Researcher: how workshops can improve their profitability in turbulent times
A recession, electrification and rampant electricity prices. At the same time, new operators are increasing the level of competition. The automotive industry’s service market is facing some tough challenges. “It is therefore more important than ever to use key performance indicators (KPIs) and measure the right data in order to be able to act smartly and achieve profitability”, says researcher and business economist Anders Parment.
Regardless of what happens with the economy, electrification, the manufacturers’ own sales and new service market operators, the workshops that use KPIs in a smart manner will identify problems at an earlier stage and earn more money. It is a matter of utilising creative and smart measurement of data according to Anders Parment, whose activities include research in consumer behaviour and business models.
Anders has published some 50 or so books on the subject and is focused on helping companies develop smart KPIs, in particular in the automotive industry. Visitors to Automässan in January will have the opportunity to learn more about Anders’ experiences and conclusions.
“A major problem is that many companies in the industry are making decisions based on guesswork. For example, they are basing conclusions regarding what a competitor charges for a certain repair or service, on what someone has said, instead of using a comparison site to check. When a customer comes into a workshop and books a service, it’s good to be confident in the knowledge that you are charging the right price for the work involved. Not too much, but not too little either.”
Need to explain the difference to the customer
Anders feels that many workshops are simply not good enough at telling the customer what certain work will cost and what they have done with the vehicle.
“There is a significant difference between a major and minor service or repair, but this is not something the vehicle owner always considers. The vehicle owner simply looks at the total price and concludes that different workshops charge very different prices.”
Anders feels that brand-specific workshops should look at the percentage of customers that come back after the 90,000 km service, which is relatively cheap, and compare this figure with the percentage that come back after the 120,000 km service, which is significantly more expensive.
“By placing more focus on providing the vehicle owner with relevant information, companies could avoid having to spend huge amounts of money on marketing aimed at winning back lost customers.”
Anders Parment feels that the business models are often too standardised.
“When workshops install the same tyres on a really expensive vehicle as they do on a cheap vehicle, they are missing an obvious trick. The workshops need to become more creative, as there is an opportunity here to satisfy the customer while also increasing profitability by thinking smart.”
“The key to increased profitability lies in the development of customised systems where greater consideration is given to variables such as the type of customer involved, the type of vehicle involved, and the expertise which the workshop can provide but their competitor cannot.”
Anders feels that the brand-specific workshops have an extremely good starting position:
“Everyone who buys a new vehicle has the brand-specific workshop as their first choice. But because these workshops have a constant flow of new customers, they are also losing many customers through carelessness, whereas an independent workshop has to really fight for each customer it attracts.”
New operators in the market often work hard to provide customised offers and increased availability, and Anders feels that more companies should do the same.
“Always try to see the customer’s needs. I might not be willing to pay a few thousand just to fix a couple of scratches on the paintwork. Not when I also have four kids and a dog to pay for!”
“Could easily backfire when the customer feels cheated”
Not being too greedy is another important aspect of Anders Parment’s message:
“A workshop might encourage a customer to replace his summer tyres, as the tread is down to only four millimetres. But a tread depth of four millimetres is actually quite good in reality. In the past, customers were encouraged to replace their tyres when the tread depth was three millimetres, but the companies constantly change the cut-off point in order to sell more tyres. Workshops run the risk of going too far with such a strategy, and it could easily backfire when the customer feels cheated.”
Anders Parment will be appearing on Automässan’s seminar stage, in G2 on floor 2, at 10:30 on Thursday the 19th of January.
About Anders Parment
Anders Parment is a researcher at Stockholm Business School/Stockholm University. His research is focused on changes in consumer behaviour, generational differences and the labour market of the future. Anders Parment is a multi-award-winning speaker who has used a wealth of knowledge, humour and challenging issues to help many companies and regional and municipal authorities to develop their customer offerings.
Automässan is the largest exhibition in the Nordics for the automotive industry’s service market and aftermarket.Automässan is the Nordic region’s largest meeting place for the automotive and workshop industry’s aftermarket. Automässan will be held at the Swedish Exhibition & Congress Centre in Gothenburg on behalf of FVU (The Association of Swedish Suppliers of Automotive Workshop Equipment) and SBF (The Association of Swedish Wholesalers of Automotive Parts and Accessories). Find out more on the website >>