3 Ways to Maximize Auto Repair Shop Profitability

Minor changes can yield big results.

Originally published on:
Sometimes minor changes lead to big results. Tekmetric Partnerships Manager David Fantin shares three small adjustments you can make to increase auto repair shop profitability.

From what we see, there’s a lot that shop owners get right. They understand how to lead their teams, grow their shops, and bring trust and transparency to their customers. But as a former trainer and franchise performance specialist, I do notice a lot of little inefficiencies that add up. 

Tekmetric touches every part of running your shop -- from managing customer information and measuring business metrics to facilitating digital vehicle inspections, repair order workflows, and even payment processing.

Because we have so much information available, we've collected and analyzed all that data at our fingertips to bring shop owners and general managers unique industry insights on how your shop can make the most money out of the work you already do.

Maximize your profitability.

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1. Streamline Your Parts/Core Management 

One common thing I see at repair shops is an overflowing parts return shelf. Often those parts have a thick layer of dust from sitting there for months or even years.

When I see those full shelves, I see dollars (think of a cartoon character with dollar signs for eyes—that's me when I see these overflowing return shelves). Don’t let those dollars sit on your shelves; put them back in your pocket!

Here’s how. 

Set expectations with your team. 

When I worked in the shop, we had a 24-hour rule for returns. Unless there’s a specific reason, no part should stay on the shelf for more than 24 hours. We were so tenacious about parts returns that the delivery team members started catching on and checking the shelves without us even asking. 

Have a linear process for ensuring the returns are complete. 

A critical component of Tekmetric is the built-in core/parts return function. From marking a part “needing to be returned” to “refund complete” and confirming the credit on your parts invoice, having a tool that helps manage this process will help protect your margins.

Set a reminder. 

Put a reminder on your phone or computer for the last business day of the month to ensure that your parts shelf is clear. Tekmetric makes it easy to know which parts need to be picked up; just compare the Parts Purchased Report to the Parts Usage Report. If there are any parts, call those vendors and get them picked up! 

2. Track Your Marketing Sources

What does your marketing strategy currently look like? Maybe you’re paying for signs on the local high school’s baseball field, or ads in grocery store brochures. Or maybe you’re paying for billboards on busy roads, or sending out bulk mailers. 

No matter which marketing tactics you’re using, it’s vital that you track the return on investment for each campaign you roll out to maximize auto repair shop profitability. For instance, if you decide to spend $2,500 on a mass mailing campaign that features an oil change coupon, you should keep track of how many customers walk into your shop with that coupon.

After the coupon’s expiration date, you’ll know exactly how much revenue that mass mailing campaign generated for your shop. If the revenue wasn’t high enough, that’s a sign that you should try a different marketing tactic.

Tekmetric simplifies the process of tracking the ROI you’re getting from different marketing sources. Within Tekmetric, service advisors can select a custom marketing source for each and every customer. At the end of the month, or whenever you choose to end your campaign, you can look at the RO Marketing Source Report to see exactly where each customer came from.

After you figure out the best marketing tactics to get customers flowing through your garage, you can really rev up your auto repair shop profitability by having your team…

3. Leverage Digital Vehicle Inspections (Because Seeing Is Believing)

“Your coolant reservoir is trash!” the technician exclaimed. 

The customer in the lobby had wanted more details on why the shop was telling him he needed to pay $1,100 for the repair, so a young service advisor had brought in the technician to explain. 

That young service advisor was me. 

Oftentimes, telling someone that something is wrong with their car just isn’t enough to close the deal. Everyone is tightening their belts these days, and seeing an estimate for a couple thousand dollars can be really tough for many people to swallow.

However, when customers can actually see what they’re about to spend their money on, there is a significantly higher chance of them approving the repair.

The Tekmetric Difference

We see it time and time again: when shops start using Tekmetric’s built-in digital vehicle inspections (DVIs) to show customers the issues with their vehicles using photos and videos instead of trying to just explain the repairs in words, it builds trust, increases approvals, and boosts your shop’s Average Repair Order (ARO). 

You can try to explain a repair all day, but the truth is, seeing is believing.

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