It’s the start of a new year which naturally makes us reflect back on how the previous year went. As easy, difficult, surprisingly sane, or crazy as we may think 2022 went, let’s see what made it work and what made it fail. Hopefully, the wins outnumber the losses, but in either case, we need to put the best tactics in place on an even bigger scale, considering now is the best time for a fresh start.
For many, we’ve been on a roll since 2019 for year-over-year improvement in top-line sales, which, combined with the best margins in place, led to greater and greater gross profit dollars. What makes these end-of-year wins even sweeter is we intentionally got here due to setting a goal. We didn’t leave room to lose. As the economy’s direction is uncertain, and with that comes buying trends more unpredictable, there is no other way to open the doors each day except to have a goal set of what we need to function.
It wasn’t uncommon to have 20%+ improvements in top-line sales year over year after the initial hit of Covid settled down, which was then followed by a never-seen-before reaction from our customers saying yes to suggestions since they were sitting on excessive funds. For two years, our salespeople had the pleasure of high-fiving each other all day long on repeated sales wins that didn’t seem to slow down. Until now.
Aim for a 20% or More Increase
The good news is even though the last six months or more have been a return to the conventional retail world we know (where we actually have to sell), a certain percentage of incoming dollars is a “gimme.” What do I mean? With inflation, a percentage of those increased revenues are part of the economy we’re in. The radiator we used to sell for $414 in 2020, now sells for $585. The coolant flush that was $138 is now $193. This “gimme” of an increase in sales dollars makes it so we can no longer strive for the bare-bones minimum of the double-digit year-over-year increases (10-13%), but instead shoot for an increase of 20% or more.
Establish a Vendor Relationship
It’s understood that if you had any two sequential years of the same revenue amount, it wasn’t truly a repeat. It was actually a loss in year two considering back-end costs are always going up, and a consistent inflation factor of 3-4% counters equal revenues of the year prior.
Now that we’ve dug in and found what made this last year tick, let’s plan for ramping up tactics to a higher level. Since we’re buying more dollars from our parts vendors, are we in the best pricing tier they can offer?
What better way than asking our vendors what our spending level was for the last year, followed by a productive conversation? Did we see the parts margin drop or increase this past year? A drop would point toward not revising our parts margins due to increase parts costs. That would mean now’s the perfect time to rebound margins back and increase revenue at the same time.
Capitalize on Maintenance
Have a win this past year with selling maintenance? Let’s make sure we’re capitalizing on scheduled items that are due per age, not just mileage. All these can be used when creating sales goals for the new year if we haven’t started already.
Once a yearly goal has been made for revenue, profit dollars, car count, and everything else, now we need to break it down into monthly and weekly (like ATI’s portal), so we have 52 chances to win, not just 12. The goal is the same week-in, week-out, not taking into account those known periods of time where we have lulls.
That begs the question — how’s your marketing looking? Here’s How to Quickly Improve Your Shop’s Online Presence.
Non-ATI Members: Want to learn more about today’s best practices for budgeting, improving profit, growing your bottom line? Start with a shop owner event at www.atievent.com. We offer virtual and in-person events, fee-based and free, for both auto repair and collision repair shop owners. Find one near you today!