Critical Efficiency

A client said – ‘We are having trouble getting our shop production over $15,000 a week’. We have tried everything, bonuses, bribes, complaining, but we seem stuck at this level. I went to the mechanic staff and ask ‘how do we do this?

Well first, they said, all the owner wants is more and more for the same pay, AND we are working in cramped quarters as we have very limited parking that’s just not enough. We went back to the owner and related these opinions. Tell us how to change this, he replied.

I went to the shop manager and explained that we needed $20,000 per week in completed work. He had a few complaints that we were able to fix by the second week and we hit $17,600 – but we only did it one more time in the next month. This shop manager had hit, what he was convinced was, MAXIMUM, so it was time for a change. We put the shop manager in another area.

The new manager requirement was to average $20,000 per week, for wages paid. The sales were there – we just needed production. The new manager pay was presented to him so he would make (the same as the other manager) as long as he averaged $20,000 per week and would be given a bonus over that amount.

We built in a bonus compensation program to reward all the mechanics at $21k, $22k, $23k, etc. We found our new average went to $23k almost immediately, but seemed to peak within the next months. We met with the shop manager and asked what was keeping us from doing $25k? He related that they were working in cramped quarters and had very limited parking. That sounded familiar.

Was the new shop manager, now producing 22-23 instead of 15-20, that much better, or was the incentive program doing it? It also appeared that when the shop manager hit a point where he was able to bonus he allowed the limitations to return. This shop now does in excess of $30k regularly, in spite of cramped quarters and limited parking.

Then the Sales Manager decided that now he was selling more – and that should be worth more in his paycheck. Now if this employee is paid a salary for 5 days work then compensation for increased sales does not come into play.

If, however he is minimum salaried plus commission on excess of base, he is due some extra compensation. IMPORTANT POINT OF ORDER- BEFORE you set wages for any employee. You must be absolutely sure that you also set the requirements for performance at that level of pay. We don’t just see how it goes. We give goals and parameters for each pay level.

I once visited an Auto repair facility that had the entire shop area CARPETED. You read right – Carpeted. I ask the owner his reasoning and he related that he was after the high end cars, Mercedes, BMW, Lexus, Porsche, Bentley, Lamborghini, etc. They want their cars cared for and pampered and the carpet shows we care. I said how do you keep it clean?, he answered ‘we just don’t let it get dirty’. If it does, the mechanic cleans it – after all, it’s a CONDITION OF EMPLOYMENT!

This is something every owner needs to consider. When business is good we don’t mind having extra people around to pick up the extra slack – however it produces a level of production that is not necessarily their best work or their best production. When business falls the owner is reticent to cut back help, because he doesn’t want to be caught short WHEN IT RETURNS.

Therefore the erosion is continuing until you re-establish efficiency ratios. You must be willing to say, to your job applicant: The wage is $1000. per week and for that I expect $20k in business completed and deposited per week. After 20k is attained, for the first thousand in excess of your base, there is an extra $50 bonus. For the second thousand (in excess of base) – $60. For the third, $70.

This is an ascending bonus and works to assist completing good weeks. But caution, it can backfire if you do not watch it. A salesman can see he is going to have a bad week he may sandbag for next week and then run it as high as possible. I have found that under these conditions you must measure everything in monthly figures. IE: $20k X 4.3= $ 86k. Bonuses start after this is accomplished.

Ray Hauenstein

15 Things that will improve your operation

* Towing – Some shops markup the tow bill as well. The tow company has a discount off retail for you and then that allows you to collect that savings as profit.

* It is also good to show that to the customer and charge him your low rate thus impressing him on your helping to keep costs down. It’s really up to you.

* Cash Sales Policy – Very few owners know about all the cash that is generated in the shop. Cores that are sold for cash after the shop is charged for them on monthly statement.

* Parts that are ordered and not used, but not returned and eventually used for unreported profits. Scrap and used parts that are sold when the manager or boss isn’t there. Post signs in office and shop -

* “If you do not receive a company invoice for your purchase it’s free” another is “Coffee is free and we don’t have a fund for it- ask for a receipt or it’s free!

Too much stuff is sold and it goes into pockets. Stop the flow of free money in your shop -it’s stealing, pure and simple!

* Use your customers – Many seniors live in retirement or group homes. Make one of your Senior customers the rep for his park or building. Give him cards, fliers and coupons. He writes his name on the back and gets a little spiff or free services for what he creates.

* Containing Comebacks – Sadly they occur, some naturally, some by accident and some through laxity and sloppiness. Watch the frequency and when lack of concentration occurs combat it. Make it the job of someone to log each occurrence and see that it’s fixed.

* Industry Reputation – People will be suspicious of you because of the industry history. Attack the problem by talking about honesty and accuracy with your shop crew and customer.

* Cross Train – Obviously this is beneficial to prevent vacations and sickness from hampering you getting work out. Everyone should learn to diagnose. Teach them how to get a confirmation from another worker – it’s another set of eyes.

* Commercial Warranties – Many commercial companies put much more mileage on vehicles than to private owners so change the warranty times to suit the duty.

* Working Hours- stagger work times to accommodate a longer day without working everybody all the time. Allow lunch hours and try to get them away from shop.

* A Personality – You need to be the personality- not your help. Be there, meet customers, picture on way, quality statements framed on the wall in lobby.

* Proper Scheduling – A terrible thing to live with is the salesman who promises work to early. Make sure your customer doesn’t have to wait or hang around and then you have to keep people overtime to get the job out. Fridays need to be controlled.

* Saturday Morning – Some shops save this time for coupon services so they don’t interrupt regular work during the week. Coupons are also good to confine to a small number a day. IE: every morning open to 10 a.m. or Saturday mornings. Take in jobs for Mondays start.

* Customer respect and their vehicles – No squealing of tires, driving home for lunch, running errands with their vehicles. The customer deserves better.

* Lot Vehicles – In hot times of year be careful not to leave windows open. When it rains you cannot always remember to close them. Keep oil off paint and from the inside. Place mats and steering wheel covers. Clean the windows before delivery.

* Language – Sloppy language demeans your shop and you. There is absolutely no reason to permit it EVER.

* Drop ins – Friends drop in to see friends and see nothing wrong with it. Coach them-limit the time and occurrences.

* Phone Calls – Watch the personal phone calls-they will make them, just control excess.

* Keep bays full- an empty shop is uninviting. It will actually turn people away.

Special Offer

If you have a management question that you would like to ask our resident Guru “Ray” Please send him an email at:
rayh@mastershopcoaching.com

Article: Ray Hauenstein, All rights reserved

www.mastershopcoaching.com

Marshall Kelly (editor)

Teach how and when to close a sale

There is always natural resistance to closing a sale if the repair can be immediately put off. “Your radiator is leaking, Mr. Jones. There are several ways to fix the situation.

1. A new radiator where we replace it with an aftermarket unit guaranteed for 3 years.

2. A radiator reseal in which we remove it and send to a shop that will flush and reseal it and guarantee it for 1 year. And,

3. Putting in stop leak and watch the fluid level to see if it seals. If you are keeping the vehicle choices 1 & 2 are the wisest. If you are considering replacing the vehicle we can proceed with #3. If you choose #3 and you are planning to sell your vehicle it probably will bring a little less money.”

When should this conversation all be done?
Obviously not without a full checkup, because the hoses may be contributive or even the water pump and then there is the thermostat. Don’t diagnose quickly at the fender.

Teach calmness and what I call ‘no big deal’ discovery. No matter what is wrong – don’t make it a big deal. It’s just a radiator problem and can be resolved in 3 ways with minor expense.

Everything is in a stage of continual wear out. Some parts wear out abruptly and some gradually.

Replacement of parts is a natural process of any vehicle. No matter what the repair cost is – is will likely cost less here, because we discount our repairs = always have! Just relax and let us find out the right options to correct the problem and then get you on your way.

At this point we must discuss honesty. It’s just a matter of truth, accurately presented.

“Your tires should be replaced immediately Mr. Jones, they’re ready to blow out any minute and you will cause a terrible accident or run over and kill somebody. I sure wouldn’t let my wife drive that car even out of the driveway”.

“Your engine is ready to blow and when it does it’s going to cost you thousands of dollars”. Now I admit that’s a little ridiculous, but get the point here – planting anything unnecessary into the presentation to enable you to close the deal is not looking after the best interest of the customer.

He should always be in control of the decision without sensationalism or trickery. He needs to feel that he is safe here and that comes from how you treat him.

Your shop needs a command structure. If you are the CHIEF then appoint who is in charge of sales and customer attention.

Who is in charge of test drives and diagnostics?

Who is in charge of installation?

Any new people are then trained by one of these. Working together is a requirement – not an option.
Your shop needs an information structure.
This is a point in which all work is noted on a whiteboard and all scheduled work needed and parts to be ordered and job deadlines are posted.

Don’t even think that you are all good enough to work without it -you are not.
You are wise to insist on continuing education and certification

Plan and budget 1% or 2% of quarterly profits to send your crew to a community college or tech school for updating.

As the owner contact your high school automotive training departments and make yourself available for trips to your shop and to speak to the students. Good new employee source.

(Next month): 15 Things that will improve your operation

Special Offer
If you have a management question that you would like to ask our resident Guru “Ray” Please send him an email at:

rayh@mastershopcoaching.com

Article: Ray Hauenstein, All rights reserved

www.mastershopcoaching.com

Marshall Kelly (editor)
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A special note from Deanna at ShopController

If you haven’t used ShopController, it is a very user friendly program. I don’t know how many customers have told me how easy it was for them to learn, even when they’re new to computers.

I’ve even had customer’s that said they’ve always done everything by hand and always will, to later tell me they don’t know how they ever lived without the program!

We have four levels of ShopController and can help you determine which one will work best for you. If you’re a new shop and need just the basics, we have that! If you’re growing and need a little more, we’ll help you grow! If you’re established and need help organizing your information, we can do that!

We’re a very “welcome to the family” type company and would love to help you in any way that we can. We always take suggestions and are continually trying to make a better program for YOU! Give us a call and we’ll show you how we can help. 800-898-2038

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ShopController has just added a new “Third Party Integration for Email Marketing“ (Video)This is an awesome enhancement to our flagship product.

With email marketing you can pick groups such as Lubrication, Tuneups, Brakes etc and selectively email reminders to your customers in an interval configured setting.

You will also have the ability to email Newsletters to the complete/selected list of customers with a built in email editor.

Note: The email marketing module is available by subscription) Call us for details. 800.898.2038

Click here to become an affiliate for ShopController
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Carfax Upgrade: Add license Plate and State for vehicle info, Real Time

Free upgrades to ShopController (version 8.0) – Save time and money while increasing car count. ShopController has been upgraded and now includes CARFAX® QuickVIN™ & Service Link™ applications.

These powerful tools help increase productivity in the shop and get your name in front of more customers. To activate at no cost, simply call 888-655-5362.
CARFAX® QuickVIN™

The tedious, unreliable process of recording Vehicle Identification Numbers (VINs) of cars you service is no longer an issue. Typing a vehicle’s license plate and state into the CARFAX QuickVIN application instantly produces the VIN.

You’ll be able to move more cars through with the ability to generate over 100 VINs per hour using this simple feature already built into ShopController.

With CARFAX QuickVIN, you won’t have to worry about technicians mistyping the VIN or handling expensive, often malfunctioning electronic scanners. Correct VINs mean more accurate part ordering and better quality of service.
CARFAX® Service Link™

Start using CARFAX Service Link – the free enhancement to your ShopController software designed to connect you with customers and keep you ahead of the competition.

Activating CARFAX Service Link means your shop’s name, location, phone number and website appear on all CARFAX® Vehicle History Reports™ that include your repair record.

This drives traffic to your website and generates more phone calls. Plus, partnering with CARFAX boosts consumer confidence and builds loyalty to your facility.

CARFAX Service Link helps keep vehicles coming back to your shop even after they change owners. Records of service from your facility may help improve vehicle value at trade-in or resale, making your repair facility more attractive to potential customers.

CARFAX Service Link lets your facility gain exposure to the millions of people who are saying,
“Show me the CARFAX.”™
Call 888-655-5362 to learn more and to activate this free upgrade(Version 8.0), courtesy of ShopController. Or call ACS at 800.898.2038

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Thank You,

Marshall Kelly (Editor)

Recommended Pay Program

Recommended pay program considerations start with a manager. The Goal is set for sales that month. This goal  is the sales needed to pay parts, supplies, overhead, wages, taxes, everything. It is the months break-even figure.

This sales figure produces no profit for the company. The managers wages for this for the 44 hour week (5 and ½ days) is minimum wage ($6.55) X 40=$262.00 + 4 Overtime hours @$9.82=$38.28.

Adding the 2 together totals $300.28 before taxes. Then bonuses are paid on some percentage (5%-6%-7%) of every $1000 of sales over break-even. This program keeps everything indexed to sales performance and insures just as much good effort that you need toward the end of the month.

Most pay the manager too much, then after 2-3 months dismiss him because he doesn’t perform to the level of his pay. The answer is keep him indexed. Your entire sales cost should not exceed 5%. Monthly Bonus Sharing is another great way to pay employees.

Everybody gets a minimum wage program plus a share of the profit for the month. The profits are based on the amount of overage there is above expenses. Mechanics can be paid another way- with minimum wage 44 hour a week program plus $14-$15-$16 per hour for every book time hours they perform.

CONCEPT of your company is reflected in the process and treatment procedures you train your employees to use when handling your customers. Teach how to start with a clipboard, as you start with a customer using a checklist and discuss his observations of what he is suspecting is his problem.

A check sheet is best that a technician can add comments to during checkout. Walk to the vehicle with customer making notations of conversations and observations. Ask who has serviced the vehicle last and how long it has been.

Record the mileage and recent work done.

If a noise or something occurring while driving seems to be the problem – arrange for the authorized test drive technician to be briefed. Ask for permission to check other systems while examining the problem area.

May I offer you a free brake check and tire inspection while we have your vehicle on the lift?’ If the customer is leaving the vehicle get all appropriate info and permissions.

Total Vehicle Care is a great concept

This is a checkout procedure that makes the owner aware of the ‘real’ condition of his vehicle. The purpose is to prevent breakdowns and keep repair costs at a minimum. A simple repair to a faulty battery cable will prevent a stranded condition.

Fluid checks find parts that are leaking and overheating. Engage the customer in a feeling of security by teaching the concept to your employees and show them how to explain the safety in the full checkout procedure. Some shops present it as a 19 point safety check you get free with every Lube/Oil & Filter. The more you check – the more defects you will find.

Consider a $20-$30 used car checkout fee for those thinking of buying a car from a private party. You look the car over – check systems and fluids and give them an opinion of its overall condition. I know shops that do this and they find that word of mouth brings even more customers. Be the authority they trust in vehicles.

Article: Ray Hauenstein, All rights reserved

www.mastershopcoaching.com

Marshall Kelly (editor)