"Opportunity Generators" Wolf in Sheeps Clothing

[Charlie]

Is it just me? or does it seem that lately there are a lot of businesses being started that insert themselves into the flow of existing transactions only to harvest your profits and lesson the margins of those doing the work and accepting responsibility (us). I am referring to technology companies: Repair Pal, Openbay, CarFix and now Blockchain to mention a few. It is frustrating to me after having built a business (brick and mortar), purchased equipment, hired employees, provide training, accepted full responsibility and risk, supported my community only to have a startup backed by money hungry venture capitalists attempt to erode our profit margin. 

I find the statements from co-founder Vladimir Lupenko of Blockchain in this months Ratchet & Wrench extremely arrogant: "The repair industry is huge, and people always get cheated"    "We use reputable and undisputable technical data to set the market and price rate". Vladimir goes on to say "Based on our contractual agreement , the repair shop will have to provide the service at the price we have calculated".

As good shop owners, protective of our future, we best rally against this technology, this Wolf in sheep's clothing. My research of these companies leads me to believe that no good will come from their involvement in our businesses. We, as independent shop owners, are operating in an industry some see as ripe for consolidation and this technology is just one of the signs.

I ask that anyone reading this post refuse to participate. The involvement of these companies is not a 'quick fix' for a shop needing car count. Their intention is to drive down your prices, recruit price shopping customers only and mine your data base for their benefit. If our industry sees their existence as a threat and together, refuse to become a member of their organization, they will disappear. Without shops to refer to they lose all value to the consumer and will not be able to return a profit to their investors.

To read the complete article, follow this link:  https://www.ratchetandwrench.com/articles/5504-how-blockchain-technology-could-affect-your-shop

To support this research here is a seperate article from this months Ratchet & Wrench magazine discussing how to price your services for long term health and growth: https://www.ratchetandwrench.com/articles/4841-how-to-price-to-gain-customer-loyalty?utm_medium=email&utm_source=utm_code

Edited January 15, 2018 by Charlie
Added additional research

[Dux]

I think it's all going to depend on what shops will be willing to participate. I think the problem they are going to have is getting shops to want to accept their coins as a form of payment.

[Robert Crawford]

I responded to the R&W article with the same feeling. Someone else " pimping " us out and telling us what we should charge without having a clue what our overhead is. I would like to go to the grocery store and tell them what my groceries will cost. Same principle. 

 

Edited January 15, 2018 by Robert Crawford

[AndersonAuto]

Isn't it fantastic when someone who knows little to nothing about our industry decides that shops are "cheating" our customers? And these software guys should be the ones who decide what a fair price is? I know for a fact that many auto repair shops undervalue their work and the owners barely scrape by. Are these companies who want to decide what I'm going to charge going to use starving shop owners as their data point for the "correct" price?

I'm going to keep running a good business that's profitable enough to stick around to honor our warranty, and I'll let people like Vladimir run other shops out of business.

[3PuttFever]

Just read the article. Thanks for the giggle Vlad. You're going to find out exactly how much that complete brake job on the 2008 Chevy Tahoe costs so consumers can compare? Sure, knowing that the truck has been abused, neglected, and is rusted to sh%t underneath your little 'program' can tell that the bleeder is going to break off, need replaced, then the brake line is going to bust loose at the next weak spot. Let's face it, Vlad, you're an opportunist preying on consumer fears of being taken advantage of. A pure deflection move meant to distract consumers from the real thief. Our industry despite having a reputation that isn't deserving of the honest shop owner and Technician will survive just fine without you or your little algorithm. Some people will never trust us because they have trust issues with just about everyone and everything. People naturally are skeptical with what they don't understand especially if that means shelling out money they don't want to spend and haven't planned on spending. The hugs I get from my customers, the cards and gifts of food at holidays or just surprises are all the proof I need to know I'm doing it right. And if I miss out on a millennial or two's business because I refuse to outbid another shop without even seeing the car for myself I'll sleep well at night still. I just don't see the benefit in Vlad's concept. 

[Charlie]

Here is a perfect example. How would you price a spark plug change on a 5.4 Ford? Keep in mind, you are providing this quote to a price shopping customer and the price you provide will be discounted by 13% (26% GPM) by the 'opportunity generator' OpenBay.

[jeffa1958]

I tried repair pal for over a year. Brought in people we didn’t want as customers. Dropped them. No change in business except more money in checkbook. My old policy for over the phone estimates was to take down their information on a piece of paper and do nothing. If they called back and bitched they had not gotten their estimate I would apologize and make out the estimate and call them back. Now we do give the estimate but it is when we have the time. People go down the line in the “phone book” they have no idea the cost of estimates. 

[JustTheBest]

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[pam]

We refuse to work with any of these "companies". Yes, in quotes because I think they're just thieves preying on the hard work of others. I'm not lowering my profit margin for a price shopping customer who will just move on to the next cheapest shop for future repairs.

[gandgautorepair]

  On 1/21/2018 at 2:59 PM, JustTheBest said:

In short, if you give up your marketing strategy to somebody else, it's the same as handing over the keys to the front door of your home. Would you do that? 

Didn't think so.

The only strategy (I know this is going to sound "boring") is to take small steps and track everything. In other words, if you can't track it - don't do it. Plain and simple. 

So now the "blow back" is the simple fact that you've actually got to do a little work. I know - pain in the butt, right? 

Hope this helps

Matthew Lee
"The Car Count Fixer"

Join me on a new free training webinar
 

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So how do you track brand awareness marketing. How do you track the effectiveness of social media marketing your brand. How do you track community involvement and sponsorships. Sorry, I get kind of tired of hearing the "track everything" stuff, as much as I would like to know how to do it. We talk about limiting offers and discounts, and talk about promoting our brand, and then talk about tracking everything. Which one is it?

[gandgautorepair]

We're doing RepairPal. Not sure we want to keep doing it. This subject discussion pushes me to drop it. Through RepairPal we get CarMax warranty work, and we've had a decent amount of it. The CarMax work has really pissed me off. They get they're 10% fee of every RO and they limit us to list price on parts. We're right in the middle of deciding if we're going to keep doing it. At least RepairPal only gets the fee on the first visit, and if we look at it as a cost of new customer acquisition the cost is in line, and they don't limit our price as long as we can justify it to the customer, which we haven't had a problem doing. RepairPal may be outta here.....CarMax is definitely outta here.

[JustTheBest]

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[gandgautorepair]

I will respectfully disagree with what looks like you're boiler plate response. I think you're outlook will go the way of the dinosaurs. Don't have enough time to invest in a long response, but a couple of comments. The whole picture and review idea is wonderful, but the people who see it are already in the shop and so are already "new customers", does nothing to attract new customers. Sure, it can add credibility along with everything else we do to add credibility and get our first time customers back in. BTW, we have a 60% return rate on first time customers. I get constant comments from customers who saw us on Facebook, they love the info and interaction. I've made a bunch of videos, and while the dollars are difficult or impossible to track, the word of mouth response is frequent and very good. This is a social media world we live in, to say it has no value or is not worth some investment of time is to have you're head stuck in the sand. I find you're comment about branding inaccurate. Building a brand is not expensive. You include your branding in everything you do, including all those things you do that you can track. If you don't brand all those things you can track then you have a very short sighted, immediate profit view of marketing that in itself will be more expensive over time. Branding through social media is extremely inexpensive, and effective, and while it can take some time it can also be fun. While we don't have hard trackable numbers, from asking people when they come in how they heard about us, we have determined that the dollars we spend on Facebook and Instagram have the same dollar for dollar return as the dollars we spend on Adwords. I'll continue to do my periodic mailers, which work, and I'll continue to do my mailers and follow up with my existing customers, which work very well, and I'll continue to do Adwords and social media. BTW, we averaged 28% new customers in 2017, and like I said previously we're getting 60% of those to return. I'm sure if I watched your video it would be valuable and I'd learn something, but at this time, no thanks.

[Charlie]

I'm pleased to see the passion behind how we all run our businesses, it's that individual passion that has gotten us to where we are. The reason for this post was to raise awareness on a possible shift in our industry that I believe we need to build a collective passion to fight. That impending change is these lead generators that will only erode our profits, and as a result, ability to grow. As we know, there is no quick fix.

I think we all agree that the most important visit to our shops is the customer's next visit, the customer who is there today. Word of Mouth is a terrific driving force creating first time customers and that WOM promotion happens through outstanding experiences with our existing customers. 

The Repair Pals, Openbays and Blockchains out there will disappear without us doing the heavy lifting - we do not need them. CarMax is being smart, they pitch their sales customers that CarMax has a national network of shops, at the ready, performing warranty work. They are paying these 'opportunity generators' to have access to this discounted network only to aid in closing the sale....giving their buyers a false sense of security. 

We are not each other's competition. The competition is the new car dealer, the Wolf in sheep's clothing are the companies aiming to profit off of our hard work and reputation - they are not our friend. 

[alfredauto]

The retail car sales side is even worse. The companies selling leads for cars are the same ones promoting fear, doubt, and distrust. Everyone knows that all used cars are lemons and you will get scammed unless you pay XX to prove you are a smart shopper with the report. We as an industry would be better off without most of it. 

[Hands On]

Couple snippets form the article:

a. "We partner with the repair shops, and when we are on board with our partner, we agree with them on the fixed labor costs and labor hours."

b. "We have developed an advanced software that enables us to find, in real time, exactly how much it will cost for a particular job. "

So which is it, b. the software determines the cost, or a. you and the shop come up with an agreed to cost?

"Based on our contractual agreement, the repair shop will have to provide the services at the price we’ve calculated. "

"We control and agree with a repair shop on how much the shop can earn from the service. "

So do you control the shop, or agree with the shop? I don't think you can agree with the shop and control the shop at the same time, unless, by huge coincidence the shop already charged what you calculated.  If the shop did already charge what you calculated you provide no service to the consumer and just add cost to the shop in a different form of marketing.

"When we come to a repair shop, we show a simple calculation of how much they will earn with us, and that they will be able to increase their capacity rate because we provide stable traffic."

I read all of these sentences and my brain translates it into one sentence:

"We talk to shop owners to see how much they need to make for a service, then we tack on a fee and advertise it to customers guaranteeing the price."

The guy is selling a form of crypto currency to generate 12 Million dollars to start this. We are all doing life wrong.
 

Edited February 7, 2018 by Hands On

[carolinahigear]

  On 1/18/2018 at 4:57 PM, jeffa1958 said:

I tried repair pal for over a year. Brought in people we didn’t want as customers. Dropped them. No change in business except more money in checkbook. My old policy for over the phone estimates was to take down their information on a piece of paper and do nothing. If they called back and bitched they had not gotten their estimate I would apologize and make out the estimate and call them back. Now we do give the estimate but it is when we have the time. People go down the line in the “phone book” they have no idea the cost of estimates. 

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When non-clients call us for a quote we act like we're taking down their number and then do nothing. We are too selective and too busy to waste time on somebody we'll never see.

[Charlie]

  On 2/6/2018 at 12:00 AM, alfredauto said:

The retail car sales side is even worse. The companies selling leads for cars are the same ones promoting fear, doubt, and distrust. Everyone knows that all used cars are lemons and you will get scammed unless you pay XX to prove you are a smart shopper with the report. We as an industry would be better off without most of it. 

Expand  

Funny you mention this. We sold used cars for the past 15 years but closed down that division (after much deliberation) in November 2017 for that very reason. Advertising these days is tied directly to several online companies: Autotrader, Cars.com, CarGurus, Craigslist and Ebay to name a few. Each of these companies earn revenue exclusively from the dealers yet to the public they pit the dealers against each other and make them compete on price. Then you have CarFax that again charges the dealer and is free to the consumer. They have trained the consumer to search for 1 owner, low mileage, accident free cars with extensive service records. What about the other 85% of inventory that costs the dealer daily. In a nutshell there are easily a dozen companies dipping into the flow of revenue and the poor dealer at the end is left with little to no profit. 

New car dealers today suffer the same consequence. Each new car dealer has 4 profit centers: New car sales, Used car sales, Warranty/recall work and service. What I have learned is that 70% of a new car dealers profit comes from general service and they can only hope to break even on new car sales. This is why you see dealer group consolidation and expansive service facilities. And ultimately this is why WE are not each others competition, our #1 competitor is the new car dealer.