Break Down Your Goal
A goal without a plan is just a wish. I don’t know who first spoke those words of truth, but as 2019 is upon us, we should all make sure we don’t hang our hopes for success this year on a wish. Everyone knows the new year’s resolution chosen more than any other is to lose weight. But, how about we change that resolution to live healthy? Losing weight has an end point that leaves us not necessarily knowing what to do when we reach that point. Living healthy, on the other hand, is something positive that we can define and do for as long we like. It’s something we can easily write a plan for and know each day if we are sticking to it. Step one might be to get 30 minutes of exercise each day, make a list of acceptable foods to eat, or set a total calorie count for each day so we know when we reach it, we can’t have any more food that day.
As we venture into 2019, we should use the same format to ensure the health and growth of our companies. Set positive goals and make an easy-to-follow plan to make sure we reach them. For example, it’s easy to say we want to be more profitable or grow our sales by 10 percent. When hearing those stated goals, they sound a lot like wishes. Instead of making wishes, we should write down plans to follow that will make success inevitable.
One of the best ways to do that is to focus on the lead measures. Most measurements that we track can be defined as either lag measures or lead measures. Using the example of weight loss, the lag measurement would be getting on the scale and checking your weight. You can stand on the scale fives times every day, but it won’t have any impact on reaching your goal. The lead measures—ones that you can control and will have a direct influence on reaching your goal—are the ones we want to be tracking each day. The lead measures in our weight loss example would be measuring our daily amount of exercise and the total calorie count we have consumed. We have total control over those lead measures. And, when we focus on hitting those lead measures, our lag measure will ultimately be moved in the direction we want.
Let’s say you want to increase your sales by 10 percent this year. The first thing you should do is define what that 10 percent is in dollars or number of vehicles. In our example shop, let’s say that increasing sales would be either $100,000 or 40 more vehicles repaired. What are the lead measures to help you sell another $100,000 of work or repair 40 more vehicles? Like our weight loss example, it is likely a combination of at least two or three things. Our example shop already fixes 400 vehicles per year (we know this because an increase of 10 percent is 40 more vehicles) so I would start with the opportunity within our existing business. If we repaired the same amount of vehicles this year and averaged writing one and a half more repair hours per vehicle, we would increase our annual sales by $30,000 (assuming a labor rate of $50 per hour). With all the information available on OE websites, it should be a very simple process to find one and a half more hour to write on each repair.
Now we only need to find an additional $70,000 to hit our sales goal. Assuming your average repair is $2,500, instead of repairing an extra 40 vehicles, now we only need to repair 28 more.
The next lead measure to focus on is closing ratio. How many vehicle owners do you come in contact with each week versus how many schedule an appointment for repair? With the DRP playing such a large role in the industry over the past 30 years, some of us have lost our selling skills. Our sample shop repairs 400 vehicles per year, or almost 8 per week. Let’s say they have an industry average closing ratio of 70 percent, meaning that for every 10 customers they talk to on the phone or in person, they get seven of them to schedule an appointment. Using our sample data of repairing 400 vehicles per year and a 70 percent closing ratio, that means they let 171 potential customers go to a competitor. If we increase our closing ratio to 75 percent, we would get two more cars for every four-week period into our shop. That’s 26 out of the 28 we needed to hit our goal of increasing our sales by 10 percent for the year.
Now, you tell me: getting two more customers per month doesn’t seem like such a daunting challenge, does it?