We Tracked 500 High-Performing Auto Repair Shops Since the Onset of COVID-19. Here’s What We Learned.
Using our unique tool, the TM-500, we tracked 500 of the industry’s top-performing auto repair shops during COVID-19. Here’s what we learned about how these auto shop owners successfully adapted their business and grew during the pandemic.
Remember spring and summer of 2020? A lot of us are probably trying to forget and move forward, and we feel you. It was a scary time period for everyone, including the automotive repair industry. Last April, auto shop owners were wondering, are my customers going to come into the shop? If people stay inside, are they going to drive less? If they drive less, are they still going to come into the shop as frequently? What if other industries are affected, and people have less money for repairs? How can we keep our team and our customers safe? What can we do to help essential workers and vulnerable members of our community?
We were nervous like everyone else. But anyone who knows Tekmetric knows that we’re committed to driving the auto repair industry forward; we wanted to answer these questions and put Auto Repair Professionals’ minds at ease. We also wanted to enable shops to not only endure the pandemic but also grow and come out stronger than ever before.
Strength in Numbers
If there’s one thing that makes us feel confident, empowered, and like we know what’s going on, it’s numbers. (Tracking shop performance and providing insights is kind of our thing). We’ve seen the power of metrics in shops across America, and we know that customers, service advisors, technicians, and the entire auto repair industry benefit when auto shop owners can make informed decisions.
So we launched the TM-500 Index. The TM-500 tracks the Average Repair Order and Car Count of five hundred auto repair shops located across the United States. But data don’t mean squat if it ain’t easy to read. The TM-500 let’s users sort data by time and region so they can quickly explore trends.
Want to know the ARO and Car Count between the months of June and November of 2020? Simply set the time period “by month,” and the TM-500 will generate an easy-to-read graph. Want to know if shops in midwest states had a higher or lower Car Count than southwest states last summer? Simply set the time period you want to observe, and hover over different regions on a map of the United States to learn how they performed. Just as the Tekmetric system for auto repair shop management gives shop owners better insights into their shops, the TM-500 gives Auto Repair Professionals better insights into their industry.
But knowing is only half the battle.
A Catalyst for Digital Transformation
The auto repair industry has lagged behind almost every other service industry in how we utilize technology. Almost anyone with a smartphone can order a pizza, sushi, enchiladas, or any other food they want and track it while it’s being delivered to their door. Meanwhile, someone paying hundreds or even thousands of dollars for a new transmission still has to go in-person and deal with a half-legible piece of paper that feels greasier than the pizza and enchiladas put together!
But we get it. People are sometimes reluctant to change. For many auto shop owners, however, the COVID-19 pandemic was the “now or never” moment to fully digitize their shops.
In 2020, Tekmetric prioritized the rollout of several features we had been working on to help shops provide their customers with the experience they’ve come to expect in almost every other part of their lives. In April of 2020, we rolled out Tekmerchant Text-to-Pay, allowing shops to invoice and collect payment via text message. In November of 2020, we rolled out Tekmessage True Two-Way Texting to make it easy for service advisors and customers to communicate throughout the entire repair process. Combined, these two features enabled Tekmetric users to provide a completely touchless experience to their customers without sacrificing the quality of their work or customer service. Much like in other industries, customers who bring their cars in for repairs appreciate the extra service and transparency of a more enhanced, digitally assisted customer experience.
As we watched many shops grow by using Tekmessage and Tekmerchant, we kept an eye on the overall performance of the TM-500. We were able to see when shops began to bounce back in summer after an early slump, and developed other understandings about where the industry was headed. Over time, we have added new metrics to the TM-500 such as state-by-state Labor Margin, Parts Margin, Effective Labor Rate, and Car Count to gain a more complete picture of these high-performing shops.
What Have We Learned Since the Onset of the Pandemic?
When making conclusions about where the industry is going, we like to be informed by both quantitative and qualitative data. The numbers give us a factual look at what’s gone up or down, and talking to people in the industry helps us make correlations between how certain behaviors, processes, and principles affect these trends.
Between the data we gathered from the TM-500 and the feedback we were able to gather from talking to auto shop owners, here’s what we have learned.
Repair shops are selling larger repair orders.
Based on the TM-500 data, shops are closing larger tickets. There are two possible reasons why shops have been able to sell more work:
People are driving less, so when they do visit the auto repair shop, they try to take care of all the necessary repair work at once.
Tekmetric features such as Tekmerchant, Tekmessage, our built-in digital vehicle inspection, and estimates that let customers approve and decline work have all enabled these shops to sell more work.
Both factors are probably at play. Considering that the TM-500 pulls data from Tekmetric shops, and we saw a bump in ARO when Tekmessage and Tekmerchant were released, it’s safe to assume that these features had an impact on ARO. At the same time, Car Count seemed to be less than it was in previous years indicating that drivers were coming into shops less often. Any shops that were able to provide a more transparent experience seemed to yield more approved work.
Fully digitized shops are the future.
You might think that all shops took a bit of a hit due to COVID-19 because it was something that affected all of us, yet some shops actually did better during the pandemic. Shops such as S&S Auto Repair and Speed Auto Repair were able to expand their businesses, improve key performance metrics, and even add new locations.
When asked why they thought they were able to grow during the pandemic, both shop owners attributed their success to a few key factors. Early on during the pandemic, these shops made a concerted effort to adapt and implement new processes that would allow them to still function under COVID conditions. They also focused heavily on community outreach, providing discounted or free service to essential workers, which gave them positive publicity. At the same time, older shops that weren’t ready to adapt were selling their businesses and even laying off workers. Suddenly, there were rock star technicians and service advisors ready to hire, and these thriving shops hired them.
Because S&S and Speed Auto Repair already had a scalable cloud-based system in place, they could easily onboard new team members and greatly reduce transition time. By the end of the summer of 2020, both of these shops were able to capitalize on the new influx of customers willing to pay for more repair work.
What Lasting Changes has the Pandemic left on the Auto Repair Industry?
While we don’t know what the future holds, we can look at this present moment and draw some conclusions. Restrictions in the United States and Canada have been greatly reduced. People are now going out to restaurants and travelling again.
But there are some things that seem like they’re here to stay. For one, many workers and employers have realized that they can be productive working from home. There may be more road trips, but generally, people will have less wear-and-tear on their cars if they’re not commuting to work everyday. More people working from home could also indicate that drivers will come into the shop less often but may be willing to approve more repairs, making it all the more important for shops to have systems in place that enable them to sell more work.
Digital customer experiences were already becoming popular before the pandemic, but after a year of living on Uber Eats and Amazon, it’s safe to say that consumers are going to expect more streamlined service experiences that leverage digital communications. Consumers want to make decisions with their phones so they can spend more time in their living room and less time in a waiting room. Shops that adjust will be more likely to thrive. Shops that maintain outdated methods will fall behind.
Furthermore, while many people are eager to get back outside and spend time with others, the pandemic has made people a lot more aware of their personal space and how easily viruses and infections can spread. Many people are likely to be more careful about going into public spaces, especially if they’re older, immunocompromised, or live and work with people who have weakened immune systems. Others may prefer to take measures such as contactless service and wearing a mask simply because of the health and mental security it provides them. Many people either got sick or knew someone who became sick during the pandemic, and these experiences are likely to stick with them for a while and affect their behavior and decisions when it comes to shopping in public.
Auto repair shops that continue to offer contactless service will be at an advantage when it comes to competing for all business, whether it’s because of safety or because your customers are too busy to stay in the shop as their vehicle gets repaired.