Ignoring the elephant in the room

[tyrguy]

I've detailed on posts before about declining hours billed over the years. Brief summary: From 1979 to 2008 every year was a record year. From the late 80s thru 2008 we always billed around 97% of our 3 techs hours [avg 6150/6350 hrs/yr]. Didn't matter recessions or whatever we were never more than 50 hrs off those numbers. The recession hit and our numbers started to decline around 3% a year. We did have a few up years, but also a year or 2 when the hours took a 8-10% hit. From 2008, our last "good year" to 2015 we saw our hours billed drop 25% to 4610/6348 or 73% productivity. So for 8 years I've been looking at the numbers from every angle and kept coming back to my theory that it was all due to the recession and slow recovery, consumer confidence, etc. But I think I have been ignoring the elephant in the room. For the first 25 years or so in business, I always had the biggest shop in our little town. Started with 3 bays in 79 and grew it to 12 bays in my old shop. In 2006 we sold the land the old shop was on and built a new shop again with 12 bays. Prior to 2006 our town of about 15k population had by my estimate 40-45 bays in town so I accounted for 25% of that. Then there was a change that I have been ignoring when analyzing my business. Prior to that time we had no car dealers in town. We now have 5. Hyundai, Kia, Nissan, Honda and VW all within a 1/2 mile of my shop. So in our little town we have gone from 40-45 bays to easily double that. Being "old school" I just never considered them my competition. I now think I was in error. So what to do? Last year my very first employee retired to run a non automotive home business. Wished him well, told him to keep his key in case he ever needs to use the shop. I mean after 37 years he's like a brother. So now I'm trying to see if we can make it with the remaining 2 full service techs, 2 tire techs, 2 service advisers and myself. Because I pay my techs minimums no matter how slow we get, I've had a big savings in wages. I've been able to cut expenses in other places as well. Plus we upped out labor rate from $95 to $100 per hour. We're still making money, not as much as before but it just feels better without techs standing around. Maybe I'm getting lazy in my old age. Anyway, I just think we have over capacity in our town at this point that will hopefully get better as town grows, which it is. Thoughts?.

[AndersonAuto]

I think it's going to boil down to a very aggressive marketing plan. I poked around on google earth in Streetsboro, and it's a tiny town with some pretty big businesses. Dealerships, Walmart, all those bigger buildings in the industrial park across from Walmart. They're all pulling employees and customers from somewhere. They can't all survive on 15,000 people. Plus, you're behind Walmart on a dead end road. Your traffic count past your building has to be non-existent. The dealerships etc. all have great frontage to high traffic count roads.

The trick is going to be figuring out exactly where the dealerships and walmart customers come from, and hit them with very aggressive sustained marketing program. You'll need to give them a good reason to drive past the places that they see every day, and to your shop.

Looking at your web site, you've got some pretty good offers that scroll through on your front page. The only thing I would suggest is that you pull the oil change and free rotate off the scrolling ads and put them as a permanent stand alone right in their face. I'd also change it from $10 off to whatever the price is, and make sure the price is very attractive.

I love your mobile web site. Extremely simple. Easy to call you or get directions to you, which is the entire point of a mobile site. I might pull the "quote" button and make them call you. Unless you've been able to track this and see a very positive relationship to people actually coming in the door based on the online quote. I'd rather that my service advisor have a crack at getting the appointment than just letting the customer base the whole decision on a number. I'd replace the "quote" button with an "appointment" button. You've got a way to set an appointment on your main web site, but can't do it on the phone. I think I'd also put the oil change offer front and center on the mobile site as well. Also, if you move them to an appointment page on their phone, put a call button at the top of the appointment page in case they decide not to fill out the form.

On your Google plus business page I'd change the main picture from the interior shop photo to the street view. Your customers don't care what the inside looks like, they want to know what building they're looking for.

Now for the biggie. Your business hours suck. NTB down the street is open earlier than you, open much later than you, AND has great street visibility. If a customer needs tires, and doesn't have to take off work to get it done, they're going to NTB. I'm sure you can kick their ass on quality and service, but customers are increasingly driven by convenience. Changing my hours from 8-5:30 five days a week to 7-7 six days a week was good for a full 20% increase in revenue.

[Jay Huh]

12 hours ago, tyrguy said:

I've detailed on posts before about declining hours billed over the years. Brief summary: From 1979 to 2008 every year was a record year. From the late 80s thru 2008 we always billed around 97% of our 3 techs hours [avg 6150/6350 hrs/yr]. Didn't matter recessions or whatever we were never more than 50 hrs off those numbers. The recession hit and our numbers started to decline around 3% a year. We did have a few up years, but also a year or 2 when the hours took a 8-10% hit. From 2008, our last "good year" to 2015 we saw our hours billed drop 25% to 4610/6348 or 73% productivity. So for 8 years I've been looking at the numbers from every angle and kept coming back to my theory that it was all due to the recession and slow recovery, consumer confidence, etc. But I think I have been ignoring the elephant in the room. For the first 25 years or so in business, I always had the biggest shop in our little town. Started with 3 bays in 79 and grew it to 12 bays in my old shop. In 2006 we sold the land the old shop was on and built a new shop again with 12 bays. Prior to 2006 our town of about 15k population had by my estimate 40-45 bays in town so I accounted for 25% of that. Then there was a change that I have been ignoring when analyzing my business. Prior to that time we had no car dealers in town. We now have 5. Hyundai, Kia, Nissan, Honda and VW all within a 1/2 mile of my shop. So in our little town we have gone from 40-45 bays to easily double that. Being "old school" I just never considered them my competition. I now think I was in error. So what to do? Last year my very first employee retired to run a non automotive home business. Wished him well, told him to keep his key in case he ever needs to use the shop. I mean after 37 years he's like a brother. So now I'm trying to see if we can make it with the remaining 2 full service techs, 2 tire techs, 2 service advisers and myself. Because I pay my techs minimums no matter how slow we get, I've had a big savings in wages. I've been able to cut expenses in other places as well. Plus we upped out labor rate from $95 to $100 per hour. We're still making money, not as much as before but it just feels better without techs standing around. Maybe I'm getting lazy in my old age. Anyway, I just think we have over capacity in our town at this point that will hopefully get better as town grows, which it is. Thoughts?.

I too thought that dealers were not competition but I think we have to be careful. They're changing. Yesterday I called the dealer for a master cylinder and they were $2 cheaper than Napa! And Napa was a reman... I ordered a rack and pinion from Toyota bc once again, they were actually cheaper!

I am seeing brake coupons and oil change coupons for dealers cheaper than I have ever seen before. And like AndersonAuto said, they have the visibility and road frontage. 

I have to say though, I love the look of your shop (pic on your website). You have been in business almost a decade longer than I've been alive! Being young I don't have much advice to give. From my very limited experience, I've noticed an increase of customers by giving more attention to social media. I am 31 but even I didn't know that Instagram is more popular among younger generation than Facebook. I just recently learned what snapchat was.

I created a Instagram and Twitter account this month and tried to upload a pic 3x a week on facebook, instagram and twitter and put more money into google adwords. Also became RepairPal certified and now featured on Repairpals website. I had a record car count this month. I don't know how long you are planning on doing this but all teens are using Instagram. so if you're looking 5-10 years ahead, I would do Instagram. I post on instagram and it automatically publishes on Facebook and Twitter so it's super convenient.

[tirengolf]

I can relate to all the above, I have a shop dad started in 1961, I have been there since 1975 . I do not think anyone will doubt the pie is getting sliced more and more every day by dealerships. From 1990 to 2000 I installed about 2500 tires a year just for dealerships and used car shops now they do their own. My tire numbers have gone down considerably over the years although we picked it up in service. Now the dealerships are becoming very aggressive on pricing in their service dept. Not all but I see some are still unethical. It is all a changing. I have an optimization company that really pushes my facebook and twitter although  I do not know if it is helping me at this point. I have sorta went back to the older way. I have made my presence a lot more noticeable I answer the phone as much as possible and try to test drive all cars. I really think people like the nice honest service, smiling people, ethical business.  it just seems harder getting to those customers.  

[tyrguy]

Yes we are behind the Walmart on a dead end street. Our old shop was in front of where Walmart sits on a 30k+/day car count main highway. We sold the 50 acres that the development with Walmart sits on. We have 80 acres left and when it eventually gets developed, we will be exactly in the center of it all. Now that being said being back here hasn't hurt our new customer count. Before we moved we were putting 50+ new customers a month in the computer. Right after the move that spiked to over 75 per month. Over the last 8 years it has settled back to were it was prior to the move. BTW, being next door to Walmart has it's advantages. We fixed their error and they send us other service work they don't do. Plus our customers love going to shop while their car is worked on. As for hours, we used to work the service department full hours 6 days a week but to keep my guys happy about 24 years ago we went to tires only on Sat giving the service dept the weekend off. Instead we made Wed a late night till 9pm. Recently I asked my guys how it was going and they said fine except for the late night on Wed. So we changed the hours again from 9pm on wed to 630pm on Tues and Wed. It might not be customer friendly but the average tenure of my employees is over 20 years. Plus as I've said before, I'm getting old and tired.

Edited March 31, 2017 by tyrguy

[HarrytheCarGeek]

tyrguy,

I think you are right, there is more capacity in the market. I think simply because of the low interest rates. After the crisis of 2008, Cash for Clunkers took out about 3/4 of a million cars. http://www.heraldcourier.com//news/opinion_columns/article_1ec4ccc4-4350-11e2-8145-0019bb30f31a.html

And then the low interest rates made the choice to get a new car easier than keeping an older car, this has hit us hard, I think.

Given that car manufacturers are claiming that peak auto sales has been reached, I wonder how it will go for us in the next few years. Plus autonomous car coming along too, should be an interest business environment. http://www.autonews.com/article/20170327/FINANCE_AND_INSURANCE/170329874/auto-sales-peak-heightens-risk-for-lenders-moodys-warns

[AndersonAuto]

Sitting behind Walmart is definitely better than my first location. I was also on a dead end, but in the back of an industrial park.

If you're putting 50 new customers on the books each month, then maybe the best thing is to concentrate on customer retention. A rewards program maybe? With that many new customers a month, I suspect most of them are tires only customers. If true, what can you do to convert them to full service customers?

If 70% of your biz is service work, what if your name became "Defer Tire & Auto Repair"? It's possible that a lot of the new customers you're putting on the books only think of you as a tire shop. 

[tyrguy]

Your right, I've considered changing the name over the years. Something to reconsider. You hit on something about the tire customers. There are a lot of tires customers that have other shops that do most of their work. But for some reason these shops prefer not to do tires or alignments. We see that a lot.

 

[AndersonAuto]

Here's what my plan would be going forward:

Name change.

Aggressive marketing campaign targeting everyone who's been in your shop in the last 3 years, but hit them with a "new customer" acquisition piece that touts repair instead of tires.

Map where these customers come from, and hit all their neighbors too.

Customer retention program like a loyalty rewards program.


I disagree that your decline is a result of too many bays in the area. Those bays wouldn't have been built if there wasn't a market for them. You need to go get your piece of the market.

 

Another thing I've learned through analyzing the numbers is that we lose a shocking number of customers every year. We see a lot of the same faces so mentally we think our customers are loyal, but then doing the data mining, we find out how many faces we forgot that we haven't seen. Especially one and done customers. We see them one time, how are we supposed to remember them a year later when they officially become a lost customer? Customers are not customers until we've seen them 4 times. My mistake in the past was to only send special offers to current customers who have spent more than $200 over the past 12 months, while the one time customers typically spent less than that. Now I include everyone.

[tyrguy]

1 hour ago, AndersonAuto said:

Here's what my plan would be going forward:

Name change.

Aggressive marketing campaign targeting everyone who's been in your shop in the last 3 years, but hit them with a "new customer" acquisition piece that touts repair instead of tires.

Map where these customers come from, and hit all their neighbors too.

Customer retention program like a loyalty rewards program.


I disagree that your decline is a result of too many bays in the area. Those bays wouldn't have been built if there wasn't a market for them. You need to go get your piece of the market.

 

Another thing I've learned through analyzing the numbers is that we lose a shocking number of customers every year. We see a lot of the same faces so mentally we think our customers are loyal, but then doing the data mining, we find out how many faces we forgot that we haven't seen. Especially one and done customers. We see them one time, how are we supposed to remember them a year later when they officially become a lost customer? Customers are not customers until we've seen them 4 times. My mistake in the past was to only send special offers to current customers who have spent more than $200 over the past 12 months, while the one time customers typically spent less than that. Now I include everyone.

I respectively disagree. You can't more than double the bays in small town and not have an impact. And it's not just me that has seen this decline. All the small independents that are still in business in town aren't doing what they did prior to 8 years ago. And remember, the car dealerships pull from a larger area than us independents so they don't need to depend on the town population like we do but they do impact this small market. However, I do appreciate your input and might use a few of your ideas.

[tyrguy]

BTW, if you know an easy way to change that interior picture to one of my exterior pictures on my google plus page, fill me in. Looks like there is no good way unless you delete all photos and start all over.

Scratch that. Looks like it rotates thru the pics on it's own. I don't think you can pick just one and have it stay that way.

 

Edited March 31, 2017 by tyrguy

[AndersonAuto]

Hmmm. I have my cover photo selected and it stays put. I didn't know you could rotate them.

[HarrytheCarGeek]

2 hours ago, tyrguy said:

I respectively disagree. You can't more than double the bays in small town and not have an impact.

Right, supply and demand, doesn't get any simpler than that.

 

For every older car that is replaced independent shops won't see them in at least 3 to 4 years,  and some even 5 to 7 years. All those 5 year 100k long warranties helps the dealers froim having the independents take a bite at the apple.

[xrac]

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[tyrguy]

Guess it doesn't rotate the pics on Google +. The reason that other pic went away is I deleted it. I have one of the exterior pics chosen as my cover pic but it doesn't seem to make a difference. I read somewhere today that the pic it sticks out there is the first one you put on the site. Guess the only way to get it the way you want it is to delete all pics and start over.

[xrac]

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[HarrytheCarGeek]

9 minutes ago, xrac said:

According to what I was reading earlier in the year the average age of the cars on the road is higher than it has ever been and the actual number of repair bays overall is decreasing.  The shops that seem to be suffering the most are the smaller shops because it is so hard to keep up we the investment needed for equipment, technology, and training.  We are looking at a new Hunter alignment lift that would cost $31,500. 

I think that's another part of the problem. But if you ask me, the fundamental and base problem is the tinkering the Federal Reserve has done with the low interest rates, that has distorted everything. From housing, medicine, education, transportation, etc. It's all a money problem.

[tyrguy]

Appreciate the replies and advice. It used to be so easy, we just opened the doors, treated people right and the numbers were always there. It's just not easy anymore. I am doing so much more to attract business than I used to digital and otherwise and it seems to no avail. But, to be honest I'm not overly concerned. As long as I can keep the doors open and pay my guys enough to keep them happy. Before i built the new building I had no debt at all and I'm rapidly approaching that situation again. I have a nice nest egg and 80 acres more of the old family farm to sell on this site. I've thought about retiring but have no idea what the hell I'd do everyday. My only regret is that the business slowdown has caused me to give up my sport of 40+ years..auto racing. 

[AndersonAuto]

My thought on the area being oversaturated with repair shops is, where are your 50 new customers a month coming from? How can an area have too many repair bays for the population, yet you pull 50 NEW customers a month? Don't they already have a shop?

I feel like I do pretty well getting new customers, and I don't pull that many in a town of 130,000. Yet at the same time, my revenue and profits are growing. Something doesn't add up.

[tyrguy]

More than likely we hit on the difference before. Being identified as a tire store we get lots of tire only customers. They have another repair shop that does their service work but they come to us for tires and alignments. Plus we get a lot of trailer, mower, race car, etc tire customers that you would probably not see. Here are our "new customer" numbers from my POS system for the last 4 years. 2013  682/ 2014  637/  2015  621/  2016  521. The drop last year started in the 2nd quarter and coincides with when we lost a tech we didn't rehire.

[AndersonAuto]

I think you have a golden opportunity here. You have a bunch of people who've been in your shop, know you, and like you. They have another shop now, but after seeing data from a bunch of other shops, I know that every shop loses a lot more customers than it thinks it does. For instance, last month I lost 87 customers, and gained 73. A net loss for me. That means for every tire only customer you have, they're a customer at a shop that's very likely to lose them in the next year or two. All you have to do is pick them up as a repair customer as well as a tire customer. I'd be in front of them every month, literally for years. Then on the day they happen to be mad at their current shop, guess who's mailer they have in their hand?

[JimO]

I think the elephant in the room that has not been addressed in this thread is the fact that years ago we all had much more work because the vehicles required more work.

Today's vehicles have longer oil change intervals, longer spark plug change intervals, 100K coolant change intervals, and lack many of the common parts we would routinely change such as distributor caps, points, condenser, wires. Steering and suspension parts are limited compared to years ago with no idler arms, pitman arms and control arm bushings failing since they no longer exist on the average vehicle. A radiator or exhaust system lasting 100k miles or more is common today but unheard of years ago. 

Today's vehicle are made better with less maintenance requirements. The maintenance that does remain happens to be poor labor profit items like oil changes. I know that everyone will chime in and say that an oil change is a profit generator by allowing us to have the vehicle on the rack and sell additional services but that is not always the case. In our area most customers lease vehicles and return them every three years, not much to do on a two to three year old vehicle with 20-25K miles on the clock.

Many of our customers work from home eliminating the daily use of their vehicle. Most of the younger generation purchase everything from Amazon which eliminates the once common task of going shopping after work. The American pastime of simply taking a ride on a nice day is no longer done by the younger generation. This all has a cumulative effect on our buisiness or lack of it. The dealers are aggressively trying to keep that vehicle in their shop and the manufacturers are creating vehicles that are more difficult or in some cases impossible to repair at our level.

Many new vehicles include maintenance for the first year and some include maintenance for the first two years which eliminates us again. My state eliminated the need for a car inspection until it is five years old. The state also eliminated the safety inspection (they are only concerned with emissions). Non OBDII vehicles no longer require any inspection. 

Up to this point the weak, poorly trained shops have failed and closed causing our buisiness to prosper but we seem to be at a tipping point due to all the items I noted above. Sorry to preach doom and gloom but I am concerned about our future long term. The only saving grace is the severe overhead a dealer must have in order to conform to the requirements of the manufacturers. Entire exteriors and interiors of dealerships need to fit the common designed "look" that the manufacturer dictates. The costs must be staggering and these costs are passed down to the consumer. The free latte in the waiting room with marble floors and chandeliers has a definite cost to the unsuspecting person that is drinking it. The next few years will be very interesting.

[xrac]

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[AndersonAuto]

I agree that cars need much less maintenance per mile driven, but we all drive a lot more miles than we used to. My dad scrapped his 10 year old car back in 1979 with 129,000 miles on it, and he was happy with how the car had done for him. I remember him saying that "the old girl doesn't owe me a dime". Now that's the average car we see in the shop, and people would be pissed if it was ready for the scrapper at that mileage. People keep their cars longer, and drive them further, giving us more opportunity to service that car later in it's life. You certainly don't sell mufflers on 3 year old cars anymore, but those cars still have a lot of life left in them at 150,000 miles, and a lot of maintenance that will need to be done to keep them on the road. The key is identifying the repair needs, which is where the oil change comes in.

[xrac]

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[tyrguy]

On 4/1/2017 at 6:46 PM, AndersonAuto said:

I think you have a golden opportunity here. You have a bunch of people who've been in your shop, know you, and like you. They have another shop now, but after seeing data from a bunch of other shops, I know that every shop loses a lot more customers than it thinks it does. For instance, last month I lost 87 customers, and gained 73. A net loss for me. That means for every tire only customer you have, they're a customer at a shop that's very likely to lose them in the next year or two. All you have to do is pick them up as a repair customer as well as a tire customer. I'd be in front of them every month, literally for years. Then on the day they happen to be mad at their current shop, guess who's mailer they have in their hand?

A bit confused here. In a previous post you said you don't pull in 50 new customers a month but then in this post you said you pulled in nearly 50% more than that. An anomaly? Secondly, how do you define loosing a customer. Not having been in for a certain amount of time?

 

 

[AndersonAuto]

2 hours ago, tyrguy said:

A bit confused here. In a previous post you said you don't pull in 50 new customers a month but then in this post you said you pulled in nearly 50% more than that. An anomaly? Secondly, how do you define loosing a customer. Not having been in for a certain amount of time?

 

 

I actually had my numbers confused when I said I don't pull in 50 a month. 70ish is normal. I was thinking of the numbers from my mailers, which is about 35-40 per month. Most of the rest are from internet / website marketing, and a few more from other sources like referral etc. Sorry about that.

A customer is considered lost when I don't see them for 13 months.

[Wheelingauto]

Some of the reasoning above has validity, but I dont usually like to rely on excuses when my business is not performing like I expect. I guess it's always been comforting to call the parts stores and ask hows everyone else doing but my bank has never accepted that as a reason for slow payment. (I am actually debt free but its a good metaphor).

Anyhow, most of the surveys conducted asking car owners the reasons for selecting a vendor, the top 3 things (not necessarily in order) are trust, expertise and convenience. Price always showed up 4th or 5th on the list. Some shop owners insist offers are the best way to get opportunities (cars on racks) but it has been my experience when you put price first you get price conscious customers. Now, I would agree that you have a lot of untapped potential in a tire database where they go elsewhere for service.

Other surveys done are people tend (77%) to buy tires from the first person (shop) who tells them they are needed. 72% of people get their cars serviced where they buy their tires. So if the above surveys are accurate I would focus on marketing to my existing database and tell them how good we are. I would be talking about my master techs and our ability to solve the difficult problems others cant. In my opinion tire stores are not known for expertise. Trust takes time to build and things like warranty, not over selling or being pushy, offer the customers sound solid advise and most of the time they will buy anyway. This also is a part of why I don't like price based offers. If you sell something that is at aor below cost it requires you to find and sell something in order to make a profit. This is a conflict of interest and just because it happens everyday in many [places does not means it has to happen in yours.

Convenience: How can you make it more convenience for you customers to do business with you. For me it was to offer shuttle service, loaner cars and pick up and delivery. As others have said if you increase your shop hours by 20% it might make it more convenient. Like you I do not want my guys to work crazy hours or have multiple shits so I try to focus on efficiency and billing out as many hours as possible within the time frame we work. Not work more hours and be less efficient or equally efficient.

I would say the one best tool we have ever implemented (other than internal processes)that grew our business was loaner cars. Far and above any other thing. Add another $5 per hour to your labor rate and give them out freely to service customers.

[Jay Huh]

1 minute ago, Wheelingauto said:

Some of the reasoning above has validity, but I dont usually like to rely on excuses when my business is not performing like I expect. I guess it's always been comforting to call the parts stores and ask hows everyone else doing but my bank has never accepted that as a reason for slow payment. (I am actually debt free but its a good metaphor).

Anyhow, most of the surveys conducted asking car owners the reasons for selecting a vendor, the top 3 things (not necessarily in order) are trust, expertise and convenience. Price always showed up 4th or 5th on the list. Some shop owners insist offers are the best way to get opportunities (cars on racks) but it has been my experience when you put price first you get price conscious customers. Now, I would agree that you have a lot of untapped potential in a tire database where they go elsewhere for service.

Other surveys done are people tend (77%) to buy tires from the first person (shop) who tells them they are needed. 72% of people get their cars serviced where they buy their tires. So if the above surveys are accurate I would focus on marketing to my existing database and tell them how good we are. I would be talking about my master techs and our ability to solve the difficult problems others cant. In my opinion tire stores are not known for expertise. Trust takes time to build and things like warranty, not over selling or being pushy, offer the customers sound solid advise and most of the time they will buy anyway. This also is a part of why I don't like price based offers. If you sell something that is at aor below cost it requires you to find and sell something in order to make a profit. This is a conflict of interest and just because it happens everyday in many [places does not means it has to happen in yours.

Convenience: How can you make it more convenience for you customers to do business with you. For me it was to offer shuttle service, loaner cars and pick up and delivery. As others have said if you increase your shop hours by 20% it might make it more convenient. Like you I do not want my guys to work crazy hours or have multiple shits so I try to focus on efficiency and billing out as many hours as possible within the time frame we work. Not work more hours and be less efficient or equally efficient.

I would say the one best tool we have ever implemented (other than internal processes)that grew our business was loaner cars. Far and above any other thing. Add another $5 per hour to your labor rate and give them out freely to service customers.

Nicely said! It's hard but my goal is to make auto repair as convenient as possible and that's one of the reasons why I am opening multiple locations. I want everyone in the Triangle to be within a 10min drive to any one of my shops.

It's hard to keep in mind that price is not number 1 factor so it's always nice to get a reminder

[AndersonAuto]

On 4/3/2017 at 2:29 PM, Wheelingauto said:

I would say the one best tool we have ever implemented (other than internal processes)that grew our business was loaner cars. Far and above any other thing. Add another $5 per hour to your labor rate and give them out freely to service customers.

What's your loaner car policy, and do you have a written loaner agreement for the customer you'd like to share?

I used to do loaner cars, but I never had a strong policy or written agreement for the customer to sign. As a result I ended up with a number of customers who thought it was OK to take a loaner out for a coupon oil change, and bring it back out of gas. After the second time my Cadillac came back needing a new front clip, I'd had enough and bought a shuttle car. Now if someone really needs a loaner, I'm happy to drive them to enterprise or hertz and get them a great rate that I've negotiated with them.

I know they can be done successfully, but in the chaos of rapid growth, it was something I never did correctly.

[Wheelingauto]

1 hour ago, AndersonAuto said:

What's your loaner car policy, and do you have a written loaner agreement for the customer you'd like to share?

I used to do loaner cars, but I never had a strong policy or written agreement for the customer to sign. As a result I ended up with a number of customers who thought it was OK to take a loaner out for a coupon oil change, and bring it back out of gas. After the second time my Cadillac came back needing a new front clip, I'd had enough and bought a shuttle car. Now if someone really needs a loaner, I'm happy to drive them to enterprise or hertz and get them a great rate that I've negotiated with them.

I know they can be done successfully, but in the chaos of rapid growth, it was something I never did correctly.

We started using loaners as a closing tool. When presenting larger repair tickets the question would usually arise, when can this be done by which we would then offer the use of a car. At that time we had only a few cars. That quickly grew into people requesting the use of a loaner while their car was in the shop and the ones requesting it were the ones who popped for the big ticket last time so how can you say no? Our loaner fleet quickly grew to it's current size of 26. If it's not common in your market it will quickly differentiate you from the other shops. In our area everyone now offers them but we were the first and by far have the most.

I do not believe in making it difficult to do business with us. Therefore, I will give you a loner for anything including an oil change or tire repair. I also believe that discounting/cheap will sometimes bring in undesirable types and since I do none of that you will have to figure out that one on your own.

Written policy will not change those who feel it's ok to take advantage of a situation. Typically we will ask upon return if they filled it back up (all loaners leave full) and if they didn''t we will ask that they do. Inevitably someone will walk in at the last minute who didn't have time and we will charge them a few bucks. Other times we will just smile and tell them not to worry about it and just note it in the management system for the next visit. Pick and choose your battles carefully.

Form 1 is our insurance waiver and we have people fill it out the first time and provide proof of insurance and a D/L. Form 2 is the one they fill out every time they take a car and its basically to remind them not to smoke and to fill it up. Again, I have had many cars totaled and we have always been made whole.

 

Loaner car agreement (daily).doc

Loaner Car Agreement word.doc

Edited April 7, 2017 by Wheelingauto

[tyrguy]

59 minutes ago, Wheelingauto said:

We started using loaners as a closing tool. When presenting larger repair tickets the question would usually arise, when can this be done by which we would then offer the use of a car. At that time we had only a few cars. That quickly grew into people requesting the use of a loaner while their car was in the shop and the ones requesting it were the ones who popped for the big ticket last time so how can you say no? Our loaner fleet quickly grew to it's current size of 26. If it's not common in your market it will quickly differentiate you from the other shops. In our area everyone now offers them but we were the first and by far have the most.

I do not believe in making it difficult to do business with us. Therefore, I will give you a loner for anything including an oil change or tire repair. I also believe that discounting/cheap will sometimes bring in undesirable types and since I do none of that you will have to figure out that one on your own.

Written policy will not change those who feel it's ok to take advantage of a situation. Typically we will ask upon return if they filled it back up (all loaners leave full) and if they didn''t we will ask that they do. Inevitably someone will walk in at the last minute who didn't have time and we will charge them a few bucks. Other times we will just smile and tell them not to worry about it and just note it in the management system for the next visit. Pick and choose your battles carefully.

Form 1 is our insurance waiver and we have people fill it out the first time and provide proof of insurance and a D/L. Form 2 is the one they fill out every time they take a car and its basically to remind them not to smoke and to fill it up. Again, I have had many cars totaled and we have always been made whole.

 

Loaner car agreement (daily).doc

Loaner Car Agreement word.doc

26 car loaner fleet!! Wow!! That has to be a major expense. When looking into doing a few loaners it seemed like the insurance would be at least a $100 a month a car. That plus upkeep seems like it would add  at least $4k a month in expenses. BTW, i am really considering doing this and am thinking about leasing a few econoboxs to do it. I like the idea of a new vehicle for dependability and low upkeep. Lastly, where do you keep that many cars. I have 50 parking places which is a lot, but that would take up half of them.

Edited April 7, 2017 by tyrguy

[Wheelingauto]

55 minutes ago, tyrguy said:

26 car loaner fleet!! Wow!! That has to be a major expense. When looking into doing a few loaners it seemed like the insurance would be at least a $100 a month a car. That plus upkeep seems like it would add  at least $4k a month in expenses. BTW, i am really considering doing this and am thinking about leasing a few econoboxs to do it. I like the idea of a new vehicle for dependability and low upkeep.

Over the years I have fixed up customer cars who did not want to make the investment themselves. Picked up cars for a couple of hundred and fixed them up. Last year I went out and bought 3 brand new Ford Focuses, this year  I bought 4 lightly used cars. My fleet has become considerably newer and nicer over the last 5 years but I dont think you can put a guy driving a 100k SL into a POS old Ford Taurus.

I have 5 Camrys, 1 Corolla, 1 Lexus ES300, 3 focuses, 3 fusions, 2 lincoln MKZ's, 1 POS Taurus, 1 POS Jetta, a Ford Edge, Subaru Outback, Honda Civic, Fit and Accord.Kia Soul, Ford C-Max hybrid, Pontiac GP and Ford Ranger.

We also have a Box Truck loaner, Honda Element as a shuttle, my personal pick up and MB convert on our policy. Almost all have full coverage and we own them all fully. We pay on average $600 a year per car so thats 18k per year.

Auto Owners is our insurance company and I hear Zurich is pretty good with loaners too.

I would not lease because they will get dented and dinged and you will not be able to keep up with it. On top of that remember they are tools. About 6 years ago I added 4 newer cars one being a 2010 Focus with 10k miles on it. The first person to drive it kissed something and took a wee bit of paint off the corner of the bumper. My Service Manager at the time got all heated about it...it happens.....its a tool.....and you aren't going to alienate a good customer over a ding or something small.

[Wheelingauto]

1 hour ago, tyrguy said:

Lastly, where do you keep that many cars. I have 50 parking places which is a lot, but that would take up half of them.

I only have 50 -60 parking spots myself. But for every car that is out I have a customers car....so usually I like it a whole lot when all 26 are out. We do have a young man who washes cars for us and part of his job is jockeying cars from front to back and vice versa

[Wheelingauto]

One more thing that is very important. Loaner cars are a huge thing when it comes to convenience. You can and must get paid for it in increased margins. When we first started we were still using paper and pen so we would manually add 10% to the estimate and no one balked. When we went to computers it has allowed us to push the GP's up.

[AndersonAuto]

That's a lot of loaners. I'm impressed. Obviously it's working for you much better than it did for me.

I never shy away from spending money if I can put a number on the ROI. I'm not sure how you do that with a loaner fleet. The expense side is easy enough, but how do you put a number on the additional sales attributed to the loaners?

Edit.  You just answered my question. Thanks!

Edited April 7, 2017 by AndersonAuto

[xrac]

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[Wheelingauto]

Just now, AndersonAuto said:

That's a lot of loaners. I'm impressed. Obviously it's working for you much better than it did for me.

I never shy away from spending money if I can put a number on the ROI. I'm not sure how you do that with a loaner fleet. The expense side is easy enough, but how do you put a number on the additional sales attributed to the loaners?

If you want to fill the other side of your shop start introducing loaners and advertise them. Give them out freely and closed sales will follow.

I dont know that you can directly account for what they do for you but you always speak about what you did to grow your business (cheap oil change) and I can say my business has grown from 2k sq feet and 800k in sales to 12,500 sq feet and 2.4 mil in sales in the last 15 years. I can also say when I was in RLO and subsequent 20 groups I was always praised for my consistency in hitting at or above benchmarks in gp numbers. I attribute part of that to the convenience of loaners.

In addition It allows for much greater efficiency, I can manage a greater car count with less people when I have loaners. People dont get as upset when a deadline is missed when they have wheels. Example: Mr Smith NEEDS that 4 wheel brake job today but you already promised Mrs Jones her car would be done today. Call Mrs Jones and ask if it would be ok to keep her car one more day and she's probably fine as long as shes got wheels. It gives you greater flexibility and with that you can knock out more work.

[AndersonAuto]

39 minutes ago, Wheelingauto said:

If you want to fill the other side of your shop start introducing loaners and advertise them. Give them out freely and closed sales will follow.

I dont know that you can directly account for what they do for you but you always speak about what you did to grow your business (cheap oil change) and I can say my business has grown from 2k sq feet and 800k in sales to 12,500 sq feet and 2.4 mil in sales in the last 15 years. I can also say when I was in RLO and subsequent 20 groups I was always praised for my consistency in hitting at or above benchmarks in gp numbers. I attribute part of that to the convenience of loaners.

In addition It allows for much greater efficiency, I can manage a greater car count with less people when I have loaners. People dont get as upset when a deadline is missed when they have wheels. Example: Mr Smith NEEDS that 4 wheel brake job today but you already promised Mrs Jones her car would be done today. Call Mrs Jones and ask if it would be ok to keep her car one more day and she's probably fine as long as shes got wheels. It gives you greater flexibility and with that you can knock out more work.

You've convinced me to give it another go. I have some larger expenses coming up, so I won't pull the trigger this year, but next year I'll start building the fleet.

I preach to people all the time to make it easy to do business with you. This is definitely part of that philosophy.

Do you add 10% across the board to cover the cost of the fleet, or is it only when you'll be putting someone in a loaner? 

[Wheelingauto]

If you trade in that 6-series you'll have a heck of a start for a fleet.

When we were pen and paper we would add about 10% to every estimate. Since we have just kept our labor rate and the high end for the area as well as keep parts gp a few points higher and do it on every ticket, not just loaners.

[AndersonAuto]

55 minutes ago, Wheelingauto said:

If you trade in that 6-series you'll have a heck of a start for a fleet.

When we were pen and paper we would add about 10% to every estimate. Since we have just kept our labor rate and the high end for the area as well as keep parts gp a few points higher and do it on every ticket, not just loaners.

Funny you say that. I was actually looking at selling the BMW. I got a dog that comes to work with me and she's not allowed in the nice car, so I drive my old beater Audi. The 650 has become a rapidly depreciating garage queen.

Makes sense to just bump all RO's. Couldn't see how you were going to determine reliably who would get a loaner prior to bidding the job.

[Jay Huh]

7 hours ago, Wheelingauto said:

Over the years I have fixed up customer cars who did not want to make the investment themselves. Picked up cars for a couple of hundred and fixed them up. Last year I went out and bought 3 brand new Ford Focuses, this year  I bought 4 lightly used cars. My fleet has become considerably newer and nicer over the last 5 years but I dont think you can put a guy driving a 100k SL into a POS old Ford Taurus.

I have 5 Camrys, 1 Corolla, 1 Lexus ES300, 3 focuses, 3 fusions, 2 lincoln MKZ's, 1 POS Taurus, 1 POS Jetta, a Ford Edge, Subaru Outback, Honda Civic, Fit and Accord.Kia Soul, Ford C-Max hybrid, Pontiac GP and Ford Ranger.

We also have a Box Truck loaner, Honda Element as a shuttle, my personal pick up and MB convert on our policy. Almost all have full coverage and we own them all fully. We pay on average $600 a year per car so thats 18k per year.

Auto Owners is our insurance company and I hear Zurich is pretty good with loaners too.

I would not lease because they will get dented and dinged and you will not be able to keep up with it. On top of that remember they are tools. About 6 years ago I added 4 newer cars one being a 2010 Focus with 10k miles on it. The first person to drive it kissed something and took a wee bit of paint off the corner of the bumper. My Service Manager at the time got all heated about it...it happens.....its a tool.....and you aren't going to alienate a good customer over a ding or something small.

WOW!!! You have quite an operation!!!!! You could start an Enterprise rental with that lol

[xrac]

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