By John Lee and Rich Diegle, ALLDATA Tech-Assist Team
Our friend, let’s call him Jim, is a great mechanic. He’s even better at writing service orders and taking care of his customers. Like many good mechanics, after years of providing great service at someone else’s shop, he decided to make the transition to opening his own shop.
He began as a one-man operation and grew to employ three mechanics and a service writer. Over the years, his shop made money for him but not much more than what he made as a good flat-rate mechanic. No matter how hard he worked or how many tedious hours he put in, he just couldn’t seem to make a “better” living as an automotive shop owner. Does this sound familiar? Unfortunately, this is the most common tale in the automotive industry.
There are so many facets to owning a successful automotive business—it’s much more than just repairing vehicles and providing good customer service. We would like to share our “prescription for success,” a few simple business tricks and tools that we’ve both used over the years. Following these can immediately impact your shop’s productivity and profitability.
Market Your Business
You can really increase your car count by dedicating about three hours per week to marketing your shop directly to other businesses that are within a one-to-two mile radius of your location. This type of marketing targets specialty businesses such as used car lots, rental-car companies, cab companies or any type of business that has a fleet of cars and trucks. Even medical and dental offices—they always have a “captive” audience. Deliver to each of them a basket of fruit, muffins or bagels along with a stack of flyers that offer the employees of those businesses, and their customers, a “special” discount. It goes a long way to consistently return every week or so to prove that you are dependable. If you show up just once or twice, your flyers are likely to end up in the “round file.”
Track Employee Productivity
Most shop owners/managers believe that they have a fairly good idea of how well their techs and service writers are performing. Unfortunately, they are unaware of many time-consuming tasks that can be wasteful and adversely affect a shop’s bottom-line. Here are two examples:
Diagnostic research is the most common un-billed task. Establish a criteria for how long your techs should spend on researching a difficult problem. Most successful shops settle on no longer than 20 minutes. After 20 minutes, techs should ask for help from other techs, automotive forums, diagnostic hotlines, etc. There is usually at least one tech out there who has encountered the same problem so there is no need for a tech to waste more time. Explain to them that it’s okay to ask for help.
The service writer’s down-time is another common un-billed task. It’s a great time to make marketing calls in the late morning or early afternoon, when it’s rare to have customer traffic. Have your service writer call other businesses to schedule a time for you (or them) to briefly explain the benefits your shop can bring to their business.
Host Customer Appreciation Events
Events that bring your customers into the shop to thank them for spending their hard-earned money with you can reap huge rewards. Remember, customers have a choice of where they take their car, so don’t just tell them you appreciate their business: show them. You can organize many types of events that include special pricing just for VIP customers. For example, plan a special event that promotes scheduled maintenance.
On a weekend day, hire local musical talent, such as a guitarist or a small group, to perform at your business. Invite families and offer snacks or invite a food truck to set up. The event could be paired with a 30k/60k/90k maintenance service. These kinds of events are golden!
Offer a free 25-point (or however many points you want) inspection for A/C service in April or for winterizing in the fall.
Evaluate and Adjust
As a business owner, one of your primary duties is to review shop reports, evaluate information and trends, and then adjust your business practices accordingly. It’s imperative that you analyze all of your reports every month—not just sales, expenses and profits. Here are a few important financial practices to evaluate:
Repair trends – Track what types of repairs the majority of your customers are purchasing and why they came in. This is how you measure the effectiveness and performance of your advertising, marketing and telephone-sales skills.
Advertising ROI – Evaluate the return on investment (ROI) from direct-mail coupons and other advertising campaigns. Are those discount coupons attracting customers who purchase the repairs you recommend or are they just there for a cheap oil change? Spending a few advertising dollars pursuing new customers is fine but it’s ultimately more profitable to send those coupons to your existing customers. They are the ones who should be rewarded for their continued patronage and are more likely to return for regular service and repairs. Promote customer loyalty – it’s much more profitable!
Pricing – It’s very important that you communicate to your customers the options and outcomes of buying quality parts versus cheaper parts. Use the “good, better, best” pricing strategy. Buyers appreciate having a choice and it gives them a basis for comparison. Three-tiered pricing gives your shop credibility because it demonstrates that you are equipped to deliver high-end parts and services. On the other hand, offering more cost-effective parts and services allows you to effectively compete against the discount shop down the street. Be sure to define both verbally and in writing how different price points result in different quality results and warranty periods. It’s also important to review your parts suppliers every month. When they change where they get their parts, you may need to adjust your pricing and warranties accordingly.
Due to the fact that every shop is a little different, there are thousands of ideas we could suggest but these should be the highest priority on every shop’s “To Do” list. Follow these guidelines and you can expect greater success. In closing, we would like to say that the only “magic pill” that really makes a positive impact on your business is the one you take EVERYDAY—and it’s called BEHAVIOR! The behavior of following through with evolving your business is the one thing that will allow you to change your status from “a mechanic who also owns a shop” to a “successful business owner.”
About the Authors
John Lee, ALLDATA Manager of Operations, Automotive Support has over 37 years of industry experience with over 15 years as a Certified Business Consultant.
Rich Diegle, ALLDATA Tech-Assist Team supervisor, has over 40 years of industry experience with over 10 years of automotive marketing and editorial experience.