Wheelingauto

One of the biggest challenges we have in this industry is finding qualified help. What is a highly qualified, efficient tech worth? Most management gurus say put them on flat rate and they earn what they earn. Yes if they become plumbers they spend a fraction of their own money on tools and equipment and are guaranteed great pay for every hour they are on the clock. If your a tech at an average shop your pay is affected if the owner does not know how to market, does not charge correctly or makes you pay because he gives something away. Its a crappy system and we loose quality people every year because of it. We have relied on flat rate for too many years to cover up our inability to manage and correctly operate a business. In addition, we do not properly value what we do and charge accordingly. We knowingly sell stuff at cost to try to get opportunities to sell something to try to make a profit or we attempt to compete at the bottom of the spectrum. One of the exercises you should go thru is figure out your current capacity and potential capacity. Your focus needs to be on tech efficiency and effective labor rate. Most of the time we do not need more techs, we need to keep our techs producing at full rate and not performing other tasks. Them ore money we can capture without adding capacity the more we can pay the better the quality.

Are you in RLO?

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.

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?

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)

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.

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)

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.

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

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.

Best advice I've seen and I completely agree.

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.

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.

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.

So no 50%.... sigh........ e mail me Sent from my iPhone using Tapatalk

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?

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]

sure