evaluating the impact of costs and sales projections for the marketing programs to be employed and adjusting the numbers to be in line with the sales and gross profit expectations of the business. When the marketing plan is refined to the point that it best supports the business plan it will be complete.

Defining the Major Processes

There are generally 3 major processes in a tire or automotive repair business. The first is the repair order processing cycle. This process can have a number of possible steps and some of them can take place multiple times during the life of a repair order. It’s important to document this process completely. List each step and indicate whether it may be repeated. The second major process is parts procurement. The way that parts are ordered should be documented and each step of the process listed. Parts can be purchased for repair orders or for stocking. The steps should be outlined completely from the point that the part is sourced and ordered through receiving to payment. The third major process is bookkeeping or accounting. The process by which the information for repair orders is fed to accounting must be documented. There also is a fourth possible process that may or may not be applicable and that’s customer relationship management. The way that customers are communicated with for these purposes should be documented.

Mapping the Processes to the New System

Once the major processes have been outlined the way that the new system will support them must be defined and documented. Creating this outline of the procedures will ensure that people know how each step of the process is supported. The process maps to the new system must then be tested and confirmed. The objective of this exercise is to become familiar with the way the new system relates to existing business processes. As stated above, existing procedures should be changed as little as possible initially but this may not be completely avoidable. When the processes have been mapped and defined the company will be as prepared as possible to switch to the new system.

Planning the Goal of Full System Implementation

Obviously a transition to a new system is undertaken because there are advantages to be realized by doing so. The initial startup should adhere to existing processes as much as possible. But the ultimate goal is to fully utilize the capabilities of the new system. Once the business has adjusted to using the new system the steps to achieve full implementation can begin. This will entail procedural changes and they should be implemented gradually. The transition from the old procedure to the new should be evaluated and the potential impact on other areas of the business should be considered. This should begin with a list of the changes that should be made to achieve full implementation, a schedule of the best order to implement them and a documented path for the changes required to accomplish each objective. In this system implementation methodology the initial stage is to map existing processes to the new system. The final result is to map processes to the capabilities of the new system.

Natural Drive and Competitive Instincts

People are naturally competitive. We all have egos that tell us to gauge our status and position in relation to those around us. What doesn’t come naturally is the means by which people act to satisfy these instincts. A person in a competitive situation can react in a positive way or a negative way. The possibility of a negative reaction is the point that can result in behavior that conflicts with the cooperative needs of a team environment. So competition isn’t necessarily contrary to cooperation. It’s the way people compete that can have either a positive or negative affect on the overall business environment.

How People Compete and Cooperate

Unfortunately, most people are not fortunate enough to have been taught the most positive ways to react to a competitive situation. Likewise they may or may not have been taught cooperation skills. So they’re left to their own devices to develop these behavior patterns. For the most part, competition and cooperation take place at a peer level. So their impact is realized primarily with coworkers. There can be many different ways that people react negatively to competition and cooperation but any one of them will adversely affect productivity and the success of the organization.

Building a Positive Competitive and Cooperative Environment

Competition and cooperation are both good things and can contribute significantly to the success of a business. In order to make sure that their impact is positive the business culture and environment must be conducive to this. People’s roles in the organization must be clearly defined as well as their responsibilities to each other. Competitive conflicts can occur when people assume a superior position for the wrong reasons. For example if they’ve been with the company longer or they’re a relative. Another example is the perception by an employee that another person is preventing their success rather than evaluating themselves and identifying how to improve. The policies and procedures in the company should be defined so that the possibility of this type of situation is minimized. Positive reactions to competition are based on self-improvement. If you want to be more then you need to do better. So rewarding people and offering recognition for improving are key to fostering a positive competitive environment. Likewise providing recognition for cooperative behavior will encourage teamwork. People respond to incentives and positive reinforcement for positive behavior creates a positive environment.

Risoria Limited is proud to announce that FastTrak Auto Shop Manager/FastTrak Tire Shop Manager release 6.0 is available for general release. Many improvements and new features have been added to FastTrak increasing the already wide array of support capabilities.

Parts Processing

New parts interface capabilities have been added to FastTrak. Parts interfaces allow sourcing and direct ordering of parts from a number of suppliers. Direct parts interfaces improve productivity and save time. The new parts interfaces that have been added to FastTrak include:

Internet Auto Parts (IAP)

The IAP interface includes links to many major suppliers and retail chains such as Carquest, Autozone and Kragen/O’Reilly.

Nexpart

  The Nexpart interface includes links to many major suppliers including ACDelco, Uniselect and Federated.

DST Turboparts

TurboParts includes links to major parts distributors such as MotorCraft and aCDelco.

The direct links to parts suppliers allow FastTrak to keep parts pricing updated on an ongoing basis. FastTrak performs weekly price checks with suppliers that are integrated and updates the part master and any related canned jobs with current pricing.

European part number format and sort

This feature allows for formatting of VW/Audi, Mercedes and BMW part numbers when entered. It also allows for special sorting on look up screens and reports so that parts are grouped together by type, etc.

Barcode label printing

Barcode label printing is now included in FastTrak. Barcode labels can be printed for inventory locations and parts. Using barcodes for inventory improves accuracy and productivity. They can be easily generated and the system can be set up to automatically print them on inventory receipt.

Alias part numbers

This feature allows a part to be referenced by more than one part number. If different suppliers use different numbers for the same part the inventory can be purchased, stored and sold by referencing it with more than one part number. This eliminates the need to have more than one part record for what is essentially the same part.

Marketing

Demand Force

Demand Force is a customer relationship management provider that utilizes modern marketing techniques to communicate with prospective and existing customers. The direct link between FastTrak and DemandForce allows the shop to subscribe to this service.

Prospect Address Type

 FastTrak now allows for prospective customers to be loaded into the database. They can be marketed to using the FastTrak marketing module and when they come to the shop they can be converted to customers automatically.

Automated Emails

The FastTrak reminders and marketing module now includes the ability to build email text (including formatting, color, signature, shop logo, etc) and schedule emails to be sent automatically for appointment reminders, service due reminders, recommendations and thank you messages. These marketing tools allow communication with the customer to occur automatically once they’re set up.

Sales

Progress/Partial Billings

This feature allows multiple billings per repair order. It supports billing part of the repair to a warranty company and the remainder to the customer. It also supports billing for long running jobs as work is completed.

Colored Invoice text

 This feature allows specification of color for the text in specific sections of the printed invoice document. It can be used to highlight certain areas such as recommendations.

Documents/Attachments

In addition to customer documents FastTrak now has the ability to store documents (pictures, scanned invoices, etc) and link them to vehicles, parts and repair orders.

Management/Productivity

Time reporting

Time reporting in FastTrak has been expanded to allow for technicians to clock on and off overhead accounts when not actually working on a vehicle. Additionally efficiency and proficiency management reports have been added enabling the performance of employees and the shop to be monitored.

Extended warranty information

Labor and parts warranty can now be linked to the original repair order

Vendor prioritization

 This feature allows specification of the top vendors to facilitate easy search when sourcing or ordering parts. Setting a vendor to a higher priority will cause them to show up at the top of the search list.

Auto-add tasks and post repair items to each RO

This feature allows tasks and post repair items to be specified as required for each repair order. If there are tasks or post repair items (quality check, etc) that are performed on each vehicle they can be specified as auto-add and when a new repair order is created they will automatically be added.

Year, make, model tasks

FastTrak has enhanced the processing for tasks that are year, make model specific so they are highlighted in search lists for easy identification. The task search screens are filtered so tasks that don’t match the current vehicle don’t appear to be selected.

Dynamic list search for tasks and parts

This feature allows tasks and parts to be searched and added directly to quotes, repair orders and vendor invoices dynamically as characters are entered into task or parts lists on the screen. A list of available tasks or parts is displayed below the line being worked on and the desired item can be selected directly from the list.   

Tires

Tire SKU Management

With this feature FastTrak imports and manages tire manufacturer SKU data into the system based on the brands specified by the shop. The SKU information includes all information about each tire including speed rating, load index, mileage warranty, traction rating, temperature rating, and tread wear rating. Also, tires are flagged as discontinued when the manufacturer does so. This saves time and provides valuable information to use when presenting the tire to customers.