jfuhrmad

Thanks for the great answers.

Everywhere I look I see that I'm supposed to target 60% gross profit.  Am I supposed to include tires in this?  I have no problem getting 60% on repairs, but when I include my tire sales then it just tanks it.  About 15% of our sales is tires.  Is anyone getting 60% GP including tires?  If so, I need to make some adjustments.

On 6/25/2017 at 0:22 PM, Hands On said:

As a small shop with two techs and four lifts, I can not afford to do oil changes all day long. I schedule one waiting oil change a day, first thing in the morning. Sometimes I will do two. I train my regulars to schedule a week ahead. 

I often suggest to my customers that they use a quick lube through out the year and just see me once a year for a good safety check. We are always busy year round and do not have car count issues.

I have issues finding employees.

Thanks for sharing.  Where do your new customers come from?

How do you guys determine your intervals?  They seem much much shorter than the manufacturer suggested intervals.  Coolant on most Chevy's is 150k and most of the time brake fluid still tests good at 100k.  I would like to get to shorter intervals because I think the manufacturers are pushing it, but I haven't found much out there to support shorter intervals other than what appears to be guesses.  Any thoughts would be appreciated.

June was our best month ever by about 20%.  Not seeing any hesitation to repair but the main used car dealership in town went under in May so I'm wondering if people are slowing down their car purchases a bit in this area.

Glad you love it!  See, it's how you communicate and what you communicate.  We don't have to be pushy or argumentative.  How we communicate changes how our customers perceive what they are getting.  That is not even what I'd call the tip of the iceberg when it comes to communication.  I know there is far more to learn and I'm on that journey, but as you can see in my example, explaining the value works wonders.

This is how I look at it, you can buy a steak at the grocery store for $10.  But if you go to a restaurant it's $40, cooked, served, and cleaned up afterwards.  

Same in this industry.

It's $100 for a part at Advance or O'Reilly's; but at my shop it's $400 installed, delivered, and clean up afterwards.

We rarely have a customer complain about our parts prices, but sometimes if they seem hesitant or their husband is "going to do it this weekend" I'll just say, "sometimes my wife orders pizza because it's easy.  It's more expensive but it's easy.  Same here.  It's okay to order a have your car repaired  sometimes."  They almost always buy the repair when I say that.

In the big picture it comes down to how you demonstrate value.  If you can't show or communicate to the customer that what you're providing is worth more than what you're charging then you are going to have a hard time.  If you can show/communicate that then nobody will complain.  That's the difference.  Communication.

The best shops have a system for communicating from front to back so the customer feels they get more than they pay for.  It really is that simple.  Learning the communication and building a system is the time-consuming part.  But as someone else mentioned there are trainings that can accelerate that.

I told you what I do because it works.  I never said it was easy or fast or a silver bullet.  It takes time and trial and error but it works.  There's nothing more to say.

Resumes are everywhere.  Just start googling.  Like I said, nobody will like this answer.  It's vague and it depends on your area.

Not to be rude but like I said, I went online and found resumes.  They are everywhere.

I'm sure nobody will like this answer but it works.  

You have to be active.  Posting ads is passive.  I actually had to go out online and find resumes and start calling guys.  I found a guy rather quickly.  It seems like lot of techs are upset with the politics of where they are, so if you can give them a pleasant place to work at, they will come and take a pay cut to do it.  

I also have job seekers show up on occasion so I always have them fill out an application and chat them up just in case I need someone in a pinch.  In February my lube tech quit abruptly (story for another day) and I had a new guy start the next day.  

In fact, my lube tech who quit stopped by last week looking for his job back.  Apparently, his new place of employment isn't quite as pleasant to work at.

34 minutes ago, nge said:

My shop and process is very similar to jfuhrmad.  But I have a question, you say you have 2 techs (as do I) and that you schedule appointments for 1hr (I also do that but for state inspections as well.  We currently do about 170 inspections per month.). My techs seem to have the biggest issue with the appointments.  Say you have a walk in come in at 8 and you are doing their service and find upsells and you have an 8:30 appt and the 2 begin to overlap.  How do you handle that situation?  Simply put, how do you manage walkins and appointments for the same tech?  I have considered hiring another quick tech but am worried the demand may not always be there.

I know if I hustle I can do an inspection, oil change, air filter, and tire rotation in 45 minutes.  So, that puts me at 8:45 to finish walk-in guy.  When appt guy shows up at 8:30 I walk out and grab their car and move it around back or into an empty bay.  Now appt guy thinks I started on time.  Then I finish walk-in guy and start appt guy at 8:15.  At this point I can do the inspection, oil change, air filter, and tire rotation in 45 minutes and have them done at 9 and I'm back on schedule.  Everyone is happy and gets done on time.

We are rarely off schedule and usually it's because of a late air filter delivery or something goes wrong with a rotation such as rusty centering ring or broken stud.  And, we always prep the customer with "it'll be about an hour, sometimes less" when they schedule.

The other thing that helps is always starting on the hour.  Try to avoid an 8:30 appt.  Instead do 8 or 9.  Then your techs can keep track of the schedule in their heads much easier.

Also, I find that we often have an oil change or 2 that are drop-offs so we can shift them around throughout the day.  That always helps too.

One question for you.  If you are doing 170 inspections per month why can't you afford another tech?  If my car count was that high I'd easily be able to afford the capacity of another lube tech and I would hire them asap.  Do state inspections not generate much in follow-up work?  We don't have them in Minnesota.

5 minutes ago, AndersonAuto said:

I think you may be a little confused about the definition of ELR. What you're describing is that you charge your full door rate on most services except LOF and tires. That's not what it means.

Effective Labor Rate is the result of dividing the billed hours by the technician into the charged labor dollars to the customer. Let's assume that your door rate is $112. If your tech flags 10 hours and you bill the customer $1120, then your ELR is $112, or 100% ELR. But, if your tech flags 11.5 hours and you bill the customer $1000, then your ELR is $86.95, or 77.63%. Always do this calculation from your books and payroll. As in, what do the books (not the management system) say that you collected in labor charges for the period in question, and how many hours did you actually pay the tech? It's really easy for the advisor to "forget" to add labor hours to the RO, but the tech flags the time. Or, if you pay the tech based on the hours shown in your management system, the advisor can add hours without adding dollars to the RO. 

ELR is one of the fastest ways to check whether your advisor is giving away labor. If your ELR is way off, it doesn't point to the problem, but it shows you that there is a problem. Then you start auditing repair orders.

 

Thanks for the clarification.  So, I did the calculation right I just did a bad job of describing it above.  Basically, my ELR is not good, so I audited all of my ROs for May and found that every time ELR is under 100%, the job includes tires or an oil change.  For example, I'll have a job where flagged hours is 1.5 but I'm only billing $110 in labor, and it turns out it was installing 4 tires plus an alternator. So my ELR there is 72%.  (I used fictitious numbers there)

Otherwise my door rate x flagged hours = labor sales on every job.  Given this, I believe my SA is not giving away labor.  Certainly, could do better on maintenance and could write time for rusty trucks a little higher, but I don't believe we are giving away time.

I'm trying to identify leaks in my profitability.  Things that don't always show up clearly in ARO or hours/RO.  ELR is a great way to see where I might be missing dollars when it comes to labor.  Or at least to understand and be comfortable with why I'm not billing 100%.  That's all.

I'm in agreement that too many metrics can make business confusing, but for guys like me who are trying to understand and improve our businesses quickly, finding the right metrics to identify and solve problems is a big deal because, as young business owners we tend to have a lot of them.  Finding 1% more profit in 2-3 areas is 3% more profit which adds up over a year and that means we can grow or buy new equipment or whatever.

Some people here have many years of experience and their shops have become very intuitive to them.  Some of us don't have as many years so this can be a place where we can learn and get up to speed quickly.

A post like this is great for someone learning about ELR because it discusses what it is but it was missing what to do to fix it.  Now, it has some actionable insight and is much more helpful.

I realize this post is 4 months old, but it I think this is the right place to post this.

What can be done to raise ELR if you have 100% on non oil change and tire ROs?  We are almost always at 100% except oil changes and tires.

I've heard of shops with over 100% ELR.  Are they just measuring it wrong or is it maintenance services or what?  The only way I see to have over 100% ELR is to either short your techs, charge over 100% for diagnostics (very justified if you ask me) or have maintenance services where the packaged time is more than the time paid to the tech.  What other ways could you raise ELR?

My shop is similar to yours.  Although this Spring we figured out how to jam a 4th lift in a 1500 foot space with 3 doors.  It makes a huge difference when we are packed.  Do it if you can.

As far as charging for diagnostics.  Absolutely.  We sell time in this industry so you have to.  Just don't call it a diagnostic.  I have a bunch of canned "Inspections" that I charge a fixed amount for.  For example, a fan inspection is $100.  A pressure test is $100.  An alternator test is $50.  I try to separate them from time as much as possible.  It's just a flat fee for the test.  It works great.  For tough runnability or electrical I have a flat $100 charge and then we call the customer and to go time based billing on the customer's authorization.

For scheduling, here's what we do:  2 techs - 1 General Tech, 1 Lube Tech.  We use Mitchell1 so the scheduler has a column for each tech.  We schedule oil changes in 1 hour slots so we can do up to 9 oil changes per day.  Sometimes we do!  It doesn't take 1 hour but then we have time for rotations, show and tell with the customer, batteries, belts, wipers etc... and we can get it done for a waiting customer before the next oil change starts.  Then we have the Lube Tech service other minor work (brakes, alternators, belts, tires etc...) between oil changes so he basically can have 2 jobs going on simultaneously all day.  Master tech has 2 bays so he can swing back and forth between 2 jobs if he's waiting for parts or authorization.  (side note, we are growing so we see patches of full capacity but it isn't like this all the time...yet)

So, when this is working with an average tech and a lazy lube tech we've averaged 7.8 cars per day for stretches of 60 days or more.  Sometimes it doesn't even feel busy.  Now I have a much faster master tech so as we spool up this Summer I expect this to work even better.  In fact, at 7-8 cars per day my service writer becomes the bottle neck. (we've actually serviced 18 cars in a day using this method...not recommended, but it worked on the shop side, just not the office).  My service writer can't talk to customers fast enough or order parts fast enough to keep up.  So we end up short circuiting the oil change inspection process because he can't write and sell all the work we find while he's answering phones and ordering parts for the bigger jobs.

I just wanted to add that 6 cars/day is relative to how many hours per car you are selling.  We haven't been great in that respect so if you are 2.5-3 hrs per car you might be at max with 6-7 cars/day.  In that case you might need a bigger space before you pursue a full blown oil change marketing program.

As for me if done right I seems I could service up to 12 vehicles per day without short circuiting my sales process.  That being said, we are trying to improve our sales process right now so this might all change when we succeed.  In that case we will add staff or reduce car count to make it happen.  I'll cross that bridge when we get to it though.

Hope that helps.

So, the root of my question relates to a system for gathering new customers.  Starbucks has one advantage we don't: addictive caffeine.  You either have a system that you know about, have a system you don't know about or you don't have a system.  So back to my question, what other systems are out there that are effective?  I suspect that being on a very busy street could qualify for this but I'm on the back side of town, so drive by traffic hasn't really worked for me.

So, for those of you not using cheap oil changes, how do you get new customers?  Are you on busy streets?  Do you have strong SEO?  What other options are out there for systematically growing your auto repair business?  Just from a pure numbers perspective it seems like AndersonAuto is making the cheap oil changes work.

May was okay.  I monkeyed with my marketing in April so my car count was lower than budget but still up over last May.  I changed it back.  ARO is up 12%.  Would have been a record if I would have left the marketing alone.

I use Gusto.  It integrates with quickbooks.  Works great!

Just talked to Chevy dealer in town and he said service and parts were terrible in April.  My May is OK but still not where it should be as far as car count goes.  Anybody else seeing May car counts lower than expected?

Do you know what the national average is?  We have about 44 bays in a town of 5000 people.  The next town over has less than 20 and the population is 5000 also.

There are quite a few threads about pricing but I think it might be better to shift that discussion to value.  How do you add value for your customers?  For example, we have a very clean waiting room with coffee, wifi, nice music etc...  We also, answer the phone in the happiest way possible, we use tablets for inspections, we vacuum the front footwells for all oil changes, we have demo parts to help educate customers and we have a 3yr 36k warranty.  Recently I've been trying to dream up ways to add even more value so I can compete hard on what I deliver.  For example, I just added a 20 year master tech, I thought I could vacuum every car and leave a thank you note on the dash.

What are you doing to add value?  What additional value are you adding that I'm not doing?  I would love to borrow some ideas if you are willing to share.

Thanks Harry.  Just for reference for a smaller town we are in Minnesota 45 minutes north of Minneapolis.  We were at $98 18 months ago.  Now at $102.  Chevy dealer in town is $118 and Ford is 15 miles away at $135.  I'm thinking of going to $105.

Wheelingauto, can you comment on the response from customers to your price increase?  We've always made small increases successfully but we've never tried a larger jump.  However, it's harder and harder to find techs so I think this type of increase may be warranted soon.