KPIs: Monitoring Your Shop’s Goals

by Chasidy Rae Sisk

Meeting any goal begins with setting the goal, establishing steps to achieve it and then monitoring how well those actions help one move toward the objective.

Businesses of all types often rely on specific key performance indicators (KPIs) to help them “keep score” and identify needed adjustments. Which KPIs are most important? KPIs can vary widely from industry to industry and even business to business, and while mechanical shops may find it useful to track some of the same KPIs as collision centers, dealerships and other companies, it may be helpful to look at things a little differently. 

First, it’s imperative to understand how each KPI being monitored actually impacts your shop and your business goals to ensure the right data is being collected and analyzed. “The biggest problem is that many shops aren’t tracking their KPIs properly or don’t understand them well enough,” suspects Jeff Notts (Altus Business Solutions).

Arguably, there are tons of KPIs that one could track, so how can a savvy shop owner or manager determine which ones are worth investing the time to understand? “There are a lot of possible KPIs, and if you look at everything you could be tracking, that can be overwhelming,” acknowledges Rick White (180BIZ). He suggests the list might feel more manageable for those who begin by identifying how frequently certain KPIs actually need to be reviewed. “Measure gross profit weekly, and every month, examine your expenses. A monthly KPI that many shops neglect is cash flow ratio. Cash flow is oxygen to a company; you cannot breathe without it, and many fail to realize that profit does not equal cash flow.”

Only a few KPIs need to be reviewed daily, according to White, who suggests monitoring invoice count completed, parts gross profit, effective labor rate (the amount a shop actually collects per billed hour) and work in progress. Most importantly, shops should be consistently evaluating the number of billed hours per day. “Nothing happens in a shop unless an hour of labor is sold,” he points out. “We want to ensure we’re at peak productivity, so we need to compare the total billed hours to our capacity to determine whether we’re meeting our productivity goals.”

Notts agrees that productivity is the lifeblood of any business. Unfortunately, it’s also one that most shops “don’t pay enough attention to. If your team only produces 50 percent of the work they’re capable of, your labor rate means nothing. A lot of people talk about percentages when measuring productivity, but how do you track and understand that? Set an hourly goal of 35 to 40 hours per week and then manage the number of cars and the time it takes to move them around.”

Notts also believes shops should track gross profit on parts, labor profitability and average repair order (ARO); however, he considers average hours per RO as “possibly the most pivotal since this tells us the shop’s maximum potential for vehicles being worked on each day. Rather than cramming as many cars in the shop as possible, we want to make sure we’re capitalizing on each vehicle we work on by increasing the number of labor hours on each order. In turn, this improves efficiency and decreases the likelihood of an accident as technicians move cars in and out of the shop’s bays.”

Of course, every business should set goals related to their finances, and customers are the primary driver of financial success, so it’s important to track KPIs related to customers as well, beginning with how many new customers are coming to the shop each week. “On average, a shop loses 17 to 21 percent of its client database each year on average due to people moving, being upset with them, dying, etc., so if you’re only marketing to existing clients, that database gets smaller all the time,” White points out. “To maintain your current number of clients, the goal should be 20 percent new customers, and if you’re looking to grow, set the target at 30 percent.”

“If we don’t have new customers, we’re doing inspections and maintaining vehicles, but we won’t have big jobs anymore,” Notts weighs in. “To keep the business growing, we need new clients bringing broken cars to us.”

Attracting those new customers to maintain a consistent client base means that shops need to market – but many make the mistake of waiting to advertise their services because they have enough work right now. 

“Marketing isn’t something you do because business is slow; it’s something you do so you don’t get slow,” White stresses. “You can’t plant a seed and reap the harvest that same day. Consumers’ buying habits have changed along with the frequency of their visits to shops, and although most people want to take care of their vehicles, they aren’t going to be loyal if they’re not happy with the service they receive. Shops need to identify their ideal clients’ desires and get really good at providing that.

“How do we serve a client to make sure they come back to us?” he queries. “Shops are like dentists – no one wants to go to the dentist because it’s painful and expensive. We need to help clients understand that it’s better to invest in maintenance and repair than to replace their vehicle at 10 times that cost, but before we can convince them of that, we need to create an environment that leaves them with the impression that they’ve found the right shop to take care of them.”

Notts agrees, suggesting shops should also be monitoring the number of lost clients. “If we don’t see them for two years, they’re lost, and we need to examine why they aren’t coming back. Why isn’t our retention rate higher?” he asks, suggesting that tracking lost sales and comebacks can help owners and managers identify shortcomings in the customer service department. “If we fail to sell the work, we’re missing opportunities. It’s easy to track missed appointments. We also need to be aware of our comeback rate because comebacks cost the business a lot, especially in terms of how our clients view our services. These days, we have to work harder than ever to sell value because consumers have access to so much information and so many options.”

Reviews and referrals are the most obvious method for monitoring customer satisfaction, and shops should set goals for both. White warns, “Understand that ‘satisfied’ customers aren’t going to leave reviews. Being satisfied merely means they got their money’s worth; it’s the lowest acceptable outcome in the customer experience because it’s only one step above dissatisfaction. When we get down to it, our goal is to help people. Making money is a byproduct of providing great service, and if you invest time and energy into creating the right experience, the money will come.”

White identifies three levels of customer experience: moments of mediocrity (you get what you paid for), moments of misery (a negative experience) and moments of magic (an experience that goes above and beyond expectations). “You’ll get reviews for moments of misery and moments of magic,” he predicts. “As business owners, we’re the authors of those stories, but if we’re not paying attention, we end up with clients who feel unseen and unappreciated. We need to be paying attention to how we make them feel and figuring out how we can cultivate an experience that creates moments of magic!”

Shops should also be creating moments of magic for their employees since they are the ones who typically create client experiences. “Just like my customers, I don’t want my team to be satisfied; I want them to be engaged,” White insists. “And I don’t want employees who merely trade their time for money. I want to hire people who see where the business is going, understand why it’s important and want to be a part of it. I want someone who is willing to go the extra mile because they feel seen, heard and appreciated.”

Why do you do what you do?” Notts asks shop owners to consider their purpose. “If you can’t explain that, you don’t know your culture, and that’s critical to drawing people in – whether it’s a client or an employee. If your team loves working for you, they will work hard and tell everyone how much they enjoy working at your shop. They’ll stick around for a long time, and they will refer other technicians to you. If your turnover rate is high and employees leave frequently, you’re either making the wrong hiring decisions or you’re not treating your team well enough to keep them there!”

Although tracking KPIs is a critical part of measuring how well your shop is meeting its goals, it’s important to remember the driving factor behind any successful business is more than numbers. “You absolutely need to be tracking your metrics, but never forget how you get them – by serving others,” White cautions. “KPIs measure how well you’re doing at taking care of your clients. If you neglect to care for the people, you aren’t going to make money. Sometimes, a relationship might be more important than a metric. Always remember the people who help us achieve those high metrics: the people performing the work and the people saying ‘yes’ to the repair.”

Want more? Check out the November 2025 issue of New Jersey Automotive!