Forecasting for the Future
Those of you who have been following my columns know that for the past year, I have been fixated
mostly on two problems with the Ford Store. The first is that we have grown past the capability of our personnel and the second is we have not been able to hire people to fill our shortages so we can continue to grow. Now that 2018 is coming to an end, I have the task of reviewing our performance and coming up with predictions for 2019.
As I start to analyze I noticed that our quick lane has averaged around 1200 oil changes per month or 7.5 oil changes every hour we are open. As I look at just oil changes, I see that with our speed bay setup we really should only be doing about six per hour to give the advisors time to sell added services. For 2018, the additional service request and hours per repair order for quick lane has dropped, while the main service drive has grown. So, I started looking just at oil changes and our lost leaders to see what can be done.
We have had the same price for oil changes for over ten years, only adding an environmental fee when it cost us to have the waste oil picked up. We also have an Owners’ Loyalty Program that gives everyone who purchased a vehicle from us their first oil change free and all of our regular customers every fifth oil change free. This loss leader is basically killing our gross since our advisors perceive their CSI will be better if we keep the line moving as fast as possible and upselling will only slow them down and upset the last person in the line. I have decided that the time has come to raise our prices.
However, once I made the decision, the debates started. My managers believe that we will see a reduction in our volume and having to deal with several of our long-time customers being upset that we raised our prices. The owners see an increase in our reconditioning cost and a reduction in volume. I first addressed with both of them the reduction in volume. I am really hoping to see one. It is my hope that our volume reduces to a point that we are able to service our customers better to build better trust. Also, if we get back to selling needed services instead of just taking orders and pushing vehicles out as fast as we can, our gross will go up allowing us to pay our technicians more and attract better people that can grow with our company.
As for upsetting customers, you will always have those people who are looking for the cheapest deal. For years we have been the cheapest around and even with the price increases, we will still be extremely competitive throughout our market. In order to combat some of the resistance our advisors may have with their customers, we have come up with a script for them to discuss the price increases during the write up process so they are aware before they receive their bill and get upset and defensive.
As for raising the reconditioning cost of our own vehicles, it’s inevitable. We do not reduce any of our package pricing for reconditioning our vehicles. These price increases are small but will raise our gross to keep up with the raising cost to keep technicians. However, if I am wrong and we start to see a significant reduction in our retail business, we will have to adjust our pricing back to where it was before. But I hope I am right and this helps us increase our gross and added services and we get back on track in 2019 with continued growth.