[pbrennan]

Randy – 

I have some extensive experience with phone systems as they relate to service companies. There are a few key features to look for in a good phone system that will ultimately translate to dollars & cents:

– Easily manageable by some office staff (to add phones @ the shop, remotely, wherever, add numbers, pull reports, etc).

– Ability to pull detailed stats that will tell you things like call volume per hour, total abandoned calls (so you can call them back), and service-level factors so you can tell when your busy hours are or if you’re doing your job answering the phone.

– Potential integrations with your shop-management software so when a person calls in, it will automatically open the customer’s profile & populate the lead source in the shop management software, based on the dialed number & caller ID.

– Ability to show custom displays on the physical phone display based on other parameters. Example: The display will show the lead source (i.e., google PPC) based on the dialed number. It’s very useful for the service advisers & will help clean up your marketing data.

In my experience, the phone is the largest source of found money in a service business, and having a good phone system will provide a huge ROI if managed properly. I hope this answered your question. I’m not sure why your phone system wasn’t good enough. Can you give more details?

Also, try a local telecom company. They might buy your phones.

[pbrennan]

I would also agree – it could be great source of referrals & future repeat customers if done correctly. But, your customer database is almost the entire value of your company. 

On another note – isn’t AAA referring to your shop, anyway? They have a list of all of their customers.

[pbrennan]

I think the question you should ask is, “Who gets the phone to ring the best?”

It’s going to be a person/company with a mix of experience in:

– Wed design

– Conversion optimization

– SEO

– Paid Search Marketing.

The web design itself relating to conversion optimization can almost be it’s own profession on it’s own, and is often under-valued. CO is a deep subject & has lots of moving parts. Are you looking to do SEO / Paid Search as part of your website package?

[pbrennan]

I believe you shouldn’t compete on price. You should sell your value. Can you create a business that can command 15-50% more because you offer a better product? Short answer: yes.

The dealerships can do this pricing model fairly easily because of one thing: capacity. They have lots of techs to work with, so they’ll always have a C tech doing C-tech work.

But if you have say, 3-8 techs, and mixture of all types, you might HAVE to put an A tech on some C-tech work when the schedule demands it. Then you could be actually just lowering your gross margin, and not increasing sales at all.

Think about this, too. I came from a background of home service, where there are just as many competitors as automotive service (think plumbing / air conditioning). We provide the best guarantees, warranties, and service in the business. We decided to do a price test. Running 9 branches in this price test, we kept 5 branches at the same pricing level, allowed 2 managers to lower their pricing to what they felt to be competitive, and in the last 2 we raised prices about 20%, on average. The difference in volume / close rate? NOTHING. The branches with lower pricing sold nearly EXACTLY the same amount of jobs, at a lower price. So did the branches that raised their pricing.

What does this tell us? A small change in price is unnoticeable to the uneducated end consumer. Consumers don’t shop around, especially if they like you and trust you. Does a non-shop owner / non-mechanic know what it takes to do a ball joint on a 1993 Jeep Cherokee? Of course not! Can people tell if they’re being “sold”? Do they research your reputation before coming to your shop? You bet.

Maybe you have some loss-leaders or jobs priced low that are highly shopped, like oil filters or tire rotation / wheel alignments. Get the customer in the door, get them to love your business, and they’ll pay more. Be Apple, not Dell.

[pbrennan]

Maybe you can make a deal with a local gas station / car wash place, and buy bulk car washes for super cheap. Then hand out vouchers when customers come to pick the car up?

Alternatively, you could do the same thing, but take the cars over yourself & have them washed, if you’re trying to deliver the car that way.

[pbrennan]

This may be a non-car-guy question, but don’t manufacturers publish their recommendations in the owners’ manuals? Maybe a call to the local dealership as a “customer” would give you a good mileage interval?

[pbrennan]

I agree with Tom.

I would also invest heavily in customer service training. Allocate a budget toward customer refunds if you haven’t already, and be liberal with your policies in making customers happy. That will ensure repeat business & referrals – which are the quickest way to grow. Have a good way to manage your online reputation as well. A service business can live & die based on their reputation.

A strong focus on other digital marketing efforts would be good: pay-per-click, SEO, and email marketing. If you can afford it, start a regular direct mail campaign to targeted areas within a 7 mile radius of your shop.

I don’t particularly recommend investing with Yelp. If you can manage to score a great reputation on Yelp, you’ll never need to spend a dime advertising with them (although you might choose to test it out in the future).

[pbrennan]

I think it’d make sense to look at this a little differently.

What exactly are you trying to measure?

If it’s defining who a “customer” is, I would include a dollar amount with that to make sure you’re including every “edge” case. For example, why not every customer with at least 1 R/O and total dollars spent over $60 or $100? Isn’t that a customer? 

From another perspective, isn’t everyone a customer?

What’s the purpose of knowing how many “customers” you have? If you’re looking for growth, it could be a number of things. Unique customers in 12 months, unique customers vs avg. R/O, or simply repeat business – % of customers that had already been to your shop in the preceding XX months… 

Define what growth is to you. Usually it’s a mix of repeat & new customers. What about X thousand total customers, broken down into repeat (last 24 months) vs new (never in the database), growth year-over-year, and overall revenue growth?

[pbrennan]

Tom Pippo has the right idea: Get a 50% down payment on work over $XXX dollars (arbitrary, but be conservative) for cars older than X years old. I.E. – maybe $700 or more, 50% down for cars older than 5 years old.

This will help w/the liens & such. You could get the lien, claim the car, and spruce it up & make it into a shop loaner (if it’s worth it).

Otherwise, put language in the contract & over the phone getting verbal approvals & be up-front about storage fees after X weeks unless it’s arranged in advance. I think it’s really a case-by-case basis, but you should implement these policies just to cover yourself in the event one is left for a long period of time or abandoned. 

[pbrennan]

Great ideas.

I would also add that managers / owners need to make this a regular process. Always be looking for rock-star employees & potential recruits, even if you don’t need them. You’ll always have a “bench” full of potential hires when things go south with one or more of your team.

Thanks!

[pbrennan]

Great post.

[pbrennan]

Wow. Amazon is poised to take over just about any industry they want!

They just launched “prime now” in my city (Las Vegas). I can pretty much have anything delivered that I can get from a Walgreens + more within 2 hours for free.

[pbrennan]

I haven’t sold a shop, but I’ve been involved in lots of acquisitions & sales in the home service industry, which has a lot of parallels to the automotive industry.

I think a good broker is absolutely worth the money. However, those are few & far between. Most brokers I’ve dealt with don’t really represent much value for either side.

Here are some things to look for in a good broker:

– Has industry experience.

– Has industry contacts (buyers – bigger companies or the like).

– Isn’t just a “marketer” that will list your business on a bunch of websites.

– Understands finance & accounting thoroughly, and how they affect the value of your business.

– Understand how to “prep” your business for sale to get the highest price.

– Understand pitfalls of negotiations, and why negotiations fall apart & what to do if they stall.

– Can perform a valuation of your business as it is today.

The only way to tell is thorough questioning & reference checking.

Otherwise, consider this: I’ve has success attracting buyers on my own by just advertising the business for sale on business selling sites. If you’re OK negotiating your own contract & terms, it might be well worth it to try that first. If you’re not OK with contract terms, financial details, and prepping your business / books for sale, it’d probably be worth the time to find a good broker.

Feel free to contact me directly if you want the name of someone I know that can do valuations & help answer some questions for you. patrick@review.camp

[pbrennan]

Great advice!

I’ve heard a lot of horror stories and experienced it first hand when a company didn’t want to give up a website. Make sure you own all intellectual property. Most hosting plans have tools that allow you to give access to a manager to manage your domain settings & hosting.

This doesn’t just go for your website / domains, however. It should apply to all creative, ad copy, etc that you have any company do. Have standard language that you use or tell your vendors that you will own all intellectual property rights, and want all source files.

[pbrennan]

Yelp can go one of two ways: help or hurt.

The first step, before you ever consider advertising with Yelp!, is to bolster your online reviews & reputation. There are a ton of ways to do this, but having a consistent process that you train your staff to use, plus a tool to track your online reputation is the first key. 

In short, if you have less than a 4 star rating, don’t spend money with Yelp!. If you have a 4+ star rating, these can be very solid leads. You can first experiment with just having an offer on your page or the ability to book appointments. Then you can go with their PPC if you’re getting good leads from that.

Even yelpers understand that Yelp! is a place lots of people complain. So if you work to improve or bolster it, and you have a good rating, you’ve already built trust with potential customers, making your conversion rates on those much much higher!

Simply getting more positive reviews on Yelp!, however, will bring you more leads. Having a better online reputation increases the response and conversion rate of all of your advertising. I tell business owners this all the time: make customer service & your online reputation the keystone of your marketing strategy; the foundation. I’ve read studies that have shown a 1-star increase to equate to 5%-9% increase in revenue. 

In short, I’d rate Yelp! a 9.5 if you have a 4+ star rating. I’d rate it a 0 if you have less than that.

[pbrennan]

I’ve heard several schools of thought on this:

1) Open Saturdays, because that’s what customers demand. Pros: It’s another day of production, depending on who is working. More capacity = more revenue, earlier deliveries to your customers. You capture more business from people who wouldn’t come in otherwise during the week. Cons: it’s tougher on your people, and not being open Saturday could be a good way to attract top employees away from competitors. (There might be ways around this – such as 2 employees on a Tues-Sat schedule). 

2) “Half-Staffed” weekends: Only staff 1 Service Advisor & a mechanic. The goal here is to simply “capture” business that would come in so you can work on it during the week. You’re answering the phone fully, doing light diag, selling some work. Not necessarily a full production day. If you have more than 1 S.A., they switch off Saturdays, as do techs. This provides the convenience for customers, but gives employees a break. This might be the best way to go at first – until you have enough business on Sat. to justify adding techs or SAs to make it a full day.

I know a general manager of a Firestone near me who knows it’s just part of the industry. He’s a top-producing guy for them, and he has Saturday & Wednesday off. They are staffed through the weekend.

In general, I think you have to consider your team, and whether you can do it in a way that will retain the best people + provide balance for them still, while maximizing the revenue of your shop. Tough choice!

[pbrennan]

Sure – 

There are some good articles & resources out there about how to design a good piece of direct mail. In general, it should be very clean / not busy with lots of text, have a strong call to action with an offer (or two) attached. The most common are cheap oil changes or free tire rotation w/oil change, etc.

This is a pretty involved subject. I’d be happy to help you out if you direct message me or email me directly – patrick@review.camp

Here are some high-level tips:

– Buy a quality list of prospects around your area. You can specify things like avg. home value, income, radius from your shop, among other things.

– Get examples of pieces that work well for other shop owners – Does anyone have any they can send Stephen?

– Train your staff on how to convert the phone calls & customers that come in. This is the step most business owners fail to do.

– Set a test budget and time frame and a decent quantity of mailers & track everything to the gnat’s eyebrow. 

– Constantly be testing & refining the mailers & lists – and do this consistently throughout the year.

There are some companies out there that will be able to do most of the list buying / piece design & mailing for you.

Again, feel free to reach out if you want more specifics!

[pbrennan]

I wouldn’t recommend doing mass media advertising until you have a large budget.

I managed large marketing budgets of home service companies ($8mm+ budget) and unless you have big budgets, the spend won’t go very far. As example, our TEST budget for radio in Phoenix was $225k. And mass media is the type of thing that needs to be executed right and run continuously, or you won’t see the benefit.

You’re best off allocating resources to other efforts, like customer satisfaction tools + direct response (PPC, direct mail, email marketing), and SEO. I’d envision a shop that has probably 10+ locations in a geographic area as one that might start experimenting with TV, radio, etc. 

Nice website!

[pbrennan]

You should absolutely have a tool where you can quantify your performance & measure the cost of advertising at the same time. The best one I know of, which I’ve used extensively, is callcap – http://www.callcap.com. It will give you booking % – by advertising medium & by person, plus unique calls. Also, you can save calls that were not booked – an excellent money-making feature.

Jeff – maybe you can give us some ideas of the specific objections you’re having, and we can go from there. Is it all price shopping?

[pbrennan]

I think it’s a great idea. Here are some considerations I can think of right off the top of my head:

1. Federal regulations: I know credit cards are highly regulated. Are you compliant with those?

2. Technical security: Are you taking payment through your software? Is it PCI compliant? Do you have bank-level security? 

3. Software development: Who developed the software? Who hosts it? Is it built to scale to many many users? Who will continue developing it & maintaining / supporting it? My suggestion would be to partner with a software development firm, since this isn’t your expertise. But REALLY do your homework before partnering with one.

4. Scaling: It’s a business like any other, and will require your time to help it grow.

5. Credit Risk: Does the owner take this risk? What other tools other than FICO does an owner have through your software to make a credit decision?

I think it’s a great idea, though – and would appeal to a lot of shops (and other service businesses). I agree with Tom – I would license it, say starting at 3% of sales tiered by volume, and their interest rates would cover credit risk & the cost of the software. The program sells itself compared to car care one.

[pbrennan]

Ty – Do they do any type of advertising tracking? Do you track phone calls specifically from Angie’s list? My guess is that these customers, since they are pickier & probably more educated, have higher average RO’s & will spread the word to more people if they are satisfied.

[pbrennan]

I think the absolute best scenario is a no-nepotism policy. 

Unless someone already brings a lot to the table and expectations & contingencies are thoroughly discussed and in writing, don’t do it. Eventually someone’s performance will suffer or issues will surface and feelings might have to be hurt. It’s tough to remain accountable to someone you’re close to.

[pbrennan]

Sometimes it might be more manual, but some smaller companies are often good to work with in getting things financed, and might be able to lend sub-prime. Here are a few:

http://www.myanypurposeloan.com/auto-repair-financing/

http://www.icarefinancialcorp.com/programs/85-services/auto-Financing/80-auto-repair-Financing

[pbrennan]

You could simply charge a “convenience fee” on an invoice instead of for rental cars, right?

[pbrennan]

Does anyone use DropBox for business? I’m thinking of using it for things like storing sales presos, process documentation, etc, in an effort to stay paperless.

Any suggestions on other Dropbox-like software that has permissions & version control?

[pbrennan]

I personally think this would be an excellent way to stand out from the crowd. Millienials & Gen Y are just coming into more $$$ & will start representing a much larger portion of your customer base. Plus, texting is a very easy & unobtrusive way to keep your customer informed – as long as it’s not marketing-related.

I don’t see a problem if your SA were to say something like “Can I text your cell to notify you that your vehicle is done being inspected / ready for pickup?” It’s much more convenient for busy, working people & again – could set you apart.

Bolt on looks pretty promising!

[pbrennan]

I believe the less you surprise the customers, the better. If there’s a way to simply add it into the cost of each task on the invoice without splitting out parts & labor & shop supplies visible to the customer, so you have ONE price for each task on the invoice, that’s best. 

That way it’s included in your price. Two big benefits there: you don’t have to explain it to customers, and customers won’t feel “nickel-and-dimed” by your shop. It could even be a selling point. No “nickel-and-dime” nonsense pricing. Also, quoting prices over the phone & drafting estimates would be a little quicker.

[pbrennan]

Agreed with Tom – 

Someone I know hired a good SA who was a math major in college & just very personable & smart. Attitude & aptitude win over experience, every time!

[pbrennan]

I was discussing this issue a while back with a shop owner. Here are a few conclusions we came to:

• The industry needs to pay more as a whole. Technicians are a declining population everywhere.
• If you want the best techs, pay for them. Offer 20% more than your competition, and/or better benefits, and be willing to pay for the talent. This affords you the ability to be very selective.
• Some ideas for getting more techs applying to your company:
• Google Adwords for searches in your area.
• SEO-Optimized Careers page.
• You’ll have to always be recruiting. Run ads 24/7/365 on the top sites, and commit to interview 2 potential techs per week. Then you’ll always have a short-list of potential hires.
• Treat your existing employees fairly and give them the opportunity to make good money & have great benefits – they will talk to other techs.
• Move techs from out-of-state if you have to. There are ways to do this to reduce your risk if you pay for relocation or sign-on bonuses.

[pbrennan]

Hey there,

I agree – my personal health insurance is going up 17% next year. I have a couple of comments about this.

First, an idea that might save you a few bucks. If your business is under 50 employees, this might be worth looking into:

Most health insurance rates are “group” insurance, and as I understand, the rates are based on actual claims data for that group. So it goes to say that groups with older populations probably have higher rates. I used to work in corporate America, for a company that had a lot of 50+ employees. As a 20-something back then, my rates were an astounding $550/mo for just me – and that was the group rate through the company of 5,000+ employees! After leaving that company, I got quotes for myself independently of any company policy, and because I was young & healthy, my rates were only $200/mo.

So the idea would be: Have your employees search for their own individual policy & see if it’s cheaper than yours at comparable coverage. Use an insurance company to help you administer the quote-gathering process. If it is, offer to cover whatever % of it you’d cover for other employees, and you’ll save the difference!

NOTE: I’m not sure if this counts as offering health insurance under the “obamacare” laws. You’ll have to check with your attorney or HR / insurance provider.

Second, do you offer more coverage for healthier employees? Does your plan administration offer discounts to non-smokers, people who aren’t overweight, etc? This would qualify them at different rate tiers, possibly saving you & the company money.

Also, If you do offer benefits, that is a big selling point in the industry. The more benefits (not just health insurance) you offer, the better employees you can attract. Perhaps you aught to think about increasing your standards among employees you hire or already have, as a condition to your increasing costs of benefits? 

Or lastly, and not least, insurance costs are always on the rise. If you have to raise prices, you have to raise prices. Your competition who doesn’t won’t be able to offer benefits to their employees, or they will eventually go out of business. Both are great scenarios for you! Ultimately that is what will happen with all businesses – and the consumers will end up having to pay for the increasing costs.