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Shop Owner Ethics - It's Not What You Think


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I have the hardest time understanding the ethics in this industry.  It's like the auto repair industry has it's own set of ethics and expectations that are completely different than any other industry.  It's absurd!  Look at it:

1) Billing for 100% of Time - Lawyers do, doctors do, accountants do, plumbers do, phone companies do, and employees do...however, shops are supposed to stick to the estimate come hell or high water.  Otherwise we are gouging or padding our time, or just adding random time.  It's crazy!  It's a double-standard that we allow to be placed on us.

2) Selling Only What Customers Need - People don't need 2 TVs, or 10 pairs of shoes, or bottled water, or Apple products, or bubble gum.  Yet none of these industries are considered unethical for selling people something they don't need.  Why are we unethical for selling people something they "don't need"?  How did that happen?  Don't go the wrong way with this...I'm not proposing telling people their car is broken when it isn't.  I'm saying that right now our industry is in a position to bow to the customer any time they don't feel like the "need" a certain repair because they'll pull the unethical card on us.

3) Marking Up Parts - Why are we the only industry that is unethical for marking up things that we sell?  Hardware stores do, restaurants do, plumbers do, Wal-mart does, O'Reilly's does.  But for some reason, certain customers expect us to sell parts at our cost.  Why not at O'Reilly's cost...or at Moog's cost?  What is the ethical price?  Is anyone allowed to make a profit selling parts?  If so, who is and why only them?  It's just crazy when I think about the unbelievable expectations people have for our industry.

Here's my theory for how we got into this position.  When we are desperate for customers we'll do anything they want.  And it's much easier and less risky (so we think) to give into them by knocking the price down than it is to spend time teaching them about what they just bought or are about to buy.  There's so much focus on shop efficiency that we don't take the time to develop customer relationships and educate them about the benefits of buying from us.

It isn't a waste of time to teach customers about their car, to show them why we are proposing a certain repair, or to explain every item on the invoice.  If we don't then people will continue to expect us to sell parts at cost, eat unexpected labor time, and not perform a proper repair all in the name of ethics.

We have to put a stop to this.  Our industry generally isn't unethical (we have 7 shops in my town of 12,000 and only one is shady) but we accept that moniker.  We don't have to.  I certainly don't.

Does anybody else think the expectations on our industry are just plain stupid?

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I don't like to just mark up my products....I usually double, triple, or quadruple my cost. Plus I buy deals and I pass the savings on to ME!!! I smother my clients with excellent, super, and unexpected service, and I make sure I am MORE than compensated for said service. If I were in business for my health, I would own and operate a GYM!!!

 

Hi-Gear

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On 8/6/2017 at 9:52 PM, jfuhrmad said:

I have the hardest time understanding the ethics in this industry.  It's like the auto repair industry has it's own set of ethics and expectations that are completely different than any other industry.  It's absurd!  Look at it:

1) Billing for 100% of Time - Lawyers do, doctors do, accountants do, plumbers do, phone companies do, and employees do...however, shops are supposed to stick to the estimate come hell or high water.  Otherwise we are gouging or padding our time, or just adding random time.  It's crazy!  It's a double-standard that we allow to be placed on us.

There is no rule, law or anything else that would limit you from charging for actual time. I know of a shop in Baton Rouge La that does just that. It separates him from the competition and he is very successful. But it's hard to be different, to lead the market and buck the trend.

On 8/6/2017 at 9:52 PM, jfuhrmad said:

2) Selling Only What Customers Need - People don't need 2 TVs, or 10 pairs of shoes, or bottled water, or Apple products, or bubble gum.  Yet none of these industries are considered unethical for selling people something they don't need.  Why are we unethical for selling people something they "don't need"?  How did that happen?  Don't go the wrong way with this...I'm not proposing telling people their car is broken when it isn't.  I'm saying that right now our industry is in a position to bow to the customer any time they don't feel like the "need" a certain repair because they'll pull the unethical card on us.

This statement makes absolutely no sense to me. We are in a service business, we do not sell commodity. This items you are describing are commodities/consumer goods. I need you to explain this thought...I cant get my head around it.

On 8/6/2017 at 9:52 PM, jfuhrmad said:

Does anybody else think the expectations on our industry are just plain stupid?

I think expectations are ours to set. If you choose to live by unreasonable expectations or allow a customer to establish expectations you are at fault. I for one have always established expectations up front with my customers. I am a professional and I will guide this process. If you decide after I present my findings that you do not wish to proceed that is perfectly fine with me. I have explained the charges up front, I will collect for my time and expertise and you will drive a broken or poorly maintained car.

While some of you post makes sense it leads me more to believe you've been beat up pretty badly and are venting. I hope it passes.

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Hi Wheeling,

I'm trying to shed some light on the lies that some newer shop owners may be buying into.  They are thought patterns that are driven by the cheapest customers but they tend to stick.  The idea is to demonstrate the absurdity of the lies and expectations that some customers place on our industry through in person interactions and online reviews.  We should not give in to these fallacies or make business decisions based on them.  I am in 100% agreement with your responses.  That's how I run my shop to and the complainers don't get to drive those decisions.  But I know there are other guys out there who mistakenly run there businesses based on the lies I outlined above.

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The biggest problem we have in this industry is that most shop owners started as technicians. Those technicians have a thought process in their head that revolves around how much they would pay for something, not how much a customer should pay. If you can buy a water pump for $30 and the technician/owner knows that he can bolt it on in an hour even though the book pays 3 hours, and as a tech he got paid $25 an hour, to them, that job was worth $55. Most guys have a hard time wrapping their head around charging a customer $400 for that job. If they sell it for $200 they made a killing - they think.

The second biggest problem that we have is that any one of our customers can buy parts just as cheaply as we can. Standard retail markup for many many years has been cost times 5. That's an 80% gross profit for those of you playing at home. When you think of a "discount" store like Walmart, that just means the items are being sold at cost times 2.5 or 3. The difference is that I can't go to the supplier for Dillards department store and buy a shirt for the same money Dillards pays. Most people have no clue how much stores mark up their products, and would be outraged if they found out. We are in the crappy position of having to explain to customers why we have to mark up parts at all, much less why we have to mark them up over 100%. A lot of the technicians turned shop owners are unable to explain it. The rest of us are compared to those shops who can't explain it.

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  • 2 weeks later...

AndersonAuto, you nailed it! Couldn't have said it better myself!

Want better customers?? Educate them. 

How? Create downloadable reports and include a simple coupon. 

What kind of reports? The title is everything... and these are just off the top of my head but stuff like:

  1. How to Save Money on Auto Repairs
  2. 7 Things No Other Mechanic Will Tell You
  3. How to Keep Your Car Running Smother and Lasting Longer Without Spending a Fortune on Useless Services

I could go on and on - but this type of information doesn't have to be long - just to the point. If you're smart, you make them actual PRINTED REPORTS. I know, I know, I can see the eyeballs rolling now - but when you have a printed report, you'll get full contact information - mailing address and all that.

Then, you can justify it by adding something like "I can't post this because my competition is already trying to get me to take this website down - so complete the form (sign up form) and I'll mail it directly to you!"

Now, you're looked upon as an expert - you're giving them information. You start to build trust. You eliminate that barrier so people will pick up the phone and call you when they need help. 

Getting new customers isn't STEP ONE: Send postcard; STEP TWO: Make up bank deposit slip. 

Has never been that way - will never be that way. The only thing you can bank on is, if you don't have a system to get more new customers, you won't have to worry about your shop in a few years because the big box stores and new car dealers will eat your lunch. 

(Sorry if this is a little blunt - but really, it's the truth!)

Hope this helps!

Matthew Lee
"The Car Count Fixer"

Get "The Official Guide to Auto Service Marketing"

Got an hour? Join me on this Training Webinar and Fix Your Car Count

The Shop Owner's Unfair Advantage FREE Access

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  • Have you checked out Joe's Latest Blog?

    • By Joe Marconi in Joe's Blog
         4
      Typically, when productivity suffers, the shop owner or manager directs their attention to the technicians. Are they doing all they can do to maintain high billable hours? Are they as efficient as they can be?  Is there time being wasted throughout the technician’s day? 
      All these reasons factor into production problems, but before we point fingers at the technicians, let’s consider a few other factors.
      Are estimates being written properly? Are labor testing and inspections being billed out correctly? Are you charging enough for testing and inspecting, especially for highly specialized electrical, on-board computer issues, and other complex drivability work?  Is there a clear workflow process everyone follows that details every step from the write-up to vehicle delivery? Do you track comebacks, and is that affecting production?  Is the shop layout not conducive to high production? For example, is it unorganized, where shop tools, technical information, and equipment are not easily accessible to every technician?  Are you charging the correct labor rate and allowing for variables such as rust, vehicle age, and the fact that most labor guides are wrong? Also, is there effective communication between the tech and the service advisor to ensure that extra labor time is accounted for and billed to the customer? These are a few of the top reasons for low productivity problems. There are others, but the main point is to look at the entire operation. Productivity is a team effort.  Blaming the techs or other staff members does not get to the root cause in most cases.
      Maintaining adequate production levels is the responsibility of management to create the processes that will lead to high production while holding everyone accountable. 
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