A Journey To Improve ARO

Unlock the secrets to optimizing your Average Repair Order (ARO) in the automotive industry. Dive into the strategic adjustments, ethical practices, and sales training essentials that transformed one shop owner’s ARO over a three-year journey, offering insights that promise both ethical and pragmatic success for your business.

ARO increasing chart

Understanding ARO and Its Significance

If you’ve spent a substantial period as an automotive shop owner, you’re undoubtedly well-acquainted with the prevailing discussions surrounding ARO—Average Repair Order. I distinctly recall my early days as a shop proprietor, engaging in earnest dialogues with experienced industry peers. Their insights into key performance indicators (KPIs) left me both captivated and contemplative, prompting me to ponder the feasibility of achieving such impressive benchmarks. Driven by this challenge, I embarked on a resolute three-year endeavor aimed at elevating this pivotal metric. Throughout the pages that follow, I am eager to shed light on the strategic adjustments that yielded substantial improvements for both my team and me. 

Refining Pricing Structures for Parts and Labor

The primary step toward enhancing the monetary value of your Average Repair Order necessitates a meticulous review of your current pricing structures for both parts and labor. Often, pricing considerations can inadvertently take a backseat, but it is crucial to acknowledge that if we fall short of our monthly Gross Profit targets, our immediate focus should be the examination of our parts and labor matrices within our point-of-sale infrastructure. This pathway not only expedites the fortification of overall business health but concurrently provides an upward push to the ARO. If you’re in a small market like me, you might have convinced yourself that your market cannot withstand higher prices. As my coach told me long ago, that’s simply not true. Create your pricing structure to meet the necessary Gross Profit goals for the business to be successful and find a way to highlight the value of your services to your clients. 

Ethical Vehicle Inspections and Client Transparency

A pivotal facet of this journey encompasses the establishment of a systematic protocol for the thorough assessment of each vehicle that enters your establishment. Assemble your team and convey to them the ethical responsibility they bear as automotive professionals—dedicated to upholding the safety and reliability of every client’s vehicle. Once this culture of comprehensive vehicle inspections becomes ingrained, institute a policy that advocates complete transparency in relaying the technician’s findings. It is vital to underscore that this practice isn’t rooted in upselling; rather, it emanates from the ethical obligation you shoulder as a professional, committed to safeguarding the well-being of your clients’ vehicles. I can promise you two things if you do this: your clients’ vehicles will be safer and more reliable, and your ARO will increase. 

The Importance of Sales Training

Having now delved into the ethical underpinnings of comprehensive vehicle inspections and transparent findings presentation, let’s explore the auxiliary yet consequential facet of these practices—sales training. The value of equipping your team, particularly your advisors, with comprehensive sales training is immeasurable. Such training significantly enhances the proficiency of your advisors in effectively conveying the significance of recommended services, mitigating any concerns clients may harbor about investing in their vehicles. By honing these skills, you exert a direct influence on the closing percentage, intricately linked to the performance of your ARO. 

Valuing Diagnostics in Service Delivery

Furthermore, the implementation of a strategic approach to diagnostics is indispensable. Charge for testing—especially to identify the root cause of customer concerns. Too often, shop owners extend these services without charge, inadvertently undervaluing their significance. This not only has a detrimental impact on your ARO but also sends a misleading message to both your team and clients. Offering diagnostics without charge suggests a lack of esteem for the service, potentially leading technicians to expedite the process and clients to perceive limited value in the recommendations. Charging for diagnostics introduces a sense of accountability—the technician is compensated, thereby fostering an elevated standard of performance. Moreover, it heightens client expectations, contributing to an overall improvement in professionalism across the entire team. 

Conclusion: The Holistic Approach to Boosting ARO

In the grand scheme, the journey toward optimizing your Average Repair Order is characterized by a sequence of deliberate actions, each bearing its own significance. It commences with an exhaustive review of pricing structures, extends to a comprehensive assessment of menu pricing, and culminates in the cultivation of a culture centered on thorough vehicle inspections and forthright findings disclosure. While these steps are pivotal, it’s equally vital to emphasize the critical role of assembling the right team, equipped with the skills and dedication to effectively execute these strategies. As you navigate this journey, remember that your commitment to ethical standards, skillful execution, and the strategic incorporation of sales training, alongside a capable team, will invariably result in a notable increase in your ARO—an accomplishment that resonates both ethically and pragmatically within the realm of automotive shop ownership. 

Matt Lofton Headshot

About the authorMatt Lofton – With over two decades of extraordinary achievements in the automotive industry, Matt Lofton is just getting started on his remarkable journey. Formerly a NASCAR driver and team owner, Matt’s early lessons in team building and continuous improvement have been pivotal in shaping his success. From winning the Orange County Speedway Track Championship to leading his family’s manufacturing and e-commerce business to record-breaking sales of over $15 million, Matt’s leadership prowess shines. In 2016, he founded Strut Daddy’s, quickly establishing it as a community favorite with numerous awards, including the Car Fax Top Award for three consecutive years. Coached by Elite’s Mike Kost, Matt has achieved a remarkable 30% year-over-year growth for three years, earning him the Elite Million Dollar Club Award. Matt now enjoys giving back to the industry as a Top Shop 360 Business Development Coach with Elite Worldwide. Currently residing in North Carolina with his wife, Terri, Matt is actively involved in community service and enjoys outdoor pursuits like bird hunting and golf. With plans to expand Strut Daddy’s to multiple locations, Matt Lofton exemplifies a dynamic force in the automotive business landscape.

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