Quantcast
Jump to content


We shouldn't make money off of claims? Why not? I say we should.


Recommended Posts

So as my shop is getting set up I have been meeting with all of my parts reps. I had a long conversation with the Oreilly rep yesterday and when I asked about warranty claims due to a bad part THEY sold me I was told that they do not do them...? He went on to tell me that they submit them to the manufacturer and they warranty the item and labor at $25-$35/hour. After some further discussion he informed me that shops should not make money on claims and I disagree. Why, when I put on a part and it fails should it cost me money to repair it? Am I not losing money when I have a vehicle on my lift making $25/hour vs $85/hour? Sure I do, I am losing money? When does a customer (we are customers to the parts store) have to lose money in any other industry? Early that same day he was telling me about their CSC program in which they will pay other shops to fix parts failures across the country... Excuse me, you just told me that you won't pay me to put a part back on but you'll pay Bob in Idaho?

 

 

Link to comment
Share on other sites



why on earth would you use oreilley. they are the worst parts dist we have ever used. Autozone pays us warranty claims, they deduct it from our bill immediately. Autozone used to be shit too but more and more these days they are getting better manufacturers, thus better parts.

Link to comment
Share on other sites

I think there may be another way to look at this, and although it doesn't change the math, I can tell you, it's just how I decided to deal with it so I could move on with my life, and not "fester" as I'm unfortunately, prone to do sometimes.

 

The warranty on the part isn't hard to understand. We'd like to believe that the parts that are made to a higher standard just naturally carry a longer warranty period, but what is the warranty, anyhow? Isn't the warranty on the part just the manufacturer's way of putting some "wiggle room" into the cost structure of our business, so we can feel confortable installing their brand, knowing that if the mean ol' manufacturers make a product that just doesn't seem to hold up, that they'll (of course) give us another? So it's decided, I think, that the parts warranty is easy to figure out.

 

The labor warranty, well, that's where I had to make some hard decisions, and if you'll bear with me, I think I can offer a solution that will make some of you smile, knowing you'll get paid for EVERY labor claim, to the very penny, that you deserve.

 

First of all, here's what I think of labor claims: The labor is mine. The labor is what I provide, and the part of the service that's most personal, and DEFINITELY between me and my customer. So, for the record, just like a distributor/manufacturer is willing to give up another new part that cost them just as much to make as the first one, because they are taking care of THEIR customer, I'm willing to give up my time to take care of MY customer. (Don't scream at me just yet - remember, I said you're gonna get paid for it, right?)

 

This is a fallen, fractured, rusting and busting world. That's what makes it exciting for us to be in such a business....we KNOW that the cars are going to continue to break down. Trying to hold the manufacturer or distributor to carrying the full weight of a labor claim isn't any different that asking me to carry some responsibility in the replacement of a part I had no involvement in designing or manufacturing. The way my business operates is this - my vendors, my customers, and me...we're the dream team! Between the three of us, putting together our collective, rational heads, we can overcome any situation, and resolve it in a way that's fair to everyone.

 

So here's what I've done:

 

First, I work with aftermarket suppliers that are willing to carry SOME of the responsibility for all costs incurred if the parts they are representing don't hold up for reasons unexplained, or more obviously related to something in the manufacturing process. Not only will they get me replacement parts, but they'll typically be able/willing to give me $25-$35 on the hour. If you're getting $50, then I applaud you. If your labor rate is anywhere near $100 an hour, then you've got close to half your labor paid for without batting an eye.

 

Second, for the love of Pete...don't fear getting correct, profitable parts margins! When people ask why the part they get from their local parts store is $11 and your estimate is reflecting a charge of $25.50....tell them the truth! Reputable installers charge a markup on their parts. Our margin runs between 55 & 60%, depending on the starting cost of the part. If you're running healthy margins to begin with on everything from a cotter pin to a $300 starter, TRUST ME...the money is in the bank, and you can afford to give the customer in front of you a break by standing tall behind the part you put in. I worked as a consultant to a shop that had 3 locations, and had been profitable for many years, that wanted to charge the customer the difference between what the labor claim would pay, and what his rate was. Shame on him! If you focus on serving your customers, the money will always follow, without exception.

 

And lastly, (and here's where you're gonna get paid for every labor claim), my advice is easy. I've trained lots of service advisors in the past, and a circumstance that always comes up is when they're struggling with making margin on an estimate, and they don't know what to do. The truth is, they DO know what to do, they're just afraid. Don't be afraid to charge what you NEED to charge to remain profitable! If you're so afraid of pitching the needed services to the customer on the phone for fear of what they might say, then HANG UP!

 

I calculated how many labor claims I typically have in a year, and how many hours of time it accounted for. I cut that number in half, divided by 52 weeks in a year, then by how many labor hours I generally sell in a week. Do you see where I'm going with this? i know EXACTLY how much labor I was "giving away" everytime I assigned a technician to an hour of labor in the bay. I have a pretty good idea how many labor hours will be tied up in a abor claim this year, so all I've done is negotiated the very best deal I can with my suppliers, and spread the difference out across ALL labor hours I sell. That, accompanied with a healthy parts margin, absolutely GUARANTEES that I'm getting paid for my time.

 

I raised my labor rate 13 cents for EVERY hour. That money annually, plus the money I get from my vendor on labor claims at $35/hour...that equals my standard labor rate against all potential labor claims...so we get paid regardless.

 

The best part is that because no one was now worried about the almighty dollar as it related to the question of a labor claim, so everyone relaxed, and was able to give a response that sounded like this: "Well of COURSE we're going to stand behind the part, as well as the labor in this case, Mr. Smith. Although my suppliers don't shield me from all the additional time it'll take to do so, your business with us is far too important to us to let you worry for one moment that your choice in mechanics was a mistake. I hope you'll let us take care of this for you, and you'll continue to count on us in the future, should the need arise."

 

Of course, we KNOW the need will arise, don't we? Remember my rusted, busted commentary?

 

 

Just one man's approach to not sweating the small stuff.

Edited by stowintegrity
  • Like 3
Link to comment
Share on other sites

Great post stow.

 

It really goes back to perception. If we are charging enough for our parts and labor then we as an industry should be able to offer long warranties to our customers without blinking. I think more time should be focused on what margins do you need to remain profitable, what kind of value you can give to the customer and how to keep getting more of these customers. If you are charging the right amount as stow has stated, you should be charging enough to cover your end if problems arise.

 

What also gets lost in the mix is the value of the customer to your business. Sometimes we are so quick to deny claims or push off responsibility to someone else such as our suppliers, the customer, the roads, etc etc. When in fact again if you are charging properly you should be making enough to confidently tell your customer, "Of course. Mr. xxxxx we will take care of that for you because you are a valued client and we are here to help." Something magical kind of happens after that... you create a happy customer that wants to spend more money with you and wants to sing your praises to others. Like everyone else I really hate having to eat jobs, time, money, parts when we know we are not at fault however in the grand scheme of things it is worth more to me not to "fester" and brood over small things and look at the bigger picture which is you have tons of money to make moving forward and taking care of your customers will net you far more value than to "win" and not take care of them.

Link to comment
Share on other sites

I agree, great post Stow, simple fix to a nagging industry problem. In WV it was an easy fix, I call both supplies and informed them that they would either warranty our $95/hour or lose our 10k+ per week in sales. Here in IN, I'm a one man shop again so I have zero pull.

 

I've always want to do some sort of extended warranty but haven't reallys sat down and layed it out.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Available Subscriptions

  • Have you checked out Joe's Latest Blog?

         0 comments
      It always amazes me when I hear about a technician who quits one repair shop to go work at another shop for less money. I know you have heard of this too, and you’ve probably asked yourself, “Can this be true? And Why?” The answer rests within the culture of the company. More specifically, the boss, manager, or a toxic work environment literally pushed the technician out the door.
      While money and benefits tend to attract people to a company, it won’t keep them there. When a technician begins to look over the fence for greener grass, that is usually a sign that something is wrong within the workplace. It also means that his or her heart is probably already gone. If the issue is not resolved, no amount of money will keep that technician for the long term. The heart is always the first to leave. The last thing that leaves is the technician’s toolbox.
      Shop owners: Focus more on employee retention than acquisition. This is not to say that you should not be constantly recruiting. You should. What it does means is that once you hire someone, your job isn’t over, that’s when it begins. Get to know your technicians. Build strong relationships. Have frequent one-on-ones. Engage in meaningful conversation. Find what truly motivates your technicians. You may be surprised that while money is a motivator, it’s usually not the prime motivator.
      One last thing; the cost of technician turnover can be financially devastating. It also affects shop morale. Do all you can to create a workplace where technicians feel they are respected, recognized, and know that their work contributes to the overall success of the company. This will lead to improved morale and team spirit. Remember, when you see a technician’s toolbox rolling out of the bay on its way to another shop, the heart was most likely gone long before that.
  • Similar Topics

    • By carmcapriotto
      Welcome to another episode of the Auto Repair Marketing Podcast, hosted by Brian and Kim Walker! 
      Today, we have a very special guest, Michael Doherty, who was our exceptional service advisor at Peak Automotive in Apex, North Carolina. 
      Michael has been a pivotal figure in our journey, and we are thrilled to share his insights on customer loyalty and retention. He’ll discuss his unique approach to building lasting client relationships and the importance of genuine care and transparency.
      Thank you to RepairPal for sponsoring The Auto Repair Marketing Podcast. Learn more about RepairPal at https://repairpal.com/shops
      Lagniappe (Books, Links, Other Podcasts, etc)
      WorldPac - https://www.wtitraining.com/
      Worldpac STX - https://automotivetrainingevents.com/event/stx/
      Traver Technologies: https://traverconnect.com/
      ShopWare - https://shop-ware.com/
      How To Get In Touch
      Group - Auto Repair Marketing Mastermind
      Website - shopmarketingpros.com 
      Facebook - facebook.com/shopmarketingpros 
      Get the Book - shopmarketingpros.com/book
      Instagram - @shopmarketingpros 
      Questions/Ideas - [email protected] 
      Click to go to the Podcast on Remarkable Results Radio
    • By carmcapriotto
      Thanks to our Partner, NAPA Auto Care Alex Saladna from WickedFile discusses the challenges shop owners face in tracking parts, expenses, and managing profit margins. With real-life examples of shop owners discovering hidden costs and inefficiencies, this episode is a must-listen for anyone looking to optimize their business operations. Alex Saladna, WickedFile Show Notes
      The Brakes for Breasts Initiative (00:00:15) An initiative by two shop owners to raise funds for a vaccine for triple negative breast cancer. https://brakesforbreasts.com Challenges in Business Management (00:02:06) The challenges in tracking parts, expenses, and managing profit margins in the automotive industry. Founding of WickedFile (00:02:38) How WickedFile was founded and the motivation behind creating a parts tracking solution for the auto repair industry. Importance of Tracking Spending and Financial Documents (00:06:05) Discussion about the significance of tracking spending and managing financial documents in the automotive industry, including the risks of financial discrepancies. Identifying Business Gaps (00:07:14) Alex highlights the importance of identifying gaps in business operations and the potential financial impact. Efficient Parts Tracking and Profit Management (00:09:25) Discussion about the significance of efficient parts tracking and managing profit margins in the automotive industry. Tracking Vendor Credits (00:10:35) Discussion about the processes and disciplines for tracking vendor credits and ensuring the accuracy of financial transactions. Simplified Document Management (00:12:04) Explanation of the simplified document management process offered by WickedFile, including email invoicing and categorization. Efficiency in Document Retrieval (00:13:31) The efficiency of document retrieval in WickedFile's system and the benefits of streamlined data organization. Expense Management (00:15:40) Discussion about the upcoming features of WickedFile for expense management, including insights into business spending patterns. WickedFile's Integration with Management Systems (00:20:19) Explanation of the integration process and the management systems currently supported by WickedFile. Inventory Management and Disciplines (00:21:47) The importance of inventory management, including tracking parts and maintaining discipline in the system. WickedFile's Role in Enhancing Business (00:25:01) How WickedFile aims to enhance business operations, improve profitability, and address parts-related challenges. Training and Support for WickedFile Users (00:26:16) Details about the training, support, and enablement provided by WickedFile for its users. Impact of WickedFile on Business Operations (00:26:57) Real-life examples of how WickedFile helped businesses identify issues such as excessive spending and theft.
      Thanks to our Partner, NAPA Auto Care Learn more about NAPA Auto Care and the benefits of being part of the NAPA family by visiting https://www.napaonline.com/en/auto-care Connect with the Podcast: -Follow on Facebook: https://www.facebook.com/RemarkableResultsRadioPodcast/ -Join Our Virtual Toastmasters Club: https://remarkableresults.biz/toastmasters -Join Our Private Facebook Community: https://www.facebook.com/groups/1734687266778976 -Subscribe on YouTube: https://www.youtube.com/carmcapriotto -Follow on LinkedIn: https://www.linkedin.com/in/carmcapriotto/ -Follow on Instagram: https://www.instagram.com/remarkableresultsradiopodcast/ -Follow on Twitter: https://twitter.com/RResultsBiz -Visit the Website: https://remarkableresults.biz/ -Join our Insider List: https://remarkableresults.biz/insider -All books mentioned on our podcasts: https://remarkableresults.biz/books -Our Classroom page for personal or team learning: https://remarkableresults.biz/classroom -Buy Me a Coffee: https://www.buymeacoffee.com/carm -The Aftermarket Radio Network: https://aftermarketradionetwork.com -Special episode collections: https://remarkableresults.biz/collections
      Click to go to the Podcast on Remarkable Results Radio
    • By carmcapriotto
      Thank you to our friends at RepairPal for providing you this episode. As shop owners we were part of RepairPal’s Certified network and you can learn more at RepairPal.com/shops.
      Customer loyalty programs are crucial for retaining clients in the auto repair industry. On the Auto Repair Marketing Podcast, hosts Brian and Kim Walker explore this topic with Joe Schindler and Jeff Rudnick. 
      Joe, a shop owner, shares his experiences with loyalty programs, while Jeff from Pit Crew Marketing offers insights on how these programs can significantly benefit automotive shops. 
      This discussion is part of their ongoing series on customer retention. They highlight how personalized rewards, first impressions, and community involvement can build stronger customer relationships, encouraging repeat business and long-term loyalty. These strategies significantly enhance customer satisfaction and drive business growth.
      Show Notes with Timestamps
      The introduction (00:00:03) Introduction of the podcast episode and the topic of customer loyalty programs. Jeff's background in Hawaii (00:01:03) Jeff's background in Hawaii and the discussion about his current location. Defining customer loyalty (00:04:19) Discussion on the definition of customer loyalty and how it is measured. Earning trust and loyalty (00:06:01) The importance of trust in earning customer loyalty and the significance of knowing the customer's intent. First impressions (00:12:00) The impact of the first impression on building customer loyalty and the significance of creating a welcoming environment. Last interaction and lagniappe (00:18:05) The importance of the last interaction with the customer and the concept of providing a little extra (lagniappe) to enhance the customer experience. Community involvement and charity events (00:20:34) The role of community involvement and charity events in creating customer loyalty and building relationships. These are the main topics covered in the podcast episode transcription segment, organized in chronological order with their respective timestamps. Community Involvement Charity (00:22:26) Shop owner's initiative to involve customers in community charity, raising funds and providing incentives for customers. Supporting Little League Teams (00:23:20) Discussion on sponsoring little league teams, the impact on the community, and the importance of community involvement. Seizing Opportunities (00:24:29) Encouragement to shop owners to seize opportunities, think creatively, and take advantage of moments for business growth. Solving Real Problems (00:25:44) Emphasizing the role of marketing in solving real challenges for small businesses and making their lives better. Involvement in the Community (00:27:31) Discussion on the importance of being involved in the community and creating a sense of belonging, impacting marketing positively. Connecting with Customers (00:28:36) Emphasizing the need to connect with customers in a meaningful way, beyond traditional loyalty programs, and the impact on advertising effectiveness. Fundraising Logistics (00:29:46) Exploring the logistics of fundraising, including tools, graphics, and collaboration with marketing companies for seamless integration. Using Rewards for Community Programs (00:36:29) Discussion on customers choosing to use rewards for community programs, the intrinsic value, and setting up guardrails for giving. Launching Shop Programs (00:41:39) The process of launching shop programs, integration with shop management systems, and activating accounts based on customer history. Service Advisor's Role (00:45:37) Reference to a previous episode discussing the service advisor's role in customer retention and the impact of the 1-to-1 service advisor-technician ratio. Joe's thoughtful gifting (00:46:31) Joe explains his thoughtful and considerate gifting strategies to connect with clients and nurture relationships. Partners with systems and processes (00:47:22) Joe emphasizes the importance of having partners with efficient systems and processes to ease the burden on business owners. Inexpensive customer gifts (00:48:37) Joe shares his inexpensive yet impactful gift ideas for customers, including hot chocolate mixers, cookies, and personalized items. Quality over quantity (00:51:20) Joe discusses the significance of giving high-quality, thoughtful gifts over cheap trinkets and the impact it has on customers. Building customer loyalty (00:53:17) Joe emphasizes the importance of little gestures and thoughtful gifts in building customer loyalty and creating a positive impact. Conclusion and contact information (00:54:02) The hosts express gratitude to the guests and provide their contact information for listeners to get in touch.  
      How To Get In Touch
       
      Group - Auto Repair Marketing Mastermind
      Website - shopmarketingpros.com 
      Facebook - facebook.com/shopmarketingpros 
      Get the Book - shopmarketingpros.com/book
      Instagram - @shopmarketingpros 
      Questions/Ideas - [email protected]
      Lagniappe (Books, Links, Other Podcasts, etc)
      Pit Crew Marketing
      Schindler's Garage
      Schindler's Garage - see loyalty program posts
      Click to go to the Podcast on Remarkable Results Radio
    • By carmcapriotto
      In this episode of the Auto Repair Marketing Podcast, hosts Brian and Kim Walker are joined by Rena Rennebohm to discuss the crucial role of service advisors in customer retention. Part of a customer retention series, this conversation highlights the importance of tailored, one-on-one service advisor training. Key topics include the shop owner's role in setting expectations, the benefits of a one-to-one advisor-to-technician ratio, and common mistakes in advisor interactions. Rena emphasizes the need for clear communication, empathy, and consistent follow-up to build trust and enhance customer loyalty, ultimately driving better business outcomes.
      Thank you to RepairPal for sponsoring The Auto Repair Marketing Podcast. Learn more about RepairPal at https://repairpal.com/shops
      How To Get In Touch
      Group - Auto Repair Marketing Mastermind
      Website - shopmarketingpros.com 
      Facebook - facebook.com/shopmarketingpros 
      Get the Book - shopmarketingpros.com/book
      Instagram - @shopmarketingpros 
      Questions/Ideas - [email protected]
      Lagniappe (Books, Links, Other Podcasts, etc)
      Rena Rennebohm: [email protected]
      Website: empoweryouradvisor.com
      Click to go to the Podcast on Remarkable Results Radio
    • By Changing The Industry
      Episode 170 - The Future of Auto Parts Using Wiretronic's AI-Powered Solutions


  • Our Sponsors



×
×
  • Create New...