Quantcast
Jump to content

Start LLC for $0 at IncFile


Start LLC for $0 at IncFile


Start LLC for $0 at IncFile

We Worry About Too Much About High Ticket Dollars and Labor Rates!


Recommended Posts

Raising your labor rate and trying to increase your average ticket dollar amount in an effort to increase income may not be the way to financial stability. In fact, it might just make you fail! Before you send for the men in white coats and call me crazy, please have an open mind and read on.

 

Like many of you, I once shared the belief that a high labor rate, quality work, high-ticket averages, and superior customer service was the business strategy to create a successful repair shop. I also believed that the customers should never control the flow of work in my bays by dictating to me when they need service and that I should carefully plan out the day. There was also a time when I would refuse a walk-in for an oil change because I had too much work in the bays. Well, I’m here today to tell you that for me, this strategy is dead. It died along with the carburetor, points and condenser. The quality of your work and providing great customer service still holds true, but in today’s world, it’s not enough.

 

Look around at the world today. Has anything changed? You bet! We live in a fast pace world where people balance work, family, fun, Church, and other obligations. Both Mom and Dad have careers and are running from ballet to baseball. The media has been drumming into our head for the past thirty years that great service is getting what you want now and fast. Why do people today value their time so much? Because they have so little of it.

 

So, here’s the scenario. It’s midday, Tuesday, at 2:00pm and Mrs. Smith arrives at your shop unexpectedly with a check engine light on. You politely and professionally tell Mrs. Smith that you would be more than happy to take the car in on Thursday. Now, she’s starts processing in her mind what she needs to do on Thursday: She needs to leave work early to bring her daughter to the dentist at 1:00pm and needs to be back at the office by 4:00 for a meeting, then dinner at 5:30 and the P.T.A at 7:00. “No, Thursday won’t do”, she says. Respectfully, you answer, “how’s next week?”

 

At this point she gets frustrated and says she will let you know. You just may have lost a customer. You viewed her problem as a check engine light and how you would fit her car into YOUR calendar. She perceived her issue as another way to balance an already demanding schedule.

 

Now let’s talk about labor rates and average repair order dollar and I will hopefully tie all this together. Concentrating on bigger tickets and labor rates as a way to overcome inadequate car counts and low profit will simply not work. I’m not saying you shouldn’t charge what you are worth. I don’t give anything away in my shop and charge accordingly. But, what I’m more concerned about in today’s market is opportunity. I concentrate on increasing my car counts to give me the opportunity to sell more. Today’s cars are not like those built in the 80’s. You don’t have the highly profitable repair work anymore and cars are more reliable. Also, take a look at what the automakers have taken away from us: Timing belts, plugs wires, fuel filters, distributor caps, rotors, etc. Not to mention long life coolant, transmission fluid and extended oil change intervals.

 

This means you will need to increase car counts in order to give your shop the opportunity to sell profitable service work. This also means that you will need to be very proactive in managing your customer’s vehicle maintenance. You will need to be very innovative in your approach on maintenance and service and diversify your services to fit a broader range of consumers.

 

Successful Big-Box stores understand the law of compounding and moving product. Even in these disastrous economic times, Home Depot would rather sell 1,000 cans of paint a week and make $6.00 on a can, then make $10.00 per can and only sell 300. Plus, having that many people coming through their doors buying paint increases sales in other areas, such as paintbrushes, primer, rollers and drop clothes. Again, when you increase the number of customers, you increase the opportunity to sell more products. This is the law of compounding sales through opportunity.

 

Before you go lowering your prices, STOP. Most of us sell at a fair price already. What I’m suggesting is that when you increase car counts you give yourself more opportunity to move product: such as air filters, cabin filter, batteries, wipers and other items. Plus, you are working on building a customer base that will more likely return in the future because your willingness to work around their schedule.

 

You may have loyal customers, but if you’re not perceived as convenient and not willing to accommodate them when they need you, you may not be capitalizing on your potential to fully satisfy a customer.

 

How do you increase traffic to your bays? Say yes as much as possible. Be more accommodating. Try to work around your customer’s schedule, not yours. Be more flexible. Your daily planner is not written in stone. Promote while-you-wait service. I don’t understand why so many shops distain the idea of people waiting for service. We now welcome walk-ins and promote while-you-wait service. It’s a goal mine of opportunity. Remember; opportunity equals profit.

Link to comment
Share on other sites


Flash Sale + Social Proof


Flash Sale + Social Proof


Flash Sale + Social Proof

I agree, I just think that in this economy, the little ad-on sales can go a long way at improving one's bottom line. I know many shops that spend countless hours diagnosing a check engine light, and never speak to the customer about service work. Some shop owners never even check the car out for service items.

 

I know you can't sell everything, but if you never tell, you'll never sell.

Link to comment
Share on other sites

Hello Joe,

 

This is Keith, former long time employee of a certain auto repair business consultant/teacher/guru. After working for this man for seven years and now owning my own auto repair business for almost six years, I can tell you your post is right on target. Any auto repair business that doesn't understand that soon will. The OE's have become their own worst enemy by making cars better and requiring less maintenance. You are right on target with that post.

 

By the way, I obviously know most of the auto repair managment trainers and what they offer and I have to say that this "Auto shop owner" website is by far the most practical, hands on, best information I can apply, most up to date, and best auto repair training/improvement information available out there in my opinion. Keep up the great work!

 

Keith - Robert's Auto Service

Link to comment
Share on other sites

Keith,

 

Great to hear from you, old friend. It's an honor to have you onboard and thanks for the compliment. Coming from you, it means a lot. I try to bring real-life information based on my 30+ years in the business.

 

Let's keep in touch, Joe

 

Joe,

 

I have much to say about what I have learned after working for you know who and now owning my own shop. I can tell you first hand what has worked and what hasn't as I applied those things I taught in the seminars. I could keep the forums busy for several years hitting on the hot topics. I should do a seminar entilted "What I leared going backwards", which is a pun based on working with an auto repair management company as the Vice President to buying and operating my own shop and applying the information. I say "backwards" because it seems most shop owners graduate to become auto repair management guru's, whereas I went the other way.

I can tell you that you have to be very careful with some of the things taught and most things have to be tweaked. Most of us need to remember that the auto repair managment guru's are trying to "wow" us with concepts and ideas as these sell their own products and services, however, it may not be as tried and true as one might think.

 

Keith

 

Keith

Link to comment
Share on other sites

You are so right!! And I am happy to hear you say that. I have attended many seminars, from a variety of companies, nothing replacing “real-life experience” as your primary teacher. However, many shop owners get stuck in the day-to-day operations and never grow their businesses. Many are unhappy and unfulfilled.

 

As you say, shop owners have a wealth of knowledge, but still may lack the ability or know-how to go to the next level.

 

I encourage you to post your ideas, comments or questions. With your background, it will be very valuable to all! I like your theme: "What I learned going backwards".

 

By the way, did you get a chance to see my blog? It’s all about my expanding the business.

 

Joe

Link to comment
Share on other sites

Create an account or sign in to comment

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

Create an account

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

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Similar Topics

    • By carmcapriotto
      Honesty is always the best policy, but sometimes is it better to omit certain information to a customer? What if you make a mistake but make it right and eat the cost? Are there situations where you don’t divulge all that information to a customer? Let’s have an open discussion on ethics and your shop’s reputation.
      Matt Fanslow, lead diagnostician and shop manager, Riverside Automotive, Red Wing, MN. Matt’s previous episodes HERE Matt Fanslow Podcast: Diagnosing the Aftermarket A to Z Al Wright, John's Automotive, Cedar Rapids, IA Key Talking Points
       There are times when being completely open is endearing, but other times where it simply hurts the shop's reputation, and the client learning about it changes nothing. They aren't paying more for the service, they aren't leaving with an improperly repaired vehicle.  The issue/mistake/mishap can be kept in-house and learned from. It's not uncommon for us to "lie" by omission, namely when mistakes are made.  We don't call out the specific tech that erred.  That is to be frowned upon.  Unfortunately, we also seem to lie by omission by not calling out the specific tech when there's a victory or a job well done. Another situation MAY be just thinking out loud, which may not always be a good thing, or misdiagnosing a vehicle. What is the best way to fire a customer without damaging the shop's reputation?   In a small community, you have to be careful in your explanation to the customer to prevent the ripple effect.  Comebacks - every shop has them, and it's the first interaction when they return that makes all the difference in defusing a bad situation. Let the customers speak first.  Reputation isn't just a business transaction, reputation is just as important as community involvement. Shop culture can also affect your reputation. It's your employee for 40 hours of the week; what do they say about you and their peers the 80 hours a week?  
      Connect with the Podcast
       
      Aftermarket Radio Network
      Subscribe on YouTube
      Visit us on the Web
      Follow on Facebook
      Become an Insider
      Buy me a coffee
      Important Books
      Check out today's partners: Shop-Ware: More Time. More Profit. Shop-Ware Shop Management getshopware.com       Delphi Technologies: Keeping current on the latest vehicle systems and how to repair them is a must for today’s technicians. DelphiAftermarket.com
      Click to go to the Podcast on Remarkable Results Radio
    • By Joe Marconi
      For the first time in a VERY LONG time, I see a lot of positive news with regard to labor rates.  More and more shop owners and managers are crunching their numbers and increasing their labor rates to better ensure their companies achieves a profit and also to be able to pay their employees what they deserve. 
      Profit is needed in order to build for the future and to be able to attract quality people. 
      I really think that this is perhaps the best time in our recent history to revisit your labor rates and bottom line and adjust your rates accordingly.  
      Have you adjusted your labor rates recently, or plan on it? 
       
    • By Joe Marconi
      As a former auto shop owner, one of the things that kept me up at night was not knowing enough about all the labor laws and human resource regulations.  
      How do you keep up with all the changes to the labor laws and human resource regulations in your state? 
    • By Joe Marconi
      At the Elite Invitational this past June, held in San Diego, we invited a customer panel to discuss a variety of issues with the auto industry. One of the things we discovered was that consumers don't know the term "Technician" and still refer to us as "Mechanics"
      This is important to understand, especially with our internet marketing.  For example, a consumer may Google, Auto mechanic near me.
      Thoughts? Opinions? 

       
    • Advertise your services or products to passers-by attracting them towards your business
    • By Eric Roberts
      Firstly let me say that I an just a regular guy from the UK who is the owner of a seven bay service centre/garage. I am not a financial expert. The dreaded inflation is upon us again. For the guys as old as me then this is nothing new. Back in the 70,s we had 15% inflation, but we all got by and lived for better trading days. Here in the UK we have always looked up to the USA because of your business prowess. So what do you guys look out as your worst enemy!
      When prices are going up then I find that the gap opens between rich and the poor's disposable income. So this question will effect garage owners in different areas. My garage is in a poor area with many immigrant families who drive cars. So this means we have to be more flexible with pricing. Finding out if your customer can afford that service ! For this reason we devised a three tier service pricing structure. This has also the effect of not loosing your profit margins. 
      The lowest price should include an oil and filter change and a general vehicle check over. This way we find the customer will perhaps be able to afford a service and your profit margins wont drop. This is just one small idea that we carry out! What do you guys do in these times of high inflation ? 


  • Our Sponsors


Flash Sale + Social Proof


Flash Sale + Social Proof


Flash Sale + Social Proof

×
×
  • Create New...