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Raising ELR
Hi all. I have been trying to move our ELR up $10-$15 dollars but struggling to do so even after making significant labor rate changes and increasing our labor matrix. I feel I have those two where I need them to be for the skill level we employ and the type of vehicles we work on. Besides Discounts, Comebacks, and Goodwill does anyone have other opinions on what hurts ELR?
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9 Replies
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All discounting should be done at the end of the invoice leaving the normal standard pricing all in place. When done this way, discounting will have no effect on ELR since it is shown in full retail and the discount is an expense. HTH 🙂
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Well, if you raised the labor rate and you are not seeing a change, is there someone discounting labor because they don’t believe in the new rate?
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Based on a recent conversation about ELR with a shop owner I started to audit all invoices from the previous weeks and HOLY SMOKES I found some gems!! Outdated CAN jobs, Multipoint inspections at no charge, Goodwilling labor to be a hero, Wholesale accounts, Warranty work, comebacks, advisors dropping labor charge to make a deal…..
Nothing here I can’t fix with some minor adjustments and conversations. We have had a very good run here and have made huge improvements these last 3yrs and I feel we started to get a little comfortable with that. Our issues will be addressed starting today but I felt it was important to share this with those of you who do not Audit your invoices. I recommend Auditing your invoices and finding that data before making drastic changes to your labor rate.
Have a great fourth of July weekend
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A quick way to do this is to check the total GP% on every invoice that was closed the day before. That should flag almost everything that you mention. Then you look at those invoices for why the GP% was low. I do this every morning and I am regularly fixing things.
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The best thing I have done in business is eliminate discounts. Made that decision after reading Start with Why by Simon Sinek.
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Rob,
Giving your techs credit for some amount of time that you’re not billing will affect your ELR. So won’t your canned jobs. Shops probably created those jobs ten years ago and haven’t updated them to reflect the labor increases.
What management system are you running?
Rick
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Hi Rick,
We are using NAPATRACS Enterprise. I made a request months ago for TRACS Tech assistance to add ELR to their Profitability Dashboard which has yet to happen. This would allow my Advisors to view ELR, Parts, Labor, and Total GP very quickly before picking up the phone to sell all needed repairs. What I have done since this post is to make sure our advisors our calculating ELR on every repair minus lof, rotates, etc… Since making these changes I have seen an increase in ELR by $15. We are getting there. As a manager a need to do a better job of teaching my advisors about KPIs. They see the KPIs as #s or goals to hit after it’s too late. I need to go deeper with them and show them how these KPIs work together and affect each other and which ones to prioritize. We fully invest in Tech training here, it’s time we do the same for our Advisors.
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Thank you for your quick response, Rob!
When calculating your ELR, I would keep your oil services and tire rotations as part of the calculation because these jobs definitely have an impact on your ELR. What’s ELR percentage? What’s your goal?
We have a powerful KPI class I’ll be presenting at Super Saturday, November 11th at Trevose, PA if you and your team can make it. If you’re interested, let me know, and I can get you more details. If you’d like an Excel sheet that makes it easy for your advisors to verify their ELR, contact me at rick@180biz.com, and I’m happy to share it with you.
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Definitely interested in seeing the spreadsheet you are using. I will email you the details today.
Thanks, Rick
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