Average Repair Order (ARO) is one of the most important numbers when it comes to business in your shop. If you focus on measuring average repair order, your shop will inevitably begin to run a more consistent operation where you are maximizing your team’s efficiency while also maximizing profits.
Some people believe that running more vehicles through their shop will fix their business. However, if you are losing 5 dollars per vehicle, you could be causing chaos and stress to your staff – and wasting their time. Maximizing the work on each vehicle will lead to higher AROs and more success.
Five key factors that affect ARO but can be controlled by your shop:
1. Type of Customers
Know the difference between discount customers (someone who expects to spend $20 dollars on an oil change but isn’t willing to buy ANY other needed repairs) and quality customers (ones who know the importance of fixing a problem before it happens; more stable income). Advertising to this quality customer is the first step to success.
2. New Customer Acquisition of 30%
Since a typical automotive shop will lose about 18% of their clients per year, it is important to gain new customers in order to have a cushion and still see at least a 10% growth rate in your shop. An increase in ARO is a way to minimize and offset any losses incurred from losing customers.
3. Thorough Inspection
You must inspect every vehicle and make sure customers know the importance of it. Think back to the discount customers who are coming in only wanting an oil change and not an inspection, they are defeating the purpose of the oil change altogether. Usually they pass on a full inspection because they don’t trust that a repair shop will be honest with them. Digital vehicle inspections are one way to build trust and transparency with your customers.
4. Effective Communication Between the Front & Back of the Shop
Once the service tech accurately assesses a vehicle’s problem and its requirements, he or she must tell the Service Advisor what is required, why it’s required, what parts are needed, and how long the job should take (based on experience and book times). When the Technician gives the Service Advisor good information, he will feel more comfortable and confident explaining to the customer. This can sometimes be hard to determine from a written repair order with messy writing rather than a digital inspection done on AutoServe1.
5. Specific Work Order Write-Up
If the first item in the work order is the one the customer initially requested, they will feel comfortable because they expected to spend money on that certain problem. Therefore, it makes them more likely to agree to buy additional items. It’s easier to sell a product or service once you’ve already sold them something they needed.
These 5 key factors will influence your average repair order. Digital vehicle inspection systems like AutoServe1 have also proven to increase average repair order by on average 15%. You can learn how by scheduling a quick demonstration of the platform below.