By Bob Cooper

Far too many shop owners are so determined to make a certain percentage of gross profit on each job, that they lose sight of profitability, as well as customer service. I’m talking about the people who judge their success by percentages rather than dollars. These are the shop owners that are so busy trying to squeeze every last penny out of every job that they forget about the dollars being lost at the same time. Sure, your technicians can take that transmission apart and rebuild it, but with rare exception, most shop owners will install a replacement, right? Does the replacement cost more than the sum of the parts and labor it would take to rebuild or repair or the customer’s transmission? Typically it does. But with the exchange unit, you don’t need technicians who are skilled at rebuilding transmissions, they have typically been dyno-tested so there is less risk of initial failure or a comeback, the warranty is off-loaded to the remanufacturing company, and your customers are happier since they get their vehicles back faster.

Now here’s the part that most shop owners miss. With the installation of exchange remanufactured components, whether it be drivetrain components, brake system components, or steering components, the vehicles and the customers are out of your service bays faster, which means you can now start on the next jobs sooner.  While there is typically less profit on the “job,” by installing the exchange component, there is a whole lot more profit per hour, and there is no doubt that profit per hour is the real secret, in any business. Just look at companies like Costco. They operate on razor thin margins, but they generate staggering per hour sales, and happy customers, at the same time.  

Over the years I’ve helped many shop owners realize that time is money, and understand just how profitable it is to install exchange remanufactured units. Not only have they been thrilled with the results, but today the overwhelming majority of the transmission shops that Elite works with have now made exchange remanufactured units a large part of their businesses. Why? Because they realize that in today’s world, turn-around time is critical to most customers. Exchange units skyrocket tech productivity, and they lessen the shop owner’s dependency on highly skilled labor. When you think about it, you’re actually outsourcing a good part of the labor that’s required, and for those of you that are in areas where you are dealing with high labor cost, the associated cost of workers compensation insurance, etc., this in itself can save you a fortune. In essence, your shop may be in New York or California, but your technicians are working…in the Midwest.

So let’s look at some numbers. If you are working on a 15% net, and if you sell an in-shop transmission rebuild for $3,000, you’ll earn $450 ($3,000 X .15). But what you’ll need to give up for that profit is 10 hours of time (R & R, rebuilding, etc.), plus you’ll have the liability of the warranty. Divide that $450 profit by the 10 hours you spent on the job, and you’ll see you’re earning a net of $45 an hour. 

Now imagine that instead you decided to install a remanufactured transmission that brought a $250 net rather than the $450. At first it might not sound like the right choice to give up the $200 in net profit, but then you consider the all-important profit per hour. In this case, the vehicle was in your shop for only 4 hours (vs. 10) so your profit per hour is $62.50 rather than $45. A nearly 39% increase! 

And good gets even better, because while your competitors are busy trying to figure out why the rebuild kit they just received doesn’t have all the right parts, you have a happy customer back on the road, and you’re now helping your next customers solve their problems.  

So in conclusion, for those of you who are interested in generating a higher “percentage” of profit, there’s no doubt that the old way of doing business may still work for you. As a matter of fact, you may be able to tell all of your friends that your profit percentage is a really good number.

But for those of you that are interested in generating higher incomes, what you need to do is find the right suppliers and take advantage of the benefits of installing exchange remanufactured components whenever possible, because one thing is for certain: No matter how you run the numbers, the one thing that you can’t take to the bank… is percentages.

Since 1990, Bob Cooper has been the president of Elite, a company that strives to help shop owners reach their goals and live happier lives, while elevating the industry at the same time. The company offers coaching and training from the industry’s top shop owners, service advisor training, peer groups, along with online and in-class sales, marketing and shop management courses. You can learn more about Elite by visiting www.EliteWorldwide.com, or calling 800-204-3548.

By Bob Cooper

If there is one thing our industry has done since the very beginning, it’s put technicians into the role of service advisors. The rationale is that they have a good understanding of automobiles, which will enable them to be competent advisors. Unfortunately, that’s the furthest from the truth. Although an in-depth understanding of automobiles can be an asset, there are a number of other things you should consider before offering a service advisor position to one of your techs.

First and foremost, you need to consider why they want the position, or why you are offering it to them. If they suggested they would like to become an advisor because it has become difficult to work on cars at their age, then they may very well be the wrong person, because they are looking to become an advisor out of necessity rather than interest. The same is true if you are looking to move a tech into an advisor position when that tech has shown little interest in becoming an advisor in the past. Two of the most common mistakes we see at Elite are shop owners making this hiring decision out of necessity rather than interest, or out of desperation rather than inspiration. In either case, there is a high probability of failure.

Another major mistake we see made by shop owners is they put far too much value on the technician’s technical skills, and far too little value on the tech’s natural people talents, and their passion for the position. Unfortunately, these owners don’t understand just how important the people skills component is to an advisor’s success. So here is what I am going to encourage you to consider before you offer one of your technicians a service advisor position. 

First of all, when it comes to selling auto repairs and services, bear in mind that natural talent trumps technical skills every time. Talent can’t be taught, but skills can, so if your tech doesn’t naturally smile, doesn’t have a positive attitude, or is not quick-witted and articulate, then they may do a fair job for you, but they will never be the advisor that keeps you ahead of your competitors. You will find there are a number of companies that offer online behavioral assessment testing to evaluate the sales potential of candidates, and I would strongly encourage you to take advantage of this type of testing. You will more than likely be surprised with what you discover. 

Secondly, you will need to evaluate how well he or she will be accepted in the advisor role by your other employees. If the candidate has a good relationship with your other employees, and if you feel your employees will be willing to take directions and orders from the candidate, then they may very well be a good fit for an advisor position. 

The third thing you will need to do is avoid overselling the position to the candidate. In addition to knowing the benefits of the position, they’ll need to know all of the negatives as well. In essence, you want to make sure that there are no surprises. We also encourage all of our clients to get the significant other of the candidate involved in the decision making process. As we say at Elite, “When you hire Larry, you get Mary”, so you will need to ensure that their spouse is also onboard with the new position. 

Lastly, I hope you do two other important things if you decide to have one of your technicians take on the role of service advisor. First of all, take them for a test drive by having them help you on the counter, and pay close attention to their people skills, how well they are able to manage their emotions, and how they deal with difficult situations. Secondly, if and when you put that tech on the service counter, remember, training trumps productivity. What that tech will need more than anything is professional sales training, encouragement from you, and the opportunity to become… a superstar. 

Since 1990, Bob Cooper has been the president of Elite, a company that strives to help shop owners reach their goals and live happier lives, while elevating the industry at the same time. The company offers coaching and training from the industry’s top shop owners, service advisor training, peer groups, along with online and in-class sales, marketing and shop management courses. You can learn more about Elite by visiting www.EliteWorldwide.com, or calling 800-204-3548.

By Bob Cooper

We all know that the industry is continuing to evolve, and you will be seeing your customers less often as time goes on. Accordingly, you will need to find ways to keep your service bays full. One way is through commercial accounts, which we will call fleet accounts. Now I realize that fleet accounts may not be practical for some of you, but for those of you who are open to servicing such accounts, here are some tips you may want to consider…

First of all, many shop owners shy away from fleet accounts because they feel they’re not profitable, and I can understand how they would feel that way. But don’t forget; you set the pricing, not the customer, and there are many business owners who are willing to pay a fair amount for quality repairs and service. Ironically, there’s a perception that in order to be competitive in servicing commercial accounts, you have to come in with the lowest price. Yet in reality, that’s not the case. When I was still operating auto repair shops, I discovered that fleet owners and managers are most interested in quick turnarounds and quality repairs that keep their vehicles on the road. There is no question that with commercial vehicles time is money, which is why every fleet manager knows that vehicle downtime costs them a fortune.

Fleet owners (and managers) need to know that their vehicles will be turned around quickly, so you may want to give them a guarantee when it comes to the turnaround time.  You should also bear in mind that your warranty will play a strong role in their decision, because it will send two messages. First of all, it will let them know just how confident you are in your repairs and services, and secondly, it will give them the peace of mind they need in knowing that if one of your repairs fails, they won’t be facing additional expenses.

Now we all know that there will need to be some conditions in place with your warranties, especially with commercial vehicles, but your basic warranty needs to be good enough to put the customer at ease. Something else that I discovered over the years is that fleet owners and managers are busy doing what they need to do with their businesses, so the more hassle-free the service and repair experience is, the more open they will be to your proposal. This leads me to the best-kept secret to landing the right fleet accounts…
What you need to do is put your entire proposal in writing. Fleet owners and managers have been duped in the past in many ways, but one of their biggest challenges is that as soon as they switch service providers, they find that a month or two later they’re faced with huge price increases. This is why you need to clearly outline the prices for the more common repairs and services you’ll provide, and you should guarantee those prices for one full year. You should also clearly outline your warranties, towing provisions and pricing, inspection services, turnaround time and any employee discounts that you elect to include.

Now before I go any further, I know that many of you are thinking that even if the account takes you up on your offer, the margins are going to be thin. I would be the last to disagree, but I also hope you consider that because the services are pre-sold, your efficiencies will naturally improve. Secondly, most advisors are more than willing to earn a little less on these accounts because the jobs are pre-sold, and thus do not require the same investment of their time. Now here comes the best part: beyond having all of the fleet account employees exposed to your brand, the account’s brand is now promoting you. To put it another way, just think of how much more powerful your image and automotive repair marketing campaigns will be when the people in your community know that many of the community’s prominent  business owners turn to you as the best choice when it comes to repairing and servicing their vehicles. I am sure you will agree; that kind of name association is priceless.

So, can fleet accounts work for you? Only you can answer that question, but one thing is for certain: now that we are seeing customers less frequently, fleet accounts will be an integral part of many successful shops in the coming years.

Since 1990, Bob Cooper has been the president of Elite, a company that strives to help shop owners reach their goals and live happier lives, while elevating the industry at the same time. The company offers coaching and training from the industry’s top shop owners, service advisor training, peer groups, along with online and in-class sales, marketing and shop management courses. You can learn more about Elite by visiting www.EliteWorldwide.com.

Most shop owners begin their careers as technicians, and eventually buy their first shop. These are often the people that feel they own a business, when in reality, it’s the furthest from the truth. Consider this…

When most past-technicians open their first shop, they spend most of their time test driving or under the hood of a car. They know if they stop working on cars, their income will come to a screeching halt. They feel that as long as they are turning wrenches they will have an income stream, and the faster they work, the more income they’ll make. So what they have in this scenario is a job; not a shop, and not a business. Ironically, they’re not much different than the tech down the street. They’ll go home tired, and they’ll judge their success by the number of vehicles they fixed that day. The only real difference is that the tech down the street doesn’t have all the liabilities, and they don’t take their problems home at night. 

Some of these aforementioned past-techs will make it to the next level, which is being a “shop owner.” The difference between having a job and being a shop owner is that shop owners have more than one person working for them, and they are able to take a few days off without everything shutting down. In most cases, shop owners feel this is a good place to be, and it is, until it’s time for them to either retire or sell their shop before their planned retirement. You see, what most shop owners fail to realize is that very few people are willing to buy shops, and if they do find a buyer, it’s typically a tech with very little money. The reason that business people with real money will rarely buy shops is because shops are typically dependent on the current owner, and there’s a shop on every corner. 

Now here’s the good news: Every shop owner can turn their shop into a business. You see, a “business” is not dependent on the owner. It has clear-cut, written systems in place for all facets of the business (pay programs, the recruiting process, the marketing plan, the sales process, etc.) so that when the new owner steps in they have everything they need to continue building the business. They have the business plans that were created by the seller, they have a seasoned staff, and they have all of the established systems in place for the business to continue to prosper and grow. In this case, what the buyer has bought is a “business”, not a job, and not a shop. 

The shop owners that are willing to embrace the fact that there is a major difference between a job, a shop and a business all have one thing in common: They are creating their own future, and they are building real equity at the same time. Is it worth the effort to transform your shop into a business? Well, the best answer I can give you is this: When the day comes for you to sell, I have a very strong suspicion that you will be thankful you turned your shop into a business. 

Since 1990, Bob Cooper has been the president of Elite, a company that strives to help shop owners reach their goals and live happier lives, while elevating the industry at the same time. The company offers coaching and training from the industry’s top shop owners, service advisor training, peer groups, along with sales, marketing and shop management courses. You can learn more about Elite by visiting www.EliteWorldwide.com.

When it comes to customer complaints, most shop owners are aware that there’s some economic price they’ll ultimately have to pay for the complaint, but will typically have no idea how much each complaint actually costs. This article will aim to bring some clarity to this long-disputed issue. 

When a customer complains, the first direct cost that you’re going to incur is the loss of your time. This is the time you spend listening to the customer, discussing the resolution, and following up with the customer to ensure that their complaint has been properly resolved. Let’s call this direct expense “customer communication time”.  I realize that the amount of time will vary with each complaint, so let’s assign 25 minutes as a realistic number for your average complaint time.  These 25 minutes are comprised of 5 minutes when the customer first calls you with a complaint, 15 minutes when they return for correction or resolution, and then an additional 5 minutes for follow up.

Now let’s look at the time spent on the internal communication that comes along with each complaint. This is the time that you spend with your technicians and service advisors discussing the cause, the resolution, and the prevention of future complaints. I feel that 15 minutes is a realistic number when it comes to this internal communication.  We’ll also need to consider the same amount of time, at a minimum, of an employee’s time spent to help you resolve the issue. So, your internal communication will cost you at least 30 minutes with each complaint.

Let’s shift gears and talk about the cost of customer attrition, and the marketing cost that will come along with each customer complaint. Let’s presume that you run a good business, and are able to properly address each concern to retain 80% of the customers who complain. In this scenario, you’ll still be losing 20% of those customers with complaints. In other words, out of every five complaints it’s safe to say you’ll lose one customer, so you should consider the marketing cost of each complaint to be 1/5^th of the cost of generating a new customer.

Lastly, you need to consider the “loss of productivity” that is associated with each customer complaint. Simply put, while your employees are discussing the complaint with you, they are unable to generate additional income for the company.

Based on everything we have discussed, here is the math you can use to calculate the total cost of each complaint, which you and your employees may find to be quite surprising.

Note: The below cost of customer complaints calculation is predicated on a shop labor rate of $100 per hour, the shop producing $200 per hour per technician, and the cost of generating a new customer being set at $30.
 

25 minutes of customer communication (25min/60min X $100)     $42
30 minutes of internal communication    (30min/60min X $100)    $50
Direct marketing cost to replace 1 of 5   ($30/5)                         $6
Loss of productivity (30 min)                  (30min/60min X $200)  $100
                                                                                            $198
If you think that $198 is a big number, please bear in mind we’re talking about the cost of customer complaints themselves, not the cost of additional repairs, services etc. that need to be performed to satisfy the customer. In addition to the $198, we haven’t taken into consideration the economic damage to your reputation, the damage to employee morale, and the loss of income that is associated with the loss of the customer and/or the direct cost of any repair.

This considerable cost is one reason why the industry superstars invest in training, they go the extra mile to deliver extraordinary service, and they follow up with each and every customer to ensure that they met with the customer’s expectations. These top shop owners know that they are far better off investing a little more money in their people, than they are spending that money resolving customer complaints. So do absolutely everything that you can do to provide exemplary service, and ensure that each and every customer… is a satisfied customer.  

Since 1990, Bob Cooper has been the president of Elite, a company that strives to help shop owners reach their goals and live happier lives, while elevating the industry at the same time. The company offers coaching and training from the industry’s top shop owners, service advisor training, peer groups, along with sales, marketing and shop management courses. You can learn more about Elite by visiting www.EliteWorldwide.com.

It’s a typical day, if there is such a thing in this business. You start thinking about what has to be done during your drive into the shop. You get to the shop and it begins. Your service advisor wants to know how to handle a warranty situation. Next is your lead tech and he’s not sure what to recommend on a car because fixing it the right way may cost more than the car is worth. Just as things are starting to settle down another tech pops in your office and needs you to see the play in some upper control arms bushings, then “call the ball” for him. Next is a customer that wants to deal with you directly. Your service advisor asks you to help Mr. Jackson, who is one of many who insists on dealing with you and only you. This continues through the day. The details of each situation are different, but the issue is always the same. Your employees cannot or will not make decisions. Does any of this sound familiar? It probably does.

Shops that operate like this are stuck in a type of dysfunction and will never experience any real growth. This begs the question, how can you break out of this cycle and have your staff function independently and efficiently? The primary problem in shops that function like this is that the employees feel disconnected from the company. Employees can feel this way for a number of different reasons. It may be that they do not understand your vision for the company. They may feel that no matter what they do, it won’t be good enough. Many times employees are reluctant to make a decision because the owner seems to think job one is to assign blame when something goes wrong, and take credit when it goes well. Some owners and managers engage in gossip and closed door criticism with other employees. All of these things, and more, can and do contribute to a culture of dysfunction that is apparent throughout the shop.

First thing first. Stop this type of negative behavior. You must decide to adopt a positive attitude and lead in a productive way that empowers your employees to function independently and contribute to their own success and the success of the shop.

Hold regular meetings and share your vision for the business. Hold meetings at least once each week. Tell your staff what you expect and give them the authority to make decisions. Assure them that they will have your full support. Make sure your meetings are interactive and get your staff to participate.

Commit to spending at least one hour per day developing written standards and procedures on how you want your shop to be run. Develop an employee policy book. Have a written procedure for the top ten jobs performed at your shop and let your staff have plenty of input.

Get with your service advisors and develop a procedure for customer write-ups. Be sure to always emphasize the three C’s; Cause, Concern, and Correction. Be positive with your staff every day. Compliment them on their success. You need to be a force for positive change every chance you get.

The gold standard of shop management is that the shop functions as if you were there, even in your absence. Break the cycle of employee emotional dependency and take your shop to the next level!

We work with many world class shop owners throughout North America, and over the years we have discovered that the majority of them have a number of things in common. Beyond the fact that they are owned and operated by people who have clearly defined goals, the right ethics, and a commitment to customer satisfaction, there are a number of other things we have discovered about both their facilities and their employees. So here’s a checklist of ten criteria that I am certain can help you take your shop right to the top...

1. The Right Look. The top shop owners in America know that they only have one chance to make a first impression. Not only do they have great websites and well-designed ads, but you’ll find that the appearance of their shops radiates cleanliness and professionalism in every regard. They have professionally constructed signs, ease of access, well-manicured landscaping, convenient parking, secured fencing for any vehicles left overnight, ample lighting and provisions for early bird key drops. On the inside these shops are not only clean and well organized, but they are inviting as well. They create this look by being comfortably furnished, by having advisors stationed where they can quickly greet arriving customers, and by avoiding signs that are negative in nature (“employees only”, “no checks accepted”, etc.).

2. Equipment. The top shops have a security system that’s monitored 24/7, complimentary Wi-Fi for their customers, and the repair and service equipment they need to get the job done right. In addition to having safe and well maintained service bays and hoists, they have computer terminals for each technician, access to outside technical support, repair and estimating software, robust business management software programs, web-based part ordering systems, and CRM programs that will keep them connected with their customers. In addition, they have computer terminals in quiet environments, which allow their employees to participate in web-based training in an uninterrupted way. Many of our top coaching clients also have two-way radios assigned to each technician, and many have now installed videos systems that allow their customers to go online and see their vehicles in the service bays.

3. Services. World class shop owners know that their customers look for a number of things when it comes to auto repair and service. Beyond good service, value, and integrity, the top shops in America offer their customers options in services and repairs whenever possible. They provide warranties that are at least 24 months in length, are always clearly written, and in many cases, are valid nationwide. These shops also accept all the major credit cards, they offer financing on approved credit, they have a shuttle service or loaners available, and/or they offer discounted rental cars. Lastly, as a customer service, the top shops in communities with a high concentration of people who speak a primary language other than English will typically employ at least one advisor who is bilingual.

4. Systems. The industry leaders know that they need to have well-designed systems in place to assure efficiencies, as well as customer satisfaction. This is why all the top shops have clearly defined diagnostic packages, written phone procedures, vehicle inspection forms, time keeping methods to track productivity and efficiencies, quality control inspection sheets, written sales procedures, estimate forms, written car delivery procedures and customer follow-up systems.

5. Parts. Our top clients are willing to spend a little more money in order to get the highest quality parts for their customers. They realize that inexpensive parts can not only lead to premature failure and costly comebacks, but they can lead to the loss of customers, and a tarnished reputation as well.

6. Pricing & Integrity. The top shops in America provide their services at very competitive prices. I am not suggesting that they offer the lowest prices or the highest prices, but for the value delivered, and when compared to other shops in their community that offer comparable services, the top shops are extremely competitive. These shops also use a pricing system that assures any two customers who receive identical services within the same period of time, on identical vehicles, will be charged the same amount. Beyond differences that occur due to discounts (senior citizen or military discounts, for example), or variances in the service, they want to assure there is integrity in their pricing.

7. The Right People & The Right Training. The most successful shop owners in America realize that they need to have extraordinary people working with them. They employ certified technicians who own tools that are commensurate with their level of skill and experience. They also employ service advisors who have a natural talent for dealing with people, and who are committed to never putting money ahead of people. We have also discovered that many of our coaching clients have followed the medical profession’s lead by now making it mandatory that their technicians and service advisors complete a predetermined number of days in training each year.

8. Employee Safety. The world class shops have the appropriate workers’ compensation insurance in place to protect their employees, and the proper safety programs and equipment. In many cases they have drug-free workplace programs in place, as well as policies that prohibit cell phone use while at work.

9. Community Involvement & Environmental Consciousness. There is no question that the top shops are engaged in their communities. Beyond their involvement with community activities, such as youth soccer and little league, they are typically involved with social causes and charities (MADD, blood drives, etc.). They are not only compliant with all relative laws when it comes to handling hazardous materials, but the top shops are also environmentally friendly (green) in every regard. These owner\operators diligently work at protecting the environment in every aspect of their business through recycling, low energy lights and appliances, skylights when possible, and e-communications rather than print.

10. A Record of Customer Satisfaction & Adequate Insurance. The leading shops in America have had very few, if any, lawsuits or consumer complaints filed against them. They are well insured to protect their customers, as well as customer vehicles left in their custody. In order to assure customer satisfaction, the top shops use a multitude of methods to solicit feedback, and follow-up with their customers. They use mirror hangers that customers can fill out and mail in with their comments, they use third party follow-up call services, follow-up email services, and they use outside companies to record phone calls so they can monitor the quality of service provided to their customers. More often than not, these shops are also willing to provide complete refunds, and go to arbitration with any customer complaint.

In closing, I am not suggesting that if your shop meets all of the above criteria then your business will unquestionably go to the top, but there is a promise that I can make you: If you put your focus on people rather than on money; if you hire employees that have the right attitude, aptitude and ethics; and if you then implement the information in this article; then you are going to do a lot more than just grow a great company. You are going to help a lot of people in your community, you’ll create a great work environment for your employees, and you’ll earn a really good income, all at the same time.

For the last twenty years Bob Cooper has been the President of Elite Worldwide, Inc, (www.EliteWorldwideStore.com) an ethics-based company that offers shop owners sales, marketing and employee management solutions. For additional help building a more successful auto repair business, learn more about the Elite Coaching Program.