Joe Marconi

I hate extended warranties. Don’t misunderstand me, we don’t refuse the work, but there’s always an issue and the education process for the customer to explain the “REAL” warranty is challenging, at best.

We diagnosed a Honda Odyssey with bad head gaskets. The car came in overheating and the oil looked like chocolate milk. We also found 2 head bolts finger tight and the coolant by-passing into the cylinder where the bolts were found loose. No brainer, right??? WELLLLL, hold on, this car has an extended warranty and the customer wants to get her money’s worth. After all,” EVERYTHING IS COVERED”, that’s what the salesman said who sold her the policy.

Well after days of numerous phone calls and a visit from the adjuster, the insurance company agrees to pay half of our estimated price, will not pay the machine shop labor to pressure test and mill the heads, will not pay for fluids and took days to give us an authorization number.

Now I am left with a distraught customer who has lost faith in business in general. She says she not angry with us, but I wonder?

Thoughts?

We have a SnapOn Verus & an older version of Vantage(use it mostly for multimeter function), & a basic OBD2 scan tool. Traded in our Modis to get the Verus. The thing about SnapOn is they never have had any support for Volvo or Saab. We do work on a few of them but not enough to buy a specialized tool just for them.

The thing I like best about the Verus is that it's a combination scanner/lab scope/ignition analyzer and laptop computer. Can store all information for each car we scan in it. Pretty good tool.

We have the Snap On Solis, would you say the Versus is a step up from the Solis?

Here is another great article on profitability by our own Joe Marconi:

 

TB Service Zone Newsletter

Thanks xrac, I think I may make you my PR agent...

It amazing the level of appreciation shop owners have for their employees and the willingness to tighten their belts also during tough times. This is why I have the utmost respect for my fellow shop owners.

Joe:

 

Sorry to take so long to reply. The plans I am referring to pay the tech a basic wage for the hours they are at work, and then pay a progressive incentive based on production. The lows of flat rate are higher, and the highs of flat rate are lower. But, the system is still significantly tied to incentive enough to make good production critical to excellent pay. Similar systems can be created for advisors and parts managers.

 

Hope this helps,

This is basicly just like my plan. Also, I agree, you need tie it around an incentive based program.

Joe,

 

That is the way the dealership that I worked at was and that is the main reason that I left. When the work was there, the required 45 hr week wasn't bad when you were turning 50-75 hrs a week. I turned as many as 130 hrs one week (in six days) and set the shop record for the most hours turned in one week. That was a great plan when there was work but like you said, if there wasn't any work, there was no base pay so it wasn't uncommon to turn 30-40 and still have to be there the full week and a sat every 3 weeks. I always wondered how "legal" it was to require us to work hours that we were not paid for. Since I am the only tech here now I pay myself flat rate because its the easiest for me to figure for now. When I get big enough to need more help, I will have to change that.

My point exactly, well said!

I can't tell my people to put in a 50 hour week and only pay them for 20. I understand the principle of rewarding hard work. But, hard work with no pay makes me wonder. And like you said; is it legal?

Many shop owners don’t agree with me but I pay a base wage with a performance bonus. The base pay is usually less than what the tech wants to make, this makes them a little hungry. In good times we all make money, in hard times we tighten our belts a little. But how can you ask a tech to take it on the chin in bad times and then ask him to go the extra mile when it’s busy. It’s the reason why I left the dealer in 1980.

If we are ever going to raise the level and image of the auto business we need to find ways to pay a decent wage in order to attract the right people.

Well it seems like I will be loosing Mark to Dad & Dad's shop, his father made him an offer he can't refuse. He's wanting to retire and leave the shop to him once they get things back up and running the way things used to be. I can't complain though he's getting what he deserves first and foremost. I honestly hope his Dad isn't feeding him a line of horse manure, and told him he'd have his position back at any time if need be.

 

I did just hire the 19 year old college student, it will be nice to actually make sure through guidance there will be one more properly trained technician entering our field, whether he stays here, or goes onto bigger and better things in the future.

 

Although at this point it seems likely I will still continue looking for a more seasoned technician to fill Mark's shoes. I've been going through multiple emails, and may have one I will be following up with here soon.

 

And Joe, your right, and since being here on the forum and learning alot just in the past couple weeks. I'm a little scared of stepping out of the shop entirely at this point, but will keep that as a focus point for the future.

I thought there was more to Mark's story. Take care of the 19 year old and, as you said, guide him and plan out his career. No one's knows the future, but you always need to have a plan.

Keep focused and always look forward. ASO (AutoShopOwner) will be there helping you through the process.

The phone was actually sitting where he always lets it set, on the alignment machine, we had some "sketchy customers" in the shop arguing with Joe the owner of the wheel and tire shop up front about the correct size tire for their 22" chrome wheels that go on their buick lesabre.

 

I believe depending on the above mentioned 19 year old college students demeanor, I may like to bring him in. Although I can only afford to at this point either pay him flat rate part time according to his school schedule, or cringing at the idea of paying him hourly. But at this point I'm unsure of weather this would be a wise move, I know that bringing in a more experienced tech I could schedule in more work, (if its available) and I have a feeling it would be. Regardless I feel that expanding my tech base would be a wise move, but whether timing is right at this time I am unsure. I'm thinking at this point I may not be loosing Mark, but I definately feel there is room for one more. Like I've read on this forum, and in which I'm trying to apply,... Not overworking myself, but focusing more so on business growth. I should know for sure tomorrow whether Mark will still be a part of my team. But until then I really feel having myself and two techs is the direction the company should go....

Keep us posted about Mark. And, please work hard on running the business. This will put you in a better position for long term growth. You can be active, but have a plan. Without a plan, it's only a dream. Dreams are nice, goals deliver results.

I dislike working on cars for people I know who expect favors. I dislike working on cars for preachers who are always looking for a deals. Joe is correct. The thinking I am your friend, you should give me a deal is not a friends thinking. A friend will think I am going to bring my business to you and you charge me a fair price because I want you to succeed. My guys are always complaining because a friend or family member wants them to do a 4 hour repair on their day off and pay them with a 6 pack of beer.

Well Said!!!

As well I'll agree, I to dislike flat rate pay. BUT, at this point in my business, it's my only choice, and with as many shops around that do the same, I'm okay with the fact, but not entirely. I would love to be able to do more for my guy, and sooner or later guys. I never once worked flat rate, I refused. So here I am paying my tech flat rate, and your right it has its ups and downs. I would be interested in atleast getting an idea of how you set up the hourly rate plus bonus based on performance. I may be to small at this point in time, but something well worth consideration for the future. I want to be able to reward good help, and offer incentives as well in the future.

Here’s my problem with flat rate: I speak to many techs that put in 45 hour weeks, only to get paid for 20, because the shop does not have the work to keep the tech busy. However, the shop owner requires that the tech remain in facility and performs odd jobs like clean up, building repairs, working on tow trucks, company vehicles, the owner’s boat, the owner’s classic car and panting the walls.

How many jobs do you know of that mandates the worker to put in 45 hours but pays them for 20?

I’m not saying that this is all shops. And, many times the tech is not productive. But, if I tell a tech that he needs to work a certain amount of hours, he needs to be compensated for those hours.

For shops that are constantly busy all year long with tons of work and the “opportunity” is always there for the tech to make money, then in that case flat rate works.

A funny story on parts mark up from today. 99 K1500 4X4, my best friend from high schools truck, so he qualifies for my friends and family rate. Needs RF wheel bearing my cost apx 65.00, walk in price at Autozone b/c I did the research for him 89.99 So I quote him 75.00 for the part, and 1.7 hours labor at 30.00 an hour (family rate).

 

He tells me, " I can get the part through car quest on our shop account at work, and pay for it in small payments by payroll deduction at his fathers pallet building shop, so how much for just the labor?"

 

I tell him, "Your my best friend Jeff, do what you want to do. But just remember that my part has a warranty with labor coverage, and I will get you the right part, if you bring me the wrong part, and you will pay my price on the right part no if ands, or buts about it. But since you are supplying your own part, and I'm willing to help you out since your my best friend you'll be paying 40.00 an hour due to supplying your own part, and you better hope its right, because the labor rate won't change when I have to order your correct part, and you tie up my rack longer than the allotted 1.7 hours it books for due to a wrong part!"

 

I reiterate once again, " If your part fails within warranty time, you'll pay me twice for labor. With my part you won't, are you sure you want to go this route?"

 

He tells me, "I've got no choice, I've got to save a buck right now."

This is a friend?

Let me tell my story. When I started my business in 1980 I had tons of friends. I gave them all super discounts because I thought they were like family. I thought they were special. Well, after a while I realized most of them wanted too much from me. They were killing my business and tying up too much of my time. When I changed my policy and told them that I can give them a 10% discount across the board, and that I would supply ALL PARTS, I lost most of my friends.

The bottom line is: if they truly are like family they don’t want you to fail and will support you business, not drive it into the ground. You are in business to turn a profit, you can’t please everyone. Look out for yourself and take of the people that appreciate what you do and are willing to pay what you deserve.

I'm getting ready to loose my only technician other than my self,... Since the begining of February to current date we've only managed to bill out 56 hours @ 55.00 an hour, I pay Mark my technician about 13.00 a flat rate hour. Although not included we've changed probably 80 tires as well which I make 7.00 ea and pay a flat rate of 3.50 each tire. The monthly shop expenses are roughly 860.00 a month. And as well still needing to buy more equipment s/a a 2 post lift, and a decent code scanner, So I'm needing about 5 thousand dollars, and am only able to pay myself a minimum share to get to and from the shop everyday. I'm extremely leary of hiring someone else, a) not having enough work for them, concerned w/ how much to pay a tech whom I don't know. As well I've know Mark my current full time technician for about 20 years, and know I can trust him, and would like for him to eventually be able to bounce from writing ro's and wrenching, while I bring on an additional technician to take his posistion. He's getting ready to possibly go back to my dad and his dad's old shop that they just reopened. Biggest issues was that his cell phone got stolen from the shop Saturday, and whom I rent space from likes to have customers in the back while we're working on there vehicles i.e. putting custom wheels and tires on there car. I have pressed the issue with Joe the quote un quote owner of the building whom I rent space from about keeping customers up front. And told him I may be loosing him due to the fact of his phone getting stolen.

 

I am wondering what is a good starting rate to pay a new technician whether they are fresh out of school or 20 years experience. With someone who proves themselves and can turn out good work quickly and up sell additional work I have no issue paying them what they're worth. Any ideas on a resolve to hopefully keep Mark, resolve his stolen phone issue, and a determining factor of bringing on another technician at this time to increase productivity in the shop. All on the same note being able to maintain profitability, and happy employees?

 

I've only been open for business for 9 months, and it seems that we are growing steadily every month.

The issue with the stolen phone is a sticky one. So let me understand; your tech is going to leave you because someone stole his phone? That does not seem right. Not to be pushy, but are there any other issues besides that? How did it get stolen? Where was the phone? If this tech is really that important to you, buy him a new phone and make sure it’s secured from now on. Also, find out what the heck is going on in the other shop. Who would steal a phone?

As far as paying a tech, the range is wide. In my area B techs make anywhere from $16 to$ 22 (without bonus pay) and an A techs can make much more. It depends on what level you are looking for and what you can afford.

Yes, I would never ever call done ... done... I almost always tell the customer that .... this is what i found... hopefully you won't have another problem, but there are so many things that can cause that check engine light to come on. To bad there isn't a check engine light for every different problem but your dash would look like a cockpit... and it would be to distracting to drive on the roads. That usually makes them feel better if the light comes back on after I'm done with the repairs that I originaly found. try that and see if it helps.

Gonzo

Yes, I agree 100%. We have all been down this road. The following note is explained and printed on every invoice for all check engine light problems and other diagnostic work:

"Note: Our diagnosis has identified a problem with you vehicle's on-board computer system. Due to your vehicle's computer program design, some tests may have been blocked as a result of the fault. After the repair has been made it will be necessary to run your vehicle for a few days to insure the check engine light does not return. Because the check engine light may return,more testing and analysis fees may be needed".

As gonzo said, this does help if the light should return or additional problems ocurr.

I dislike lose leaders and super low discounts. It attracts a bottom basement type customer and the shops that use it usally do a bait and switch, hard upsell type approach. I like to do what you do which is offer a value package. We do however, use a competitive barke promotion that is low enough to attract interest but not too low to not be profitable. We use it to attrack new customers. We feel that the majority will keep returning once they have dealt with us.

Excactly, market your business to create return customers. That is the purpose of marketing. Also, like I always say, don't try to be everything to everybody.

Can you tell me more about your brake promo?

We always charge more money when additional labor is required. We use Specialty Products (Oriellys carries them in our area) and their catalog has a fairly accurate labor guideline for every product the sell. When asked to cost for alignment our answer is always " Our base alignment is XX.XX which allows us to make corrections to all alignment angles that were made adjustable from the factory. If your vehicle requires kits,cams or shims to fine tune the alignment, those will be extra".

This usually opens new dialogue about what a kit, cam or shim does and allows myself or my adviser to put on our educator cap and explain why these items are needed and what benefit the client can expect for his or her money.

I then close with "tires are getting more expensive these days, spending a few extra dollars today, if needed, to extend tire life just makes good sense to me, wouldn't you agree"?

Its their car. Don't decide the repair for them. You didn't buy it, build it or break it. Offer the client the option to repair it correctly and watch how many agree with you. Can you do that? Sure, Is it easy? Not always but we seem to be pretty successful at it anyway. Give it a try, you might surprise yourself.

I agree. Always give options, but guide your customer to make the right choice. I don't give my alignments away. Why? Because I won't just set the toe and let it go.

By the way: I also use the phrase; I didn't buy it, build it ot break it....the three "B's" of the auto repair business.

Welcome to the site. Good to have you here. I look forward to getting to learn from you.

Welcome to the team, looking forward to share ideas and learn from each other.

This is a good but "depressing" article.

 

http://scragged.com/articles/the-business-of-america-is-government.aspx

Wow, great article. I agree, depressing. But don’t give up. I believe that the tied will turn soon. I can’t believe that the American people are that stupid. There are however, fooled by the political climate.

I still have faith the traditional small business that made this country great. We hold all the cards, we just to know it.

Good point regarding the quick ones, didn't consider that. Any one else out there with more thoughts!!

I charge more for any alignment that requires more labor. For example, if I need to install a ball joint shim on a Ford truck, I will charge accordingly. If I need to drill out the rivets on an upper strut mount plate under the hood on a Ford, I will charge more.

I also have different prices for 2 wheel, 4 wheel, light truck and Hi-end cars such as Mercedes, Jaguar, BMW. ETC

You can buy the generic tool for around $220 but it won't have any of the advanced "enhanced" features as they call them. If you look on AutoEnginuity's site it will explain the different options that they offer. I decided to buy it straight from them instead of from someone on ebay and since mine has had problems I am glad I bought it straight from them. My machine works well for domestic applications but for some reason I have not been able to make it work on any Asian cars at all. I have been dealing with them for about a month now and finally sent my adapter back to them because I was doing everything right. They figure I have a hardware problem. I will let you know more when I get it working properly.

Please keep us posted!

It’s truly amazing how some people view our industry. What other business allows this to happen. I never hear my plumber, oil burner service man or carpenter complain about people wanting to install their own parts.

 

Is this a “left over” vestige of times long ago? Or are there still a lot of shops out there that are so desperate or ignorant that they think they need to take in every type of customer?

I believe the only way to become successful is to slowly work yourself out of the bays. It’s hard for some, I know it; it was very hard for me. But when I was tied up all day long to the day to day operations, I did not grow. I reached burnout in my 30’s. I was a slave to my own business. I did not realize that I was not a business man but merely owned a job.

When I finally realized that I needed to run my company and not just work in it, my company began to grow. Find the best techs; find ways to increase shop production and provide the best service you possibly can. Eventually I hired enough people to take care of every task and operation my company performs. This freed me up to do what I need to do…and that’s to continue to grow my company and look for other business opportunities.

I may have switched gears a little on the topic, but I feel that this needed to be said.

You are absolutely correct as to how the customer often has the wrong part. When the consumer goes into AutoZone on a weekday evening or weekend they do not realize that the manager isn't there or any commercial sales account people. There is a $7.00-$8.00 person behind the counter that doesn't know anymore about cars than they do. The combination of the consumer not knowing even basic information about their car (is it a 3.0, 3.3, or 3.8 6-cylinder) with a counterperson who is not knowledge results in the wrong part at least 40% of the time. Often I get someone wanting me to install their $50 water pump on a $400 timing belt/water pump job or their $40 heater core on a $600 heater core job. I always tell them that we do not installed customer supplied parts and that who ever did this job they should let them supply the part so they can have a warranty on the whole job. Some get it and some don't. Here is someone with a liftetime warranty on a $50 part and no warranty for the several hundred dollars of labor.

 

The general public also doesn't get the fact that our shops buy parts at a discount to what they pay. Recently I quoted a fuel pump job at around $600 parts and labor. From the guy's wife I found out that he eventually changed the fuel pump himself but wound up telling her he didn't really think he saved anything. I found out that he paid more than $125 more than we would have paid for the fuel pump and it took him a whole day to get it done. At least he wasn't the guy who paid to have his fuel pump installed only to find out the problem was not the fuel pump but the fuel pump regulator. A job that should have cost less than $300 parts, labor, and diagnosis wound up costing him over $850 because he was trying to save a buck.

It’s truly amazing how some people view our industry. What other business allows this to happen. I never hear my plumber, oil burner service man or carpenter complain about people wanting to install their own parts.

Is this a “left over” vestige of times long ago? Or are there still a lot of shops out there that are so desperate or ignorant that they think they need to take in every type of customer?

Here are sales ideas that may be worth reading:

 

Sales Ideas...

Thanks for the tip. That’s a lot of great info. One thing I'm not too sure about and that's discounting. How do feel about discounting in good or bad times? I prefer building packages that give the customer value, rather than a discount. For example, we sell a “Seasonal Maintenance Package” for $69.95, which includes: LOF, tire rotation(with the balance), BG engine and BG fuel additive, top off fluids and a 30 point inspection. We sell a ton of these and promote them 4 times a year.

Thoughts?

I strongly suggest that you read the E Myth. It seems like you run your operation as a technician and not as a business man. You should calculate for yourself what profit you want to make and what your goals are. With a 20% parts margin you will end up like many shop owners, you will have a business that is only worth the equipment when you are ready to retire.

GREAT suggestion, great advise, I have the read the E Myth twice and actually took the E Myth Master Course. It helped me understand that we need to build a business that runs on its own and one that can grow with the right people in place and by creating systems and polices.

The beauty of the E Myth is that it applies to all types of business. When the owner of the shop is nothing more than the hub of the company and everything is dependent on him/her, the business will suffer.

The bottom line is that shop owners need to be more than just technicians tied down to the day to day operations. Remember, just because someone is a great chef, does not mean he knows how to run a restaurant. The same holds true for mechanics.

Twest6792, welcome to the forum. Yes, Joe, we would all be more interested in how you track or manage productivity.

It’s a bit involved but I will do my best to explain.

First, all newly hired techs are told that we track productivity and for the first month or so we keep carefully track of their productivity and efficiency. This is done to find what they are capable of doing. In other words if a tech works a 40 hour week and is producing an average of 35 hours per week, we make that number his minimum level of expectation. The goal is to get this tech producing 40plus hours in a 40 hour work week.

This strategy works because it gets the tech to compete against himself, rather than worrying about what other techs are doing.

After about 4 to 6 weeks we put the tech on commissions based bonus. The tech will receive a bonus when the tech books any over his minimum level. So, if a tech is rated at 35 hours and he books 40, he will get a 5 hour bonus (based on his hourly rate) for that week.

Every month the tech will be bumped up 5 percentage points. After that A techs must achieve 110% efficiency and B techs must achieve 100%. To be eligible for bonus the tech must work a minimum of 40 hours.

All comebacks that are clearly the techs fault will come off their bonus.

If a tech cannot achieve these levels, the tech needs to find another job.

Please note; if the shop has little work due to a snow storm or other reason, we do not count those hours.

I hope this explains my system. I tried to trim it down to make it easy to understand.

Please let me know if you need anything clarified.

Greetings--

 

I'd like to respectfully put a few ideas out on the table - for your consideration. I believe your assertions regarding how you manage your business would be familiar to many shop owners, and other small-business people – and many would strongly agree with you. HOWEVER... following through on some of your assertions in the long run can put your business at risk. Having done a lot of work in this area - I have a lot to say. I've held off here on a longer response--but the key ideas I'd challenge small business owners to answer for their business are:

 

1. How do you create profitable growth in your business (because growth “at any cost” will create a “race to the bottom” for you and your competitors)?
   
2. What differentiates your business in the eyes of your customers – what value do they get from your business that they’re willing to pay for? (HINT: The answer is not “lowest price”. Customers who seek the lowest price are loyal to … the lowest price. They’re not loyal to your business).
   
3. How do you find more customers like your MOST DESIRABLE customers (the ones who come back over and over again, the ones from whom you make the most money; and/ or the ones who refer others to you…)?
   
4. How do you change your business cost structure to operate effectively in line with “prices the market will bear” – AND to deliver the value that the MOST DESIRABLE customers find in your business?
   
5. What is the lifetime value of each of your customers – and how do you extend/ add to that lifetime value your business can capture from your MOST DESIRABLE customers?
   

 

If you'd like to hear/ read more: please see our pageson small business growth & development... or drop me an email offline: [email protected]

Evan, first, welcome to the forum! It’s about time you joined in.

For those of you who don’t know Evan, he was very instrumental in helping me during my expansion project working on getting my focus directed in the right direction with respect with understanding customer demographics, marketing to “My Customer”, branding and understand value proposition.

As usual, you clarified princely what needed to be said, nice job.

Question; do you think that some shop owners resort to "desperation marketing" when the see their bays empty and perceive that other shops may be doing better?