Running a Shop

Correcting Your Worst KPIs

Order Reprints
FB_Topical_0719.jpg

In the eyes of his co-workers, Craig Amundson is Raymond Auto Body’s man behind the curtain.

“We consider him our Wizard of Oz, because he’s kind of a know-all guy,” says shop co-owner Jason Slomkowski.  

Amundson serves as the St. Paul, Minn., shop’s chief financial officer, but spends much of his day blueprinting cars. And he’s a big reason why the shop rakes in $12 million in annual revenue, and gets $300 per technician per hour—roughly $100 higher than most shops.

“When [technicians] get the car, it’s balls to the walls,” Amundson says, “and let’s go.”

Amundson is just one of the innovators in the industry these days that has unlocked keys to great KPIs like technician productivity. And crafty employees like him are invaluable to their shops … because nothing slows a facility down quite like poor shop metrics such as technician productivity, or cycle time—which, according to data from the 2019 FenderBender Industry Survey, plenty of facilities struggle with.

Amundson will be the first to tell you that his suggestions for producing top KPIs aren’t all that elaborate. And, like other shop operators FenderBender spoke to for this story, he insists other shops could easily adopt his strategies and benefit. The magazine spoke with authorities on typical shop challenges like capture rate, repair-versus-replace, and administrative costs.

Whether their facility was big or small, whether it was located in Connecticut or Indiana, all those successful shop operators were in agreement in one area: if you study your shop stats consistently, you can improve almost any performance metric before long.

“I do that, religiously,” says Amundson, of monitoring KPIs

Here’s a look at how to improve KPIs that commonly trip up many shops.

CAPTURE RATE CURES

No one likes letting a potential customer slip through their grasp. Ed Dietz is certainly no exception.

That’s why Dietz, the chief operations officer for Lefler Collision & Glass Repair Center, takes

great care to make sure his employer’s capture rate is a staff focal point.

“When a customer walks in the door, they’re looking for trust and direction,” says Dietz, who helps oversee Lefler’s four facilities in the Evansville, Ind., area.

Most in the collision repair industry consider 60 percent to be a solid benchmark with regard to capture rate, sometimes referred to as “assignment received to estimate start date.” Lefler currently boasts a capture rate near 70 percent.

It takes several key steps to capture customers that effectively. Dietz, a 20-year veteran of the industry, recently shared Lefler’s capture rate keys with FenderBender.

Monitor Shop Stats Often.

Slightly more than one-fourth of the respondents to the 2019 FenderBender KPI Survey said they don’t routinely track KPIs (with several noting that they simply don’t have the time to). At Lefler shops, however, Dietz and the front office use their shop management system to efficiently keep tabs on performance metrics on a daily basis.

“Capture rate affects the front staff,” he explains, “but we’re also looking at supplement percentages, and all kinds of financials. If you just dedicated a day or two (per week) to them, then you’re never going to get caught up. You’ve got to stay on top of those.”

Utilize Customer Service Reps.

The shop leaders in Evansville want their one or two customer service reps at each location to be able to answer clients’ questions about issues like rental car providers. That’s why the staff at Lefler locations often goes through role-playing scenarios—to practice, and to be coached on any recent mistakes.

“That gives people peace of mind, so they’re comfortable with the repair process,” Dietz says. “And getting ahold of customers right away is critical. All my CSRs are working off multiple monitors, and it highlights if they’ve got incoming information. Once that pops up, we would like to be touching that customer within 30 minutes, [to develop] rapport right away.”

Be Reachable After Hours.

One way in which Lefler connects with customers is through its website mobile estimating feature. Dietz feels such technology is imperative these days, with so many customers pressed for time due to intense work schedules. While customers can only provide limited information via mobile estimating features (often providing rather inconclusive photos), Dietz appreciates the fact that such technology allows Lefler the chance to get started with the claims process.

“You’re able to initiate the claim,” he explains. “Dedicated employees get those alerts, saying, ‘Hey, you’ve got an estimate.’ And we may shoot [customers] a text or an email, from our phone, saying ‘We’ve got your information, and we’ll be in touch in the morning.’”

Follow Up on Missed Chances.

Often, potential customers arrive at body shops and get an estimate before getting a chance to speak with their insurance provider. And, in other situations, vehicle owners insist on getting multiple estimates. In both of those scenarios, Dietz has employees reach back out to those potential clients over the next couple days.

“We’ll contact them again, and say, ‘We know you were in for the estimate; did you have any other concerns, or is there anything we can help you with?” Dietz notes. “We may not get [their business] that day, but, over the next few days, those follow-up calls are very effective.”

Educate Customers.

If your shop simply writes estimates and lets customers walk out the door, with a lengthy amount of time to make their decision on which shop to use, you’re likely to lose a lot of business, Dietz says. It’s that belief that motivates him to have his staff promptly educate customers on the repair process involved with today’s technologically-advanced vehicles. Being forthcoming with customers inspires confidence, he adds.

“Customers are looking for trust, empathy, and direction,” Dietz reiterates. “When you’re the one to share knowledge that your competitors aren’t, then you’ve got a huge leg up.”

CYCLE TIME SOLUTIONS

Multiple times per year, Fedor Auto Body Works’ staff has to brace for impact, standing in the face of an onslaught of non-driveable vehicles.

“One month you get a bunch of trainwrecks,” manager Chris Fedor says. “It’s a rollercoaster, and you have to ride it.”

Despite the fact the Norwalk, Conn., shop gets plenty of heavy hits, it nevertheless posts a solid cycle time of 3.6 days on average—no small feat considering that, in the FenderBender Industry Survey, 86 percent of respondents claimed a key-to-key cycle time of five days or greater. Fedor’s general body shop philosophy is key for producing such efficiency: make sure everyone is well-aware of all procedures.

“If you have everybody generally on the same page,” Fedor says, “your KPIs will see a huge effect.”

While cycle time is a KPI that most shops routinely keep tabs on, it’s also one they struggle with the most; findings from the Industry Survey indicated that more than one-third of respondents (36 percent) have shop cycle times of 8 days or worse. With that in mind, Fedor, who oversees a shop with an annual revenue of $2.4 million, offers the following suggestions for improving one’s shop cycle time:

Periodically Check Equipment.

If equipment breaks down, it can cripple a shop’s cycle time. That’s why the staff at Fedor Auto Body Works takes great care to consistently check the functionality of equipment.

A veteran technician who has been at the shop since 1990 oversees those quality-control measures. The technician tours the shop floor and makes a quality check at least once per month. Then, he brings his findings regarding equipment to the attention of shop leaders.

Schedule for Consistency.

At his Connecticut shop, Fedor tries to schedule repairs so technicians have a fairly consistent workflow throughout the week. He does that in an effort to avoid the Friday rushes that many shops encounter.

“You want to make sure,” Fedor says, “that you’re not just dropping everything off on Monday and trying to get it out on Friday, and riding that crazy rollercoaster. Don’t just have everything dropped off on Monday and have nothing to fix Thursday and Friday; that’s bad.”

Get Employee Engagement.

Every other week Fedor Auto Body Works, which boasts a 94 percent CSI score, has a 15-minute staff meeting in which employees are updated on the shop’s current KPI report. The staff is also given goals for the future.

“It’s just reminding people of the direction we want to run,” Fedor explains. “If you don’t have meetings where people are reminded that, ‘This is what we want to achieve,’ then everybody gets on their own tangent and starts working their own way.”

Pay Attention to Parts Delays.

A common obstacle to great cycle times: unreliable parts deliveries. Fedor’s solution when parts delays arise is to notify customers, schedule technicians’ work around the delay as much as possible, and to choose expedited shipping options if available. He also uses digital price-matching tools like OEC’s CollisionLink.

“Doing the price-matching has been one of the biggest effects on my KPIs [like] cycle time,” Fedor says. “You get the right part the first time. You’re not sending back a headlight because it doesn’t have an LED option.”

Put Tools at Techs’ Fingertips.

Fedor tries to set his technicians up for success by ensuring that they have necessary repair tools, like resistance spot welders, in their bays before they start repairs. He has also become a big believer in printing out OEM repair procedures for repair work on today’s technologically advanced vehicles.

“Say I know a quarter panel is being changed,” Fedor says. “What are the procedures for it? Do I have to order a specific glue? Order it and get it in before the technician even gets the quarter panel off the car.

“It takes a little more effort on the office staff to get a technician what they need to do the job right. … If you focus on quality, the rest of it falls in line.”

REPAIR VS. REPLACE

Richard Daku and his brother, Robert Daku, co-own Daku’s Auto Body Shop in Catasauqua, Pa. Richard Daku has been in the business since his youth, and now is a third-generation owner of the shop.

When he was 11 years old, his dad handed Richard a broom and offered to pay him 50 cents to sweep the body shop floor.

He’s been at the shop ever since.

For Richard and his brother, getting the rest of their staff to understand the importance of tracking repair-versus-replace items is a big deal, he says. The shop repairs about 125–150 cars per month and has a nine-day key-to-key cycle time.

Daku has often run into a scenario where he writes an estimate, writes down that a part needs to be repaired and then, during the teardown process, it will get turned into a replace.

The repair-versus-replace issue is often difficult for shops to monitor if they have advanced driver-assistance systems limiting repairability of items.

Below, Daku notes some of the keys to keep in mind when tracking the repair-versus-replace KPI.

Monitor cash flow.

A body shop will make more money on labor than they do on parts, Daku notes. This is in part due to the different labor rates in each state and the increasing parts prices.

“If you sell a whole lot of parts and have less labor then that hurts your bottom line,” he explains.

To accurately track these numbers and how they’re impacting the shop’s profit, Daku says the brothers use ProfitNet. Each week, they’ll look at a printed report and keep a general rule of thumb in mind: keep parts versus labor 10 percent apart, with parts being 10 percent below your labor.

The shop now notices more replaced parts in the repairs. The industry tends to see more steel metal panels replaced, for example. And, this number is shown in the shop’s percentage of sales.

Educate your team.

“Us owners are going to see the numbers changing on a day-to-day basis,” Daku says. “We’re going to see that car all of a sudden and think about why the hood is getting replaced when we wrote repair.”

In Daku’s shop, his team usually sees more repairable items during the summer months, when the shop needs more labor hours to keep employees busy. During winter months, the shop staff tries to get jobs out more quickly to accommodate the extra work.

Of course training a staff always helps finetune such shop processes. Consider: Of the shops that noted in the FenderBender Industry Survey that they attend training annually, 43 percent worked at facilities with yearly sales volumes of no less than $2.5 million.

Daku recommends owners also meet with their shop managers or foremen at least once per week. Those meetings provide a way for operators to share the numbers they’re seeing and show how they found them on the KPI reports. Focus on one KPI at the meetings each time, he suggests.

Converse with other shops.

Daku has been involved in an Axalta Business Council for almost 20 years, he says. He highly recommends that other operators attend such meetings, because the shops will usually share their financial reports in a manner that’s educational.

Daku’s 20 Group facilitator, Mike Anderson, president of CollisionAdvice, then provides a current benchmark that the shops can strive to hit. Industry average benchmarks are posted as well as the 20 Group’s average numbers, so each member can compare their own to other shops.

ADMINISTRATIVE COSTS

Administrative costs are increasing in the industry and the amount of sales that estimators can handle today are declining, due to the amount of time required to research OEM repair procedures (which, according to the 2019 FenderBender Industry Survey, 93 percent of responding shops have access to).  

Today, most shops are at or around 10–13 percent for sales and general administrative (SGA), while the industry occasionally sees smaller shops with families willing to work more to keep the cost lower. According to Investopedia, general and administrative expenses of a company include all the costs not directly tied to making a product or performing a service. It includes the costs to sell and deliver the product and the cost to manage the business.

General administrative is a KPI that Santostefano sisters Sabrina and Adrianna, co-owners of Santostefano Auto Body in Middletown, Conn., have meticulously tracked. The shop, which has been family-owned since 1973, produces approximately $700,000 in annual revenue out of a 3,000-square-foot shop. The shop, which boasts a 4.9-star rating on Facebook, operates successfully without any DRPs.

The Santostefano sisters started running their grandfather’s shop five years ago and quickly fell in love with the customer-interaction element of the business. In 2019, both sisters remain close to the front area of the shop to handle administrative processes and greet customers. They learned that the way to handle administrative duties meticulously was to divide the tasks between each other. For five years, they’ve dealt mainly with office management.

The first year they started in the collision repair industry, the sisters had to spend every estimate walking the customer around the vehicle, in an effort to build rapport and show they had the requisite repair knowledge.

“An administrative fee is something that shop owners are trying to implement now,” Sabrina Santostefano says, in regard to the time it takes for the shop staff to write an estimate that an insurance adjuster did not do.

Charge the correct fees.

The administrative fee is a cost that shops are starting to charge insurance companies as a way to gain some cost back from spending time writing an estimate for the insurance company.

“If [the insurance company] refuses to send someone then we charge for it,”Sabrina Santostefano says.

To track this KPI, Santostefano says the sisters print out a paper copy of the estimates written each week and go through the stack to mark off the percentage of jobs that were booked for sales and the percentage of jobs not booked.

Sales General Administrative is important to track, she says, because an estimate might take 15 minutes of the estimator’s time for a light hit but could take closer to an hour for larger collisions. That time is time the estimator isn’t working on other tasks in the shop.

“It’s my time that we’re taking up to do an insurance company’s estimate in this scenario and my time is not free,” Santostefano says.

Realistically, a shop should aim to book about 80 percent of its sales, she says.

Use tools readily available.

The Santostefano sisters say the best way to keep track of repair jobs and other general administrative costs is through CCC ONE. This software will even update the shop staff when numbers are approaching the “red zone.”

“A management system usually costs more each month and is a great investment for a bigger shop,” Sabrina Santostefano says. “We’re smaller, but growing.”

Santostefano Auto Body, comprised of six bays and six employees, typically schedules about five jobs per week and tries to get those back out the door on Friday.

TECHNICIAN PRODUCTIVITY

Like many effective shop leaders, Craig Amundson checks his workplace’s KPIs every pay period, and then makes adjustments accordingly, should he notice any drains on efficiency.

That diligence has paid off at Raymond Auto Body, which boasts an annual revenue of $12 million. And, stellar technician production is the engine that drives the shop, where each tech produces more than $600,000 per year.

The keys to that stellar technician production include the following:

Employ a Porter.

The staff at Raymond Auto Body used to waste tons of time roaming the parking lot, trying to find vehicles ready for repairs. Eventually shop co-owner Jason Slomkowski decided to hire a porter and devote them to keeping tabs on vehicles. The porters also frequently bring parts to technicians.   

“That little process saves us tons of time,” Slomkowski says. “We realized our technicians were walking around, spending too much time moving cars. Just make a tweak and, all of a sudden, it makes your technicians more efficient, because they’re not having to roam around.”

Give techs two bays.

According to the 2019 FenderBender Industry Survey, 21 percent of respondents said their shop’s technician productivity percentage was less than 100 percent. And, of the shops that claimed a technician productivity percentage of 110 or better, 62 percent worked at shops with a yearly sales volume north of $2.5 million.

In in an effort to be as productive as possible, the leaders at Raymond Auto Body make sure each technician has multiple bays at their disposal.  That way, the employees can continuously stay at work, even if unforeseen issues arise like parts delays.

“In the event that they’re waiting for a blueprinter,” Slomkowski says of technicians, “they have another bay where they should be working on something else.”

Have techs do teardowns.

In order to avoid shop floor oversights, Amundson prefers to have each technician tear vehicles down. At the shop, which has a 97.6 CSI score, technicians put all broken parts on a rolling cart and, when new parts eventually arrive, they can usually quickly match them and verify that the right parts were ordered.

“There’s nothing better than a technician checking a part in,” Amundson says, “because they know exactly what they’re looking for.”

Have quality control sheets.

A body shop usually runs smoothly when communication between departments is effortless. That’s the thinking behind the quality-control sheets that Slomkowski passes around his shop. The sheets are passed around after each employee takes care of their step in the repair process. Because Slomkowski—whose shop is certified by the likes of Mercedes-Benz, Porsche, and Tesla—knows that, if his staff forgets to fix a chip in a blend panel, it’ll invariably be the first thing a customer notices.

“By having a sign-off system like that, it creates accountability,” Slomkowski says. “People have to understand that what they do affects the next person in line.”

Stage vehicles.

The repair plan has the biggest impact on Raymond Auto Body’s stellar technician productivity. Ultimately, the shop’s leaders don’t want to waste technicians’ time. So, they make sure

vehicles are “body-stall ready,” Amundson says.

“What I would tell anybody is, don’t get that car in the stall until your [technicians] are really

ready to work on it,” Amundson says. “If an insurance company says ‘We think you might need to pull it, and fix that quarter panel.’ Well, I pull it first, before the technician gets the car.

“The industry yells about not having enough technicians, but if you make your technicians just 10 percent more efficient, then you don’t need another technician in your shop, and you’re going to have less of a need.”

 

SNAP SHOT: THE TYPICAL SHOP 

The 2019 FenderBender Industry Survey drew responses from 372 shop operators. The statistics below shed some light on today’s “typical shop”:

BUSINESS TYPE: 64 percent were independent, single location.

SHOP SIZE: 29 percent 5,000–9,999 square feet.

 

Related Articles

Important KPIs for Your HD Collision Business

Your KPI-Tracking Guide

You must login or register in order to post a comment.