Wednesday, March 28, 2012

The Brutal Facts about Electronic Multi-Point-Inspections

One of our Dealers was asking us if the Multi-Point Inspection program he has is worth the $7500.00 a month he was spending for it. I asked him how much he paid to have it installed before the monthly fees? He said around $40,000.00 for the printers,computers, and training. I also asked him when it was installed? So I grabbed the financials and went to work on the "Return on Investment"

The 12 months prior to installation C.P. Labor was averaging 1.8 @ 80.00 or $128.00 per ticket averaging around 600 CPRO's per month. After the installation the CP hours per RO increased to 2.2 @ 80.00 or $176.00 per ticket in CP Labor. This only lasted for "Two Months" after the installation and so called training they provided and went back even below the average or 1.6 @ $80.00.

The next step was to find out how long it was going to take to break even and make a profit. The following formula is what I used:
  1. $40,000.00 Initial Install Fee
  2. $7500.00 per Month User Fee X 12 months ($90,000.00)
  3. Look at a 12 Month Period First
I took $40,000.00 plus the $7500.00 per month for twelve months. That equals $130,000.00 total which I divided by 12 and came up with $10,833.00 direct expense every month for the next twelve months. WOW! How much will I need in additional C.P. Labor Sales to break even?
  1. $10,833.00 Monthly Expense
  2. Divided by a Gross Profit Percentage of 70% 
  3. Equals $15,476.00 in Additional C.P. Labor Sales 
So if we take $15,476.00 divided by 600 C.P. R.O.'s equals $25.79 per C.P.R.O. or .3 @ $80.00 over and above to just break even. Doesn't seem like much however if you remember we actually went backwards after two months being on the program.

The other thing to remember is I want a Return on my Investment not just break even! The basic assumption that technology is the answer is really flawed! Remember that the best tools or technology will never substitute for Leadership and Management.

The Truth is if you are unable to get your Technicians to perform a "Paper Multi-Point Inspection Form" with every customer, Technology will only add to your expenses! I always ask a Dealer how well they are doing since installing "New Technology" and I get a "Don't Ask" 90% of the time and that's why your here!

That's not to say that it can really enhance a Service Operation that has Great Leadership and Management in place who believe in "Mastering the Basic Fundamentals" first before ever installing a program like this. I believe in three things that always work:
  1. Leadership/Management
  2. Master The Basic Fundamentals
  3. The Right People for the Right Job
How well is your Multi-Point Inspection Process working? Are my customers being advised on the condition of there vehicle every time they visit? 

Want more information on our Multi-Point Inspection Process? 

Guy Salkeld is the President and Head Performance Coach of Automotive Consultants Group Inc. The only Low Risk High Return Training, Coaching, and Consulting company in the world! To learn more go to  Have a question? E-Mail Guy directly at or Call me direct at: 305-331-3373    

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