Four Ways to Make Use of Length of Rental Data
The way Scott Schaefer sees it, length of rental (LOR) contributes to all aspects of the collision repair process.
“LOR contributes to CSI; customers generally want to get the car back quicker. LOR makes our insurance partners happy because it reduces their expense,” he says. “If you have a low LOR number, in general, it usually is a measurement of your operational strength and your processes.”
Schaefer and his 10 Missouri and Illinois body shops, Schaefer Autobody Centers, started tracking LOR on their own roughly seven years ago before beginning use of the Enterprise Automated Rental Management System (ARMS) three years ago.
It’s the same reason why Daren Pierse, former owner of Arizona Collision Specialists in Scottsdale, Ariz., decided to implement the system, as well. Pierse wanted both a better understanding of the areas his shop was being judged on by his insurance partners and a third-party source for reliable data that both parties could agree on.
“What I looked for was a third party that says, ‘You’re saying your LOR is X, they’re saying it’s X plus two days. We say it’s X plus one day. You’re both wrong.’ That was a good third-party way of coming up with a solid number,” he says. “It’s validation.”
Since both operators began measuring LOR, Schaefer and Pierse have not only reduced their businesses’ LOR time to multiple days below their market averages—so much so that Pierse was one of two shop owners awarded the 2014 Enterprise Best Length of Rental Award—they both say that every shop should be monitoring and utilizing that data every day.
How It Works
To put it simply, LOR is defined as the day a rental ticket opens and the day it closes. For body shops, they can access this LOR information and manage rental reservations through the Enterprise ARMS software, which integrates with management systems.
“It’s really pretty seamless,” Pierse says. “On our end, we don’t really have to do much. Before it was always, call Enterprise and say, ‘Come get your car, it’s done’ and then they would log it out. Now, it’s all handled through the ARMS system.”
In addition, the software also has reporting functions, including closed ticket summary, current month closed ticket summaries broken down by insurance companies, forecast report for an estimated LOR and market averages.
“For instance, say there was a bad winter in the Northeast. You’re being compared to other shops in the Northeast. You’re not being compared to someone in the South who didn’t have storms,” says Kris Goodrich, owner of Goodrich Auto Works in Bath, N.Y., and the other recipient of the 2014 Best Length of Rental Award. “Our goal is to beat it by four days below the market average. Our area might run 10 average insurance billed days, so we’re trying to get to six or better.”
Four Ways to Utilize LOR Data
1) Validate your own numbers.
For Pierse, measuring LOR allows him to use those reports as a benchmark and verify that his own in-house measurements—particularly hours per day—are accurate.
“If you get lazy and put it off for a day, your results are not going to be accurate. It could make you look worse than your truly are.”
—Scott Schaefer, senior vice president, Schaefer Autobody Centers
“I start looking as to, ‘Why was I a day off in my calculations to Enterprise? Why am I off in our benchmark that we all agreed to?’” he says. “Then I can look internally. I want my internal numbers to be what the third party is, and if it’s not, then I need to look at mine and tighten them up or even get with Enterprise and say, ‘How are you classifying when a car has left my shop?’”
Asking those questions, he says, has gone a long way in increasing the accuracy of his own data, fixing issues within the ARMS software and even how he communicates with Enterprise.
“We started realizing that sometimes the rental car company didn’t shut it off on the correct date that we called it on. Maybe they lagged or someone was out sick and they missed doing it. We found issues like that over time, addressed them and put procedures in place on both sides to mitigate that,” he says.
2) Acquire DRP business.
Because the Enterprise LOR data is seen as the industry standard for cycle time, Schaefer says it has been helpful in acquiring and maintaining DRP relationships, particularly since the shop can favorably compare its LOR time to the market average.
“For us, we’re consistently about two days faster than the market average,” he says. “We’re able to show we have a shorter length of rental than the market average and that helps us to make sure we’re all on the same page, we’re communicating what KPIs we need to work on and how we’re doing. To us, that’s a big benefit.”
It’s an apples-to-apples comparison, he says, which creates a selling tool that’s more powerful than simply using the data available from a management system, which doesn’t allow you to benchmark yourself against area competitors.
3) Verify billing.
Schaefer says another benefit of utilizing LOR data is to ensure that billing and reports are accurate.
“We don’t want the insurance company being overcharged for rental,” he says. “If a body shop does make the mistake of not marking the car delivered and completed, then they are not only hurting their metrics, it’s also unfairly charging the insurance company. It’s our responsibility to make sure that when we’re fixing the car, we’re fixing it the right way and we’re billing for stuff that we’re doing and not billing for stuff that we’re not doing.”
While there isn’t significant input needed from the body shop in the ARMS system, all three shop owners agree that one sure way to keep LOR time down is by hitting the “stop” button in the reservation as soon as the vehicle is returned.
“If you get lazy and put it off for a day, your results are not going to be accurate. It could make you look worse than you truly are,” says Schaefer. “Let’s say it’s a busy Thursday and we’re delivering a bunch of cars within the same hour, it’s easy for us to get caught up in the business and to forget to go back and click on the right buttons to make sure it’s tracking properly.”
Goodrich says that monitoring the stop button has helped regularly shave his LOR time down by a day or two. He notes that inconsistencies with the stop time can also happen on Enterprise’s part, which is why it’s important to monitor that and ensure that the rental kept running in the system even after it was returned.
4) Better manage your rentals.Prior to measuring LOR, Goodrich says that he wasn’t concerned about when rental cars were returned.
“Usually people in a rental car don’t care as much about getting their back. Sometimes their rental car is a lot nicer than theirs.”
—Kris Goodrich, owner, Goodrich Auto Works
“Usually people in a rental car don’t care as much about getting their car back. Sometimes their rental car is a lot nicer than theirs. Why would they want to hurry that?” he says. “I was thinking the same thing: If they’re happy, I have all these other cars that need to be fixed, I’ll just put that one off. I didn’t put any effort to try do them quicker. As long as they have their coverage, everyone was happy.”
The problem is that he wasn’t hitting his estimated completion days. Although the shop may have set an estimated date of two weeks out, the insurance company only allotted eight days, which he says significantly drove up his LOR time. Now, the ARMS system will notify him if his estimated completion date is longer than the insurance company’s, and the shop will consequently make it a greater priority to try to match that date. Or, if Goodrich knows a job will be delayed, he may decide to put the customer in one of the shop’s 10 free loaner vehicles, rather than an Enterprise rental.