AndersonAuto

Again, I apologize for my tone yesterday. Phones going up and down for hours and sitting at my computer while tech support does little to nothing about it made me more than a little irritable. I probably shouldn't have been on a forum of any kind. No, I don't intend to make money on the oil change. You're right, it's a very small GP on the coupon oil change, and no net. But that's not the point of the discount coupon. The point is to get people in my door, and to make sure that I'm the facility that takes care of ALL their automotive needs. I never want them to have a reason to go elsewhere. Not even for an oil change. Giving the new customer a list of needed service on their car when they come in for a coupon oil change can be a negative or a positive. It's all about setting their expectations. Consider these two scenarios: 1. The new customer comes in for an oil change, coupon in hand. You tell them you'll get right on it. You write the repair order and move the car in to your lube dude. You either have a competent lube dude do a good inspection, or have one of your techs do it. 30 minutes later, the RO makes it's way back to the service desk with a $1000 list of needed repairs. You bid the jobs, taking another 15 minutes, and present them to the customer. The customer is shocked, and feels like it was all a bait and switch. He's also impatient because he believes you should be done by now. The customer declines all repairs and you never see that customer again. 2. The new customer comes in for an oil change, coupon in hand. You tell them you'll get right on it, and "while your car is here, I'll have my technician look the car over and make sure everything else is OK for you." The customer replies "Thank you, that would be great." The next few pieces of scenario 2 plays out exactly like scenario 1, except that you've now set the expectation with the customer that you're going to inspect the vehicle, and present your findings to them. In other words, you have permission from the customer. Also, by using the words "... make sure everything else is OK for you" you've set yourself up as their assistant, not just someone looking for a sale. Now instead of the customer being irritated that it's taking so long, they know you're doing more than just the LOF. They all know there are things wrong with their car, and aren't surprised when you find them. It's getting permission to find them that makes all the difference. To conclude scenario 2, the customer approves 50-60% of the recommended repairs. You tell him the car will be done this afternoon, and offer him a ride home. Try using those exact words (I can't stress this enough) for a week or so, and do great inspections. I bet you'll change your mind about oil changes in general, and maybe see why I like giving them away for no net. Psychology is important, but it's as easy to make it work for you as against you.

It is one location. I bought my building in 2011 when the commercial real estate bust caught up to the residential bust. It was on sale to say the least. I was looking to build an 8 bay shop down the street from where I am now, but instead I got 21 bays for $100K less. We only use one side of the shop (11 bays) but we keep inching toward having to put lifts in the other side as well. We're spoiled with so much space, and all my guys know it. That said, I've seen some shop owners manage to pull off some incredible numbers from a tiny location. It takes better organization skills than I possess, but it's possible. The most efficient shops I've seen run one bay per tech. I have no idea how they manage to do it day in and day out.

Sorry guys if my responses have been a little on edge. Phones have been going up and down for the last 3 hours and tech support has been less than helpful.

But could you do $1500 a week at a proper GP? What if the salaried tech doesn't produce? I pay my master techs $32 a flag hour with absolutely no guarantee. That will likely go up shortly, but as a reference point that's where we are.

That spreadsheet is on the bookkeeper's computer and she's shut it down and gone for the day. I can tell you what I average, and that's about 30 new customers on the LOF coupon monthly. The spreadsheet doesn't break down new customer sales vs existing on the coupon, so I'd have to go through it. I do know that new customer average RO tends to be pretty good since we've not seen and inspected their car before, so there's more wrong with it. I really don't care much about new customer sales vs existing on the coupon. I care about how many people have been incentivized to come into my shop, and what marketing piece did the job. I don't know how many times I've heard people say that once you've marketed to someone and got them as a customer, then you can remove them from your marketing. They say once you've "built up your customer base" you can stop the marketing all together and save the money. I call BS on that. Do you know one single human being over the age of 5 who has never had a Coca Cola? Ever seen a Coke ad? I mean, they've built up their customer base haven't they? Why do you suppose they still spend so much as a dime one marketing, much less millions?

To your first point, I'm not losing money at 29.95. Unless you know my costs, you can't say whether I'm losing money or not. What differentiates me from anyone else offering the cheap oil change is the full inspection on the vehicle, and knowing that the service was done correctly by qualified technicians. Most of my oil changes are done by my lube dude (to keep costs down) but 4 of my 6 techs are ASE masters. You don't get that at Jiffy Lube. I also track all my new customers, and I track my existing customers. They're not cheap. My average RO last year was $428. That's every single repair order including oil changes, and even including $0 tickets. Everything. I agree with you that there's value in washing a customer's car after a big repair, and we do that on big jobs like engines and transmissions. I would do it more if I had a wash bay in house. But the premise is bringing in new customers. Potential new customers can't feel good about a car wash until after they've been to your shop. I agree that I've trained my customers to look for the discounted oil change. I'm happy about it too. They look for my LOF coupon, act on it, and spend $428 on average. So I make a very small profit on the LOF, and since the average car we see is 10 years old with 150K on the clock, we sell them an average of $400 in additional repairs at 62% GP. My sales have grown from 770K six years ago to 2 Million last year. How's your growth doing?

So far, exactly the same. Time will tell, but so far so good. February had just over 90 coupons and 33K in sales after discount. I'll take it. I have used the coupon price to "throttle" the response in the past. If I was too busy with oil change customers, I simply raised coupon price $5. But that was before I had fully staffed my shop, and I haven't had to do that in quite a while.

I just started with the full synthetic only oil changes in January, so I haven't tried other (higher) price points. But why would I? The point of a cheap oil change is to bring customers in the door. I want my offer to be so good that they can't possibly pass it up. For most people, oil is oil. They have almost no understanding of the difference between full synthetic and a blend. If my coupon oil change can be almost $20 less than Jiffy Lube, then I'm good. If the price is similar, even if I'm offering better oil, the average customer can't tell the difference. If my sale price is close to what an oil change "should" cost (in their mind) the automatic assumption is that I'm overpriced in general and would overcharge them (again, in their mind) for a brake job etc.

Are you able to maintain a good labor gross profit while paying $35 per flag hour? What's your labor GP target? I would be more leery of the guy wanting $1500 a week than the guy looking for flat rate. At least the guy wanting flat rate knows he can produce enough to make money. The guy wanting $1500 a week could be great, but more likely just has a high opinion of himself and wants to be taken care of whether he gets any work done or not.

Almost forgot the best part about my 29.95 full synthetic oil change. I used to run a 19.95 coupon oil change with a synthetic blend. Now with the full synthetic oil, I make $5 MORE per coupon oil change. I still don't make much, but I went from trading dollars to actually making a small profit. And I'm still $15 cheaper than the standard oil change at Jiffy Lube.

The oil is a dexos approved house brand from our oil vendor. My oil filters are also a house brand from Factory Motor Parts. If the customer wants anything else, or if it's a european car that needs a euro spec oil, it's going to cost a hell of a lot more. Of course diesels of any kind are not included. If the customer shows up with the coupon for euro or diesels, I kindly explain why I can't do that, but then discount their oil change by the amount of discount that the standard oil change people get. Never had a complaint. If the car is a run of the mill car that happens to have a weird and expensive filter, I'll generally eat it. I more than make up for it by being able to inspect their car and sell them needed services. I've had a few people ask about using a non-synthetic oil. We just explain the advantages of using a full synthetic, and that if they really want regular oil, we can get it for them at a higher cost. No one has asked to pay more money for worse oil.

I'm trying to figure out your aversion to offering a discount to bring in customers, but you are willing to spend money on other things that are much harder to track their effectiveness. I'd rather give a $10 discount on an oil change, be able to track what exactly brought the customer in, and what my ROI was on that offer, than spend $15 washing their car and not having a clue how effective it was. You're very fortunate to be staying busy while offering no discounts, and if that's working for you then it's a boost to your bottom line. But the original poster is looking for ways to market to a few specific groups, one can only assume that he's not happy with his current car count and sees those groups as an opportunity for growing his customer base. There are very few ways that I know of to rapidly pay for an advertising campaign than to offer a strong incentive to come to the shop. The items of value are nice and certainly enhance the customer experience once they're in your shop, but they don't drive people to act. If you're wondering what I consider a strong incentive, my current mailer coupon has a full synthetic oil change for $29.95. No trick or gimmick about it, just a full synthetic oil change for under 30 bucks. I don't even keep regular oil or a blend in the store. My ROI for that coupon is 680%. What's the ROI on a free car wash with every service or a longer warranty, and how do you track it?

I'm not saying that you shouldn't use a discount to attract new customers. I send 15,000 mailers a month with cheap oil changes and tiered discounts. Been sending them for almost 5 years straight and it's still working. My point was that he needs to think about how to best get the ad in their hands. Many traditional marketing methods don't work because you can't exactly mail to them. If you can't make them aware of your service, or a discount to incentivize them to come in, then all the discounts in the world won't matter.

Thanks!

You could do a discount for them, but more importantly, how are you marketing to them? It doesn't make any sense to offer a discount if they have no way to know about it. Generally, I shy away from giving discounts to specific groups like that. I have Garmin world HQ around the corner from me, and have a lot of customers from there including Garmin's company fleet. The only difference between them and people in the neighborhood that you might send coupons to, is how you get the coupons in their hands. That's going to come down to internet marketing mostly. Get your web provider to target searches to the hospital and university. Also check with the HR department at both. See if they'd like to include a "special offer" from you as a benefit. The offer could be exactly the same coupon as everyone else gets, but labelled differently. That way you don't have to set up anything special for them, but you can still track it easily.

One of my favorite sayings "If you lend someone $100 and never see them again, it was money well spent."

My thoughts on servicing the next gen cars? Everything breaks. Lefty loosey, Righty tighty. There was a time that guys were leery of servicing disc brakes. They would all obviously have to go back to the dealer. Then it was computer controls. Then fuel injection. Then flashing computers. And on and on. Bring it.

I'm fortunate enough to have a large enough operation to have checks and balances that most shops don't have. My bookkeeper is on top of the numbers constantly and cracks the whip if anything is off. If an advisor does anything that doesn't make sense she sees it in the morning and calls them on it. Then her and I audit books once a month. My biggest exposure is the bookkeeper, so going over the books monthly limits my exposure as much as possible. In an accounting class I took many years ago the instructor talked a bit about best practices. The one thing that stuck was that if someone wants to steal $100, three people should need to lose their job for it. It's hard to find three people who are willing to give up their job for $33 a piece. I'm not sure as independent repair shops we'll ever get to that point, but always keep it in mind whenever possible.

The coach actually has a shop in Colorado and they work nationwide.

Problem no. 1 is that you're managing off your feelings. What's your gross profit on parts? GP on labor? What's your break even? What's your car count? You're inspecting every car aren't you? How many jobs are your techs finding per RO? What's your average HPRO? What's your rent factor? What's the benchmark you should be aiming for on all of these numbers and many more? If you're managing by your feelings, what happens when you have 2 shops? Or 3? How do you manage those shops if you're not going to be present in each shop every day? I could go on and on, but the point is that if you don't have a good handle on your numbers it will be very difficult to be a profitable shop. I looked at your demographics, and your customers are not wealthy, but that doesn't do very much to change the cost of auto repair. It is what it is. If you're feeling uncomfortable about what you're charging, run the numbers and find out what you should be charging. The numbers don't have feelings.

Automotive coach. Good guys that own (still own) a very successful shop. They helped a lot with getting the sales and gross profit side in order. They helped me get a lot of things fixed, but I feel they neglected the expense side more than they should. They came on site, interviewed all the employees, went through all my processes etc. After that it was strictly over the phone and reporting numbers to them. They were worth the money, and I'm still friends with them. Knowing what I know now, I probably could have got more bang for the buck, but it was the right fit for me at the time.

I let a tech go that was a consistent 65 hour a week producer. That certainly hurt. But.... He threw temper tantrums. The other techs hated working with him. His diagnostics sucked. He always had an excuse for why his diag was wrong, or why it wasn't his fault. The shop is better without him.

How much would it be worth or how much would I pay?? The knowledge would be worth somewhere around a cool million. How much would I pay? Obviously nothing because it took me 12 years to actually hire a coach of any kind. When I finally pulled the trigger, I paid $2000 a month on a 2 year contract. Spendy for sure, but I made a lot more than I paid.

It's very simple. Just give the payroll company the number of hours the tech is to be paid for, and make sure they understand the tech doesn't get overtime. That's just about it. If you pay flat rate only with no guarantee like I do, then the tech isn't eligible for overtime. It makes life easy both for payroll and legally.

Get some training that covers both the sales side and the expense side. Maximize sales, minimize expenses. I belong to a 20 group and it's been great. I would caution you about expanding until you've figured out how to be profitable in your current situation. There's no reason to go from being a very busy but unprofitable 5 bay shop to being a very busy but unprofitable 10 bay shop, or worse, 2 unprofitable shops. Funny story about being unprofitable. For many years I was running by the skin of my teeth. My general manager went to training a little more than a week ago on how to read your financials in an automotive business. The trainer included some samples of P&L and balance sheets in the training materials. He recognized the balance sheet as one of mine from back in 2013. The trainer told the class that the shop in the example was probably not losing money, but was dangerously close to getting into trouble due to lack of cash. He was right of course. Since then I've gone from barely scraping by month to month to having 250K in my checking account and 100K in an investment account, all due to knowing what benchmarks I need to hit not only on the income side, but on the expense side.