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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Be Consistent With What You Say and Do

posted on August 13th, 2014 posted by Joe Marconi of Elite Worldwide

As shop owners, what we say to our employees and how we act is important in how others view our ability to lead.  It’s crucial to be consistent with your policies and with everyone you employ. Never show favoritism and follow through on all promises and commitments.

The morale of the shop starts at the top. The shop owner, the leader, sets the tone. We all know how hard it can be to remain positive and find the good in people and that silver lining each and every day. But, if we are poor leaders, inconsistent and convey a negative demeanor, the results will be damaging not only to morale, but to the success of the company.

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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Should Your Shop be Open December 26th?

posted on August 6th, 2014 posted by Jim Piraino of Elite Worldwide

Merry Christmas!

What? Christmas? Yup, it’s not that far away, and if you haven’t looked at the calendar it falls on Thursday this year. So what? Well, if you’re a shop owner you will probably give little thought about the Friday after Christmas until sometime late in December when an employee asks, “Hey boss, are we open or closed on the Friday after Christmas?”. At that point it will be too late to make a good decision. If you decide not to close you will most likely aggravate some, if not most, of your employees (who will forever label you as “Scrooge”). Your customers will not have had enough warning and many will expect you to be closed. Your vendors will not know what your needs will be for that day and your entire staff will be irritable that day. 

On the other hand, if you decide to close you will be faced with another quandary.  Do you pay or not pay your staff for the time off? Some employees would like the day off either way. However, some may be on a tighter budget and closing without pay could present a hardship. These are the employees who will tell you to stay open.

Some of you will be open no matter what, and I respect that. However, if you are on the fence, I have a suggestion that actually takes the decision and stress out of your hands, and all it takes is a little effort on your part now. A simple calculation to determine an average day’s sales will give you a number that represents the sales loss if you choose to close. Agree? Then what you can do is take that number and add it to your sales goals for the months of September, October and November (so if an average day’s sales is $6,000, you would add $2,000 to the September sales goal, $2,000 to the October sales goal and $2,000 to the November sales goal).  If you hit those sales goals, and have essentially covered the cost of closing, on December 1st you can announce to your staff and your customers that you will be closed on December 26th.  If the sales goals are not met, then the shop will be open on the 26th.

The other holidays do not have the same seasonal effect. No one really minds coming in on Thursday when the 4th of July is on Wednesday. Of course, New Year’s day will be on Thursday also, so should you close on that Friday????? Hmmm.

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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Selling Multiple Repairs – Guidelines for Success

posted on July 30th, 2014 posted by Bob Cooper

In today’s market, service advisors are facing a number of challenges. One of the more complex challenges is when a skeptical first-time customer comes in for an oil service, and the advisor discovers that this customer needs a long list of repairs. This is what most advisors refer to as the proverbial “laundry list.” Unfortunately, what most service advisors will do is either hold back some of the recommendations because they are afraid they’ll scare the customer away, or they’ll struggle through their presentations. So here is what I am going to recommend that you do…

#1. With every first-time customer you need to do a lot of fact finding. Beyond the standard questions you ask, you need to ask them how long they have owned the vehicle, and whether they bought it new. You also need to ask when was the last time the vehicle was in a shop, what it was in for, if anyone else drives the vehicle, and what their plans are for it. In essence, you need to discover if they plan on keeping it, and if so, for how long.

#2. Have a conversation with every first-time customer about your vehicle inspection process, and how they’ll win. Take a moment to tell them about the qualifications of the technician who will be inspecting their vehicle, and let them know the inspection service is being performed for two reasons: to ensure there are no safety concerns, and to establish a baseline for what services may need to be done, and when.

#3. When you build your estimate, always bundle all repairs and services that are relative to each system on the vehicle; the brake system, suspension system, cooling system, etc. This way you are prepared with a price for taking care of everything that needs to be done in each of the systems.

#4. We all know that when we start a sales presentation, and the customer senses they will need a number of repairs, they’ll get anxious. They’ll then immediately ask for a price, or they’ll tell you they just want the oil service done. The secret? Always ask for permission to talk about the price after you’ve reviewed your discoveries with them. For example…

“First of all, Mr. Smith, when you brought your car in this morning, you said you were concerned about a couple of different things, so tell me if I am missing something here. You said the brake pedal was going down quite a bit, and you also said you needed to have your Mustang back by 4 o’clock.  If I remember correctly, something about an anniversary dinner; is that right? Well look, I have some really great news for you. When it comes to your brakes, and being able to have you out of here by 4 o’clock, we’re going to be able to solve both of those problems for you. As I mentioned this morning, the gentleman who inspected your Mustang is Jim Piraino. He’s an ASE Master Certified technician, he’s been with us for 12 years now, and I have to tell you; he’s really gifted at what he does. Now we’ve taken a look at all of your service records, and I’m actually looking at a copy of Jim’s inspection report, so let me tell you what we discovered. First of all, I’d like to say congratulations on taking good care of your automobile because your battery, your tires, your suspension, and your drive train all appear to be in good, operable condition. Now, in addition to the brakes, there are a couple of other things that I’d like to chat with you about, so if it’s ok with you, let me tell you what Jim’s discovered, we’ll have a conversation, then I’ll be more than happy to answer any questions you might have, and we can go over the prices at that time as well. Are you onboard with this approach, Mr. Smith? Terrific!”   

#5. If they can’t authorize everything, and you need to prioritize, always start with what they brought their vehicle in for, followed by anything that has to do with their personal safety, then the safety of others, followed by vehicle maintenance and comfort items.

#6. Never compromise your ethics. If you do the right things for the right reasons, and if you never put money ahead of people, it will show through to your customers. Combine your shop’s ethics with the above guidelines and you have my promise: you and your customers will be thrilled with the results.

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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Employee Behavior Outside of Your Shop

posted on July 23rd, 2014 posted by Joe Marconi of Elite Worldwide

I got a call the other day from a fellow shop owner who needed to vent. He runs a big shop and gives his techs a lunch break every day from noon till 1:00 pm.  His techs got into the habit of going to the local mall and hanging out in the parking lot; smoking cigarettes and often getting a little too loud. They were not causing any real trouble, but it just didn’t look good.

Someone finally called from the mall to complain and said that many of the business owners at the mall were afraid that this was affecting business. The techs were also not too careful about the cigarette butts.

The shop owner was furious, disappointed and embarrassed.  He asked me what he should do.

I suggested that he have a talk with everyone at the shop. Sit them down and explain to them that when they wear the company uniform they represent the company, and everything they do, even on their own time, may affect the reputation of the shop. If that reputation is damaged, business will suffer; especially if the business is in a small community.  Everyone in the company should be accountable to themselves and to the company.

I think this is a lesson for all of us.  We need to be careful of who we hire and how we communicate the culture of our companies.

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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Booking the Customer’s Next Appointment? Why Not?

posted on July 16th, 2014 posted by Joe Marconi of Elite Worldwide

What do doctors, dentists, eye doctors and hairdressers all have in common? Thats right; they all book the next appointment. So why dont we do it? Oh, I know many of you do, and that’s great. But most shops don’t, and I have heard every excuse under the sun why booking the next appointment does not work (“My customers don’t know what they are doing in 4 months”). Well, guess what; when your dentist books your next cleaning, you don’t know if you will be available on the booked date in six months or a year either, do you?

Booking the next appointment will help to smooth out the highs and lows in your workflow. It will keep the customer coming back to you and not thinking of someone else.

But there is a trick to the success of booking the next appointment. What does your dentist do a day or so before the appointment date? Yes, he calls you. And if you cant make it that day? Right again; he books another day. So the trick is to set up a call system to remind customers.

The thing to remember is that every car in your shop today will need future service work, the questions is; will that customer come back to you? The odds are in your favor when you book the next appointment.

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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