Drank the ATI cool-aid

[Bob K]

I'm 8 month's into the program and have made gains in many areas. Having said that I'm frustrated with all that I've learned, changed and tried, I feel more and more like the gerbil in the wheel going in circles. One month up and the next down over and over. Although our ARO is increasing, our car count is decreasing. Also I've noticed we've lost some regular customers possibly due to our increased prices and labor rates. While we are making more with less cars going through the shop, I'm concerned about the downward trend of defecting clients. Anyone else involved with ATI experienced the same?

[bstewart]

How much did you increase your prices, and in what time span? Are you charging fair rates for the level of service you provide (like a dumpy shop charging $90/hr vs a nice shop charging the same)?

Also, do you do follow up calls to your recent customers to ask them about their experience?

How about follow up calls to your "regular" customers that you don't see anymore? Maybe that will shed some light on the situation?

 

Increasing ARO and decreasing car count will generally lead you to higher profitability, as long as you are still filling the bays.

If car count has dropped so much that your techs are not working all day, then you have problems.

[mspecperformance]

Bob K, I can not comment about the things you are learning from ATI however coming from the perspective of someone who has taken control of their automotive management and shop owner education into their own hands as well as the help of a consultation company coach I would like to pose to you the question of really looking at the factors as to why you are feeling the negative effects of Down business. If you are up one month and down the other you have to look into your marketing efforts both new customer and CRM. when speaking about profitability with higher ARO and a deceased car count well that is a natural occurrence. You have a finite amount of labor hours to sell so by nature if you are selling more hours per car you will have to have a decrease in car count since those sold hours are concentrated on a smaller number of cars opposed to being spread out. Also losing customers due to a price increase, that's a tricky one. In my experience I have increased prices dramatically and not felt any detrimental effects. You have #1 match the value to your price. You have to make it worth it for your customers to be paying a higher price. Also the ones you lose due to price increases may no longer fit in your mould as an ideal customer any longer. Price and money are a matter of perception. The great majority if your clientele have money to spend. I often say this to my own staff, you can spend $5 and feel like you got ripped off or spend $5000 and feel great like you got your money's worth. It all comes down to a matter of perception. The ultimate goal is to make your customers perceive that they are getting tremendous value from their purchase/investment with you. That is the golden answer.

[benzfxr]

Don't feel bad if a lower quality customer leaves! Lower car count with higher ARO will reduce the stress of the staff, increase profits and continue to bring in better new customers. We look at our bottom 20% from time to time and decide if they need to be fired. By paying more attention to the top 20% (the quiet ones) you'll have a better run and more profitable shop.

• 80% of a company's profits come from 20% of its customers (Top 20)
• 80% of a company's complaints come from 20% of its customers (bottom20)
• 80% of a company's profits come from 20% of the time its staff spend
• 80% of a company's sales come from 20% of its products
• 80% of a company's sales are made by 20% of its sales staff^[7]

 

 

Read this: http://en.wikipedia.org/wiki/Pareto_principle

Edited May 6, 2015 by benzfxr

[alfredauto]

That principle is true in theory, not in practical real life. I am fully aware of the 80/20 rules, but say you fire 20% of your problem customers, now a new 20% will form from the new group. It always ends up the same until there's nobody left to get rid of. If you are in a large city with endless people and little competition by all means filter out the problem cases. If competition is tight or you're in a small town you'll be the next garage for rent if you are too selective. If anyone has succeeded in getting only A+ customers let me know.

 

I'm kind of playing devils advocate here.

[mspecperformance]

That principle is true in theory, not in practical real life. I am fully aware of the 80/20 rules, but say you fire 20% of your problem customers, now a new 20% will form from the new group. It always ends up the same until there's nobody left to get rid of. If you are in a large city with endless people and little competition by all means filter out the problem cases. If competition is tight or you're in a small town you'll be the next garage for rent if you are too selective. If anyone has succeeded in getting only A+ customers let me know.

 

I'm kind of playing devils advocate here.

 

 

I believe the idea is really not to achieve 100% pure top tier customers that give you no problems and pay what you want. It certainly would be nice but that would be fantasy land talk. The real take away is to always try to achieve a goal and work towards it. If the principle is in place and you know what you have to do which is in this case fire your bottom 20%, you will eventually get a lot closer to that 100% awesome customer base. Worse case scenario you fire your bottom 20% and you fill in with another set of mediocre clients however hopefully by then you will have put system in place to filter out the worse of the bunch and the new 20% will be better than your last 20! I have learned from experience there absolutely nothing wrong with firing crappy customers.

[andresauto]

You need a good Service Writer who customers like and can communicate with easily and freely. That schedules appointments, follows up with appointments, and calls customers for after repair quality assurance , makes future recommendations, and has no cosiderations on presenting high dollar amounts. I had the same issue of ups and downs in numbers till I hired a good Service Writer that stabilized the front. You'll know a service writer is good when there is an increase in appointments and profits. I had some real losers that made the shop tank, so it really makes a difference. You do not want just another body in place that leaches income from the business. I had one guy who only had to stand in the shop and phones would stop ringing. Not kidding!! I'd send him home early phones would ring. I'd give him the day off and business would pick up. On his last day before he was fired, the shop made $43.45. The morning I fired him the shop made $10,000. by the end of the day with no sales that he created. This may seem bazaar but I've experienced it time and time again in the last 20 years I've been at the shop.

 

As for labor rate, in 2009 my labor rate was $95.00 an hour. 2010 $115.00 per hour. 2015 $125.00 per hour. Every year our net profits have gone up since 2009 from the initial labor rate increase. The car count is important but the net profits are the key indicator year after year if a decision to change your operating basis was correct. I had a one bay shop in 2009 and now have an 8 bay shop in 2015.

As far as losing customers I have lost many along the way, the lowest price seekers are probably the first to go. It bothered me at first because I wanted to be the customers go to guy for automotive work. I've also lost customers who wanted to see me stay small, strange at that may seem, there are those people who want to see you operate small time. I've lost those who wanted to play the victim, they tell you everything you did wrong to them and how it's all your fault there cars are not running right. With every loss there's a gain and sometimes that gain will be your sanity. As many business owners I'm in business to do a great job AND MAKE A PROFIT! So if that means less cars for more profit, day after day, year after year, I'm still headed in in the right direction.

 

You must know your numbers in business and not worry about a situation of lower car count if there is an increase in net income. As a shop gets more organized administratively and adds technicians the car count and income will increase. It's much easier to increase car count with lower prices but only the most vanity driven shop owner would like it to look more busy to the public out there and make less money. I've been there.

[mspecperformance]

Hey Andre, I think we met back a few years ago at a Management Success 1-2 day event. Worst event I have ever attended. Glad to see you are doing well.

[andresauto]

Lol, thanks. We did meet. I liked that event. No matter what event or class I take I always learn something. I signed up for both ATI and Management Success. I invest alot in training and education. Both ATI and Management Success both cost a pretty penny but it's what I made of the education that was the real difference. If I made no changes in my business operations, both schools would have been just another bill to pay and a total waste of time and money. Both companies have you keep numerical graphs to see whether you are making gains or dropping the ball somewhere. I can complain and find faults in everything I've ever attended or spent money on but I'd also have to look at the improvements I've made. I expanded to an 8 bay shop from a one bay shop and have offers made on 3 local shops for sale in the area that I'd like to buy. I have spent over $100,000. on education and training in management and have out produced the previous years income consistently.

Point being every action I've taken

has a reaction including the action of no action. But the ongoing result is improvement and greater income. Both schools have changed my life in different ways,on a simple level with ATI I set the labor rate to be more profitable and eliminated my greatest liability customers which was mostly wholesale work. With Management Success I set the shop up administratively and with the proper personnel to function without my daily attendance. In the last three weeks I have worked one complete day as a fill in mechanic. I could have made improvements faster if I followed the programs more stringently.

I don't want people to get the wrong idea by the previous statement that was made that it was the worst event you ever attended. That's at the same level of someone insulting your shop but they never did business with you, they just came in for an estimate and didn't like you. As a client of both companies, both are what you make of them. But most importantly an individual and his/her company are a creation and reflection of their personal knowledge, control and responsibility for themselves and that company. The best investment I've made to date is toward my own personal knowledge and how to handle my money making machine.

[mspecperformance]

Andre i respect your opinion on Management Success but what I left out of my comments about Management Success was that they did actually personally insult me during their one on one consultation. It was very demeaning and i care not to repeat my experience however lets just say it left such a bad taste in my mouth that i left without finishing the 2nd day and I called threatening to charge back my card. Thry eventually refunded me the weekend cost and apologized for their representatives action but it will still stand as one of the worst experiences i have ever dealt with. I am now working with Elite and hsve made great changes to my business. In closing i do stand by my experience as the Management Success experience was the worst class ive ever attended.