Giving discounts properly in your auto shop is important for attracting and retaining customers, building a positive reputation, and managing finances. In each auto industry shop management software system, there’s a procedure to reduce customer repair order totals, or in other words, discounts. How we discount in those SMS systems can either give us much-needed data or mask problems away from our eyes. In ATI’s portal data, tracking discount dollars is an intentional entry with much value.
Track Your Discounts in the System
The dollars we take off invoices driven by marketing ploys via email, social media, or mailers should be tracked separately to distinguish a company directive from in-house adjustments. As a side note, when extending marketing discounts through different mediums, we should be tracking the return rates of different campaigns so adjustments can be made to invest in those items that have a great return on investment versus those that fall flat on their face.
Discounts applied that are not tied to marketing are very important to reflect on repair orders and track. Letting your parts matrix do its job, posting billed labor dollars, and discounting as you see fit should all appear plain as day. Why? First, the customer in front of you, or who they converse with at home, will want to see what was applied and how. If an item is under warranty, it’s immeasurable how valuable we appear when a line item or complete invoice is reduced to zero dollars. Second, we need our SMS system to tell us at the end of the week how much revenue we’ve intentionally removed. If we don’t post a warrantied part that uses our in-house matrix, and the labor has billed hours but no dollars attached, we have no way to track the discounts given away, how often we’re warrantying items, or the possible associated part or technician issues.
Research What Your Discounts Cost Over Time
Monitor the impact of discounts given. Regularly review your sales and profit reports to monitor the effect of discounts on your business. Look for sales and profit margin trends and compare the results to previous periods to determine if discounts are helping or hurting your business. Based on your analysis, adjust your discount policy as needed. For example, consider tweaking eligibility criteria, changing the discount amount, or adjusting the promotion duration to improve its impact on your business.
Don’t Discount Internally
Some people make the mistake of discounting “internally.” This means reducing the part or labor revenue collected without applying a discount line but modifying selling prices. Unfortunately, doing this makes it so discounted dollars can’t be tracked, and if we wanted to access how much we discounted last week, last quarter, or last year, reporting won’t be accurate. As a result, we may be unable to tell if our advisors are taking liberties they weren’t allowed to.
If friends or family stop by and ask for their discount, it has to show if you have such a program. We may find at the end of the year, such a program costs us thousands of dollars in lost revenue, which then gives us less money to pay the bills with. By the way, if there’s anyone who should understand discounting isn’t good for your business, it’s friends and family. Specific SMS systems can lock pricing to discourage your advisors and you from being able to amend pricing internally.
This isn’t the economy to make concessions and reduce the perceived value we bring to our customers. But when we do, tracking is imperative. It may be a shocker for some when we accurately report discounts and then research what it costs us over time. We may think, “What could we have paid for if we didn’t discount this much?” It could be employee benefits, a much-needed piece of equipment, or the top trim level on the RV we wanted. So let’s get to business the right way every day.
Non-ATI Members: Want to learn more about today’s best practices for marketing, selling, improving profit, and 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!