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Shop Owner Ethics - It's Not What You Think

jfuhrmad
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jfuhrmad Enthusiast

jfuhrmad

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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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carolinahigear Collaborator

carolinahigear

Posted
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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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Wheelingauto Collaborator

Wheelingauto

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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.

jfuhrmad Enthusiast

jfuhrmad

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Posted

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.

AndersonAuto Community Regular

AndersonAuto

Posted
Posted

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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  • Have you checked out Joe's Latest Blog?

    • Joe Marconi
      The Technician Shortage Is Our Fault, And It's Time We Own It
      By Joe Marconi in Joe's Blog
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      The Technician Shortage Is Our Fault, And It's Time We Own It
      Nearly every day, I hear shop owners complain: "There's a technician shortage. We can't find qualified people. There's no one out there." If that's true, then who's to blame?
      The industry? The schools? The government? I don't know how you feel, but who promised us an endless supply of qualified technicians?
      Another common complaint is that young people do not want to work in the trades. Well, if that were true, then why are other trades such as HVAC, electrical, and plumbing growing? What are they doing that the automotive industry is not? 
      Here's the reality we need to face: We do have a problem, but we shouldn't look for someone or any entity to rescue us. Not the government. Not the trade schools. Not the recruiting companies. No one owes us a workforce. If we want great people in our industry, it's up to us. At some point, we need to own up to the truth: Building a pipeline of qualified technicians is our responsibility.
      In this blog article, I will break down the key reasons we are in this situation today and what we, as an industry, can do to solve the technician shortage. Are you ready to look in the mirror?
      Have We Pushed Technicians Away?
      Let's take a look at flat-rate pay. True flat rate, which pays a technician only for the hours they produce, is a controversial pay plan that emphasizes high production levels and creates a competitive work environment that, if not properly controlled, can lead to increased mistakes and a decline in morale and team spirit. Additionally, the stress and physical demands placed on technicians as they age are not favorable to long-term employee retention. What do we do with technicians as they grow older into their fifties and begin to slow down? 
      I have heard all the arguments and pros and cons of flat-rate pay, and I am not going to judge any pay plan. Let the facts speak for themselves. True flat rate has changed in most areas around the country and has evolved into a pay plan that gives technicians some pay guarantee.
      Many shop owners have learned that team morale, along with the opportunity to earn income, is important to technicians and to the company's long-term success. But let me ask you: how many technicians have left or been pushed out over the years because of the old flat-rate pay system?
      Another issue is the workplace environment. I remember being grateful to be hired as a young technician at a local repair shop. While very thankful, the work environment was not ideal. The shop owner kept the bay doors open year-round (I am from New York) unless it rained or snowed. He felt that if the bay doors were closed, customers might think we were closed for business. We had no heat and no hot water. Many of the jobs were done outside, year-round,  in all types of weather. The starting pay was minimum wage, with no benefits, sick days, or vacation pay. 
      Now, again, I need to point out that I was truly grateful for the opportunity this shop owner gave me. I learned a lot working there, and the experience was pivotal in my career. But looking back, I wonder how many people were discouraged by these working conditions?
      While the physical demands of the repair workplace are daunting, perhaps even more critical is the culture. Too many of my generation shop owners preached the mindset of "my way or the highway." We were the business owners, after all. We started our companies, took all the risks, and provided jobs. Why shouldn't we be the ones to set the ground rules our way?   
      Many of us found over the years that the "my way or the highway" mentality was a sure way to isolate employees and make them more likely to look over the fence for greener grass. In other words, it led many technicians to seek employment elsewhere, where they felt they could be appreciated and recognized for their hard work. The issue, however, was that there wasn't much green grass around. Disappointment after disappointment, bouncing from repair to repair shop, eventually led to despair. So, I ask you: were workplace conditions a contributing factor in today's technician shortage?
      Another factor that we are all well aware of is the complexity of the modern automobile. When I started, the work was mostly physical, and you were required to master essentially three vehicle models: General Motors, Ford, and Chrysler. Let's fast-forward to today. The evolution of automotive technology, along with the extensive training and tools required, has outpaced the typical technician's pay compensation, with no clear career path. Again, leading to frustration and insecurity about the future.
      Here is the bottom line: people don't leave their job; they leave their experience. We must do a better job. 
      The News Isn't all Bad; Your Next Steps to Fix the Technician Shortage
      To fix the technician shortage, it will take a combined effort from everyone in the automotive industry, particularly automotive shop owners. Shop owners are in the perfect position to make the greatest impact, not only on their businesses but also on the future automotive workforce.
      First, shop owners must become better leaders and understand that their ultimate success is directly dependent on the people they assemble around them. Any shop owner who mistakenly believes they can build an empire solely on their abilities is destined for serious disappointment. Business owners who think like this will eventually plateau. Without the collective contributions from a team of qualified people, your business will stall; it will not continue to grow.
      Create a workplace that attracts top talent: a clean, professional, well-equipped facility designed to support productivity, teamwork, and a career, not just a job. Build a great reputation in your community by getting involved locally. Become the auto repair shop that people take notice of as "the" place to work.
      Next, shop owners must become more financially knowledgeable. Knowing your numbers and what you need to achieve for a strong bottom-line profit is essential to paying technicians the money they need and deserve. Profit will also allow you to compete with other trade industries by providing a benefits package that has real take-home value and security.
      When it comes to culture, this is where the rubber hits the road. People crave recognition, praise, and a sense of purpose. Despite what you hear, people are not just money-motivated. Once people feel secure in their financial situation, retaining and motivating technicians can only be achieved by connecting with them on an emotional level. You cannot show enough appreciation. Give out praise for a job well done as if your business depended on it, because it does.
      As technicians age, we need to have a place for them. Expecting a 58-year-old to perform like a 35-year-old is unrealistic. We need to be more focused on career pathing. Provide training, skill development, and coaching to develop leaders and mentors within our older workforce. While their bodies may have slowed, the knowledge they have gained is priceless. 
      Our future is dependent on young people entering our industry. We need to give more young people opportunities. Every shop owner across the country should consider hiring an apprentice, then build an apprentice training plan and career path for them. If every shop did this, we could solve the technician shortage within five years. Get involved with the trade schools and high schools in your area. Look into the NAPA Apprenticeship Program. Don't sit on your hands with this one. Do it today.
      Lastly, don't get left behind. Commit to ongoing training for all your employees. Keep up to date with tools and equipment tailored to your business model. Don't try to be all things to all people and all vehicles. Identify your core profile customer and the vehicles they drive, and become an expert on those vehicles and the services you offer.

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