http://www.autoshopowner.com/article/automotive/sellingrepair/ Fri, 17 May 2013 22:53:01 +0000 86400 Selling automotive repair articles written by members of AutoShopOwner.com http://www.autoshopowner.com/article/automotive/sellingrepair/sell-the-job-not-labor-time-and-parts-r146
We were booked for that day, so we scheduled an appointment for the following day. The customer reminded the advisor that he must wait while the work is being done and asked how long will the job take? The advisor responded by saying, “Let me create an estimate and I will be happy to discuss how much time we will need and the cost for the job”.

Looking at the labor time on his screen the advisor turned to the customer and said, “The book time is nearly 5 hours, so you will be here for a while”. The customer replied, “Not a problem, I’ll take a walk, go to the mall, no problem”.

The customer arrived at 8am the next day and we got started on the job right away. The car was dispatched to our top technician, who also has the highest productivity rate in our shop. We had the parts all accounted for and asked the foreman to help when needed; to insure it gets done on time. Our goal: to have the job done by noon.

The job was done by noon, returned to the customer and all was well. Right? Wrong!

The next day the customer called and asked to speak to me. It’s never a good sign when I hear over the page, “Joe, Line 3, customer requests to speak to you”. It was the water pump customer. He started by saying, “You know Joe, I’m not one to complain, but the guy  at the counter told me it was about a 5 hour job and you did the job in 4 hours, why did I get charged for the nearly 5 hours, and not just the 4 hours”.
I paused for a moment to collect myself. Inside I was upset. I don’t know who I was more upset with, the service advisor who told him the book time, or the customer.  I began to explain the details of the job to the customer.

Now, I need to clarify something. Once you start explaining yourself after the fact, you have lost the battle. The customer has his perspective, and his perspective is reality, which is the only reality we need to consider. But I proceeded anyway. I told the customer that we use a labor guide as just a guide and by telling you the labor guide time of nearly 5 hours can mislead you into thinking that this will be the exact time for the job.  I continued to tell him that we had all the tools and parts laid out and that the foreman also helped to get the job done quicker. I knew by his response, “But your guy said it’s about a 5 hour job”, that I was going nowhere with this. We had made a crucial mistake and now we have a disgruntle customer.

I apologized and agreed with him that from his perspective it looks like we overcharged him. But I also reminded him about the discount we gave him, and that the price also included a cooling system service, using BG products, that comes with a lifetime protection policy and that the price he paid was a fair and honest price backed by a great protection warranty.

I am not sure if this made him happy. He said that he will be back in the future. I hope so.

The lesson here is simple. We need to move away from stating parts and labor. At my shop we know better than that. This was a slip of the tongue. The advisor was merely trying to convey to the customer that this particular job will take a while. He was just trying to prepare the customer.  We need to do better next time. Telling customers a particular job is 2 hours, 4 hours or 10 hours is misleading and hurts both parties; the shop and the customer.  A job is worth what a job is worth.

This is not to suggest that we don’t need to have some standard, guideline or benchmark. I am saying that you should not tell a customer, “The Labor is 4 hours and the parts are $100, so your total will be $580.00 with tax”.  This is not an effective way to sell work. I am also not a fan of posting labor rates. Our labor rate is $105 per hour. Luckily in New York you do not have to post the actual rate, just how you arrive at the rate. (Yes, this is correct, check with the New York Department of Motor Vehicles if you don’t believe me). I am not sure about other state laws, but you should check.

We all know the issue with hourly labor rate. Let’s say your labor rate is $100 per hour and your give your tech a work order for an oil change and front brakes with rotors on a Honda Civic. The labor for the oil change is $15.00 and the labor for the brake job is $100. The oil change takes your tech 30 minutes, which means the effective rate for this operation is $30.00 per hour. Now, your tech also takes 30 minutes to replace the pads and rotors, making the effective labor rate on this job, $200.00 per hour! So I ask you, do we really need to post a rate that has no justification? Plus, when a consumer looks at the rate, he or she looks at what they make per hour. They won’t tell you, but they are thinking, “Boy, nice to make 100 bucks for an hour’s work”. Most consumers don’t understand GP percentage on labor and the net after payroll and expenses on that $100.

We have many meetings at my shop with the service advisors on this subject. One of things I preach is to consider the complexity of a job, not just the published book time. I make this argument; it takes 4 hours to cut someone’s lawn, and it also takes 4 hours to remove a brain tumor.  Are both jobs worth the same? We all know the answer to that question. The point being, an entry level tech performing oil changes and tire rotation is different from an A tech performing complicated diagnostic work on a Mercedes. They both may take one hour to complete, but the A tech’s work must be billed out at a higher rate. That’s basic economics.
I had an issue with my well pump a few weeks back and I called my plumber to check it out. He called me on my cell phone and informed me that lighting must have hit the well and I would need a new well pump. He gave me the total price, the warranty, the benefits of the pump he was installing and all the little extras he would do while he was there. He never mentioned time or a breakdown on the pump or additional parts.  I had no idea how long he took to install the new pump, nor did it matter. A job is worth what a job is worth.

We all need to adopt a policy which moves away from selling parts and labor time and price a job for what a job is worth. Breaking down the labor time and parts brings up questions and issues that complicate the selling process. The time to review parts and labor is at car delivery, not during the selling process. Notice, I said parts and labor at car delivery, not parts and labor TIME. We get caught up with this labor time issue and it hurts us. We need to track technician labor productivity and efficiency, but we need to sell a complete job, giving the customer a total price with taxes and all the benefits that come along with doing business with you.]]> Tue, 25 Sep 2012 00:53:06 +0000 8a3363abe792db2d8761d6403605aeb7 http://www.autoshopowner.com/article/automotive/sellingrepair/the-true-essence-of-selling-r108
In a world where service advisors don’t want to be considered salespeople, we need to search our souls.  Why is it that “selling” has become a dirty word? Why is it that we cringe at the term “sales?”  It’s simple!  Most service advisors do what they do each day because they care about people. To become a “salesperson”, in their mind, means to become pushy and overbearing.  To most, it means that their interest must shift to one thing and one thing only… The customer’s Visa card!  So, what’s the best way to overcome this misperception?  First and foremost, we need to get something clear:  Selling is helping people through a difficult decision making process.

Let’s face it: Many of our customers are poor decision makers.  How many times do customers come into your shop, only for you to discover that they’ve been neglecting their vehicles?  In many cases, this is because a service advisor has never helped them truly understand the value of vehicle maintenance.  These customers who have a pattern of making poor decisions are the ones who need our help the most!  True salesmanship is always going to put the customer’s best interest ahead of everything else.  If selling starts violating ethics, in my mind, it is no longer selling; it’s stealing.

Over the years as an advisor, I discovered that in most cases, a customer’s decline in vehicle maintenance happens slowly.  This gradual decline can be primarily attributed to the failures of the advisors. Rather than genuinely caring about what’s in their customers’ best interest, service advisors are acquiescing to their customers with the attitude that, “It’s the customer’s money, it’s the customer’s safety, and he can do whatever he wants”.  This is the easy way out; the path of least resistance!  We need to ask ourselves…is this right?  What if this customer was your grandmother or your daughter?  Would you just roll over and accept that they made the wrong decision? Of course not!

So, where do we go from here?  Well…service advisors need to become true salespeople.  In large, sales skills come into play once you really grasp how people behave and react in a buying environment.  When we sell auto repair, we have to keep in mind that we’re selling something that isn’t pleasurable for people to buy!  Many times, we’re also selling an intangible.  Talk about tough!  We need to learn how to sell in a way that helps our customers see the true value of each service, because in order for the customer to authorize the service, the perceived value of that service needs to exceed the value of the money the customer will have to spend.

We always need to ask ourselves, “How will the customer win by saying, ‘yes’?”  This is, after all, what your customers care about most, in that they will always be thinking, “How do I benefit?”
If we, as salespeople, can master selling benefits instead of parts and labor, then we’re one step ahead of the crowd.  Let’s work together to help our customers, because they need us!  After all, we are the experts… right?

This article was contributed by Doris Barnes of Elite, a former industry-leading service advisor who currently heads up the Elite Masters Service Advisor Training Course.]]> Thu, 09 Feb 2012 04:10:22 +0000 b9d487a30398d42ecff55c228ed5652b http://www.autoshopowner.com/article/automotive/sellingrepair/dont-let-discounts-kill-your-business-r80
We are slowly moving toward better economic times.  If you’re reading this, you have weathered perhaps the worst economic period in your business career.  Now, more than ever, is the time to show strength in your company by offering quality customer service and repairs, continued community involvement, continued training, and by remaining positive.  All while maintaining profits and building for your future. Discounting to make up for poor profits or weak car counts is a path that may have long lasting negative consequences.  Rather than discounting prices, companies need to find ways to build their brand and culture.

Personally, I don’t like discounting my services and repairs.  In general, shops give far too much money away as is.  I understand as well as anyone the power of a loss leader or discount promotion.  There is a place for this type of marketing, but when you realize what a discount costs you, it becomes apparent that we need to be very careful about what and how much we discount.  A $10.00 discount can take an additional $100.00 in sales to make up for it, depending on your net profit margin.

One discount I really have an issue with, is the one that’s used to close a sale. Ever notice that your best, loyal customers, never negotiate your price? Those are the customers who need to be rewarded, not those who want to suck profits from your company.  If a service advisor needs to use discounts to close a sale, it’s an indication of insufficient training or that you have the wrong person on the counter. Effective service advisor skills are crucial to the success of your company. If you have the wrong person in that position, act quickly. You aren’t doing the right thing for you or for that person, if they are in the wrong position.

Another problem I see is the mindset that we somehow need to offer discounts to attract customers, or to maintain existing customers.  I disagree with that thinking.  If you are doing all the right things and hire the best people, you should not have to give away the farm in order to attract or retain customers. Would you choose a doctor, dentist, lawyer, or accountant because they’re the cheapest in town?  Of course you wouldn’t.
We may not be doctors or lawyers, but we are professionals. Build value in the eyes of your customers, offer outstanding customer service. Create a customer buying experience so powerful that your customers wouldn’t think of going anywhere else. Go the extra mile and reward those customers that patronize you over and over again. Be competitive, but be profitable.

Your business must make a profit. And let’s not confuse breakeven with making a profit. Most shop owners know their breakeven, but some are stumped when questioned; “How much do you need to make above breakeven?”  Breakeven only pays the bills of your company and nothing else.  Breakeven should never be a goal.  Your business must make a profit above breakeven in order to reinvest in your company, put away money for the future, pay for your kid’s education, train your people and do the things that make life fulfilling. Discounting your services can greatly affect this.

Too often discounts attract the wrong customer.  Our marketing and advertising should be about branding our business and focusing on our target customer base.  The only exception: if your business model is truly a discount store and you have built you business catering to that clientele.  Truthfully, I don’t know of many quality shops that advertise, “Come to me, I’m the cheapest around”. Do you?

Advertising should invite the type of customers that fits your business model and those that value all that your company has to offer. If your advertising is always offering discounts, you just may be attracting the customers you don’t want.]]> Thu, 08 Sep 2011 03:27:33 +0000 045117b0e0a11a242b9765e79cbf113f http://www.autoshopowner.com/article/automotive/sellingrepair/we-worry-about-too-much-about-high-tickets-dollars-and-labor-rates.html
Like many of you, I once shared the belief that a high labor rate, quality work, high-ticket averages and superior customer service was the business strategy to create a successful repair shop.  I also believed that the customers should never control the flow of work in my bays by dictating to me when they need service and that I should carefully plan out the day. There was also a time when I would refuse a walk-in for an oil change because I had too much work in the bays. Well, I’m here today to tell you that for me, this strategy is dead.  It died along with the carburetor, points and condenser. The quality of your work, tracking key performance numbers and providing great customer service still holds true, but in today’s business world, it’s not enough.

Look around at the world today. Has anything changed? You bet! We live in a fast past world where people balance work, family, fun, Church and other obligations. Both Mom and Dad have careers and are running from ballet to baseball. The media has been drumming into our head for the past thirty years that great service is getting what you want now and fast. Why do people today value their time so much?  Because they have so little of it.

So, here’s the scenario. Its Tuesday 2:00pm and Mrs. Smith arrives at your shop unexpectedly with a check engine light on. You politely and professionally tell Mrs. Smith that you would be more than happy to take the car in on Thursday.  Now, she’s starts processing in her mind what she needs to do on Thursday: She needs to leave work early to bring her daughter to the dentist at 1:00pm and needs to be back at the office by 3:00 for a meeting, then dinner at 5:30 and the P.T.A at 7:00. “No, Thursday won’t do”, she says. Respectfully, you answer, “How’s next week?”

At this point she gets frustrated and says she will let you know. You just may have lost a customer. You viewed her problem as a check engine light and how you would fit her car into YOUR calendar.  She perceived her problem as another way to balance an already demanding schedule.

Now let’s talk about labor rates and average repair order dollars, and I will hopefully tie all this together. Concentrating on bigger tickets and labor rates as a way to overcome inadequate car counts and low profit will simply not work. I’m not saying you shouldn’t charge what you are worth. I don’t give anything away in my shop and charge accordingly. But, what I’m more concerned about in today’s market is opportunity. I concentrate on maintaining healthy car counts to give me the opportunity to sell more. Today’s cars are not like those built in the 70’s and 80’s. You don’t have the highly profitable repair work anymore and cars are more reliable. Take a look at what the automakers are taking away from us: Timing belts, plugs/wires, fuel filters, distributor caps, rotors, etc. Not to mention long life coolant, transmission fluid and extended oil change intervals.

This means you will need a healthy car count in order to give your shop the opportunity to sell profitable service work. This also means that you will need to be very proactive in managing your customer’s vehicle maintenance. You will need to be very innovative in your approach on maintenance and service,  and diversify your services to fit a broader range of consumers.    

Successful “Big-Box” stores understand the law of compounding and moving product.  Even in these tough economic times, Home Depot would rather sell 1,000 cans of paint a week and make $6.00 on a can, then make $12.00 per can and only sell 300. Why? Having that many people coming through their doors buying paint increases sales in other areas, such as paint brushes, primer, rollers and drop clothes. Again, when you increase the number of customers, you increase the opportunity to sell more products.  This is the law of compounding sales through opportunity.

Before you go lowering your prices, STOP.  Most of us sell at a fair price already. What I’m suggesting is that when you increase car counts, you give yourself more opportunity to move product: such as air filters, cabin filter, batteries, wipers and other items.  Plus, you are working on building a customer base that will more likely return in the future because your willingness to work around their schedule.

You may have loyal customers, but if you’re not perceived as convenient and not willing to accommodate them when they need you, you may not be capitalizing on your potential to fully satisfy a customer.

How do you increase traffic to your bays? Say “YES” as much as possible. Be more accommodating. Try to work around your customer’s schedule, not yours. Be more flexible. Your daily planner is not written in stone. Promote while-you-wait service, if at all possible.  At my shop we welcome walk-ins and promote while-you-wait service. It has proven to be a gold mine of opportunity for us. I do understand that smaller 2 or 3 bay shops may not be able to handle a flood of waiting customers. For these shops you may need to rethink your business model to insure that your daily scheduled jobs are balanced properly in order to maximize opportunity.  Remember; opportunity equals profit.]]> Sat, 23 Apr 2011 03:33:21 +0000 7f1de29e6da19d22b51c68001e7e0e54 http://www.autoshopowner.com/article/automotive/sellingrepair/why-cant-you-give-me-a-price.html
I got a call a few weeks ago from a customer (we’ll call him Dave). Dave asked me to give him a price on a 60k service for his daughter’s Honda Civic. She was coming home from college and he wanted to get her car up to date with needed maintenance. I asked Dave how many miles were on the car, and after looking up the vehicle’s records, I realized that she had put over 12,000 miles on the Honda, since we saw it last.

I explained to Dave that it would be in his daughter’s best interest if I give the car a general inspection first, from bumper to bumper; just to make sure everything was ok. After the inspection I would be happy to give him a price on the 60k service and any other items identified during the inspection. Dave responded back, “You really can’t give me a price on the 60,000 mile service?” I explained again that many miles have past since we serviced the car and I just want to be sure that we look at the car in its entirety and not just focus on the 60k. After a pause he agreed and booked the appointment.

The Honda arrived a week later and was dispatched to one of our techs for a complete general inspection. The inspection revealed only a few additional service items along with the scheduled 60,000 maintenance service. I was a little concerned about Dave’s insistence about the price when I first spoke to him and told my service advisor that I would be calling Dave about his daughter’s car.

I reached Dave at his office and informed him that we had completed the inspection on his daughter’s Honda and that the car was in great shape. In addition to the 60,000 mile service the Honda would need a rear brake adjustment, a brake light bulb and a set of wiper blades. I gave Dave the total price, for the complete job. Dave responded back, “How much is the 60,000 mile service?” A felt a little confused at this point and itemized all the prices for him. He proceeded to tell me that a local dealer sent him a coupon and their 60k service was $80.00 cheaper! He asked me, “Why should I spend the extra money with you for the same service?”

I could have explained to Dave that the coupon from the dealer was a special promotional price only. I could have also explained that dealers sometimes use these specials as lost leaders. I could have gone on to say that we employ only ASE certified technicians and that they receive on-going training and that we invest in the latest equipment and information systems. I also could have argued that this is how we justify our prices. But I didn’t say any of that. What I did say was this, “Dave, do you remember when you were leaving for vacation a few years ago, on a late Friday afternoon, and you noticed you had a flat tire on your camper? Do you remember I stayed open until you arrived to repair the flat tire? And do you remember the day your daughter was leaving for college in her sophomore year, and the check engine light came on an hour into her trip? Do you remember you called me and asked for my help? Do you remember how I arranged for a tow company to stand by in case your daughter broke down? And do you remember that I stayed opened until your daughter returned back so I can check the car out? Dave, is the service we have given you throughout the years worth a least $80.00?”

There was a long pause and I knew from the sound in his voice that he felt a little embarrassed. He apologized and said that that he was trying to save a little money with the high price of gas and food these days. He also admitted that, with his daughter in her last year in college, he is feeling a little lighter in the wallet. We completed the 60k and the other service items later that day.

What’s important is that I never tried to discredit the dealership. That would have gone nowhere. I also tried to direct the attention away from price and focus on the value of the relationship we have created throughout the years. In retrospect, I don’t know if I should have thrown it in his face, about what I did for him the past. I have mixed feelings about that.

I think in these shaky economic times we need to concentrate on service. We need to address the concerns of the customers and give them options. Your customers will be looking to you for help and guidance, that’s part of your job. The shop that continues to deliver outstanding service and charges a fair price will thrive. I have lived though many economic roller coasters in my 30 years in business and have no doubt that this ride will pass too.

If you’re wondering if I gave Dave a discount on the job, you can ask me that and any other questions, in the topic I have started for this story, in our forums. Let me know how you feel I handled the situation.]]> Sat, 23 Apr 2011 03:15:58 +0000 1afa34a7f984eeabdbb0a7d494132ee5 http://www.autoshopowner.com/article/automotive/sellingrepair/no-matter-how-things-change-they-cant-take-away-tires-service.html
One thing about Randy, he did not like change. I remember one day a Volkswagen rolled up the driveway and parked in front of the bays. I could see the displeasure on his face. He ran out to the car and firmly said, “I hope you don’t expect me to work on this thing”? Then he kept silent and stared at the driver of the car. The driver of the VW said something but I couldn’t hear what was said. Randy just continued to stare and the owner finally put the car in gear and drove away. As Randy stepped back into the shop, he turned to me and said, “We are not a foreign car repair shop… never will be!”

Randy would talk about electronic ignition and how it was going to destroy the tune-up market. He also feared disc brakes, claiming that this brake system would make brakes last longer and that too will hurt business. He hated the fact that cars were mandated to have catalytic converters and other emission control devices. Randy said this will only complicate matters, make cars run worse, and accomplish nothing. Randy was a nice person and a great boss. But, like so many others, he could not accept the change that was occurring in the automotive industry.

As we fast forward to the present, it becomes apparent that our entire way of life is about change and the automotive world we once knew, no longer exists. Forty years ago, in cities across the nation, street corners were dotted with gas stations that not only sold gas but were the go-to guys for repairs and service. There were no quick lubes and new car dealers were content with their healthy car sales. We all know the demise of the corner gas station, the emergence of quick lubes, and other national accounts that make up the auto service industry. New car dealerships now understand that in order to sell cars they need to focus on the customer cycle experience. If they sell a car and somehow retain that customer in the service department, they will increase their chances to sell that customer another car in the future. Because of this, many new car dealerships are very aggressive in their marketing approach to the consumer, attempting to do what independent shops have done since the first Model T rolled off the assembly line…taking care of the customer.

Yes, the world will continue to change and it will become increasingly more difficult to compete in this market. However, if you are total car care facility today, you have a distinct advantage over your competitors; you sell tires and service, and attract the majority of the motoring public to your bays. You are the preferred choice of the motoring public, and no matter how bad things may appear in some parts of the country, you are sitting on a gold mine. Whatever the car makers throw at you, you will be ready. Let’s face it; whether it’s a hybrid, electric, or powered by hydrogen, they will all need to be serviced and repaired.

Thirty years ago, I did not start out selling tires; I was strictly an independent “repair” shop. Five years ago when I began planning to expand and open up a new facility, I studied different business models and found that the model which offered the greatest opportunity for growth, was in tires and service. I watched through the years as many capable repair shops struggled and eventually failed. Not because they were technically inept, but because they did not see the change that was occurring around them. Their focus on heavy car repairs and complicated diagnostic work actually put them at a disadvantage. It’s not that they were wrong to perform this type of work; it’s still part of what we do today. It’s just that in order to thrive today, you need to accept that you need to be profitable, and that means shifting a lot of your focus to preventive maintenance, tires, brake work, and becoming more accommodating to your customer.

My new facility model offers a mix of tires, wheel alignments, preventive maintenance, steering, suspension, brake work, and features express lanes for while-you-wait service. This new facility also serves as a feeder for my old shop where all the diagnostic work, engine work, transmissions, clutches, and other traditional repairs will be performed.  This new model creates opportunity for the best of all worlds.

Modern automotive service centers can no longer rely on those traditional repairs that once dominated the business. Cars are more reliable and many of those money-making services no longer exist. But one thing they can’t take away? They all need to roll down the road and that means eventually they will all need tires and service. We will obviously need to stay ahead of the curve by continually training our people and invest in new equipment. But, the work will be there, in some form or another.
I often think back to those days working in that 2-bay gas station in the Bronx. It truly was from a much simpler time. There’s nothing wrong with reminiscing about the good old days, but time never stands still for anyone, so don’t get stuck there, you may not find your way back.]]> Sat, 23 Apr 2011 03:00:45 +0000 ec5decca5ed3d6b8079e2e7e7bacc9f2