Fullerton, Calif. -- On March 15, the Automotive Service Councils of California (ASCCA) hosted a day of educational workshops and an expo of industry service providers to demonstrate to Southern California shop owners some of the many benefits of belonging to the trade association.
ASCCA President Allen Pennebaker of Orinda Motors in Orinda, said the direct benefits of belonging to the association include free legal services, legislative representation, and discounts from vendors. "You also get to be affiliated with a group of the best and most dedicated individuals in the business," he said.
The event, which drew more than 40 people, revolved around three one-hour presentations by prominent industry trainers speaking about recruitment, industry myths and change, and selling.
Recruiting employees
Robert Spitz, business development manager for Management Success, led off the day with "Building a Winning Team – Recruit the Right People." "To be successful, you need a team of professional people who share your point of view in running the business," he said.
Spitz began by discussing the differences between recruiting and hiring. "Recruiting is a sales and marketing function," he said, "while hiring is a human relations function."
The process starts with believing that there are good employees available to be hired and using effective marketing to reach them, Spitz said. "This is not a new problem," he said. "It's been going on forever, and the shops that figure out how to overcome this problem are the winners."
Recruiting is about finding and choosing the best employees for your business rather than just settling for what comes through the door, Spitz said. Because technicians are in demand and not that readily available, it requires that shops cast a wide net and use language that will speak to the desires of the person they are trying to attract, he said.
"What would you look for if you were looking for a job as a technician," Spitz asked. "Ask yourself honestly, 'Would I work for me?' If the answer is no, you have some things to fix before you begin recruiting because what most owners are really looking for is a technician like themselves."
Recent surveys of technicians by Management Success show that the first thing technicians are looking for is a good working atmosphere (36.8 percent), followed by a good salary (32.8 percent), then benefits (10.9 percent), good equipment (8.7 percent), and location (4.3 percent).
"This gives you a window into the consumer's mind so that you can market to these points," Spitz said.
Spitz said many shops get too specific, listing a particular number of years' experience, ASE certifications, and the salary being offered. "You need to think past Mr. Perfect and open the door a little," he said. "This is a numbers game, and you need to throw a lot of spaghetti against the wall to get something to stick."
Because the goal is to attract as many potential applicants as possible, he suggested using numerous ways to attract them, including newspaper ads, the Internet, fliers in the community, mentioning it at church and other social venues, and anything else that can help get the work out. "Work the grapevine of friends, employees, parts suppliers, and equipment vendors," he said.
When putting together an ad, Spitz reminded shop owners to address employee desires. He said one effective ad he has seen starts out, "Are you upbeat and positive but your boss isn't? Busy upbeat auto repair shop looking for techs to join team. If you have the right attitude and some experience, call.…"
When people reply, don't get pulled into discussing things like salary over the phone, Spitz said. "Treat the people like they are price shoppers. Get them in the door."
For instance, he said, if they ask about salary, reply, "That depends on what you can do. Why don't you tell me about yourself. Ask them questions and get them talking. That keeps you in control of the conversation."
Because technicians sometimes change their minds, get better offers, or use the offer to get more money from their current employer, Spitz also suggests hiring more than one, if possible.
Myths and change
Ken Brookings, who along with partner Chubby Fredericks owns Automotive Training Institute, spoke to the group about "Myths and Change: Why Shops Struggle."
"When there is change in the industry, a lot of myths develop," said Brookings, and they are often false and hold shops back.
One thing that hasn't changed is that the automotive service industry is huge and offers a great deal of opportunity, Brookings said. The industry is estimated to have sales of $295 billion and provide 4.5 million jobs in the United States, representing 2.2 percent of the gross domestic product. He said it is bigger than the insurance industry, farming, the legal industry, and the alcohol industry.
"The industry has also been growing rather robustly in recent years," he said, noting that growth was 4.1 percent in 2007, 2.1 percent in 2006, 5 percent in 2005, and 4.6 percent in 2004.
This argues with myths such as "Ever since 9/11…," "All my customers are trading in their cars…," "Extended warranties are taking all my work," and "People just can't afford to…," Brookings said.
There have been many changes in the industry, though, he said, noting that women now buy 51 percent of cars, 58 percent of auto repairs, and 71 percent of all service.
Vehicle reliability has also had a tremendous affect on the industry," Brookings said, showing a graph illustrating that the number of vehicle problems has dropped exponentially since 1980. "'Unreliable cars will break reliably' was the original business model in this industry, but it doesn't work well anymore," he said.
If your business model is still centered on fixing broken cars, it will be very difficult to overcome this change, Brookings said. "You may be very good at what you do, but you may not be choosing the most effective things to target with your business."
A number of myths about what is important in running an automotive business have also served to "steal your money and increase your stress," he said. Many in the industry have long believed that gross revenue was a key management figure, but he said managers should be focused on gross profit instead.
"The major controller of gross profit is gross margin," Brookings said. "It's the most important number in your business."
By the accounting measures that the Automotive Training Institute uses, surveys show that average gross margin is 31.5 percent, Brookings said. "Twenty percent is going out of business," he said. "Twenty-seven percent will just allow you to hang on by your fingernails." By contrast, he said the company's training program targets gross margins in excess of 50 percent.
A poor gross margin and therefore gross profit often gets shops thinking that they need more business -- a higher car count, he said, but that is often not the case. "If you have eight, nine, 10 cars a day, you probably don't have a car-count problem," he said. "You have a problem making the correct gross profit on the cars you have."
Achieving maximum sales
"The whole idea of having a business is to make money," said Maylan Newton of Educational Seminars Institute. "To do that, you have to be a salesperson."
Car count is only the first part of the equation for a successful shop, Newton said. "A lot of us have great employees and are getting the customers in the door, but then we're not completing the job and selling them."
While some people are uncomfortable with the idea of selling, Newton said it is actually something that we all do every day, whether as kids when we persuade our parents to buy us a bike or when we ask a girl to go out with us.
To capture customers, Newton suggested using questions and answers that lead. For instance if a customer asks the price, the shop can ask, "Is the price the most important thing to you?" or, "What have you been quoted so far?"
Newton suggested also asking customers what they liked or disliked about other shops they have visited and if they had a maintenance plan at their previous shop. Those questions give the shop information that it can use to demonstrate why having your shop fix their vehicle will meet their needs and desires.
"It's up to us to pick up on their clues, to recognize their buying signals," he said.
Newton said that where many people fail is in the close. "Closing is easy," he said. "You ask. The close should come after your sales presentation and again after you have handled all of the customer's objections.
"It's important to remain quiet after you've asked for the money," he said. "Wait for him or her to tell you the objection -- don't try to guess."
Newton suggested a permission close, such as, "Shall I take care of these items for you today?" or an assumption close, such as, "I can have the car ready by 5. Would you like me to go ahead with it?" There is also a circumstance close, such as, "Because of the condition your car is in, current problems may cause more damage with driving it. We can have you ready to roll by 5 if you give us the go-ahead now."
No matter what the situation, it's critical that you are always being honest with the customer about what is needed. "The goal is not to manipulate the customer," Newton said. "I want to get the best service for the customer while also meeting all of my business needs."
The sales process doesn't just apply to new customers, he said. "Every time a customer shows up in your store, you have to resell them on the trust, reliability, and fairness," he said. "We have to sell them on all of the things that we are providing them with every time."
Once again, Newton said that the relationship with customers is a lot like courtship. "Remember when you first met your wife and you were nice to her," he said, drawing laughs. "When we are first courting customers, we're nice to them but, unfortunately, once we get them, we often stop paying attention to them.
"You should never take their loyalty for granted because there are people out there with $30 million ad campaigns, selling $79 brake jobs, who are trying to take them away from you."
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