Are Low Car Counts the Real Issue?

posted on October 22nd, 2014 posted by Joe Marconi of Elite Worldwide

Car count is a key performance indicator (KPI) that shows you the health of your business. But before we blame low car counts for why we are not achieving our sales goals, we need to take the time to look at all the numbers and analyze labor and part margins, average repair order (ARO), production issues, other critical KPI’s, customer retention and workflow processes. Only after a thorough analysis can we begin to work on the issue of car counts.

This is not to suggest that a shrinking car count is not a problem. Many shops are experiencing declining car counts for a number of reasons: increased competition from dealers and mass merchandisers, improved car quality, less frequent factory scheduled maintenance, and decreasing vehicle visits, among other things.

The key is to track all key numbers and vehicle visits per year, per customer.  If you see your car count trending down, you are not meeting your sales objectives, and all other KPIs are in line, then you need to address this issue.

But, are you really losing customers? You may find that customer visits per year is the problem. With manufacturers constantly increasing oil service intervals and the perception that cars don’t need maintenance, this is a big problem, and it may be the reason for a declining car count.

A more proactive approach through selling preventive maintenance and other services will help. In addition, you should bump up your marketing efforts, especially with your existing customer base. And lastly, make sure you stand out by providing world class customer service.

This article was contributed by Joe Marconi. Joe is the co-founder of autoshopowner.com, and one of the 1-on-1 business coaches who helps shop owners through the Elite Coaching Program

 
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An Auto Shop’s Guide to Handling Web Leads

posted on October 15th, 2014 posted by Bob Cooper

In today’s world your customers have 24/7 access to the web. Whether it be on their home computer, work computer or their smartphone, no matter where they are they can be online within moments. This is just one of the many reasons today’s consumers are turning to the web for answers, and more and more shops are receiving requests for quotes over the web. This simple three-step guide has been developed to help you better handle those web leads in the most professional way, and turn them into customers at the same time.

1. Know your goal. In all cases your goal should be to get the web lead on the phone with your advisor. There is a rule we share in all of our sales training, and it simply states that people buy from people they like, trust and view as a credible expert. Starting with the “like” requirement, when someone first reaches out to you over the web they are attempting to communicate with your shop. The really good advisors know they need to convert that “website visitor – shop” relationship into a “customer Mike – service advisor Bob” relationship.  People do business with people, not with companies, so in all cases the first thing that web lead needs to be sold on is your service advisor to the point where they like your advisor, trust your advisor and view your advisor as a credible expert.

2. Respond quickly. How quickly you are able to reply is going to play a huge role in your success. When someone is reaching out to you for a quote, or any other question about their vehicle, there is a high probability that they are reaching out to other facilities as well. This doesn’t mean the first shop that replies will get the job, but they will certainly have the first opportunity to get the sale. If another shop responds first and handles the customer well, by the time you reply that potential customer may have already made a decision.  Your web leads are expecting a quick and professional reply, so if you want the web lead to like you, it starts with a fast response.

3. Have a strategy in place. First of all, bear in mind that the majority of the people requesting a price are not the price shoppers most advisors believe them to be. Just like with a first-time caller that asks how much, your web leads don’t know the questions they should be asking: questions about how long you have been in business, whether you employ certified technicians, etc. So never prejudge the person that sends a web request asking for price. In all cases, call them if they provide a phone number. If they do not provide a number, as soon as you receive the request you should reply by thanking them for reaching out to you. You’ll need to introduce yourself in your reply, and you’ll need to let them know your position with the company.  In your email you’ll also need to ask a few questions to start the flow of communication we are looking for. Beyond asking year, make and model, you can ask when was the last time they (had the brakes serviced if they’re requesting a quote on brakes, had maintenance performed if they’re requesting a price on maintenance, etc.), the approximate mileage on the vehicle, and why they suspect they need (brakes, maintenance, etc.). If you pose the right questions, and get the communication and a relationship started, your next response should be to let them know you have some additional questions, and ask if there is a phone number you can reach them at.  In essence, you are asking them to take a call, which should always be your goal with a web lead.

In summary, with web leads you need to have a goal of getting them on the phone, you’ll need to reply to each request quickly, and you will need to have a strategy in place that sells them on your advisor and your shop. If you follow this simple procedure, and never put money ahead of people, you have my promise – you’ll bring in more of those web leads that will help you build your business.

For additional help turning leads into customers, learn more about Elite’s Masters Service Advisor Training Program

In: sales
 
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What You Need to Know About Selling Struts

posted on October 8th, 2014 posted by Elite Worldwide Admin

By TJ Reilly

Just when I thought I was doing everything that I could to increase sales, I learned something very important:  I very rarely sold struts or shocks.  Basically, I really didn’t know when struts or shocks were bad until they completely failed.

I’m finding that my clients, and most shop owners that I speak with, don’t know either.  A lot of stores will automatically sell struts when the car gets to 60,000 miles.  But why?  How can you possibly convince your customer to spend over $1,000.00 just because the car has 60,000 miles?  I don’t think that’s ethical.

Here’s what I learned:  Test drive every car at 5 mph and hit the brakes.  If the nose of the car dives, then it needs struts.  I learned that bad struts will increase the stopping distance as much as 20 feet!  Bad struts also put more wear and tear on the front brakes. In fact, front brake rotors are more likely to warp with bad struts.

I’ve already tried this 5 mph test drive on several cars and it works;  the low mileage cars I drove had no nose dive and the high mileage cars did, so I would recommend using this testing method in your shop as well.

This article was contributed by TJ Reilly. TJ is the owner of one of the top shops in the country, and is one of the 1-on-1 business coaches who helps shop owners through the Elite Coaching Program

In: sales
 
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Effective Leadership Means Ignoring Certain Things

posted on October 1st, 2014 posted by Joe Marconi of Elite Worldwide

One of the toughest things to do as a business owner is step away and let the people you have put in charge make key decisions and take control of your business. Business becomes part of your life, maybe not your entire life, but a big part of it. You still value family and friends, but for shop owners, business becomes an integral part of one’s life. As a shop owner, your thoughts are never far from family and from your business.

This is not the first time I have spoken about how hard it is to let go, and it will not be the last. I have put people in levels of management and built systems to take care of the tasks that should not be done by me anymore. But in order to have real control and to keep moving the business in the right direction, we need to ignore certain things, and trust not only the people we employ, but the systems that we have put in place.

The other day I walked into the shop at 11:50am and saw two techs having lunch, while the other techs were working. Normally lunch is at 12:00 noon. I was annoyed and visibly showing it. My manager made the decision to let these two techs take an early lunch since their ordered lunch had arrived early. I made no comment, and just walked away.

While I may not have been in agreement with his decision, it was his decision to make. I must not and cannot undermine, prejudge and take away his authority by stepping in and forcing my opinion on this matter.

As business owners, we need to build the systems, polices, and the procedures that will allow our businesses to run and grow with or without us. We need to put a system of checks and balances into place to ensure success. Most of all, we need to hire the right people, assign them to the right position, train them, mentor them and then leave them alone and let them do their jobs.

This article was contributed by Joe Marconi. Joe is the co-founder of autoshopowner.com, and one of the 1-on-1 business coaches who helps shop owners through the Elite Coaching Program

 
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What Every Shop Owner Needs to Know About Accountants

posted on September 24th, 2014 posted by Bob Cooper

In order to build a successful auto repair shop, there are a number of things you will have to do. You will need to have clearly defined goals, a plan, and you will need to surround yourself with successful people. You will need gifted techs and advisors, a great support staff, the help of marketing professionals and business coaches, and a great accountant as well. Unfortunately, most shop owners don’t understand how to find the really great accountants, they don’t know what to expect from them, and they don’t know how to utilize their services. With our changing economy, and the ever-increasing tax burdens we face in business, now more than ever before, you need to be working with a great accountant. What I would like to do with this article is help take the mystery out of the relationship most shop owners have with their accountants to help you build a more profitable business.

Putting first things first, the overwhelming majority of shop owners make two mistakes with their accountants: they use them as overpaid bookkeepers, and they feel their accountant should be giving them business advice. Unfortunately, that’s the furthest from the truth. Unless your accountant knows the key performance indicators that are hit by the top shops in America, what the loaded cost of labor should be for a profitable shop, and what the top shops generate in part profit as a percentage of sales, they’ll be hard pressed to tell you where you can improve. In essence, with rare exception, accountants don’t know your business. Over the years I have learned that we need to look to accountants for help with one thing, and one thing only; reducing our tax liabilities.

So here are my recommendations if you want to build a more profitable business. First of all, make sure you are using a good accounting software program, such as QuickBooks. You’ll also need to make sure you have a well-designed chart of accounts, and you’ll need to have a general understanding of business finance. You don’t need an accounting degree, but you should have an understanding of terms like gross profit, operating expenses and cost of sale.  Secondly, you will need to know the ideal targets for your key performance indicators. These are the numbers hit by the top shops in America, and knowing them will allow you to look at your income statement and quickly see where you are doing well, and where you can improve.

The third thing you will need to do is ensure you have a great accountant. When looking for the right person, you will need to keep two rules in mind. Rule number one simply states that if we put out peanuts we will get monkeys. Choosing an accountant is no different than choosing a good mechanic; you get what you pay for. There is a reason the cheap accountants are cheap, and the good ones are not cheap because they produce a good return on investment. Where do you find the superstar accountants?  You will find they typically represent higher income earners that need to maximize their tax savings, so the best place to start is by asking your attorney, your doctor and any other high income earners you know for referrals.

Once you have the right accountant, you will need to meet with them at least twice a year. Your first meeting should be during the first half of the year to review your shop’s year-to-date performance, to project your yearly income, and to start the conversation about your tax strategy.  You should then meet again in the third quarter to ensure you are on track, and make any necessary adjustments.

In closing, the top notch accountants will typically help you save a lot of money, and will ensure you are in compliance with all relative tax laws. The low-priced accountants? Just like hiring the low-priced technicians, more often than not they will cost you an absolute fortune.

For additional help building a more profitable, successful auto repair business, learn about how you can join a team of 90 of the top shop owners in the country through Elite Pro Service

 
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The Key to Calculating Monthly Sales Goals

posted on September 17th, 2014 posted by Jim Piraino of Elite Worldwide

Far too many shop owners will set an annual sales goal, and then simply divide that number by 12 to set their monthly goals. However, since this approach does not take the number of work days in each month into account, it is not the way that you should be setting your monthly goals, especially if your service advisors receive a bonus for hitting and/or surpassing monthly goals. With that said, I would suggest setting your shop’s monthly sales goals using the following method….

Grab a calendar and calculate how many days your shop will be open and operating during the year. Typically this number will be about 254 if you are closed on the weekends (365 days per year – 104 weekend days – 7 holidays= 254). You can further adjust for technician vacations if you’d like, but for our purposes, let’s use 254.

Next, divide your annual sales goal by the number of days you’ll be open during the year to calculate a daily sales goal. So if your annual sales goal is $1,200,000, divide that number by the 254 days you’ll be open to arrive at a daily sales goal of $4,724.41. When you’ve arrived at your daily sales goal, it’s time to set your monthly sales goals by multiplying your daily sales goal by the number of work days your shop will be open in each month. Since most shops will be open for 21 days this September, the September sales goal would be 21 X $4,724 = $99,212.61.

Calculating your monthly sales goals using this method will give you a much better idea of your shop’s performance each month than if you were to simply divide the annual goal by 12, and will give you a number that’s more fair to base your advisors’ bonuses on, so I would strongly recommend trying out this approach in your shop.

This article was contributed by Jim Piraino, a past superstar shop owner who now helps other shop owners 1-on-1 through the Elite Coaching Program.

 
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Are You Getting Enough Labor on Some Jobs?

posted on September 10th, 2014 posted by Joe Marconi of Elite Worldwide

Some repair operations have finality to them.  By that, I am referring to jobs that do not require additional labor after the job is complete.  For example; installing a tail light lens, set of wipers, an air filter or cabin filter.  Once these jobs are done, they are done.

There are other labor operations, such as brake work and wheel alignments, where even though a road test is required after completion, there is enough gross profit built into these jobs that we do not need to  worry about the total labor charges.

Now, let’s take an O2 sensor, catalytic converter or other similar jobs. These jobs are not over once the part is installed.  The tech needs to retest the system and the component, verify the repair and road test the vehicle.  In addition, more time is needed to sell that type of repair. Where I am going with this? The labor time to replace an oxygen sensor is only part of the repair.  You also need to account for the additional time needed to complete the operation: retesting, verifying and road testing.  Not taking this into account could hurt labor production, which will affect your bottom line.

Oh yes, I am hoping that everyone is getting paid for testing, too.

This article was contributed by Joe Marconi. Joe is the co-founder of autoshopowner.com, and one of the 1-on-1 business coaches who helps shop owners through the Elite Coaching Program.

 
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The Secret to Higher Profits and Happier Customers

posted on September 4th, 2014 posted by Bob Cooper

In building a successful auto repair business, most shop owners feel that what they need to do sell is more parts and more labor. Although both of those items are a part of your business model, one thing is for certain: your customers don’t look forward to buying either of the two, at any price. Yet thousands of shop owners are having sleepless nights trying to find ways to squeeze more money out of their part and labor sales.

While I was still operating auto repair shops I was intrigued by the fact that while my customers had little, if any, interest in the parts and labor they were buying, they were quite interested in the warranty we provided on our repairs. In essence, what they wanted more than anything else was the peace of mind in knowing they would have good, dependable transportation, and that they wouldn’t have to worry about paying again if the repair were to fail.  It was at that very time I realized that what I needed to sell more than anything else was peace of mind. I then did a tremendous amount of homework on the insurance industry, and it didn’t take me long to realize that they are all in the business of selling risk. The way they win is by factoring the inevitable losses into their premiums. As an example, for every 1,000 people they provide life insurance to, a certain number will inevitably die during the insured period, but if they choose the right customers, and charge the right amount, they’ll have plenty of money to cover those few predicted deaths. Next I evaluated the probabilities of different types of part failures, and the kind of customers I wanted in my shop.  I quickly discovered I could take the repairs that had the lowest probability of failing within five years, price them out as optional services, and completely change the way I was operating my business.

First of all, most of our failures would typically occur within 30 days, so regardless of whether I offered a longer warranty or not, I would be covering that repair. I also discovered that if the repair failed shortly outside of our standard warranty, we would cover the cost for the purpose of customer satisfaction. With this understanding, it became obvious to me that the only additional risk I would be taking would be for any failures that occurred beyond the term of our standard warranty, yet within the time outlined in our extended warranty. In my case, on our targeted repairs we offered lifetime warranties that were non-transferable. Now here is the best part: I discovered that no matter how much someone loves their automobile at the time of repair, odds are that they ‘ll no longer own the car three years later due to lifestyle changes, tempting car sale ads, etc. So my exposure (risk) was more limited than you’d imagine.

Now let’s talk about profit, and happy customers. Imagine if you were to offer your customer a standard master cylinder for $XXX dollars (with a one year warranty), and at the same time you offered them the option of a premium master cylinder (with a five year warranty) for a small additional amount. If they elect to go with the part that carries the longer warranty, then all those added dollars fall right to the bottom line. When done in the right way, the added profits will dwarf the few additional repairs you will have to perform. If you do the math, not only will you will be amazed at how profitable this can be, but as icing on the cake, the customers that choose to invest in the services that carry the longer warranties will be thrilled with the peace of mind you are providing them with.

Now if this isn’t all reason enough, consider that Harvard Review reported on a study of what occurs when people are provided with options in a sales environment. They discovered that when test groups were offered one DVD player (Brand A), only 10% would buy. When they added a second player to choose from, 32% purchased brand A, and 34% purchased brand B. The lesson?  People love choices, so offering them the option of a repair with a longer warranty is one that many of your customers will love, and it will put more money on your bottom line at the same time.

Note: Many states view offering different warranties as offering insurance, which requires a license. By providing different parts or services in your options, you’ll be good to go.

For additional help building a more successful auto repair business, learn more about the 1-on-1 coaching and customized action plan offered through the Elite Coaching Program.

 
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Community Involvement Will Help Grow Your Business

posted on August 27th, 2014 posted by Joe Marconi of Elite Worldwide

Part of your advertising and marketing program needs to incorporate community involvement, whether it’s with local business groups, church functions, the local chamber of commerce or other local organizations. The community needs to know who you are what you offer. Make it a point to network with business people to help promote local business and show that you support the people in your local area.

Remember, people like to know who they are doing business with, so knowing who you are will help drive people to your door.

This article was contributed by Joe Marconi. Joe is the co-founder of autoshopowner.com, and one of the 1-on-1 business coaches who helps shop owners through the Elite Coaching Program.

 
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Selling Auto Repair in 2014

posted on August 20th, 2014 posted by Bob Cooper

As our industry continues to evolve, there are a number of changes you need to consider. Cars are being built better, so they are lasting longer, and with service intervals constantly being extended, you will see your customers less often. Additionally, as the competition continues to heat up, your advisors will need to be razor sharp from that first call through car delivery. So here are some tips that can help you be more successful when it comes to driving up your sales and customer satisfaction.

1. With first-time callers just a mouse click away from contacting another shop, you will need to ensure that your advisors are at the top of their game when it comes to selling themselves, and your company, to the caller. Remember, customers have to feel comfortable with your advisor before they will be open to recommendations. You should sit down with your entire crew and create a list of the top 5 reasons people should choose your shop. Rather than listing the same features your competitors would list (equipment, warranties etc.), your list should include items such as your culture of never putting money ahead of people, the fact that you’re AAA approved, you’ve been serving the community for over XX years, have 5-star ratings on review sites, etc.

2. With vehicles lasting longer, your advisors need to be really good at selling maintenance. Most advisors make a fatal mistake by focusing on the parts and labor rather than the benefits of the service. Instead of trying to sell the sparkplugs and filters that your customers don’t want to buy, your advisors should be telling your customers how the maintenance will help squeeze every mile out of every gallon of gasoline, protect their vehicle manufacturer’s warranty, maximize the resale value of their vehicle, etc.

At Elite we have every student that goes through our sales training meet with their coworkers to create a “benefit list” for their more popular services, and review that list prior to presenting the sale. The results have been outstanding, so I would strongly encourage you to do the same.

3. When customers need a major repair like a replacement engine or transmission, make sure your advisors don’t jump to the conclusion that the vehicle is not worth fixing. For example, if a customer needs $5,000 worth of work to put their vehicle back into good shape, in many cases it may very well be a really great investment for the customer. As we all know, when someone buys a used vehicle they are buying two things: a lot of unknowns, and someone else’s problems. On the other hand, if they invest in their own vehicle they’ll know exactly what they have, those repairs will be warrantied, and they won’t have to go through the exercise of selling their vehicle and buying a replacement. You should have an in-depth conversation with your entire staff about major repairs, and how in many cases they are the perfect solution for your customers. You should then discuss how you can help your customers cost justify the investment. For example, if a customer in need of a major $3,000 repair were to keep their vehicle for just 3 years, the investment would be less than $100 a month. There is no way they would be able to purchase a replacement vehicle for anywhere near that low of an amount. Your advisors need to help your customers through the math, because not only is it their job, but they have an ethical responsibility to help your customers make really good decisions.

4. Never stop the self-improvement process. You should have your advisors record their sales presentations in a way that meets with all applicable laws, then once a week you should review some of those recordings. This will give you the opportunity to congratulate them on most of their sales, and have a conversation on what could have been done differently on the ones that were lost.

If you do the things that I have recommended, and if you never put money ahead of people, then you have my promise: Your sales, and your customer satisfaction, will go straight up.

For additional help increasing your shop’s sales and CSI scores, learn more about Elite’s industry acclaimed Masters Service Advisor Training Course.

In: sales
 
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