Transmission Repair

I, too, used to extend credit in my early transmission repair career and it didn't work for me. 30 years, 3 locations, and 2 states later, I learned a new method. I bought an expensive location in an affluent neighborhood with high visibility and traffic count. I also tried to specialize in 10-year-old and newer vehicles. I never had a payment problem at that location. The customer either had a debit or credit card available. Would we refuse to work on older vehicles? No, I just didn't turn on the sales charm and sometimes asked for a parts deposit. I never got beat out of money at that location. Was it a cheap solution? No, not at all. Between the mortgage and PPC advertising online of $13K/mo. it was (to me) the cost of admission to a hassle-free financial situation.

A great piece was written by Dennis Madden of ATRA. (Automatic Transmission Rebuilders Association) The Beatings Will Continue...

I don't know what to tell you, Gerald, each shop is different. I can tell you how I handled it. I was a transmission builder long before I became a transmission shop owner so my method of handling comebacks is different. Before I start, let me tell you this. I worked at a lot of transmission shops that were franchises, independents, and even a dealership. Something pervasive to me was most of them couldn't keep me busy all the time. I remember distinctly the week between Christmas and New Year's of 1981 when I was at a Chevrolet dealer; I took home $81 and I'll never forget it. I felt they were lacking in marketing, sales, or both. When I became a transmission owner, that all changed. I didn't pay flat rate, but by the clock hour. If we had a comeback or a no-go that failed the final road test, they were paid again. I don't care if it was a defective or mismatched part or even the technician's mistake I paid them. They could always depend on getting at least 40 hours a week. Because few shops do that, the techs would go the extra mile. They would sometimes beat themselves up for mistakes or the other techs would think less of them. Peer pressure ended up being a great equalizer. The poor techs I would let go. The way I see it, marketing and sales were my job as a shop owner. The very first year I was in business, I bought a full-page Yellow Page ad. (back in the day) I later transitioned that to online Pay-Per-Click advertising. I spent A LOT on marketing and a lesser amount on comebacks, but I still always paid. It was incumbent on me to structure our prices to cover those costs. We were the highest-priced transmission shop in the area; equal or higher than the dealer. Transmissions are a transaction-based business, not relationship-based like most shops. So be careful of your pricing structure. Our business was a lot like the collision business; one and done. Move on to the next job. A repeat customer to us was either a comeback or somebody with multiple vehicles and really bad luck. 🙂 So, take everything I've said with a grain of salt. It worked for me very well over the years. I did a little bit of shop coaching/managing after I retired and the almost universal problem I saw the most was undercharging for their services. In other words, giving work away. The other problem I saw was after my engagement was over, that shop would go right back to doing the same thing as before, forgetting everything I had done and taught them. I guess old habits are hard to break. When the shops starve, the techs starve. Trickle-down economics. I hope and pray you work your way out of the comeback issues.

As with all things in this industry, with time, effort, and gaining experience, we get better at it. I ran across a great marketing post in the Parts Tech blog about marketing. It gives a step-by-step recipe for developing a marketing program from scratch for beginners. Here's the article---> https://partstech.com/blog/auto-repair-shop-marketing/

Even though I like the Electric Vehicle (EV) future in theory, putting it into practice is going to be difficult. In my view, there are more cons than pros at the current time. However, given the time, the pros will outweigh the cons. The whole reason there are more negatives than positives at the current time revolves around politicians thinking the EV conversion is going to be simple, like throwing a switch. Nothing could be further from the truth. Battery technology, sourcing raw materials, gearing up assembly lines, and retraining assembly line workers are all challenges to be dealt with long before EVs can be sold en masse. Tesla is currently leading the pack when it comes to EV adoption, although they still have their challenges. In my view, politicians are trying to ram EV adoption down our collective throats way ahead of what’s possible. Thank goodness they are starting to get their wits about them and the U.S. House of Representatives has recently voted against the proposed federal EV mandate. (See: Ratchet & Wrench article) The transition to EVs is going to be long, slow, and hard, unlike what the Biden administration currently thinks. Furthermore, I think the typical automotive shop that makes heavy investments in EV diagnosis and repair (other than routine maintenance) is quite a bit premature. Shops are already equipped and trained for routine maintenance. Leaving the heavy diagnosis and repairs to the places that sell the EVs in the first place, is my vote. I do believe that, over time, EV adoption will take place. However, it won’t replace conventional ICE-powered vehicles. ICE-powered vehicles will always be sold, albeit in lesser quantity. That will never go away. What’s your view on the ICE-to-EV adoption model? For, against, or indifferent? No matter the outcome, I feel very strongly our industry will adapt and never go away.

Thank you, Joe. The link starts playing about 7 minutes into the video for the sake of brevity. Members can also start the video from the beginning if they are interested in viewing the whole video.

I've been a transmission repair specialist for all of my 40-year career. At first, it was because I loved the challenge of automatic transmissions. As time went on, I learned I was truly blessed because I haphazardly learned that specialization was the key as well. Lucky me. I don't know of a tech that can meet the time for any G/R time the first time they do a job. For that reason, I never went into G/R because there were too many 1-off and first-time repairs. However, I was tempted to go into G/R when transmission repairs got slow. I agree that specialization is the key, as well as the future, of G/R. I predict the majority of the shops will do what they've always done when technology changes; they will adapt. After all, didn't G/R originally adapt from the blacksmith shops to cars? Below is a recent CNBC news video that puts forward an idea of what the automotive industry can expect over the next 11 years... https://youtu.be/P-NF-7miGLo?t=418

The nearest transmission shop was 7 miles away.

The term "Loaner Car" implies the word "free". Here's a link to a used car rental company's rental agreement that you could modify and make it your own. https://www.rentawreck.com/rental-requirements.htm

UPDATE: Altman has returned to OpenAI. This speaks volumes about leadership. 2:30

Some business models work well with call tracking while other business models don't. The transmission repair and collision business are two business models that work particularly well with call tracking. Using call tracking, I was able to whittle down my keyword list from 1,400 keywords to only 35 keywords. It worked particularly well for my transmission repair shop.

Here’s what’s happened in less than a week: OpenAI's board fired their CEO, Robert Altman, then Altman was hired by Microsoft, and over 500 employees of the 700-employe workforce sent the OpenAI’s board members a letter to hire Altman back, all board members are to resign -OR- the 500+ employee workforce will resign and go to work for Altman at Microsoft. Microsoft's CEO Satya Nadella said late Sunday that the company was hiring Altman and Greg Brockman, OpenAI’s president who resigned in protest after Altman was ousted , and was opening its doors to more joining from the company behind viral chatbot ChatGPT. That’s a lot to happen in less than a week. It becomes obvious that Altman had a close relationship with the workforce. The workforce believes in and has respect for Altman. The best automotive repair shops are run this very same way. Let this be a lesson for all. The moral of the story is no matter how big your shop is, it’s never too big to develop a close relationship with all the employees. (3:00)

If that's the case, first-year revenue is going to be an educated guess, at best. No fortune tellers that I know of. Your guess will be as good as mine.

Thanks for the detailed explanation. The first problem I noticed was the long wait time. That's not a "busy-ness" problem, that's a production problem. My first suggestion is to hire more technicians. That will be a self-fulfilling prophecy. It will increase repair business sales. Yes, buying your own building is best, but remember the majority of your profits come from fixed operations (parts, service) and not new car sales. Focus on those 2 revenue streams. Instead of making up numbers, I would forecast future sales based on previous sales and add what you feel is appropriate for the number/capabilities of your techs. Most importantly, don't estimate or bill by the book unless it's warranty work. "The book" is grossly underestimating work creating a situation to where you end up under-paying techs. Make sure you get all the adds when it comes to labor. As the saying goes, "Work ON your business, not IN your business" Tom Peters calls it MBWA or "management by wandering around." I know you feel you want to be productive, but you will be less productive by being a hands-on owner. Lastly, hire a new/used car sales manager. You don't need the headache. Delegate. Focus on fixed operations. Larry Bloodworth [email protected] (801) 885-2227

The learning curve was long and slow. I did a lot of research figuring out how the bidding system worked in AdWords. They were using the Dutch auction, aka 2nd bid, method. Only if I was the top bidder on a particular keyword, I would win the auction but pay only a penny more than the second-highest bidder. It took me a couple of years to finally learn that. I originally started bidding cheap with about 1500 keywords. Over time, I learned that I only needed about 35 keywords. Then I learned the power of negative keywords. I put leaks, noises, and vibrations in as negative keywords, basically any minor work. I also came to learn that no matter how much I wanted to spend, there were only about 1,500 clicks per week to be had in my market area. The last 3 years we had before I sold our shop, I was spending about $1K/wk. on ad spend. We kind of grew into an equilibrium of that much in ad spend with gross revenue of our small, 3K sq. ft. shop of $1.2M-$1.3M/yr. I only used Google AdWords for the last 5 years we were in business. We started out with $25/wk. ad spend and in 2 years we maxed out at $1K/wk. ad spend. To answer your question, it took 2 years to get the results I wanted. Google AdWords has changed a lot since I retired. As I understand it, you can no longer have different bid amounts for different keywords. Instead, you set up a weekly budget amount and AdWords does the rest. My top #1 keyword was transmission repair. I hope this can help others.

Being a transmissions-only repair shop, I used Google AdWords to "throttle my business". Normally, I would target AdWords for a 5-mile radius around our shop. If things got slow, I would expand the radius. Conversely, if we started scheduling something like 2 weeks out, I would actually pause my AdWords campaigns altogether. The furthest out I've ever done is a 100-mile radius. Because of our geographical location in the SLC area of Utah, we would then start getting out-of-state jobs from Nevada, Idaho, and Wyoming. Over time, I eventually got good at throttling our business to where we usually had a steady, controllable volume of work. I learned it took about 3 clicks to get an appointment and clicks were averaging about $12/ea. The cost of customer acquisition ended up being about $36 to $40 each. Not bad considering the nature of big-ticket transmission repair. It worked well for us. I learned how to work on my business and not in my business as we did all our own website and AdWords campaigns. Our AdWords campaigns were definitely not like this:

I agree.

Call tracking can be had for as little as $2 per line, per month. You use different numbers for Yelp, AdWords, Google search, etc. All the numbers are forwarded to your main line. You get a report on demand whenever you need to see which marketing/advertising works, and most importantly, which ones don't work. If you don't have a way to know where the phone calls are coming from, you will have no idea. I used Convirza.com and had 50 numbers to get popular search term data. Take a look at Convirza Video. Here's a sample of the data I got for just one day of calls. https://docs.google.com/spreadsheets/d/0B6naMtwBgwRKUlhUbnRJQzlTUzA/edit?usp=sharing&ouid=116584774469407774432&resourcekey=0-ZaeM6Cd4yWsV_dtIRyZUEw&rtpof=true&sd=true Be sure to check out https://www.convirza.com/price/ for a form to fill out to get the latest pricing information.

Speaking of advertising dollars, are you using tracking numbers for different marketing/advertising efforts?

I didn't use the phrase "loaner car". I had the customer sign a car rental agreement. It worked well for me. If the job turned out to be something major, I had the option to waive the car rental charge. We were a transmission shop, with no general repair. Just transmissions, clutches, transfer cases, and differential work. I sold our shop to a nearby competitor in 2015 and sold the real estate to a plumber in 2020. I often miss the good old days. 🙂

Free? You've got to be kidding. You're offering a convenience service and that has value. What value should be determined by you, even if it is only a token fee.

I would offer a pickup & delivery service instead of working in the customer's driveway. An hour's shop time would be an appropriate fee for both if they are within a 5-mile radius of your shop. More time for further out.

Sounds like frustration to me. Where is the tech's slice of the pie? Perhaps a mass exodus in the making?

As I understand it, if a flat rate pay system works out to be less than minimum wage, THAT is illegal in all 50 states because it's a federal law. I completely understand, Joe.