Wheelingauto

58 minutes ago, AndersonAuto said:

I can't begin to tell you how much better my life is than it was 6 years ago.

6 years ago I had been in business almost 15 years. I was very much in the same school of thought as you are regarding oil changes and discounts. The shop was working for me well enough to be able to buy my new building (I did own my old building too). With the new building came a lot of expenses, and I had a lot of bays I needed to fill FAST. I tried a few things that were not too successful. I was growing, but not nearly fast enough. Money got tight really fast. A year after moving into my new building, I bit the bullet and actually went into a little debt to launch my mailer campaign. I joined my 20 group 3 months later, and my facilitator tried to get me to lease a portion of my building to reduce my rent factor, and told me to cut down on the marketing expense. I said no, and no. He also said I should consider removing current customers from my mailer list. Again, no. I got bitched at constantly because my expenses were too high. I don't think my facilitator or other members could see how I was going to become profitable. I told them I was going to sell my way out of it. Impossible they said. Challenge accepted.

My biggest regret in business is not marketing my old location as much as I'm marketing now. It was something I thought I couldn't afford. Now I see that I can't afford not to. For every dollar I spend on my mailers, which is my lowest ROI piece, my customers give me $6.80. I'll take that all day long, and I'm not going to judge the people handing me money as being "cheap" for using a coupon.

Are you in RLO?

13 hours ago, AndersonAuto said:

My sales have grown from 770K six years ago to 2 Million last year. How's your growth doing? 

And finally.....

I cant tell you how awesome this is. I love to see shops reach their potential. Imagine if every discussion you had made you think as much as this one. And you still have another half of a facility to grow!

My business is really good, but I've been at it a long time. Thanks for asking.

13 hours ago, AndersonAuto said:

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.
 

This is my point. You've trained you customers to wait for service until they've gotten their coupon. You also are training them to pay attention to price by focusing on it. Studies show people choose auto repair providers do so for top 3 reasons, trust, expertise and convenience. Price is always 4th or 5th on the list. All I am saying is I think we should focus on the strengths we have and bring in new as well as retain customers on those top 3 things. If we bring price to the forefront aren't we telling them it should be more important than it is?

And if so how long until your competition does it cheaper because they cant to the top 3 right? If all they have to offer of value is cheap they reap what they sow. And this is the whole point of my argument. I am not saying what works for you does not work, I am saying it does not work for me and letting others know there are other ways.

Imagine if we raise the bar for the whole industry how much higher we can raise our own bar?

13 hours ago, AndersonAuto said:

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.
 

Excellent numbers, I was not comparing you numbers or your results. I was stating one can measure successful marketing campaigns without coupons by tracking those metrics as well as others.

The value in washing a car is immeasurable. When  someone gets an oil change there is absolutely no difference in how the car operates. The owner is much happier when it's clean. The warm fuzzies created when asking a customer if they have time for a wash when the service is completed is a reward in itself. Many people state they come in for the car wash and the oil change...meh...no one gets exited for auto repair.

You are correct, the car wash may not bring them in, it does bring them back without training them to wait for a coupon. (next post)

13 hours ago, AndersonAuto said:

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 get this. I also run a facility that makes these claims.

Jiffy lube states they are vehicle maintenance experts. Pretty impressive.

Your lube dude may be more qualified than the kid a JL but really how much more? And do you have a valid measuring stick?

All that being said, I am saying when you introduce price to the offer the rest looses the limelight. Everyone says they have ASE certified techs, great warranties blah blah blah. The people are responding to the price. See above Psychology thoughts.

13 hours ago, AndersonAuto said:

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.
 

I pay $2.29 a qt for house brand synthetic oil from Keltners. add a $2 filter and you have $13.45 in raw materials for a 5 qt oil change. Your lube dude I suppose can be had for as little as $8 an hour although in my neck of the woods he/she would cost several dollars per hour more. Add in cost of employment at 20% and we are at $10 an hour. Oil change with inspection takes 30 minutes so that's another $5. They say when you take a tech off task he looses .2 plus the time he's off task. To do a quick look over even without accounting for the .2 to get back on task you have .2 and a master tech @$30 an hour $6. If the mast tech does not look over the car then you lose the value statement made above.

You belong or used to belong to a 20 group. They all cut up the pie differently but it's still all a pie. My training tells me benchmark for expenses is 40%. @ 2 mil @40% is 800k. 11 hours a day 6 days a week is roughly 3377 hours. 800k divided by 3377 is $236.89 per hour. 236.89 divided by 7 bodies is $33.84 per hour per body. While you may be making gross profit I doubt you are making net.

General repair shops do not make money on oil changes. The point I was making is a lot of people understand that you are at best breaking even on an oil change. In order to make a profit you MUST find something wrong with their car.

I think this is a poor way of initiating a relationship with a new customer. It can lead to resistance.

I also believe your facility is gorgeous and will overcome a lot of that resistance in itself. (but it does not change the psychology of my argument)

12 hours ago, AndersonAuto said:

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? 

When I first read your response I puffed up my chest and was about to rip out a lengthy response. I went back and read thru the thread and I had responded to the questions you asked about tracking and response on value based items. I guess  I can see how you may have taken that as a challenge to your positions/beliefs and I apologize for that. I in no way meant this to be an argument or even imply one side has more merit than the other. I do however enjoy a spirited debate on shop operations so I will respond to your points about one at a time throughout the day as I get time.

29 minutes ago, AndersonAuto said:

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. 

Just curious, how many of the 90 were existing customers vs new. What were sales to new vs existing?

5 hours ago, AndersonAuto said:

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?

MY aversion to discounting is derived from my experiences. First off, to offer something at a loss (your losing money at $29.95) you must find something wrong and successfully sell it to make a profit.

Cheap brings in cheap.

What differentiates you from anyone else offering a cheap oil change?

If they came to you for a full synthetic $29.95 oil change will they go to your competition for a $27.95 full synthetic oil change? Whats the value proposition?

I can and do track every new customer though the door. Most are referred or have found us through reputation.

I can do a very complex and expensive repair on a car, the owner had no idea what I've done or how I've done it. They walk out and see a clean shinny car and it makes them feel a sense of pride or at least good about their car. They can see something was done.

When asked about what makes us different I dont talk about my $29.95 oil change. I talk about doing things the right way, not cutting corners and standing behind them for 3 years or 36,000 miles.....nationwide.

Once you start discounting you train your customers to look for discounts and may in the long run hurt yourself (see car manufacturers)

ROI on free car washes and longer warranty cam be tracked in customer retention, avg ticket, sales growth and net profit.

I also do not care for discounting as a means to bringing in new customers. If this is all you have of value to offer then the next guy who lowers his price will surely win them over.

Another way you could drive new customers from these organizations is to offer them something of value which might enhance what you already do such as a car wash with any service or maybe giving them a better or longer warranty with all of their repairs. Something that makes you stand out and shows more creativity than $$ off.

39 minutes ago, AndersonAuto said:

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.

Best advice I've seen and I completely agree.

11 hours ago, alfredauto said:

Discount tire is all about volume. I don't try to compete on price with them it's not possible. It's the Walmart of the tire world. I'm not saying it's a bad business model or not wildly successful but I'm not putting $35 tires on my car why would I put them on my customers car? 

Discount tire sells a lot more than cheap tires. Read the book 6 tires no plan, it's about the founder of Discount tire. Good read.

11 hours ago, autorepairuniversity said:

 because were ALWAYS busy and working our butts off. I am considering expanding to get a few more bays.
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Just like in fixing a car you need to analyze the numbers to understand the underlying cause of this. The old AAA business model of if your not making money you need to work harder is not the answer. Adding bays is not an automatic fix....

15% off of what?

Yeah, but if you have a shop grossing 2 mil at 20% net you'll get there a lot quicker

You can grow very quickly and not make a penny, as a matter of fact I would guess that to be fairly easy. That being said what do you feel are the primary contributors to your current situation? You should be able to turn more than $500 a day even as a single man operation.

Wow, some people are really cut out for this. I've been doing it in my 2 bay shop since 09, and I think it's time to close the doors.

why?

Many years ago I created the goal that when I am 62 years of age I can lock the front door and auction off the whole thing. Now keep in mind if I can afford to do that anything above and beyond is gravy.

I do agree with Anderson above, take yourself out of the equation and you will have a saleable business. To count on what you think your business is worth or will be worth when you want to retire is....um.....risky.

Read the book 6 tires, no plan.

I have always been taught tires are a separate income line with a separate GP target. I would not and do not break out oil changes/oil services for that gives me an inflated number which makes me feel good but does nothing for the true number. As we try to grow our businesses capturing all services (loyalty) is key and will lower our numbers but should be part of the measurement IMO.

Not saying it is not true, just saying I have never seen anything like it. Would like to see a statement or contract that showed how it worked. Is that your average rate or fixed rate for all cards processed? Do they charge the same for Amex, & Discover? What about debit cards, are they the same?

So no 50%.... sigh........ e mail me

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1.44% on all cards seems to good to be true. Many types of cards charge more than that. There are set interchange rates charged by the card companies (visa, mc, etc...) and for many types of cards it is higher than 1.44% (rewards cards, fleet cards, Amex, Disc), some are lower (debit cards and some others). Not sure how anyone could charge 1.44% all in for everything unless you are doing a whole lot more debit cards. We are doing over 10 million a year in credit cards and I have shopped many times over the last 30+ years and never seen anything that is one fixed flat rate. I have seen cost (interchange) plus plans and tiered rate plans (usually with 3-4 different rates on different types of cards). Would be interesting to see how this works.

FYI: I am not in any way affiliated with any CC processor.

That being said if you've never seen it I guess it cant be true.....but....if it is.....cant I get 50% of what you save the first year?

True. We use WorldPay (First Mile). We pay a flat Fee per month ($200) no matter how many we process, then the bank fees. Have saved as much as $500 in both stores from old system (EPX)

Not true! I have been in the game almost 30 years and thought this was true. Had a close friend who did my processing at cost plus. When my current provider was referred to me I had my friend call him and find out that "catch" there was none and he told me he oculd find no reason not to go with this new company and had no idea how they could provide service below cost.

I have been with them almost 4 years and it's still 1.44% all in. Not above....I know he does this for the automotive industry only as I have wanted to refer him to others. E mail me and I will forward his info [email protected]

 

Thats very low! Would it be ok if I msged you for a referral to your merchant provider?

Basics like gross profit, difference between mark up and margin. Tech efficiency productivity. Then how to measure, monitor and adjust.

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