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Yesterday, went for a drive through North Jersey, was very concerned to see that independent shops are putting permanent signs with the $19.95 oil change offers, the $59 A/C recharge, and the $5 dollar flat fix. This reeks of desperation, clearly the industry is coming due for a strong correction. At my shops this month we are starting to see price resistance from the lower income segment, we are having to exert price flexibility for price discovery which we are finding to be 10% to 20% from list pricing. The mid to upper segments are still going strong.

Edited by HarrytheCarGeek
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yes this has been going on for a long time in my area, the problem around here is that the big name parts houses are catering to the public, they are giving them the same price as we get parts for. Then the next piece to the puzzle is the hack shops and shade tree mechanics on the street under cutting shops prices big time .. How do you compete? Well I am not to sure there is anything that can be done about this but as time goes on people will have to start looking for a place that can actually repair their car and not throw part after part at it . It is hard to deal with but I stand firm on my prices. I explain that my price may be a little higher, but you will have a warranty with the work and that the work will be done right the first time. So you pay for what you get. Cheap work isn't good , good work isn't cheap ! Until some sort of standards are set on who can actually work on cars etc. this type of thing will go on and on, but also you have to figure that the shop doing the cheap work is just looking for the quick turn around, thus the work is not going to be done properly. A/C recharge for 59 bucks, well may only be good for 59 minutes before needing another recharge and a 19.95 oil change how is that possible? Recycled oil? cheapest filter on the marked.. I think time will sort these shops out as people become fed up going back to them for things to be made right and the shops will get annoyed with the costumer complaining all the time and black list them so in the end it may take time, but I think will work it self out.

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skm,

You are right, these guys pretty much all they can do is the basic maintenance stuff, some of them cannot even afford the scanners to do brakes on the most recent vehicles models. So, yes, time is coming where these guys will not make enough to stay in business.

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I do cheap oil changes, although since switching to only using full synthetic it went up to $29.95. No desperation here. It's part of my business model, and working fantastic.

Now that you mention it, a permanent sign is certainly cheaper than my mailers. I'll have to think about doing that.

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1 hour ago, AndersonAuto said:

I do cheap oil changes, although since switching to only using full synthetic it went up to $29.95. No desperation here. It's part of my business model, and working fantastic.

Now that you mention it, a permanent sign is certainly cheaper than my mailers. I'll have to think about doing that.

I don't see anything wrong with enticing a customers in with a "cheap oil change" but you are also using a full synthetic a good oil, and I am sure that you are not offering all your services at a cheap price as I think is more or less the topic of this discussion.  Some shops are giving all services at a very low price, I don't know how they could even stay afloat . Also if you have the right techs or a dedicated guy for those oil changes I don't think there would be any problems, but some techs don't like to do the oil changes especially if they are on a commission pay base. You have to remember that a lot of people that go for the cheap oil change are there just for that. You may find work off the cars but may have a more difficult time selling it. But that being said as long as it is working for you keep it up. One other thing that will play a role in things is demographics .

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skm, you're correct and I agree with you on a couple of points. You said... "a lot of people that go for the cheap oil change are there just for that." Yes, you're 100% correct. That's the same for Groupon type offers and coupons - and they are hard to convert to "good customers".

Secondly, you said "One other thing that will play a role in things is demographics". Correct! Just because these 1,000 people live close to your shop doesn't mean that they are the type of customer you want. 

Cheap oil changes can work, but they should be promoted to YOUR CUSTOMERS to get them back in. 

Then, if you do it right, you don't even have to discount those oil changes. How? Send them a text message and fix your car count

When I speak with shop owners and they tell me that "their customers are cheap", or "they would never go for that", I reply by asking one simple question. "Who attracted those customers?"

You get what you promote.

Hope this helps!

Matthew Lee
"The Car Count Fixer"

Get "The Official Guide to Auto Service Marketing"

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We have cheap oil changes, $25.95 syn blend Cam2 oil. It helps draw people in and keeps them coming back. BUT, my shop is in a "good" area and doesn't draw many unwanted customers. Either me or my wife will make a point to chat with each customer getting an oil change. We will talk about anything, except their car. Must of our customers think of us as friends.

We also did Groupon for about a year and sold a little over 1,200 oil changes on it. Groupon is the only paid advertising that worked for us. I tell other business owners all the time how it has worked for us. I think at least 1/3 have become regulars. Remember, our shop is located in a good area, middle to upper class, so we tend to have a good customer base to start with. Alot of women have told me they love to use groupon.

The main thing with drawing people in with cheap oil changes is to talk to them and build that relationship right away. Don't let them come in and leave with out having a good talk.


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I agree that demographics play a big part, especially depending on how you are marketing your cheap oil change.  It is great that the CHEAP is working for some members and I wholly agree with PherBag that talking to the customer and building a relationship is paramount.  But it does not work for everyone and by everyone I mean the shops not the customers simply because of demographics.  In my area there were at least 4 shops that tried the $18.95 oil change.  Techs hated the oil changes, the shops have all but dropped them and with the exception of one but they are still $25.95.  That shop is just a quick lube but you will not roll out of there without them trying to sell you every wallet flush there is.  So when the victim tires of the cheating and unnecessary service selling and goes to a legitimate shop, they refuse ALL recommendations, even when you show them the tie rod end that's about to pop apart. 

 

Why am I pointing this out when it's a quick change place and not a real repair shop?  Because that's the impression that is built in the customers' minds.  the purpose of your cheap oil change is to get the customer in the door to find and sell extra services.  How is that different than this quick change scam shop?  It's not, not really.  Not in the customer's mind.  How you can make your shop different is not by not offering an oil change but by not using it as a loss leader in an effort to find and sell more services.  Offer it as a legitimate service at a legitimate prices.  Why do we feel the need to give our time away?  Do we not value our time?  If not why should the customer and why are we surprised when they come to us for the cheap oil change and then shop any recommendations we find and then pick the cheapest shop for each of them too?  If you aren't willing to be part of the solution because being part of the problem is making you money, well, there's not much to say about the poor level of ethics involved. 

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On 6/15/2017 at 9:06 PM, skm said:

…the next piece to the puzzle is the hack shops and shade tree mechanics on the street under cutting shops prices big time .. How do you compete?

 Until some sort of standards are set on who can actually work on cars etc. this type of thing will go on and on, “

 

But who is going to establish AND enforce those standards?  I’m in the State of Michigan where we have not only facility licensing but also mechanic/technician licensing.  But we also suffer from “Craigslisters” too.  Why?  Because our industry is not interested in enforcing or submitting to the licensing conditions, proficiency standards or the regulations much less PAY for the agency staff to enforce the same.  In the face of this lack of support from the industry the politicians place no importance in funding the agency responsible either.  Our industry whines and cries about these issues but we at the same time refuse to understand that if we are going to have these standards and an equal, level playing field, we too have to take some responsibility and accept oversight of our shops too.  In short, too many anti-gubbermint types wanting “those people” to be controlled but not themselves.  I wonder how members of the AMA feel about all the regulations, rules and restrictions in their profession?  It doesn’t have to be THE government but it has to be some form of a governing body.  Until we as a profession can accept this, we will never be able to address or fix the problems you identify.  But still, thank you for putting a voice to the problems all the same. 

 

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On 6/16/2017 at 5:58 PM, AndersonAuto said:

I do cheap oil changes, although since switching to only using full synthetic it went up to $29.95. No desperation here. It's part of my business model, and working fantastic.

Now that you mention it, a permanent sign is certainly cheaper than my mailers. I'll have to think about doing that.

And how are you offering $29.95 FULL (or 100%) synthetic oil changes for only $29.95.  What is your margin or are you not worried about margin and just worried about getting the cars in and upsetting of this price?  Offering $9.95 / $19.95 or $29.95 oil changes are nothing but a way to attract those chasing the cheapest oil changes, then if and when "specials" are over, they will move on to the next discounted service.  We have found that all the mailers, GROUPONS and other mass ways to attract clients will not attract great clients.  Do they build build car count yes, but is it the car count and the clients you want?  How many of those GROUPON clients remain your clients?  Or do they move on to the next cheap thing?

We don't offer these discounted services, we offer quality services with integrity and a smile while not pressuring clients to purchase their repairs.  There are multiple shops around our area doing the discounted services, but our bays remain full and our schedule is full for the next 2 weeks with appointments.  

As mentioned early but another subscriber: Cheap work isn't good , good work isn't cheap!!  

 

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2 hours ago, TheTrustedMechanic said:
On 6/15/2017 at 9:06 PM, skm said:

But who is going to establish AND enforce those standards?  I’m in the State of Michigan where we have not only facility licensing but also mechanic/technician licensing.  But we also suffer from “Craigslisters” too.  Why?  Because our industry is not interested in enforcing or submitting to the licensing conditions, proficiency standards or the regulations much less PAY for the agency staff to enforce the same.  In the face of this lack of support from the industry the politicians place no importance in funding the agency responsible either.  Our industry whines and cries about these issues but we at the same time refuse to understand that if we are going to have these standards and an equal, level playing field, we too have to take some responsibility and accept oversight of our shops too.  In short, too many anti-gubbermint types wanting “those people” to be controlled but not themselves.  I wonder how members of the AMA feel about all the regulations, rules and restrictions in their profession?  It doesn’t have to be THE government but it has to be some form of a governing body.  Until we as a profession can accept this, we will never be able to address or fix the problems you identify.  But still, thank you for putting a voice to the problems all the same. 

 

I am with you completely on this, I know I have heard over and over when I bring this up about how they don't want the government controlling more of their lives "they already control enough" well sometimes their are reasons for this.. If there were no rules there would be total chaos, well sort of how it is in a lot of the automotive industry.. Just like you hear people saying they don't like that the government is watching them or has the ability to listen to their phone calls. Hey if you are not doing anything wrong why the hell do you care.. They can follow me listen to my conversations I don't care it would probably bore them LOL.. Then yes they are always worried about how it is going to be funded, well they are already dipping into the state inspections where I live.. they are electronic every one you do you pay 3 bucks to the state. Which we incorporated into  the cost of the inspections. I mean do you really think that it would be enough to damage your business ? I don't not to mention a level playing field, getting rid of all the hack shops would only mean more customers for your shop so it is one of those things where does the pros out weight the cons. Well I think that it would in the long run

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5 hours ago, cmautocare said:

And how are you offering $29.95 FULL (or 100%) synthetic oil changes for only $29.95.  What is your margin or are you not worried about margin and just worried about getting the cars in and upsetting of this price?  Offering $9.95 / $19.95 or $29.95 oil changes are nothing but a way to attract those chasing the cheapest oil changes, then if and when "specials" are over, they will move on to the next discounted service.  We have found that all the mailers, GROUPONS and other mass ways to attract clients will not attract great clients.  Do they build build car count yes, but is it the car count and the clients you want?  How many of those GROUPON clients remain your clients?  Or do they move on to the next cheap thing?

We don't offer these discounted services, we offer quality services with integrity and a smile while not pressuring clients to purchase their repairs.  There are multiple shops around our area doing the discounted services, but our bays remain full and our schedule is full for the next 2 weeks with appointments.  

As mentioned early but another subscriber: Cheap work isn't good , good work isn't cheap!!  

 

Yes, I am offering a full synthetic Dexos approved oil change for $29.95. The margins aren't much, but it's not zero. Just north of $5.00 if my lube dude does it. Pretty much zip if one of my master techs does it. But margin on the oil change isn't the point of the oil change. The inspection is. And no, we don't just load the RO up with wallet flushes. My advisors won't put up with that. We do a full and proper inspection on the vehicle, that we can demonstrate the need for any item at any time, and we present the findings to the customer. Since my advisors are great at their job, they sell a large portion of the work.

I spent the weekend at the lake, and on Saturday my guys closed $17,751 at $555 a repair order. We're closing in on another record month, and should end up at about $220K. Then I'll net 20% of that. And I've promoted myself up to shuttle driver. Life is good.

 

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15 hours ago, skm said:

I am with you completely on this, I know I have heard over and over when I bring this up about how they don't want the government controlling more of their lives "they already control enough" well sometimes their are reasons for this.. If there were no rules there would be total chaos, well sort of how it is in a lot of the automotive industry.. Just like you hear people saying they don't like that the government is watching them or has the ability to listen to their phone calls. Hey if you are not doing anything wrong why the hell do you care.. They can follow me listen to my conversations I don't care it would probably bore them LOL.. Then yes they are always worried about how it is going to be funded, well they are already dipping into the state inspections where I live.. they are electronic every one you do you pay 3 bucks to the state. Which we incorporated into  the cost of the inspections. I mean do you really think that it would be enough to damage your business ? I don't not to mention a level playing field, getting rid of all the hack shops would only mean more customers for your shop so it is one of those things where does the pros out weight the cons. Well I think that it would in the long run

This is something I've struggled with. On the one hand, I completely agree that we need some sort of system to ensure that technicians are qualified. In the state of Kansas, as in most states, there are licensing requirements, tests to ensure competence, and continuing education requirements for a whole array of professions. You can't call yourself a Dr without passing medical board exams, you can't call yourself a CPA without passing the CPA exam. You also can't cut someone's hair or give them a massage. Or pull a permit for new construction for plumbing, electrical, or to be the general contractor. And probably a thousand other professions I can't think of at the moment. The qualification requirements to be a technician is to simply say "Hi, I'm a mechanic". 

But.....   The states that do have auto repair regulatory bodies (the BAR in CA and other states) the main focus is on the front counter, not the techs. Those states seem to believe that the most damage comes from unethical shop owners, not incompetent techs. And if we did end up with a technician licensing regulations, would we end up like hair salons with the constant harassing of the techs by the state? I have a friend who was fined by the state because she had a spray bottle on her station that was unmarked. It contained water. After paying her fine, she had to make sure there was a label on the bottle that said "water". I don't know about you, but I'm not interested in that sort of meddling. 

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2 hours ago, AndersonAuto said:

“If we did end up with a technician licensing regulations, would we end up like hair salons with the constant harassing of the techs by the state? I have a friend who was fined by the state because she had a spray bottle on her station that was unmarked. It contained water. After paying her fine, she had to make sure there was a label on the bottle that said "water". I don't know about you, but I'm not interested in that sort of meddling.“

 

First, I am in a state that does require technician licensing so I know how much the state “harasses the tech.”  If you pass your test, pay your fee and do good enough work to keep your job and no one complains, then the state largely leaves you alone.  But if you do something that raises a complaint, then they investigate.  Too many complaints and they investigate a little deeper. 

 

Secondly, it’s only meddling if you don’t want to be responsible for your actions and your inactions that may contribute to harm.  Such as your “boo hoo, poor me” scenario, your friend knew it was water, maybe her co-worker knew it was water, but would anyone else know it wasn’t peroxide or another chemical?  What if this salon bought a cleaner in bulk like many of us do brake cleaner and put that cleaner in a generic, unmarked bottle?  I’m sure the salon, like many of us buy more than one generic container to put bulk material into.  The salon would have numerous spray bottles and if none were marked, just because it had water yesterday doesn’t mean it doesn’t have Formula 409 today.  WHY are you upset that the bottle should be labeled?  Is it some pathological bent that all government is bad? 

You do know that very little of what the government does in the way of regulation is proactive, right?  That means they are REACTING to PAST instances of failures to protect, abuses of citizens/customers, exploitations and other bad acts.  By not marking her bottle no one else would know if it was benign water or something more serious.  By not marking your gaseous materials tanks no one knows if it is acetylene, oxygen, nitrogen, helium, propane, recovered r-134a or what is in it.  Sure the size, color and shape are a tip off, but isn’t that a form of marking?  How would you feel if your techs peeled the labels off of all the spray cans in your shop?  You wouldn’t know if you were spraying silicone lubricant, belt dressing or paint.  This simply is a stupid, indefensible and inexcusable argument you are making. 

Likewise, if the state agency is funded by fines instead of by, GASP! taxes, do you think they are going to give warnings or issue fines?  Everything has a price and the price has to be paid.  If not by everyone paying their share of what it takes to have a civilized society then it will be paid by those who create opportunities for chaos.  By not marking a generic container your friend was creating an opportunity for chaos.  I’m sorry to be harsh but I don’t think you have any ground to stand on to make your complaint.  I am not a big government type but I do believe that government is necessary to make sure that everyone has a right to expect to be treated fairly, honestly and is safe from unreasonable risk of harm.  Being a business owner (or sub-contracting hair stylist) does not absolve you from being accountable for creating opportunities for chaos. 

 

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1 hour ago, TheTrustedMechanic said:

I think you know you don't have a legitimate reply so you simply attack the messenger.  Telling.

Really? I had actually started to type out a response, but decided that due to your tone it was just going to turn into a urination contest with no real point.

If you think that after your rant directed at me, my telling you to relax is an attack, you've got much bigger problems than I thought. Thin skinned perhaps?

In the mean time I'll continue to wish for a good solution to the technician licensing issue without being at risk of govt regulators finding an ever increasing need to justify their existence.

Have a great afternoon. I know I am.

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okay, okay lol, everyone has their own opinion like they say opinions are like assholes everyone has one.. LOL.. but that being said this is just like anything else in the world.. it is divided. There are democrats, republicans etc.. some like Trump some don't. Some people like a nice T-bone steak some like a nice salad, just because someones opinion is not the same as someone else's it doesn't mean you or they  are wrong.. for anything ever to take place people need to work together. Debating things is usually how things get hashed out. Although hashing things out we need to understand someone else's opinion and listen to them with a level head so we can come to a bipartisan conclusion .. 

 

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20 hours ago, AndersonAuto said:

Yes, I am offering a full synthetic Dexos approved oil change for $29.95. The margins aren't much, but it's not zero. Just north of $5.00 if my lube dude does it. Pretty much zip if one of my master techs does it. But margin on the oil change isn't the point of the oil change. The inspection is. And no, we don't just load the RO up with wallet flushes. My advisors won't put up with that. We do a full and proper inspection on the vehicle, that we can demonstrate the need for any item at any time, and we present the findings to the customer. Since my advisors are great at their job, they sell a large portion of the work.

I spent the weekend at the lake, and on Saturday my guys closed $17,751 at $555 a repair order. We're closing in on another record month, and should end up at about $220K. Then I'll net 20% of that. And I've promoted myself up to shuttle driver. Life is good.

 

What are you paying for the oil?  Oil filter? Sounds like you are doing well but........

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35 minutes ago, AndersonAuto said:

I outlined all of this in another thread. 
 

Mind IF I ask what brand, because getting Dexos Full Synthetic in Texas is over $4.00/quart.  A WIX oil filter of $3.00.  

Again, I don't see basement bargin oil changes being super effective, except for taking care of current clients.  Conversion rates for the people chasing cheap oil changes is extremely low, regardless of how well you treat them.  

Sound like you are doing something right or different!  Keep up good work.

 

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It's a house brand oil from our local supplier, Allied Oil. It's Dexos approved, but we don't have to pay for the brand name. Very few customers know or care, and if they do we are glad to install whatever oil they want, but certainly not for 29.95. The filter is also a house brand from Factory Motor Parts. Super cheap, and hasn't given me a bit of trouble for over 4 years using them. Again, if someone cares, we'll be happy to upgrade the filter as well, for a price.

We are certainly doing well with this. I did just short of 2 Million last year (as in 1.5 days business short) and as of today I'm up 17.89% over last year. The second half of last year was really strong, so I suspect that gain over last year will shrink a bit, but I expect to end the year at 2.2 and a 20% net.

That said, oil change marketing does produce a fair number of "one and done" customers. Quite often they will spend money fixing other things they need on that first visit, but you may never see them again. It's just a part of the model. A lot of guys couldn't sleep at night knowing they're going to have 100 customers fall into the Lost Customer category in a given month. I just roll with it and keep pounding the marketing. We're certainly doing things to try reducing the outflow, but it will always be there to some extent. 

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On ‎6‎/‎26‎/‎2017 at 9:39 PM, AndersonAuto said:

It's a house brand oil from our local supplier, Allied Oil. It's Dexos approved, but we don't have to pay for the brand name. Very few customers know or care, and if they do we are glad to install whatever oil they want, but certainly not for 29.95. The filter is also a house brand from Factory Motor Parts. Super cheap, and hasn't given me a bit of trouble for over 4 years using them. Again, if someone cares, we'll be happy to upgrade the filter as well, for a price.

We are certainly doing well with this. I did just short of 2 Million last year (as in 1.5 days business short) and as of today I'm up 17.89% over last year. The second half of last year was really strong, so I suspect that gain over last year will shrink a bit, but I expect to end the year at 2.2 and a 20% net.

That said, oil change marketing does produce a fair number of "one and done" customers. Quite often they will spend money fixing other things they need on that first visit, but you may never see them again. It's just a part of the model. A lot of guys couldn't sleep at night knowing they're going to have 100 customers fall into the Lost Customer category in a given month. I just roll with it and keep pounding the marketing. We're certainly doing things to try reducing the outflow, but it will always be there to some extent. 

I have been reading your post over the last several weeks and what you have had to say has really intrigued me. It makes me want to come check out your shop. The cheap oil change has never worked for me and you have me wondering what I'm missing. Right now we are doing a $80 synthetic oil change that is bringing in customers that are willing to invest money in their cars. When we have tried the $19.99, $29.99, $39.99, etc., we get customers that usually don't spend more than that. Also you continue to beat previous sales. Most shops I am in contact with are seeing year over year sales on a steady decline for several years now. In fact, I just purchased the customer base of one that went bankrupt.

 I have a few questions in you have the time and are willing. The first question is how do you handle the oil change part of a service. For example, a 15,000 mile service on my Volvo includes a little more than an oil change. It includes a few other checks, a cabin air filter, and we also put some BG chemicals in it. For this example lets say we get $200 for this service and we normally charge $85 for an oil change. In this case would you modify the price of the service because of the oil change special price?

 I know you said you will accommodate a customer's requests when it comes to oil and filters, but do you try to upsell the oil change itself? Do you try to move them to a better oil or filter to increase the R.O.?

Do you have any insight on why like my shop, most shops dislike and struggle with the oil change specials, while it seems to be working so well for you?

Last question. Do you have any thoughts on why you have been able to thrive over the last few years when most in this business are experiencing flat to no growth?   

Thanks
Scott

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17 hours ago, ScottSpec said:

 I have a few questions in you have the time and are willing. The first question is how do you handle the oil change part of a service. For example, a 15,000 mile service on my Volvo includes a little more than an oil change. It includes a few other checks, a cabin air filter, and we also put some BG chemicals in it. For this example lets say we get $200 for this service and we normally charge $85 for an oil change. In this case would you modify the price of the service because of the oil change special price?

First, the oil change coupon doesn't include European cars. Most of them take a Euro specific oil and my house brand doesn't work. We will give a discount off the Euro oil change, which I don't have a set price for as they all seem to be a bit different. If someone comes in with a Euro car and my mailer, I do discount their oil change by the same dollars off that the coupon would save them on a non-euro car.

To the heart of the question, assuming that it's a domestic/asian car, we would do the oil change for the coupon price, but try to upsell the remains of the 15K (or whatever miles) service. In your example, we would do the oil change for the coupon, and try to sell the remains of the service for $115.
 

17 hours ago, ScottSpec said:

I know you said you will accommodate a customer's requests when it comes to oil and filters, but do you try to upsell the oil change itself? Do you try to move them to a better oil or filter to increase the R.O.?

We don't. To me, it feels like bait and switch. I think it would put off more customers than revenue it gained. If they have a coupon for an oil change, they have every right to believe that they'll get a quality oil change at that price. If they come to your shop and you try to upsell to a better oil and filter, you just told them that if they don't buy the better stuff, you'll be putting crap oil and crap filter on their car. That customer might buy the upgrade, but odds are they won't buy anything else, and they won't be back.
 

17 hours ago, ScottSpec said:

Do you have any insight on why like my shop, most shops dislike and struggle with the oil change specials, while it seems to be working so well for you?

You've got to have the very best advisors that money can buy at your front counter. This is not to say they have to be pushy salesmen, but they have to be smart and people have to genuinely like them. Thinking on their feet is a must. I also give my guys 100% authority to do whatever they think is right for the customer. If I wish they had done something different, we'll talk about it so they can improve next time.

The LOF is not a Lube Oil & Filter. It's a Labor Opportunity for the Future. The point of the oil change is not the oil change. It's all about the inspection and proper presentation to the customer.

Every single oil change is extremely valuable, but the only way you'll know how valuable is to track every single oil change coupon you get back. You have to know exactly what your ROI is on that mailer. I think a lot of shops don't track this stuff, and think the oil change coupons are a loser. If done correctly, they're definitely not a loser.

17 hours ago, ScottSpec said:

Last question. Do you have any thoughts on why you have been able to thrive over the last few years when most in this business are experiencing flat to no growth?   

I think a big part of it is the commitment to the marketing. Cheap oil change marketing takes time to develop, and it's expensive. You're going to see a lot of oil change only repair orders in the beginning. Stick with it. Eventually you'll train your customers to look for your coupon when they need an oil change. A lot of shop owners see this as a bad thing. I see it as essential. In order to service a car it MUST be in your shop. There's literally no two ways around this. I've trained my customers to come see me when they need an oil change, and they all know we do everything. When we present the findings of the inspection, they've already been in my shop a couple of times, and trust us to do the work. Besides, it's convenient. 

Speaking of convenience, we do everything we can to make it easy to do business with us. Open early, and open late. 7a to 7p 6 days a week with a full crew. Need ball joints and a brake job to go with your Saturday oil change? No problem. We can have it out before close. Need a ride home while we take care of that? No problem.

Edited by AndersonAuto
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I typed out a lengthy response, and fat fingered it. Bad things happen when you hit CTRL-ENTER repeatedly. I can't find a way to delete the posts.

Mods, do your thing.

Edited by AndersonAuto

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17 hours ago, ScottSpec said:

 I have a few questions in you have the time and are willing. The first question is how do you handle the oil change part of a service. For example, a 15,000 mile service on my Volvo includes a little more than an oil change. It includes a few other checks, a cabin air filter, and we also put some BG chemicals in it. For this example lets say we get $200 for this service and we normally charge $85 for an oil change. In this case would you modify the price of the service because of the oil change special price?

Euro cars and anything diesel are not included with the oil change coupon. The house brand oil we use for the coupon oil changes doesn't fit euro cars. We also don't have a set euro oil change price because they all seem to be so different. We will discount a euro car's oil change by the same dollar amount that the coupon would take off the standard oil change price.

In your case I would charge whatever the oil change would cost, less the coupon discount, then try to upsell the rest of the required services for $115.
 

17 hours ago, ScottSpec said:

I know you said you will accommodate a customer's requests when it comes to oil and filters, but do you try to upsell the oil change itself? Do you try to move them to a better oil or filter to increase the R.O.?

No, we never do. To me, it feels like bait and switch. The customer has a coupon for a full synthetic oil change, but now you're telling them they should buy something better? The question that would come to mind is "what kind of crap were you going to put in my car if I don't buy better oil?" The increased revenue would be minor, and the customer would rightfully distrust you. How's that brake job sale going to go after that?
 

17 hours ago, ScottSpec said:

Do you have any insight on why like my shop, most shops dislike and struggle with the oil change specials, while it seems to be working so well for you?

Oil change specials are something that takes time to develop. I think most shops try them once or twice, and don't do it again. They also don't do proper tracking. I can tell you that my mailers, which have an oil change coupon and a tiered discount, give me an ROI of 680%. That's $$ spent to Gross Revenue after discount, not net profit, just to be clear. My minimum ROI for any marketing to make it worth while is 300%. But it takes time to get there. You can't just do it once and decide it didn't work.  We track every coupon or discount, every month, without fail. The key to it is knowing what you're actually getting out of it, instead of listening to your service advisor bitching about coupon LOF customers who don't spend a dime.

One of my advisors who has been with me for almost 10 years used to complain non-stop about the coupon oil changes. He's on a 100% commission pay plan as are all my advisors and wanted to not include the coupon oil changes in his pay plan. He was absolutely sure they were killing his ARO and GP%. I just pulled out the tracking and offered to remove all the repair orders with mailer coupons for him. All $35,000 worth. He declined. 

17 hours ago, ScottSpec said:

Last question. Do you have any thoughts on why you have been able to thrive over the last few years when most in this business are experiencing flat to no growth?

Quality service advisors working on a properly structured 100% commission pay plan. A good advisor is very smart and can think on his or her feet, but also has a great personality that people like right away. The rest you can teach. The pay plan is very important because it keeps the advisor laser focused on what you want them to produce. In my case, GP Dollars, ARO, GP%, Parts GP%. It's also tiered to reward them for better gross sales. Your advisors need to do just that, advise. They don't need to be pushy, and certainly not lie to a customer. The average car we see is 120K and 10 years old. There's more than enough work needing to be done without trying to push them into something they don't need.

It's also commitment. You have to be committed to the marketing plan. It's stupid expensive and it hurts to get started. When I kicked off my mailer program I was doing about 75K a month in gross sales. Over the next 12 months I spent almost 100K in marketing, mostly coupon mailers. You have to be committed to it, and give it time to develop.

The key though is the inspection. The entire purpose of the oil change is to inspect the car. Unless you're jiffy lube with minimum wage guys and buying oil for half what I pay, the oil change is a loser no matter what. Your techs hate doing them, your advisors hate selling them, and the shop makes little to no money even at full price. But... if you do a proper inspection and properly present it to the customer, and make it easy for your customer to buy, you'll come out ahead. 

I've been told I don't know how many times that I need to remove current customers from my oil change marketing list. You've already got them as a customer, why continue to discount them? You wouldn't want to train them to just look for the coupon would you?    I can't imagine a bigger mistake.  I absolutely want to train my customers to look for the coupon oil change. It's the only service that every customer knows they need, and they have a sticker or a light to tell them when.There is no worn tie rod light. On most cars, there is no worn brake pads light. The only way my customer knows that these things are an issue is if someone tells them. The shop that tells them there's a problem is the shop that gets the work 90% of the time. And you can't tell them there's a problem until the car is in your shop. There's absolutely no getting around this fact. So, get the car in the shop. Simple, right?

Convenience. Make it easy for the customer to do business with you. We're open early, and open late. 7a-7p six days a week. Full crew on Saturday too. No half day half crew garbage. If I have a Saturday waiter oil change that needs brakes and ball joints, I can give them a ride home, and have their car done by the end of the day. Techs make money, advisors make money, shop makes money, customer isn't out of a car on a work day. Everyone is happy.

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1 hour ago, AndersonAuto said:

Well, hell. You'd think I could figure out a message board by now. I guess not. 

Thanks for taking the time to share all this insight and info. You've given me a lot to think about. Your last comment about figuring out a message board has me a little confused though. I have another question about your oil change specials. Is this an on going special/price, or a offer that comes and goes. Do you have a time when customers are paying your normal price for oil changes? 

Thanks
Scott

  

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1 hour ago, ScottSpec said:

Thanks for taking the time to share all this insight and info. You've given me a lot to think about. Your last comment about figuring out a message board has me a little confused though. I have another question about your oil change specials. Is this an on going special/price, or a offer that comes and goes. Do you have a time when customers are paying your normal price for oil changes? 

Thanks
Scott

  

I fat fingered the control-enter keys. Repeatedly. This caused my comment to repeat post 4 times. Then I tried to fix it, and thought I lost it all. Re-wrote the whole thing, then found that it saved (or a mod saved) the post as I originally wrote it.

It's ongoing for the last 5 years. The only thing that's changed is when we went to full synthetic at the first of the year, and the price went up 10 bucks. We do sell the synthetic oil change for 47.50 if the customer doesn't have a coupon. It's rare, but it happens.

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39 minutes ago, AndersonAuto said:

I fat fingered the control-enter keys. Repeatedly. This caused my comment to repeat post 4 times. Then I tried to fix it, and thought I lost it all. Re-wrote the whole thing, then found that it saved (or a mod saved) the post as I originally wrote it.

It's ongoing for the last 5 years. The only thing that's changed is when we went to full synthetic at the first of the year, and the price went up 10 bucks. We do sell the synthetic oil change for 47.50 if the customer doesn't have a coupon. It's rare, but it happens.

Do you still do oil changes with conventional oil?

Scott

 

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18 hours ago, AndersonAuto said:

Oil change specials are something that takes time to develop. I think most shops try them once or twice, and don't do it again. They also don't do proper tracking. I can tell you that my mailers, which have an oil change coupon and a tiered discount, give me an ROI of 680%. That's $$ spent to Gross Revenue after discount, not net profit, just to be clear. My minimum ROI for any marketing to make it worth while is 300%. But it takes time to get there. You can't just do it once and decide it didn't work.  We track every coupon or discount, every month, without fail. The key to it is knowing what you're actually getting out of it, instead of listening to your service advisor bitching about coupon LOF customers who don't spend a dime.

The one thing I hated about RLO's tracking was when a shop would issue a coupon and then track the returns without separating acquisition from retention for just that piece.  I suspect knowing you are a disciple is that you track it this was as well.

For the month of June what were your new vs returning and their avg tickets?

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24 minutes ago, Wheelingauto said:

The one thing I hated about RLO's tracking was when a shop would issue a coupon and then track the returns without separating acquisition from retention for just that piece.  I suspect knowing you are a disciple is that you track it this was as well.

For the month of June what were your new vs returning and their avg tickets?

You're correct, I don't separate new/existing customers in my coupon tracking. June tracking is not complete yet, so I can't give you the specifics on what the mailer coupon did. However I can pull new customer data easily and tell you that the ARO for a new customer last month was $494.  Overall ARO was $457.  Total RO count was 489, with 114 of those being new customers. What I can't tell you is how many of those came in with mailer coupon in hand, new or existing. 

While it would be nice to have the tracking spreadsheet separate the new from existing, I guess I don't care all that much. I have plenty of new customers coming in, so I know my new customer acquisition efforts are working, and I have a good ARO. There are certainly some fine tuning that could be done by digging deeper into the data, but I currently have bigger fish to fry. 

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1 minute ago, AndersonAuto said:

You're correct, I don't separate new/existing customers in my coupon tracking. June tracking is not complete yet, so I can't give you the specifics on what the mailer coupon did. However I can pull new customer data easily and tell you that the ARO for a new customer last month was $494.  Overall ARO was $457.  Total RO count was 489, with 114 of those being new customers. What I can't tell you is how many of those came in with mailer coupon in hand, new or existing. 

While it would be nice to have the tracking spreadsheet separate the new from existing, I guess I don't care all that much. I have plenty of new customers coming in, so I know my new customer acquisition efforts are working, and I have a good ARO. There are certainly some fine tuning that could be done by digging deeper into the data, but I currently have bigger fish to fry. 

Many years ago I used to spout off about 60/40/20 and why do I need to track any more than that. A wise shop owner instructed me that one day I might need to be able 'diagnose" an issue with my company if things weren't as good..he was right...maybe you should be tracking where new customers come from.

 

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10 minutes ago, Wheelingauto said:

Many years ago I used to spout off about 60/40/20 and why do I need to track any more than that. A wise shop owner instructed me that one day I might need to be able 'diagnose" an issue with my company if things weren't as good..he was right...maybe you should be tracking where new customers come from.

 

The tracking spreadsheet does tell me how many new customers are coming in from the mailer, it just doesn't separate the ARO on new vs existing. I can also tell you that 49 of my new customers came to me through the web site either by calling the tracking number or filling out an appointment request. I can't tell you how many of those 49 also had a mailer in hand. I can assure you there is overlap, but I don't know exactly how much.

I do have a pretty good handle on where my customers come from. Not great, but good. I could do a better job with it, but I see it as another ROI problem. If I tie up my admin gal doing the work that I might need if things take a downturn, my ROI is zero if I don't do anything with that data. However, I think it's important that I know that I can put those numbers together quickly should I feel the need.

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12 minutes ago, AndersonAuto said:

but I see it as another ROI problem. If I tie up my admin gal doing the work that I might need if things take a downturn,

If you've already set up this level of tracking one more piece of data would take nothing to retrieve.

What I am hearing you say is as long as the results support my position it is good enough....

 

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15 minutes ago, Wheelingauto said:

If you've already set up this level of tracking one more piece of data would take nothing to retrieve.

Mostly correct. Meaning that I could retrieve it at any time I feel the need, but it's more work than "nothing". It's not just one piece of data. She would have to separate new from existing customers on our mailer tracking and calculate ARO for each category. The tracking sheet also doesn't have her record customer information outside of new or existing, so she would have to do that. Then she would need to compare that list to the new customer list generated through the back end of our web site, and of the customers that overlap, somehow assign them to either having come through the web site or the mailer. Or maybe they came from some other source + had the coupon in hand. I think that people rarely choose an auto repair shop based on a single piece of marketing. It's entirely possible (probable?) that someone got my mailer, asked their neighbor if they've used us and got a positive referral, looked up our google reviews, clicked the adwords link to our web site, set an appointment on the web site, and finally came in with coupon in hand. When asked how they heard of us, they could have given a number of answers, all of which are correct. How would you assign the percentage of influence each source had on their decision to come in?


One big morale buster that I've learned over the years is to have your employees do work or gather data, then do nothing with it. Everyone hates busy work. Getting this level of detail would take her several hours a month, maybe more. I don't know since I've never had her do this, but it's not a couple minutes job. It's an ongoing job that would have to be kept up with every couple of days. I'm not going to waste her time with something I'm not going to use immediately.

17 minutes ago, Wheelingauto said:

What I am hearing you say is as long as the results support my position it is good enough....

Your hearing is excellent!  😃

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5 hours ago, AndersonAuto said:

Nope, unless someone insists on it, which has never happened.

When you switched from conventional oil to synthetic, did you see a change in the type of customer that responded? On the surface, it seems it might draw in customers who are willing to invest in their vehicle and limit the ones who aren't.  Also, I see you offer a 10% discount on the front page of your website for new customers. How to you handle the regular customer that thinks you should give him the discount for being a long time customer?

Thanks
Scott 

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1 hour ago, ScottSpec said:

When you switched from conventional oil to synthetic, did you see a change in the type of customer that responded? On the surface, it seems it might draw in customers who are willing to invest in their vehicle and limit the ones who aren't.  Also, I see you offer a 10% discount on the front page of your website for new customers. How to you handle the regular customer that thinks you should give him the discount for being a long time customer?

Thanks
Scott 

I didn't see any change in the customer base when I switched. I still get the same great customers I got with conventional oil.

I'm not aware of any existing customers who have asked for the new customer discount although I'm sure someone has asked at some point. That said, my mailer also has a tiered discount on it that's got an equally good discount as the new customer discount on my web page. You probably also noticed that the oil change coupon on the web site is 34.95 instead of 29.95. We did that so we could easily see if they were a web site only new customer, or if they got the mailer. The web site and mailer used to be the same price, but then they all got lumped together in my shop management system. I thought it would help tracking a little, but I actually don't look at the web site coupon stats very much. They get used, but I have other methods of tracking my web site effectiveness. 

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3 hours ago, mspecperformance said:

Anderson, are you apart of the turnaroundtour group?

I'm not. I used to belong to a Gary Gunn group 15 years ago. He was teaching a course based on the E-Myth book. It was good stuff, but I wasn't in a place in my business at the time that it was a good fit for me. It was very much a touchy-feely sort of methodology, and at the time I was in need of nuts and bolts. Still am I guess, because otherwise I would feel the need to go back and reference the materials from the course.
 

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Very interesting read. I also have been doing inexpensive oil changes, and I consider it to be successful. My shop is in it's 6th year (brand new shop), and we have grown in gross sales an average of 30% a year for the last 4 years. We currently do a semi-synthetic oil change for 29.99, which is 5 qts and filter, including inspection and battery test. Full synthetic is 59.99, 5 qts with a premium filter. Most European is a separate price on an individual basis. Our car count is 250-300, and we've been averaging 100-120 oil changes a month. We average 15% of oil changes are new customers. So far this year we average 17 new customers a week, and the ARO on new customers is higher than the ARO on existing customers. Overall ARO for the last quarter is $454. We have struggled with ARO and GP% but with training, solid goals, and pay plans we seem to have gotten over the hump.

I've had interesting discussions about this subject, and seem to be going somewhat against the grain, but I haven't been able to convince myself to change strategy. My goal was to get my existing customers to come to us for routine service, not just try to remember us if they have a problem. Since only 15% of oil changes are new customers I think we've accomplished what was intended. The low oil change price has also attracted new customers, but since most of our new customers come for more than that, it isn't currently a big new acquisition strategy. One thing the oil change price is a part of, and that is developing a good value reputation. We watch closely those things we consider comparables, like oil change, brake job, trans service, and make sure our prices are at or below market average in our area, then charge a good price for everything else. I know we're one of the highest priced shops in town, yet we regularly get good reviews about how reasonable our prices are.

Still open to ideas about this, but I'm not currently convinced to change, and it's encouraging to read Anderson's experience.

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We see gas stations attract people with low cost gas, but high on everything inside. The busiest gas station here has the lowest gas prices, but make up for it on items inside. It also has the biggest convenience store and it always has a long line inside. It's Race Trac, may be there's one near you.


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How do you calculate the average R.O. in your shop? I know the simple calculation is to divide gross sales by R.O.'s, but that alone can give you a pretty inaccurate number. I am big into documenting and making notes on everything. I save all emails from customers, etc. So every car or part that goes thru the shop gets an invoice. This helps keep track of what happened and when, makes sure inventory is not lost, and that taxes are paid. So when a loaner car needs an oil change or light bulb, a R.O. is created. If one of the employees needs an oil filter, an R.O. is created. There is no labor on those and the parts are billed at cost. We also do Maryland State inspections. Quite often they are for other shops and the R.O. is never going to be more than the cost of the inspection. When they bring it back for re-inspection, another R.O. is created for $0. If a customer comes by to have us check their oil, coolant, ck tire pressure, etc. an R.O. is created. So simply dividing gross sales by R.O. count can rally skew numbers. Also, do you include sales tax?

I have played around with many variations. Sometimes I will filter out the invoices below a certain amount or with no labor. I figure the inclusion or exclusion of sales tax is not a big deal as long as you stick with the same methodology.

Scott 

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14 hours ago, ScottSpec said:

How do you calculate the average R.O. in your shop? I know the simple calculation is to divide gross sales by R.O.'s, but that alone can give you a pretty inaccurate number. I am big into documenting and making notes on everything. I save all emails from customers, etc. So every car or part that goes thru the shop gets an invoice. This helps keep track of what happened and when, makes sure inventory is not lost, and that taxes are paid. So when a loaner car needs an oil change or light bulb, a R.O. is created. If one of the employees needs an oil filter, an R.O. is created. There is no labor on those and the parts are billed at cost. We also do Maryland State inspections. Quite often they are for other shops and the R.O. is never going to be more than the cost of the inspection. When they bring it back for re-inspection, another R.O. is created for $0. If a customer comes by to have us check their oil, coolant, ck tire pressure, etc. an R.O. is created. So simply dividing gross sales by R.O. count can rally skew numbers. Also, do you include sales tax?

I have played around with many variations. Sometimes I will filter out the invoices below a certain amount or with no labor. I figure the inclusion or exclusion of sales tax is not a big deal as long as you stick with the same methodology.

Scott 

In my shop we just use the Mitchell number, which includes every RO and includes sales tax. It does include some $0 sales RO's like for a shop vehicle or my personal vehicles, or some comebacks. There are so many ways to handle shop and personal vehicles, it either jacks up gross sales if you include at regular price, or hurts RO ave and GP% if written at $0. I agree, it's pretty hard to do an exact comparison of RO ave from shop to shop because of some differences in how we calculate it, but it can show trends for our own shop and give us a range of comparison with other shops.

I've considered doing some hand calculations, but in the end as long as I calculate it the same every month it shows the trends we are using to manage the shop.

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On 6/25/2017 at 9:46 PM, AndersonAuto said:

I spent the weekend at the lake, and on Saturday my guys closed $17,751 at $555 a repair order. We're closing in on another record month, and should end up at about $220K. Then I'll net 20% of that. And I've promoted myself up to shuttle driver. Life is good.

You had a $17k day and will do $220k for the month? That's fantastic! My biggest month is $100k and I'm shooting for $85k-$95k per month. By your numbers that's approaching 400 cars per month. Without knowing how many bays and/or Techs I have to imagine you're an 8 to 10 bay store with 5-6 Techs working. That's hammering it. 
 

 

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Looked up Wheeling. Big shop. Over twice my size. Looks bright, clean, and open. I do like what I'm hearing on these forums everyone and thank you for keeping discussions alive. I'm in year 4 of buying a thriving shop in a growing area amidst a downturn and lots of competition opening up every year. i love it, though. I just met with an oil vendor who thinks I need to raise my oil change prices to attract less of the declining public. Hard paradigm shift and I'm not certain that's the right path to take now...

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13 hours ago, 3PuttFever said:

Looked up Wheeling. Big shop. Over twice my size. Looks bright, clean, and open.

Thanks, been doing this 30 years now. Started out as a 2200 sq ft 5 bay shop and moved into the rest of the building 16 years ago. While there are many successful shops represented here I would say for large shops Anderson and I are similar (we've gotten to similar sizes and numbers <mine are better haha>) but got there on completely different roads when it comes to marketing.

13 hours ago, 3PuttFever said:

I just met with an oil vendor who thinks I need to raise my oil change prices to attract less of the declining public. Hard paradigm shift and I'm not certain that's the right path to take now...

Anderson has become very successful going the route of the oil change special but his route is offering incredible value (really cheap synthetic oil change and inspection) which will cause some of the real deadbeats to seek service elsewhere (think $12.95 lofs). You can read about his success in many forums here. Me....I was a little more idealistic in my approach. I don't have a menu price for anything. People do not come to me for price and I don't want them to. While we don't charge much (about $35) for a basic oil change we do not advertise price or specials anywhere anytime I dont care how slow it might be. The times I have done it many years ago I regretted every time. People find me because they are tired of being sold something they don't need, incompetence, or just plain poor service.

So, we offer value through our service without the special. Different routes. While there were many times in the early years I was fearful because business was slow, I've never managed the business from fear of being broke. I have always taken the route of doing things (IMO) the right way and the money will follow. It have worked out well for me.

As a businessman (who is getting older, wiser and less idealistic) I can see the route Anderson has taken could be appealing to gain quicker car count (ouch).

13 hours ago, 3PuttFever said:

I'm in year 4 of buying a thriving shop in a growing area amidst a downturn and lots of competition opening up every year. Hard paradigm shift and I'm not certain that's the right path to take now...

Now, all that being said. You need to figure out what sets you apart from all this new (and old)competition. I will bet every time that service, expertise and convenience will win, and price is not part of the picture. Probably some of the best advice I can give from my experience is let the top 20% of you customers dictate who you are and what you do. Focus on that and not what the bottom 20% of your customer base tells you. We have a tendency to focus on the pain and try to minimize it but in reality you cant fix miserable people with miserable cars and wallets. You can increase the pleasure of great customers which will keep work fun.

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55 minutes ago, Wheelingauto said:

in reality you cant fix miserable people with miserable cars and wallets

Great post and a quote we should all remember. 

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17 hours ago, 3PuttFever said:

You had a $17k day and will do $220k for the month? That's fantastic! My biggest month is $100k and I'm shooting for $85k-$95k per month. By your numbers that's approaching 400 cars per month. Without knowing how many bays and/or Techs I have to imagine you're an 8 to 10 bay store with 5-6 Techs working. That's hammering it. 

Since this was mentioned, I looked up where we ended the month for June. $218,789 with a $447 ARO on 489 repair orders. The shop is very large, with 6 techs and a couple lube dudes. I actually have more bays than I need to produce those numbers, but I bought the building right, and I have room to grow.

Wheeling does do better numbers than I do, but he's been at his current size for about 10 years longer than me. I'll catch him. ;)   We have different marketing philosophies, but both seem to be working. My marketing strategy was born out of the need to fill the bays of a very large shop as quickly as possible. We have the luxury of having great demographics in the surrounding area. The local population has enough money to fix their cars, but not so much money that they don't look for a little savings where they can get it. The cheap oil change works great as a way to bring customers in, then the inspection brings in the real work.

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