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  • 2 weeks later...
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Here are my cliff notes from last weeks leadership meeting with my front counter staff:

the incredible importance of offering financing, all the time, and especially in times like this
if your concerned prices are getting out of hand, offering financing to offset
even folks that have the money will consider financing, "until things cool off"
maybe no better time to offer financing to those that don't need it. 
folks that don't need financing will not let financed accounts go past free period, but still appreciate

 

Our shop is in a area where the average household operates closer to their "breakeven" point for household expenses, than many. Any bad news typically effects us earlier then markets with more affluent households. Traffic was off by 11% in April and sales by 24%, after a record 24 month period right up thru the end of the first first quarter 2022. We tend to attract the "higher" income households in our market, and rarely have any kind of "payment" issues. If I compare my financial diligence and attitude that i practiced in my lifetime, to those households, then I believe that those customers that can afford repairs, may still be interested in financing with free periods as a cushion, against uncertain times. I have used hundreds of thousands of dollars in "free money" financing over my lifetime very effectively, without accruing interest charges, even though I could have paid for most of those dollars, for most of my life. 

If you are worried about driving your customers into higher debt, then make sure you are putting your extended financing in the hands of the ones that don't need it, not concentrating on the ones that do, or only offering as a last resort.  We use Synchrony Card for as many as can be approved for it, which offers 6 months interest free. This is most of our financing. 

We brought in Easy Pay, for those that can't be approved for tier one credit. I still believe it can be used effectively for those with credit issues, and comes with 90 days interest free. We strongly encourage payoffs within the free period. 

We run 6-8% of sales that are financed, average throughout the year, with tire season months running 15-20%. I would like to see the average in the 15%-20% range for the year. 

Right now, maybe more than any time in my business career, I believe we have the best opportunity to offer free money to those that don't need it, but would appreciate it. 

% financed, is now a monthly metric that we track and discuss weekly. 

 

 

  • Like 3
Posted

When people say that they don't have the money, I see three possible reasons:  1) They really don't or 2) They have prioritized other non-essential items above this expense, or 3) They need more time to pay as they may not have a slush fund readily available, but can easily absorb this repair into their budget with time.

I remember one no-money situation where the lady was in a hurry to get to the nail salon to have her expensive looking nails done again.  Did not finance as it wasn't a priority to her.    Or, that new iPhone just came out and I've almost got enough saved up for it.  Hmmm.  Car repair or New iPhone?  In truth, the new iPhone, that's only 9 months newer than your current one, will give you more joy-for-your-money than the car repair. 😁 So it truly makes the decision harder.    Less so, if the car is not running.

However, we don't look down on anyone needing financing nor question why.  We encourage them to only take it if they can stay within the no interest period, otherwise we discourage it.   

We recently had to finance a lady for a repair that came at a bad time.  She was moving and had new deposits to put down, moving expenses, etc.   She had no brake power assist and didn't have enough meat-on-the-bones to bear down on the brakes with full confidence.   She had to drive from appointment to appointment for her job.   This was a Positive Financing outcome.

(Interesting side note:   I was listening to a podcast with 360 payments as a guest when the topic of CC Chargebacks, came up with respect to financing.  Chargebacks are unique to CC and thus don't apply).

On 5/1/2022 at 6:25 AM, rpllib said:

Right now, maybe more than any time in my business career, I believe we have the best opportunity to offer free money to those that don't need it, but would appreciate it. 

% financed, is now a monthly metric that we track and discuss weekly.

I recently noticed that we are seeing a spike in Financing, but I didn't really pay much attention to it... until I read your note.  I track the numbers, but didn't think about any patterns.  Well, by golly, there are patterns!  It's on the rise.  Already, in the 1st 4 months, we're 35% higher than all of 2021 financing.

Last month, my financing jumped to a record 14.8% whereas, the previous month it was only 5.2% of repair sales.  2021 had a mere 2.2% finance rate overall.  I'm not exactly sure why we are seeing a spike, but I do know that this program is helping us to capture large tickets that might otherwise do partial or nothing without it.  

I don't think we are seeing the "free money" folks.  I'd say 100% are time shifters.

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  • Have you checked out Joe's Latest Blog?

         0 comments
      It always amazes me when I hear about a technician who quits one repair shop to go work at another shop for less money. I know you have heard of this too, and you’ve probably asked yourself, “Can this be true? And Why?” The answer rests within the culture of the company. More specifically, the boss, manager, or a toxic work environment literally pushed the technician out the door.
      While money and benefits tend to attract people to a company, it won’t keep them there. When a technician begins to look over the fence for greener grass, that is usually a sign that something is wrong within the workplace. It also means that his or her heart is probably already gone. If the issue is not resolved, no amount of money will keep that technician for the long term. The heart is always the first to leave. The last thing that leaves is the technician’s toolbox.
      Shop owners: Focus more on employee retention than acquisition. This is not to say that you should not be constantly recruiting. You should. What it does means is that once you hire someone, your job isn’t over, that’s when it begins. Get to know your technicians. Build strong relationships. Have frequent one-on-ones. Engage in meaningful conversation. Find what truly motivates your technicians. You may be surprised that while money is a motivator, it’s usually not the prime motivator.
      One last thing; the cost of technician turnover can be financially devastating. It also affects shop morale. Do all you can to create a workplace where technicians feel they are respected, recognized, and know that their work contributes to the overall success of the company. This will lead to improved morale and team spirit. Remember, when you see a technician’s toolbox rolling out of the bay on its way to another shop, the heart was most likely gone long before that.
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