Elon Block

TheTrustedMechanic hit the nail on the head. It's not your fault if you've bought into the ARO myth. Because some misguided training companies are still teaching these old school, cheesy tactics. So, it can be confusing when you hear them say focusing on your ARO is the way to grow your business. It's one way. But it's not long-term and it makes running your business profitably way harder than it needs to be. I learned this lesson the hard way. When I was first promoted from tech to management in the 80's, two things happened that caused me to look at the business in a new way. The first thing that happened... I was working in a Goodyear retail location as a sales manager and we got a memo from Corporate. The memo said... effective immediately, the total of each ticket had to be a certain dollar amount. If we didn't hit that number, disciplinary action would be taken against the salesperson AND the manager that had allowed that customer to get out the door for under that dollar amount. So, if the customer came in for an oil change, you needed to find something to pad their bill. This tactic for creating sales and profits did not go unnoticed by the public. And it didn't take long. It resulted in class action lawsuits against Sears, Goodyear and Firestone for selling unneeded services to drive ARO. http://www.tirebusiness.com/article/20130913/NEWS/130919945/1996-a-look-into-the-past-goodyear-settles-service-fraud-suit http://www.nytimes.com/1992/06/23/business/sears-auto-centers-halt-commissions-after-flap.html http://www.rubbernews.com/article/19990621/ISSUE/306219990/firestone-auto-stores-hit-with-fraud-lawsuit So, managing and selling by ARO to grow your business, delivers short-term results, at best. Let's look at what we're really doing here: We're fixing cars - that's it. The other thing which happened that shaped my philosophy about the business was an article my manager gave me called: The Customer That Never Came Back. http://sellmoreautoservice.com/TheCustomerThatNeverComesBack.html Customers can tell when you see a dollar sign on their forehead and you won't even know what happened until you see their vehicle in your competitor's parking lot. They won't hesitate to give someone else a chance at their business. An ARO is only a number - a way of measuring what you're billing but if you only have one car a day that has a $500 ARO, what difference does it make? The only thing that matters is: How many loyal customers do you have that view your shop - as the shop to be trusted with one of their most important possessions? And are willing to pay YOU to solve their automotive problems. How do you know your shop is being perceived this way? Look at your bays. And look at your appointment calendar. This is the true measurement of how you're doing. If you don't have bays full of profitable, legitimate work - week in and week out, month in and month out... something is missing.

My next question is: what is your strategy for promoting and selling alignments? There's no right or wrong answer. There just has to be a strategy that delivers predictable results and sales.

M-Spec, since you wrote to me and asked me to weigh in on this topic, here is my take. From my perspective, even though the question may seem simple, it's actually more involved, especially when you're considering investing in a new alignment machine. It's all about being clear about your intention. Here are a number of questions to consider. What are you trying to do by investing in a new machine? For example... What are you trying to do by focusing on this, as a service? Are you trying to bump your ARO with your existing customers? Are you trying to attract new customers? Are you trying to make it convenient for your customers to have everything done in your shop - to make it a one-stop-shop? Are you trying to set your business apart from all of the other shops in the area, by offering alignments? Are you trying to fix efficiency issues only? These are questions only you can answer. For example, a Hunter rep or any other sales rep can tell you how great the alignment opportunity is but the alignment rack is only a tool. You could have the latest technology and tools, but if you can't get the customers in the door or communicate with the customer what the value is to doing business with your shop, it's time and money wasted. So, basically... how important it is... pertains to your situation only.

That's great you are starting a delegation system. As you move forward, you may want to consider documenting each new system so you can use it for training purposes. Looking at it from the bigger picture, standardizing everything in your shop allows the business to run on auto-pilot. That means you have the freedom to work on the business - not in the business. It also gives you the freedom to take time off from the business if you want because the shop runs efficiently and profitably, whether you're there or not. In my humble opinion, it's a goal worth shooting for.

Marcus, Michael Gerber and many others teach business principles that emphasize focusing all of your attention on Product, People and Processes, as the only way to really create a profitable business that runs on auto-pilot. So, picking a Product line you believe in... is only part of the equation. Having Processes your People can use to sell those Products and perform those services... is the rest of what's required to have a wildly successful and profitable business. Look at it this way... your techs use Processes to service a vehicle properly. If you want predictable sales and profit numbers, your sales people need Processes for selling service and tires effectively and consistently. Processes also make managing your shop super easy. For example, if you walked through the shop and noticed an employee using an old Coats tire machine to change a performance tire mounted on an alloy rim... you would stop immediately and show him how to do it correctly before he damages something. Ignoring this behavior is going to cost you money. The same principle applies to managing what happens at the counter. Because there is a direct connection between what happens at your counter - and whether you have a shop with full bays - or you have empty bays. The old school methods of selling service no longer work because today's consumers - in today's economy - no longer respond to anything that is salesy or pushy. So, whatever sales process your people use has to be customer-friendly and yet, strategically walk your customer through the sale... so they give you the approval to do the work. It also needs to be a step-by-step, standardized Process your people can actually do - even if they are not smooth talking sales people. In other words, you need to make sure the Process can be learned and used by "normal" People. Because without a structured, effective sales method your employees can actually see themselves using... They will fall back into the more comfortable order-taking routine. I don't have to tell you that when that happens, you are missing legitimate selling opportunities to really service the customer and fill your bays with profitable jobs.

Here's something to consider. Regardless of whether we like it or not... a review is feedback. Think about it... we used to have to pay for a mystery shopper program, in order to get feedback on how the customer felt about the service. Now, with the internet, we get that feedback for free. For this to be valuable... we need to be willing to be open to feedback. Just like with the mystery shopper report, an online review is an opportunity to look at what's going on in our business. From an objective customer viewpoint. Less than favorable feedback indicates something isn't working smoothly or properly in the business. If there's a pattern to the nature of the reviews, that's good news for us because we can now focus on it and fix it. It always has to do with the 3P's: our Product, our People, and/or our Processes (our people are using - or not using, whichever the case). We can either curse or ignore the review or we can explore what can be improved upon so that our business does better. As for getting reviews... Getting reviews is a marketing angle. If we're doing a good job, we don't need that kind of marketing or any other kind to have a booked calendar and full bays. Think about it. You only need a small segment of loyal customers spending all their money with you to maintain their vehicle - year in and year out - to have a thriving and profitable business. http://newsroom.aaa.com/2014/05/owning-and-operating-your-vehicle-just-got-a-little-cheaper-aaas-2014-your-driving-costs-study/ What that means is... if the average customer spends $750 per year for vehicle repairs and maintenance, those people are getting their vehicles fixed somewhere. Why not at your shop? When you calculate that out... you need less than 1,500 customers to have a million dollar a year business, (or whatever your goal is for 2015). Give customers what they want and you will easily own your share of your market. Simply put... here's what customers want... They want to be treated fairly and with respect. And they want a shop they can trust to take good care of them. The bottom-line is... The shop that has systems in place to consistently provide that experience - both in the bays and at the counter - will have no trouble meeting their financial goals - regardless of the weather, the economy or any other outside forces.

This sums it up nicely. We also believe in the KISS Principle. (Keep It Simple and Straightforward) To piggy back on what you said.... If the Sales Process is not simple for the sales people to use... And it's not simple for the customer to understand... The shop will have empty bays, techs standing around doing nothing, and will struggle to make a profit.

bstewart directed me to this post because the subject matter is related to a pricing conversation going on here: http://www.autoshopowner.com/topic/9788-do-you-guys-perform-fleet-work-do-you-work-on-sprinters-how-profitable/ As I indicated in the other thread, pricing of parts and labor is a big subject and there is no one-size-fits-all answer. There are a number of things to consider when we're talking about pricing. For example, how does your pricing strategy impact what happens at the counter? Because everything that happens at the counter affects your entire business. So with that in mind, we need to look at it from the customer's standpoint. And we need to look at it from the shop's standpoint. Let's start with the customer's standpoint. The Good, Better, Best method is a great way of selling tires. Because when you sell tires, your Good, Better, Best options for your customer allows them to choose a tire based on a number of variables, primarily mileage. For example, the customer gets to choose from a 50,000 mile, a 65,000 mile and an 80,000 mile tire based on how much they drive the car and how long they plan to keep it. This is very easy for the customer to wrap their mind around and understand. In other words... If the customer chooses the 50,000 mile tire, it's easy for them to understand that if they drive (the national average of) 12-15,000 miles per year, they'll get at least 2-3 years out of their investment. If they choose the 65,000 mile tire, they'll get even more years out of their investment. And so on, with the 80,000 mile tire. That's a decision that's very easy for the customer to comprehend and make an educated decision. If your service advisor was to offer a Good, Better, Best when they're talking about a repair to a vehicle - meaning they're going to ask your customer to choose a part with: no warranty, or a 6 month warranty or a 2 year warranty (for example). It's impossible for the customer to make an educated decision about what's best in the situation. They have no idea what the normal life of a part might be. They don't know anything about cars - like you do. But let's say, in their confusion, they choose the least expensive part... Let's look at how this will play out later - at the counter.... If the part fails, your service advisor now finds themselves in a defensive position which means he/she is now having to spend time reminding the customer, "Well, Mr. Jones, this is the option you chose and this is the end result of you making that decision." Any way you look at it, this becomes a losing battle for both the shop and the customer. So, why even go there? Most people do not want a ton of options. They just want you to explain to them in a SIMPLE, straightforward manner about what they should do. (In other words, coming from a place of: What would YOU do if this were YOUR car?) So, here are some key factors to consider: What do you want to be known for? Do you want to be known as the cheapest in town? Or do you want to offer quality service, and quality parts - all at a fair price? Or somewhere in between? And then, based on that.... Make it simple for everybody. In other words...what is the warranty you want to provide to your customers on ALL of your work? 6 Months? 1 Year? 2 Years? 3 Years? Lifetime? Any one of those options is fine. Pick one and stick with it and then, be confident in what you're selling. Because you're the expert. One more point on pricing... The price is only one factor a customer is considering. These are 6 other factors/concerns your customers have BEFORE they even walk up to your counter or pick up the phone to call you. Even if that person is a LONG-TIME customer, they have CONCERNS they are weighing every time they have to make a decision, regarding the maintenance of their vehicle. Here's a video that covers the "7 Critical Concerns": http://youtu.be/6wZKsQwbhMU Understanding the customer's mindset will help you sell more service - without discounting your prices.

Pricing is a BIG subject and there is no ones-size-fits-all answer. Plus it's another case of looking at things from the shop's standpoint - and the customer's standpoint. From the shop's standpoint first... Parts and labor pricing is situational and needs to based on a number of factors, such as: How you want to position yourself in the marketplace Your retail customer / commercial customer ratio The vendors you use How you're buying (Buying "right" is key to parts profits.) What is the value you bring (that your competition doesn't have) How well your sales people can communicate that value so that the customer knows beyond a shadow of a doubt they made the right choice to choose you for all their needs There are more things that I believe need to be taken into consideration. For example... using a blanket GP margin for all of your parts may seem like an easy fix... but from a percentage standpoint, after market parts pricing is different than dealer or distributor pricing. From the customer's standpoint... The internet has made it very easy for anyone to do some simple research and determine what the "Suggested Retail Price" is for your parts. "Suggested Retail Price" is a phrase your customers are very familiar with and a comparison method (we have all been taught to use) when shopping.. So, using a blanket GP can put you in a situation where the consumer is going to feel ripped off if/when they do any research and see they were charged way more than the easily available, published prices for that same part. What that means is: Parts have become somewhat of a commodity. You can still make a profit on parts - it's just not where the real money is The REAL profit opportunity is in your labor because let's face it... that's the true value you bring to your customer. All of your training, your experience, your trustworthiness, your tools, including technology, your parts and labor warranties, etc, etc. The list is endless. That's what the customer is willing to pay for and is what REALLY sets you apart from everyone else in your town. And to answer your direct question to me: Discounting your services is not the way to build your business or increase your paycheck. From my experience... having a business model based on providing killer service at a fair price for all involved... is the only way to build a loyal customer base - whether it's retail or fleet.

By the way... here is the complete report: http://www.bbb.org/globalassets/local-bbbs/council-113/media/complaint-stats/us-stats-inquiries-2013.pdf

You made a really good point. By being able to communicate clearly and effectively with the customer, you were able to win them over. From the customer's standpoint, she now has a shop she feels she can trust... and from a business standpoint, you made a profit on the job. And more importantly, you have a loyal customer and great referral source, which will pay off forever - in future jobs. I am not sure if everyone is aware of what I call "The HIdden Problem" that is standing between you and the sales and profits you want. Briefly... this problem is the fact that consumers don't trust the people in the automotive industry, which includes the tire and auto repair end of it, too. Here is the latest BBB.org stats: http://sellmoreautoservice.com/wp-content/uploads/2014/12/bbb2013statistics.jpg If you notice, the "Auto Repair & Service" category came in at number 10 for complaints and number 5 for inquiries - out of over 5,000 industries. What this means to you is: the public is trying to avoid being taken advantage of, which is their greatest fear, by doing research online and by phone. They're making inquiries at the BBB site and reading reviews on all of the review sites in order to help them determine who they can trust. And then, they are trying to be a "smart shopper" by ringing you up. And unfortunately, because they know very little about that big piece of steel sitting in their driveway... they're asking the only question they know how to ask, which is, "How much....?" Yes, there are some people that are shopping for the cheapest prices... but the majority of people calling or stopping in are just trying to do the only thing they know how to do... in order to solve their problem. And by the way... the auto repair industry doesn't help when all of the advertising focuses on "Here are our prices and special deals for your next....." oil change, brake job, wipers, etc. So, the consumer is confused. And the person and shop that can help them clear up all of their confusion... will win every time. Every phone call, every person that stops in is an opportunity to add another customer. When you look at it this way... we are no longer in the auto repair business... we are in the communication business. This really is the best time to own an auto repair business because all you have to do is to communicate just a tiny bit better than your competition and you'll own your market.

If you want to really impress your customer - so much so - that they will be telling EVERYONE they know, about what their "auto repair shop" sent them... Send this: https://www.corsoscookies.com/Thanks-A-Buzzillion-3032/ with a note such as: "Thank you for choosing us to take care of you!" I am not a "cookie person" but these cookies are addictive! I've done business with this company for years and they do a great job! Order one for yourself and then, decide. I think you'll love them. (I'm not affiliated with them, in any way - I'm just a huge fan!)

I agree those articles are very good, especially the checklist on this article: http://www.ratchetandwrench.com/RatchetWrench/December-2013/Make-Fleet-Service-a-Valuable-Addition-to-Your-Shop/ As with everything, there is the benefit to the shop and the benefit to the customer. And it has to be a win-win for both parties. Like all customers, they need someone they can really trust to take care of their vehicles. What the fleet customer needs is to have their vehicles running because when a vehicle isn't running, they're not making money. There are many aspects to beginning a successful relationship with a local business owner, but one of the keys is to be clear about how you do business and how you're going to take care of the customer's vehicles for them. In other words... Doing preventative maintenance is the key to helping that business owner keep that vehicle on the road. In their mind, they make think it's all about fixing today's problem. The bigger picture is: It's all about keeping the vehicle maintained so that you can catch potential problems before they become major problems. So, if you have a standard inspection process in place for your regular customers, you're going to use the same process every time a fleet vehicle comes into the shop. The customer needs to be able to understand and buy into that whole concept or the program will fail. From a shop's standpoint, fleet work can be a nice addition when priced properly, and as long as the shop's workflow is organized to handle their special needs.

You bring up a good point. Road hazard warranties are meant to take care of the normal driver out on the road, that may have an unexpected situation happen. Not the driver that is using his vehicle for sport, etc. Discount Tires (and all other tire companies I'm aware of) have standard exclusions and conditions, such as not covering commercial and off-road tires. Here is a link to their website: http://www.discounttire.com/dtcs/infoCertificate.do So, not sure who sold the warranty to the fellow Jeeper you're talking about... but based on Discount Tires policies, "off-the-highway tires" are excluded. In your situation, I wouldn't offer it on any off-road tires you sell. And if the customer brings up the subject, it needs to be explained to them in a simple, straightforward manner that warranties are not available on off-road tires.

10% of your retail price of the tire. For the customer, we have found 10% of the retail equals a number that makes sense for them. For the shop, selling road hazard is an additional income stream/profit center. But the biggest benefit for the shop is the long-term impact, which is created because you will be maintaining the tires for the customer... giving you a natural oppotunity for doing their oil changes and all of their service needs. Looking at the big picture, it's not just that one single sale. It's the lifetime value of the customer. In other words, when you calculate how much a customer spends maintaining their vehicles over their lifetime, that's equal to thousands of dollars going to your bottom-line. [This is not even counting how many friends, family members, co-workers, etc that customer will send to you because you will have positioned yourself as "the trusted shop to get all their vehicle needs taken care of."]

I started a new thread about the road hazard warranty here: http://www.autoshopowner.com/topic/9790-selling-road-hazard-warranties/

Hi everyone! My webmaster finished uploading the training video I promised you on "Selling Road Hazard Warranties". Let me know if you have any questions. Here is the link: https://www.youtube.com/channel/UCzE5eJf07QtPVxjZ4r6zL0Q

Here's an update on the training I promised you on how to sell road hazard. My webmaster is almost finished with the video recording. I'm also waiting to get clarity on the best way to provide this to you without breaking any rules of the forum by posting links.

Thank you for your comment. Feedback is always good because it's an opportunity to improve my communications skills to make sure I explain things as clearly as possible. I can see how what I posted was not clear and confusing because I used the wrong terminology. Let me start over. First of all, you're correct. The patch/plug repair is the correct method of repair - when done correctly. The TIA has clear standards on what size injury is repairable and what size is not. This is what I was thinking when I posted: I have seen many cases of ignoring the maximum allowable damage size of 1/4" and repairing injuries as large as 1/2" - rather than having the tough conversation with the customer about the tire not being repairable. In this type of a situation, the customer had been told they are only going to be paying a fairly small amount of money to fix their issue and now, the counter person has to go back to them with a surprise conversation about having to buy a new tire instead. If that sales person is not skilled at handling this properly, they may feel pressured to just go ahead and repair it as they had promised, rather than face the customer with the bad news. This scenario is a pretty common one, unfortunately.

Sorry everyone, I just realized my assistant was logged into this forum on her account. The above post was written by me.

First of all, I want to acknowledge you for having the awareness to realize you need help. And then, having the courage to ask for help. This is a huge step you've taken here. As others have already pointed out, coaches are necessary if you want to take your business to the next level. It's because from a business owner's perspective... "we don't know - what we don't know." We're just too close to the situation. However, committing to a big monthly payment - without feeling certain that what may have worked for others - will also work for you, can be scary, especially when cash flow is already tight. Here are some things I recommend business owners do when choosing a coaching/training program... The biggest thing to do is: to make sure you are in alignment with the core philosophies of the program. In other words, all coaching and training requires a shift in your thinking and doing things differently. It just boils down to deciding if the program is a good fit for the way you want to treat your customers and run your business. Bottom-line: selling to today's customers in today's economy is way different than it was just a few years ago. Today's customers no longer tolerate all of the pushy, salesy, objection handling and high-pressure sales tactics. And will not hesitate to take their business up the street and/or tell others on the many review sites if they feel like they are being taken advantage of. What that means to you is: I recommend before investing ANY money, you interview or somehow get a taste of the core philosophy of any training company you might consider. The last thing you want to do is to spend time or money - only to find out, the training goes completely against how you want to run your business. There's never been a better time to own an auto repair business than now. When you position your business properly, you end up being known as the only shop in your area that can be trusted when it comes to auto repair and tires. Once that happens, you own your marketplace. Again... congratulations on taking the first step in getting help.

In response to the requests for the word tracks for selling road hazard, I started typing it up and when I looked at it, I realized it was going to be pages and pages of information which read more like a dry text book. So, I decided it would be more effective to just provide you with a video. The video will do a way better job of explaining it. My webmaster is working on it and should have the information for me later in the week. As soon as he's done with it... I'll post it.

Are you guys offering road hazard warranties? The reason I asked is: I noticed on your invoice examples, there was no mention of a road hazard warranty. There are two big benefits for offering a road hazard warranty to your customers. One is the benefit to your shop. The other is the benefit to your customer. From your shop's standpoint... there's an opportunity to add to your bottom-line, create loyalty with your customers and help them avoid a potential problem down the road. It can either be an in-house program or you can use an outside vendor to manage the program. There are also a handful of manufacturers that offer a road hazard program on their product line at no additional cost to the customer - or you. This is one manufacturer, for example: http://www.kumhousa.com/owners/tire/replacement-and-original-equipment-warranty-policies (I'm not affiliated with them, in any way. I just happen to know about their program.) Regardless of how you set your program up, road hazard warranties are profitable, when sold properly. It's 100% profit and even if there's a claim, you're still going to be way ahead. Not only that... you will look like hero in the customer's mind, if they need to use it. Now, from a customer's standpoint, there are a huge number of people that believe in protectiing their investments. They will almost always purchase a warranty - if offered properly - when they buy computers, appliances, electronics or anything that has a potential of failing or being problematic. Tires fit into this category. What they don't want to have happen is: they buy tires and then, all of a sudden, one of them needs to be replaced because of a road hazard. If they don't have a warranty, they now have to pay full price again - to replace that tire. (They're going to be pretty upset if they find out, at that time... they could have purchased a warranty, but it wasn't offered by your sales person.) What they do want is to: have peace of mind - that if something should happen, it's never going to cost them full price to replace that tire. So, they view purchasing a road hazard warranty, as a small price to pay for that peace of mind. Now, not everyone will buy it. Some people just don't believe in insurance of any kind - period. And that's okay. But there's no way of knowing unless you offer it to them. So, your sales person's job is to offer the warranty every time - to every customer. But, they need to know how to offer it in a manner that doesn't confuse or overwhelm the customer. If you're interested, I would be happy to share a sales process, including a work track for selling the warranty. Just let me know.

My assistant let me know about this conversation. So I thought I would mention a couple of things when it comes to adding tire sales to your business. You've already gotten some great insight in this thread. Here are a few other things to consider. There are two big benefits to selling tires. One is the benefit to your shop. The other is the benefit to your customer. From your shop's standpoint... there's an opportunity to either KEEP an existing customer or to GAIN a new customer. Looking at the big picture, it's not just that one single sale. It's the lifetime value of the customer. In other words, when you calculate how much a customer spends maintaining their vehicles over their lifetime, that's equal to thousands of dollars. Someone's going to get that customer and all of their tire, maintenance and repair work - it might as well be you. If we're talking about an existing customer... and they have to go up the street to purchase their tires... chances are: your competitor is not only going to sell them tires... They're going to start poking around that car and first thing you know... you're lost that customer. If it's a new customer that stopped in or called, asking about tires... There's an opportunity right in front of you, to get another new customer. You can either help them out and begin a relationship with them, or you can turn them away. One thing to note is: many cars are equipped with high-performance tires. And the margins are even better on those, compared to just a regular passenger car or light truck tires. Even if you're not a tire dealer, there are huge opportunities - not just in selling the tires but all of the other work it naturally leads to such as: brakes, suspension work, alignments, TPMS work, etc. Now, from a customer's standpoint, it may seem like they're just interested in shoppping prices when they call you. Calling about prices is the only way they know how to educate themselves on where they should go - to solve whatever their problem is. The reality is: price is way down on their list of priorities (whether we're talking about tires or service). For most people, they're not looking for the cheapest prices. They're actually looking for someone they can TRUST to help them take care of all of their vehicle needs - hopefully at one shop - because the're busy, just like you. If you can gain their trust - whatever the opportunity is - there will never be any questions or haggling about any of your pricing. I'll keep an eye on this thread and if you have any specific questions about tire sales, I'd be happy to answer them for you.