Six Steps to Better KPI Tracking
With one location, it’s easy to be intimately involved with the nuts and bolts of your business. After years in the business, you may even be able to predict, or simply feel, how the business is doing.
That’s not the case with four or five locations.
Take it from Darrell Amberson, president of operations at the 10-location LaMettry’s collision in the Twin Cities area.
“You realize that you can’t do that in every shop—it’s not physically possible,” he says. “You have to turn over operations to others.”
That’s where data and tracking key performance indicators (KPIs) becomes critically important. Amberson and his team rely on data to keep an accurate pulse of how the business is doing as a whole, and on a by-store basis. And while Amberson acknowledges that the KPIs to track might not be dramatically different than a single-store location, the way they should be tracked differs significantly.
As told to Anna Zeck
1) Note the differences between facilities.
Although most of our shops are, on average, 15,000 square feet, they vary to some extent, both in terms of the facilities and the clientele. For example, in our more suburban locations, we see more domestics than imports. In other suburbs, particularly one location by a motorplex, we see a lot of exotics, Porsche and Teslas. So, when you’re looking at KPIs and, particularly, comparing locations, you need to take some things with a grain of salt because the different characteristics might affect the numbers one way or another.
2) First, set benchmarks and goals across the operation.
In general, we set goals across the board, but a mixture of both. In the early fall, we have a strategic meeting offsite with upper management. During that meeting, we set two or three specific goals for the organization for the upcoming year.
When it comes to tracking KPIs, there are a handful of key numbers to look at broadly, which can then be further sliced and diced to look at in a number of different ways. From a broad perspective, you want to look at:
- Sales, although those will be based on the shop. If we’d like an overall sales increase of 10 percent for the organization, it might not be fair to ask that of a small shop bursting at the seams. But, there could be a younger shop 10 miles away with a lot of potential that gets at 15 percent sales goal instead.
- Parts gross profit
- Labor gross profit
- Paint and materials gross profits
- Cycle time in 30-day and 6 months periods
- CSI numbers
3) Now, drill down into those numbers on a per-store basis.
Our managers don’t necessarily get complete P&L statements for all the locations, but we share a lot of data with them through CCC ONE so we can reference differences in the shop and also ensure consistency. We are a company that makes a lot of decisions based on data and the reports we generate. By looking at the numbers from a big picture, you can easily see if anything is off, and then work with the general manager to dig deeper into that number and figure out the core issue. On the flip side, if someone is doing really well on a specific number, you can dig into that and see what they’re doing and share it with the other shops.
Here are some ways that numbers can differ that we need to take into account:
Parts gross profit will vary based on the brands we work on. Typically, the European brands don’t offer as much of a discount on parts as a domestic.
If you have key insurance relationships, it’s important to segregate the cycle time numbers for each of those.
When we break down allocation of expenses, you’ll sometimes find that a typical high-end European job will have a different mix of parts versus labor because their parts are more expensive than a run-of-the-mill Toyota. Parts sales as a percentage of the total sale is going to be higher.
If paint and materials gross profit gets out of whack, you want to start breaking down gross profit by liquid product versus sandpaper, or looking at how much the painters are mixing to see if they’re overmixing.
5) Mine CSI numbers for more data.
CSI should be looked at as a tool for improvement, and not a feel-good number. If you’re interested in constant improvement and If you’re going to look at it really honestly, you want to know what the customer is displeased about and with what they’re pleased. If there’s an immediate issue, you also want to know about it and correct it as quickly as possible.
There’s a lot of data in your CSI reports that ultimately leads to the customer’s emotional impression of you, the goal being that they’re so happy with you they’ll endorse you. Pay attention to quality numbers and the courtesy numbers. How is your staff treating your customers? What kind of quality product are you producing?
6) Create a schedule for looking at the numbers.
Although most businesses operate on a monthly cycle, I look at the numbers on a weekly basis. There are pros and cons with this and you need to decide what’s best for you. One positive with the monthly is that it’s a good measurement and a reasonable amount of time for most numbers. But, one, the size of the month varies. And, two, because it’s a longer period there’s an inclination the last few days of the month to push and have a good month. Then there’s a hangover for the first few days of the next month because you closed out some ROs, you haven’t received payment from insurance companies, etc. As a general rule, your sales suffer and you’re playing catch-up.
You don’t get that when you’re tracking it weekly. The con of tracking it weekly is that it won’t be as consistent, mainly because the size of jobs varies. As an example, if you're producing 10 jobs per day, but you’ve got two or three trainwrecks where you find one more issue and you can’t close it that week, that can make that week look pretty poor and the next week looks awesome. On a monthly view, you don’t have those fluctuations.
Every Friday, by mid-morning, we’re looking at computers and our accounting people are sending out the sales numbers by store. During COVID, we have two or three upper management calls per week to see what’s going on.