Ratchet+Wrench - June 2017

06.17

STRATEGIES & INSPIRATION FOR AUTO CARE SUCCESS

ONE SHOP’S MOVE TO

CUT CUSTOMER ATTRITION PAGE 54

PREVENT

CYBER SECURITY THREATS

PAGE 52

A SHUTTLE SERVICE

SOLUTION PAGE 51

SHOP SURVEY AN IN-DEPTH EXPLORATION OF THE QUESTIONS SURROUNDING THE INDUSTRY’S TECH BOOM

DO ELECTRONIC INSPECTION SHEETS BOOST ARO? PAGE 40 ARE MSOs BETTER EQUIPPED?

PAGE 41

ARE YOU INVESTING ENOUGH IN TECHNOLOGY? PAGE 43 WHAT CAN TELEMATICS DO FOR YOUR SHOP? PAGE 44

MITCH SCHNEIDER:

HOW MUCH IS YOUR SHOP WORTH? PAGE 60

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J U N E

Learning to Delegate Ken Gamble's two-shop operation, North Hills Automotive, runs like a well oiled machine thanks to Gamble’s well-honed ability to delegate.

F E AT U R E

C A S E

36

54

SURVEYING TECHNOLOGY

Our second annual look at the technology paramount to today’s shops.

B Y B R Y C E E VA N S

S T U DY

RETAIN CUSTOMERS

Lou Murante took an individualized approach to fixing the customer retention problem in his shop.

R E PA I R

L I F E

64

LET IT GO

Ken Gamble’s South Carolina business reached new heights when he learned one simple tactic: letting go.

B Y K AT H L E E N S A N D O VA L

PATRICK COX

B Y T R AV I S B E A N

PRINTED IN THE U.S.A. COPYRIGHT ©2017 BY 10 MISSIONS MEDIA LLC. All rights reserved. Ratchet+Wrench (ISSN 2167-0056) is published monthly by 10 Missions Media, LLC, 571 Snelling Avenue North, St. Paul, MN 55104. Ratchet+Wrench content may not be photocopied, reproduced or redistributed without the consent of the publisher. Periodicals postage paid at Twin Cities, MN, and additional mailing offices. POSTMASTERS Send address changes to: Ratchet+Wrench, 571 Snelling Avenue North, St. Paul, MN 55104.

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TA B L E O F C O N T E N T S

J U M P

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13 ONLINE

23 BREAKDOWN

14 CONFERENCE UPDATE

25 VIEWPOINT

Determining benchmarks for sales per square foot Numerous session speakers announced

Distinguishing exempt versus non-exempt employees

IRIDIUM-ENHANCED FOR PERFORMANCE. ENGINEERED FOR VALUE.

Understanding the millennial mindset

27 SPEED READ

ASA voices opposition to Texas vehicle safety inspection program bill

28 SHOP VIEW

Turbo Tim’s Anything Automotive’s quirky branding

31 THE RETURN

CAM2 Rack E-Pack Rack

33 STRAIGHT TALK

Inspire trust between leadership and staff in the shop

16 AWARDS INSIGHT

JOE MARCONI

Keys to successful communitybased marketing

18 EDITOR'S LETTER

Don't fear technology

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51 SHOP ADVICE

A step-by-step approach to implementing a shuttle service

52 TECH+TOOLS

How to prevent a cybersecurity breach in your shop

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58 EDUCATION+TRAINING

Successfully make the switch from paper to digital inspections

60 THE BOTTOM LINE

The most common ways to determine your shop’s value MITCH SCHNEIDER

69 CUSTOMER CENTRIC Learn to communicate with millennials AUDR A FORDIN

70 SOLUTIONS

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Ford Customer Service Div. Engraver: None Doc Scale: 100% FMQC2333000 Output Size: 100% 1155321 Media/Type: Magazine FCSD-01375 6.75” x 9.5” 8.375” x 11.125” 8.375” x 11.125” This document utilizes the Pantone + color library

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READ WHAT THE PROS READ.

EDITORIAL EDITORIAL DIRECTOR Bryce Evans MANAGING EDITOR Anna Zeck ASSOCIATE EDITOR Travis Bean STAFF WRITERS Kelly Beaton, Noura Elmanssy CUSTOM CONTENT PRODUCER Tess Collins WEB CONTENT PRODUCER Kathleen Sandoval EDITORIAL INTERN Melissa Steinken CONTRIBUTING WRITERS Audra Fordin, Joe Marconi, Mitch Schneider PRODUCTION ART DIRECTOR Zach Pate GRAPHIC DESIGNERS Fue Vang, Becca Sugden PRODUCTION ARTIST Leah Quinto SALES PUBLISHER Chris Messer 651.846.9462 / cmesser@10missions.com NATIONAL ADVERTISING SALES Alysia Nelson 651.846.9463 / anelson@10missions.com SALES MANAGER Matt Mortinson 651.846.9452 / mmortinson@10missions.com REGIONAL ADVERTISING SALES Melody Todd 651.846.9468 / mtodd@10missions.com CLIENT SERVICE SPECIALIST Jen George 651.846.9465 /jgeorge@10missions.com

“I like Ratchet+Wrench because the articles are about current topics and really focus on owners and running a business. The topics are new, interesting and thought-provoking, and I always take away something.”

10 MISSIONS MEDIA PRESIDENT Jay DeWitt MARKETING COMMUNICATIONS SPECIALIST Anders Seefeldt SALES SERVICE SUPERVISOR Mariah Straub SALES SERVICE REPRESENTATIVE Meghann Moore EVENT AND SPECIAL PROJECTS COORDINATOR Katie Cornet DIGITAL MARKETING & MULTIMEDIA ASSISTANT Josh Resch-Lien

- Troy Minske, Owner | Rum River Automotive, Princeton, MN

EDITORIAL ADVISORY BOARD Andy Bizub, Midwest Performance Cars Greg Bunch, Aspen Auto Clinic Leigh Anne Best, Mighty Auto Pro Ryan Clo, Dubwerx Ron Haugen, Westside Auto Pros David Toole, Toole's Garage HOW TO REACH US SUBSCRIPTION SERVICE tel 800.869.6882 fax 866.658.6156 email subscriptionservices@ratchetandwrench.com.

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COMMENTS, DISCUSSIONS, FEEDBACK AND MORE FROM AROUND THE WEB FACEBOOK

PODCAST

AAA: ONE THIRD OF U.S. DRIVERS CAN’T PAY UNEXPECTED REPAIR BILLS

Oftentimes, we show a customer what they are spending per month on auto repair. At our shop, the average is about $70-$80 per month per vehicle.

— DAV ID CHIFFENS OW NER, A MBLER TIRE & AU T O SERV ICE A MBLER, PA .

TWITTER

RADIO

This month, Ratchet+Wrench focuses on evaluating the technology and tools in use in shops across the country.

LINKEDIN

@Snapon_Tools announced its software upgrade.

Read more on what this upgrade means here: bit.ly/2nTvVDQ — @R AT CHE TN W RENCH

Kia and Hyundai to recall 1.4 million vehicles over engine issues.

Get more information here: bit.ly/2o0HhoU — @R AT CHE TN W RENCH

Kia and Hyundai to recall 1.4 million vehicles over engine issues.

Get more information here: bit.ly/2o0HhoU

THINKSTOCK

— @R AT CHE TN W RENCH

SALES PER SQUARE FOOTAGE

Nick Edwards, operations manager at Car Center—Collision and Mechanical Group, noted that he is working on opening a new shop and wants to know how much space he really needs. He reached out to other shop owners to ask, “What are you getting as far as sales per square foot.

Does anyone know what industry averages are?” ratchetandwrench.com/ educationincentives.

0 6 .17 / R + W / 13

O N L I N E / C O N F E R E N C E U P D AT E

UPDATE

Art of the Pivot Ryan Clo, owner of Dubwerx in Cincinnati, will present on how to pivot your shop, resulting in not only a transformation, but also explosive growth.

RATCHET+WRENCH ANNOUNCES CONFERENCE SPEAKERS

A slate of conference speakers have been added to the agenda for the Ratchet+Wrench Management Conference, to be held Sept. 24-26, 2017 in Chicago. Those speakers include the following:

• Ron Haugen, owner of Westside Auto Pros in Des Moines, Iowa, will explain how to move away from price and focus on how to better meet customer’s expectations, as well as strategies for increasing technician efficiency.

• Ryan Clo, owner of Dubwerx and Just Saab in Cincinnati, will show how to transform a stagnant shop into a powerhouse business equipped to thrive.

EARLY BIRD SPECIAL

Registration Open —

Ratchet+Wrench Management Conference registration is now open at rwconference.com.

Early bird prices are available for a limited time.

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With 24/7 online ordering, RepairLink gives you access to competitively-priced OE parts. Increase customer loyalty through state-of-the-art online technology and the preferred parts procurement solution of shops.

Visit OEConnection.com/ratchetandwrench to enroll.

RepairLinkShop.com BE PART OF IT ALL

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COURTESY RYAN CLO

• Leigh Anne Best, owner of Mighty Auto Pro in Medina, Ohio, will present on the best tips for finding and hiring the right people, and how to engage with customers over the phone.

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Sprinter is the 2017 ALG Residual Value Award winner in the Fullsize Commercial Van segment. Metris is the 2017 ALG Residual Value Award winner in the Midsize Commercial Van segment. ALG is the industry benchmark for residual values and depreciation data, www.alg.com. Edmunds.com logo is a service mark of Edmunds.com. All rights reserved. ©2017 Edmunds.com

AWA R D S I N S I G H T / G R E G P H E A S A N T

NOMINATE NOW Do you know someone you'd like to see profiled in this space? Email submissions@ratchetandwrench.com

R AT C H E T + W R E N C H A L L - S TA R N O M I N E E

G R EG PH E ASA N T TECHNICIAN A MASTER MECHANIC R E N O, N E V.

B Y K E L LY B E AT O N

Greg Pheasant attended his first NAPA Autotech training session when he was just 13 years old, with his shop owner father. A little more than a decade later, the young technician had already earned 16 individual ASE certifications.

That doesn’t necessarily mean all forms of shop technology come easily to Pheasant, however. The 25-year-old simply knows that studying up on shop innovations can make his work more efficient. That’s why he’s even willing to help veteran techs embrace new software.

“We all like things that make our lives easier,” explains Pheasant, a technician at A Master Mechanic in Reno, Nev. In that spirit, Pheasant rallied the troops at the shop in 2016, when the facility had been slow to adapt to Bolt On Technology’s tablet software, due in part to a few shop veterans who lacked technical savvy. The young technician studied the product thoroughly, and became the point person at his shop for teaching co-workers about it.

“Before I even presented it to anyone, I had to educate myself so I was very familiar with the program, so I could answer questions,” says Pheasant, who was nominated for a 2016 Ratchet+Wrench All-Star Award. “There has to be a leader in the situation, of that technology that you’re going to implement.”

Pheasant, whose workplace now has some technicians with a productivity percentage as high as 94 percent, has plenty more tips for getting a shop crew to embrace and learn new technology. He shared them with Ratchet+Wrench.

COLLABORATE WITH COMPETITORS. When A Master Mechanic was in the implementation stage with new tablet software, Pheasant reached out to other shops in his area, and those phone conversations soon revealed that several nearby peers had similar questions about the technology and how to use it as efficiently as possible. So, Pheasant helped set up a group training session. Now he has a network 16 / R + W / 0 6 .17

of colleagues he can reach out to when technological questions arise.

The technician says staying connected to colleagues and former co-workers in his area has helped him view the tablet software from different angles, which has strengthened his knowledge.

CONVERSE WITH SOFTWARE COMPANIES. By forging an open line of dialogue with software companies, Pheasant has inspired no less than five recent program changes. He has found software companies to be fairly receptive to making program changes that improve shop workflow.

“A lot of these programs will adapt to make work easier for you,” Pheasant says.

“I’ve made changes in some of the programs in Bolt On individually, just by calling and asking a few questions.”

TRAIN CONSISTENTLY. The tide of technology has made for scenarios in which manufacturers like Chrysler and GM frequently update their

scan tools. As a result, it’s imperative for shops to train regularly, Pheasant says.

At A Master Mechanic, employees attend 12 training sessions per year—one per month, usually for four hours at a time. Pheasant says that has helped him and his co-workers keep pace with new vehicle information.

BE PERSISTENT. Once shop operators have found a new form of technology that fits their point-of-sale systems—and that has been proven to be efficient at other shops—they need to demand adoption of it from employees, Pheasant says.

Because Pheasant envisions an industry in which oils and antifreezes vanish in the not-too-distant future, giving way to shops replete with computer technology, techs need to be armed with as much information as possible to keep pace with competitors.

“These vehicles aren’t under warranty for very long before we see them,” he notes.

“And it’s nice to be able to know what’s going on, to have a heads-up for what’s coming your way.”

FUE VANG

ILLUSTRATE ALL FUNCTIONALITIES. Pheasant works with a few veteran technicians, who, not long ago, were used to writing tickets by hand. Those experienced employees weren’t eager to embrace tablet technology. Until, that is, Pheasant showed them how tablets can make their lives exponentially easier.

Now, after some hands-on training, those veteran techs have become fans of the tablets’ voice command functions, and the fact they can look up wiring diagrams instantly.

“I think a key with everyone was once they realized the communication gap that that bridges,” Pheasant says.

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EDITOR'S LETTER

THIS LETTER WAS NOT WRITTEN BY A ROBOT

AS TECH ADVANCES, DON'T FORGET THE HUMAN ELEMENT can elicit myriad reactions— running the gamut from exhilarating to horrifying.

On one end of the spectrum, advances in computer systems and artificial intelligence have led to a higher quality of life.

Technology can (and has) helped cure diseases, better control the world’s food supply, and open up an era of incredible interconnectedness that has forever altered the way people communicate and go about their daily lives.

Of course, on the other side of the argument: Robots will take our jobs.

That’s a joke, but I don’t mean to make light of anyone’s trepidation surrounding technological advancements; there are legitimate concerns, starting with the very fact that as technology replaces many tasks formerly performed by real, live people, there is often a personal, human element that’s lost, not to mention a tangible loss of jobs in some cases.

I’m going out on a very short and sturdy limb here in assuming many of you fall more in line with that first group mentioned, rather than the second. On pages 36–44, you’ll find a summary of our Just uttering the word “technology”

18 / R + W / 0 6 .17

second-annual Ratchet+Wrench Shop Technology Survey. Judging from the results in it, the vast majority of folks operating businesses in the auto service industry have embraced technology and have chosen to face any challenges associated with it head on. To borrow a couple examples: Eighty-one percent of respondents now use an electronic management system (up ever so slightly from 80 percent in 2016), and 35 percent use an electronic inspection sheet (3 percent percent higher than in 2016). Ninety-nine percent of you have at least one diagnostic scan tool, and roughly 95 percent have a repair information subscription.

Those are fairly remarkable numbers that show just how progressive this industry really is—and there are plenty of other examples in the story. I won’t give it all away here. Read the story. and if you still yearn for even more, look for the revamped, complete, for-sale report online at ratchetandwrench.com/2017shoptechsurvey. It’ll be worth your time.

But here’s my point with all of this, and, really, it’s a point that’s been made countless times in past issues of our magazine by people far more qualified than me to make it: Technology aids in creating

NICK SPAETH

efficiencies in the tasks your business—any business—performs, which ultimately allows more opportunity to make true connections to customers.

Yes, every industry has experience with technology replacing certain jobs. It’s true even in journalism, as our team here at Ratchet+Wrench sat through a seminar recently in which the speaker discussed how “robots” eventually could write our stories. The Associated Press has already started using computer systems to generate content in some isolated cases. Maybe this could become the norm? Maybe it’s far-fetched and unrealistic? Maybe a robot wrote this entire letter? Who’s to say? (Full disclosure: A robot did not write this letter.)

Whatever the potential outcomes could be, the fear of the unknown can’t cause hesitancy in making decisions that better your business and improve the quality of life for you and your team. Technology won’t replace the human element that makes your businesses great, but it will change the way you operate. And in the end, long-term success likely will come down to how you react. Is the advancement of technology an issue or an opportunity? Well, that’s up to you to decide.

RADIO

BRYCE E VA NS, EDIT ORIA L DIREC T OR BE VA NS@10MISSIONS.COM

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9:54/ AM 0 6 .174/12/17 / R+W 19

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Genuine Mercedes-Benz Air Filters allow up to 60% more clean air into your engine,* while still filtering out unwanted particles. That’s because our filters have more pleats to help block dirt, gravel, and other debris from reaching your engine. A cleaner engine — at a competitive price.

This is why you should choose Genuine Mercedes-Benz Air Filters. Contact an authorized Mercedes-Benz dealer or learn more at www.mbwholesaleparts.com. *As compared to leading paper air filters and based on test #ISO 5011-2000, which measures filtration efficiency using diesel soot.

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— PAGE 28

/

IDEAS

/

PEOPLE

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TRENDS

NICK SPAETH

NEWS

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J U M P S TA R T

Service Advisor Overtime Pay Regulations Shift NON-EXEMPT OR EXEMPT? EXPERTS EXPLAIN—AND GIVE PREVENTATIVE TIPS—ON THE 9TH CIRCUIT COURT RULING

BY TR AVIS BE AN AND MELISSA STEINKEN

In March, the 9th U.S. Circuit Court of Ap-

peals ruled that service advisors, in contrast to technicians, are “non-exempt” employees under the Fair Labor Standards Act (FLSA).

This means that service advisors are entitled to overtime pay—though that does not apply to every state.

State laws on exempt and non-exempt employees differ, and that can make payment a little muddled for shops, says Stephen Marmaduke, managing partner for Wilke, Fleury, Hoffelt, Gould & Birney LLP. Often, shop operators overcompensate and end up paying an employee a lot more than required.

With some confusion over the changes to the exempt and non-exempt status of service advisors, shops are scrambling to adjust their payrolls. But, despite the differing state laws, shops can take the proper precautions to avoid potential legal issues.

BREAKING DOWN THE CASE The ruling came after service advisors at a California Mercedes-Benz location sued the dealership in 2012 and alleged that they had been wrongly characterized as exempt employees and should have been paid overtime compensation.

On appeal, the 9th Circuit in March reversed the district court's decision regarding the plaintiffs’ overtime claims because prior U.S. Department of Labor (DOL) guidance and regulations issued in 2011 supported a finding that service advisors are not covered by the exemption for mechanics and salespeople (Navarro v. Encino Motorcars LLC, 780 F.3d 1267 (9th Cir. 2015)). The dealership appealed the 9th Circuit's decision to the U.S. Supreme Court, which agreed to take the case.

The 9th Circuit Court of Appeals has ju-

risdiction over South Carolina, North Carolina, Virginia, West Virginia and Maryland.

The ruling is in conflict with the 4th and 5th circuits, which previously ruled service advisors are non-exempt, Marmaduke says.

“When that happens, you get these parallel legal authorities, which is one of the things that makes it so tough to manage for a business owner,” he explains. “Decisions in the 4th and 5th Circuits don’t apply to the 9th. So really it’s just about knowing what your regulations are.

“Federal law is a little different, specifically with regard to how overtime is calculated in, say, California. In general, California is more stringent than the federal law, or more liberal, depending on what side of the coin you’re on. And so, in California, you generally don’t have to look at federal law a great deal because California law is going to be what applies. It’s really a state-by-state case.”

DIFFERENCES BETWEEN EXEMPT VS. NON-EXEMPT To put it simply, the difference between exempt versus non-exempt employees is that non-exempt employees are paid on an hourly basis, while exempt employees must have some type of administrative or management responsibilities. With service advisors, Marmaduke says, this could go either way.

“Some of them may be working more than a 40-hour week,” Marmaduke says.

“Maybe they come in on Saturdays to help out customers. If you have been treating them as exempt employees, meaning you’ve been paying them a flat salary and you’re not paying them overtime, and now they’re nonexempt, then they could retroactively have a wage claim for overtime—that can go back three years. And if you’ve got multiple service

writers, those hours add up, and that could be quite a bit of money. So you have the retrospective claim you’re worried about. And then going forward, you’re going to really have to clock them in and out to make sure they don’t get into an overtime situation—or if they do, you need to be aware of it.”

Mary Kemnitz, CFO at D&H Enterprises in Concord, Calif., and a member of the Automotive Service Councils of California, says she pays her service advisors hourly with added incentive to reach team bonuses.

“Everyone in my shop qualifies for team bonuses, not just technicians,” Kemnitz says.

Part of her payment plan stems from how California’s minimum wage is always increasing, she says.

In states like California, shop owners won’t have as much trouble with federal laws due to their more stringent state laws, Marmaduke says.

“If they want to switch from exempt to non-exempt, then the employer should work out a fair compensation program,” Kemnitz says.

Kemnitz gives her employees a bonus once the whole team hits its numbers goal for the period.

One of the problems employers encounter is mistaking how much their insurance covers. Insurance does not cover lawsuits that arise from paying an employee incorrectly.

PREVENTING POTENTIAL MISHAPS Kemnitz checks her employees’ statuses on CalChamber, an informational site from the California Chamber of Commerce.

This site is her go-to place for help for human resources.

“I really caution against employers classifying an employee as exempt,” Kemnitz says.

She would not pay her employees a salary unless that person was an owner and had been given a share of the stock in the business.

Marmaduke recommends people in the industry first take a look at wage orders issued by the labor commission and look closely at the standards set for their employees.

Yet, he says the easiest way to clear up any confusion is to call a lawyer or talk directly to an HR person.

“The frustrating thing is there are a number of rulings—both federal and state agencies that have ruled things that are very similar, but not quite identical,” he says. “If you’re questioning if they’re exempt or non-exempt, they’re probably non-exempt. You need to look into it further.”

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repair information | shop management | shop marketing

J U M P S TA R T

Selling Maintenance to Millennials AN EXPERT IN MILLENNIAL TRENDS AND ENGAGEMENT SHARES HER TIPS FOR SELLING VEHICLE MAINTENANCE

BY TESS COLLINS

A 2016 study conducted by personal finance website NerdWallet found that 64 percent of millennials are surprised by the cost of car maintenance. The study also found that millennials share many of the same attitudes about vehicle ownership as other age groups. That begs the question: If millennials are shocked by the cost, and other generations share this sentiment, how can mechanical repair shops sell maintenance services?

Leah Swartz, senior content specialist at FutureCast, a department within Barkley advertising agency, has written articles on millennial trends and engagement tactics that have been featured in major publications such as Forbes and the New York Times. According to Swartz, the key to getting millennials to invest in vehicle maintenance and turn them into repeat customers is creating a personal connection and establishing trust.

WHAT SHOULD SHOP OWNERS KEEP IN MIND WHEN IT COMES TO MARKETING TO MILLENNIALS? I think the automotive industry is a ripe category for personalization. When I say personalization, I’m not just talking about the fact that my mechanic knows my name when I come in. I’m talking about a surprise-anddelight feature. A shop that communicates that they know you were here six months ago and provides a reminder and a coupon for an upcoming service will do that. Millennials are all about an environment that says, “I know you, I know what you need, and I’m going to help you.”

We recently conducted a study that looked at the millennial mindset. We took what we knew about millennials with the assumption that this generation is the most influential of all consumer groups. We put a survey out to the general population and we saw that there are six key drivers to the millennial mindset: innovation, purposeful, accessible, social circle, self and trusted.

“Trusted” is the most important mindset for

the auto industry, followed by “social circle.”

“Trusted” accounts for 48 percent of millennial-mindset brand preference and “social circle” accounts for 23 percent.

When it’s broken down by gender, the most impactful driver for millennial men is “social circle” and for women, it’s “trusted.”

What that means is that men are looking for a shop that people are recommending and one they can talk about with their friends.

Women are looking for a shop that they can trust and that keeps its promise. Knowing this, shop owners should be working on getting customers to talk about their brand beyond social media. It’s necessary to be on social media but that’s not the secret—it’s how you get people to talk about your brand that will get millennials to come in.

PERSONALIZATION SEEMS LIKE SOMETHING THAT ALL GENERATIONS WOULD APPRECIATE. IS THERE REALLY A HUGE DIFFERENCE IN MARKETING TO MILLENNIALS THAN TO OTHER GENERATIONS? Yes and no. I think that different generations have a different set of needs but if you’re really looking at what’s impacting the general market, millennials have a huge impact. If you create a target campaign that’s directed toward millennials, it’s more likely to message up to other generations. I’m not saying that this is the end-all-be-all and that you can’t segment and create a campaign and messaging platform based on different needs, but we have seen that when something attracts the millennial generation, it’s likely to influence all.

WHY DO YOU THINK MILLENNIALS ARE HESITANT TO INVEST IN MAINTAINING THEIR VEHICLES? We like to refer to the millennial generation as a trade-up, trade-down generation.

What’s important to note about this generation is that this is a group that graduated college and got into their first career around 2008, which was the height of the recession.

When it was their time to hit the job market, the reality of the recession hit them full force and they had to reimagine their financial capabilities. This leads to the trade-up, tradedown principle. Things that millennials have deemed valuable and necessary for their lives are what they’ll trade up for. Things that they can budget, they’ll trade down.

The assumption that I’ll make on why a high percentage of millennials are shocked by the cost is that the automotive industry is so crowded that there are always cost-cutting ways that they can approach auto maintenance with and millennials are always looking for those deals.

WHAT WOULD BE AN EFFECTIVE WAY TO MARKET A SERVICE, SUCH AS AN OIL CHANGE, TO A MILLENNIAL? I think an example of something that works really well goes back to personalization. Do you know me? Do you actually know what kind of car I drive? Do you know what I use my car for? Imagine getting a standard discount coupon straight to your house for $25 off. Now, imagine getting a personalized text message that says something along the lines of, “Hey, Leah, we know you’re driving every day to get your kid to school.

Let us help you with that—here’s $25 off your next oil change.” That approach will be much more effective.

ONCE A MILLENNIAL HAS COME INTO THE SHOP, WHAT CAN BE DONE TO KEEP THEM AS A CUSTOMER FOR LIFE? A great way to do this is through a customer relationship management program. This is something that’s incredibly important for the automotive industry. It’s all about creating multiple touch points and reminders and being involved with customers. It doesn’t necessarily mean sending out a direct mailer every month. It could be as simple as sending an automated text that says, “Hey, have a great drive today.” It’s things like that that will keep you top of mind.

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J U M P S TA R T

COURTESY AMERICAN & IMPORT AUTO REPAIR

ASA OPPOSES TEXAS BILLS TO END VEHICLE SAFETY INSPECTION PROGRAM Texas Senate Bill (SB) 1588, introduced by state Sen. Donald Huffines (R-16), would dismantle Texas’ safety inspection program and institute an “inspection program replacement fee” due at vehicle’s registration or registration renewal.

SB 1588’s House counterparts, HB 3995, also calls for the elimination of the safety inspection program.

“Texas has a successful vehicle inspection program that protects the motoring public.

This private-public partnership program show not be eliminated without further research and input from stakeholders,” said Robert L. Redding, Jr., the Automotive Service Association’s (ASA) Washington, D.C., representative. “Other states have pursued exhaustive studies and determined that these safety inspection programs prevent accidents and injuries, as well as save lives. We ask that repairers contact their legislators and request these bills be defeated.”

ASA encourages all interested parties in Texas to visit TakingTheHill.com to contact their state representatives in opposition to these bills.

N.Y. STUDENTS NAMED 'AMERICA'S TOP TECHNICIANS' Two seniors from H.B. Ward Technical Center in Riverhead, N.Y., finished in first place at the 2017 National Automotive Technology Competition.

The students, John Deluca and Evan Wagner, who can now call themselves “America's Top Technicians,” were sponsored by the Greater New York Automobile Dealers Association and beat out 29 other teams from across the country to win the national competition.

It is the sixth time that a team from Greater New York has brought home the national title. It is also the second win for H.B. Ward.

The National Automotive Technology Competition, which is the auto industry’s largest school-to-work initiative, pits the nation’s best high school automotive technology students against each other for the title. The national competition culminates with a three-hour, under-the-hood component where students diagnose and repair automobiles that are rigged with a variety of malfunctions. Students are also tested at ten

Educating Consumers American & Import Auto Repair, a Federated Car Care member, recently hosted auto care clinics for women at its shop.

separate workstations, including job interviewing, CAN Bus (controller area network), STEM, brakes, wheel alignment and balance, wiring repair, information retrieval, hybrid vehicle repair, mechanical, and SP/2 shop safety.

“Computer systems dominate today’s new cars so the students who make it to the finals of this competition have shown that they have an extraordinary ability to combine highly technical knowhow with problem solving abilities. We need these highly motivated and talented young people in dealerships across the country to make sure vehicle owners have access to technicians with the best computer and technical skills,” said Mark Schienberg, president of the Greater New York Automobile Dealers Association, which organizes and sponsors the annual event.

The National Finals, held in New York in conjunction with the New York International Automobile Show, are possible thanks to the generous contributions of over 125 industry sponsors including automakers, industry organizations, OEM suppliers, educational institutions, and dealers associations from across the country. This year, prizes and scholarships totaling more than $3 million were awarded to the participants. Snap-on, the competition’s official tool supplier, provided tool sets to all competitors.

WOMEN IN AUTO CARE UNVEILS NEW WEBSITE Women in Auto Care, formerly the Car Care Council Women’s Board, has launched a new website as part of its recent rebranding initiative. The new website features full

events coverage, a robust member roster, a comprehensive news selection and a variety of other features and resources for women in the auto care industry.

The website has been designed to include online functionality for its membership application and most popular awards, the Women of the Year and Automotive Communications Awards.

FEDERATED MEMBER HOSTS AUTO CARE CLINIC In honor of National Car Care Month, Federated Car Care Center member American & Import Auto Repair recently had a women’s car care clinic at its location in Johnson City, Tenn.

“Our women’s car care clinic went over really well and we received lots of positive feedback from the participants,” said Tim Smith, owner of American & Import Auto Repair.

“We covered a lot of ground and a good time was had by all. Our clinic was ideal for moms wanting to be more safety conscious for their families, single women looking to maintain their vehicles and teen drivers who are learning how to care for their car. We are already planning our next event and look forward to even more women from the community joining us for a fun night of learning.”

The clinic focused on ways to stay safe, save money and learn more about their vehicle. Some of the areas covered included how to change a flat tire, what to look for under the hood, the safe way to jump start a vehicle and how to prevent the five most common mistakes that can cost drivers.

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J U M P S TA R T

Turbo Tim’s Anything Automotive

1

MINNEAPOLIS

BY TESS COLLINS

PHOTOGR APHY NICK SPAETH

2 SHOP S TAT S

1

Owners: Tim Suggs

Before the shop’s relocation in 2014, owner Tim Suggs stumbled across a stray cat that the shop decided to adopt. The black cat has become a symbol for Turbo Tim’s and has made its way onto the branding for the current facility. One cat turned out not to be enough for Suggs: The shop inherited another black cat from one of its customers.

Suggs’ wife and co-owner of the shop, Rachel Grewell, says if Suggs had it his way, the shop would be filled with cats.

Size: 15,000 square feet Average Monthly Car Count: 550 Annual Revenue: $2.1 million

/ SHOP PETS

2

/ E Y E- C AT C HIN G SIGNAGE

When they moved into their current location, Suggs and Grewell asked around about the cost of purchasing a sign. When they uncovered the expense, they decided to make their own and enlisted the help of the staff and their local artist friends. They cut out the letters and the logo, which features a cat with its tail wrapped around a turbo, and even rusted the letters to create a patina feel.

3

/ CUSTOMER LOVE

The eclectic logo for the shop can be found on various branding materials, including $5 T-shirts that the shop sells. The T-shirts are a big hit. Although Grewell says they’ve never calculated how much of a profit they’ve turned on selling these, she says it’s a great way to get their name out there.

One of their customers was in a band, CHARN, and took a photo onstage wearing the shirt and shared it with the shop.

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3

HAVE AN OUTSTANDING SHOP? Send a few photos and a brief description to submissions@ratchetandwrench.com and we might feature it here.

4 4

/ A R T A P P R E C I AT I O N

For the past few years, Turbo Tim’s has participated in an art show in Minneapolis called Art-A-Whirl. During the art show, Turbo Tim’s hosts a car crushing event where Suggs drives over donated customer vehicles, which have been painted by local artists, with a military vehicle he purchased several years ago. The shop also makes a point to purchase an art piece each year and display it in the lobby of the shop.

5

5

/ MUR A L WA L L

The staff is friends with artists that are a part of a collective group of artists that create collaborative pieces. They created a mural featuring Suggs’ truck floating in the fish tank that takes up an entire wall in the shop.

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/ N O T-Y O U R AV E R A G E S H O P F L O O R

The artsy feel at Turbo Tim’s doesn’t stop at the lobby. The shop floor, which features 16 lifts and individual workbays for each of its 12 technicians, features bold colors.

The color scheme was based off the colors used in Suggs and Grewell’s wedding.

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J U M P S TA R T

S TAT S SHOP REVIEWS OF AUTO CARE PRODUCTS

Website: cam2.com

CAM2 Rack E-Pack Rack

Cost: $200 Uses: Storing oil Training Required: None

A NORTH CAROLINA SHOP OWNER SHARES HOW HE’S SAVED MONEY AND SPACE BY USING AN OIL RACK

BY TESS COLLINS

THE SHOP: Carmedix Auto Repair has two locations in North Carolina—one in Raleigh and one in Durham. Both locations have six bays. The Carmedix team is made up of six technicians and four service advisors. Owner Jay Huh says that they are currently working on opening a third location.

The Reviewer

COURTESY CARMEDIX AUTO REPAIR

J AY H U H CARMEDIX AUTO REPAIR R ALEIGH AND DURHAM, N.C.

Huh quit his job as a service advisor two years ago and started working out of his home garage. Huh has experience in almost every aspect of the mechanical repair industry. He’s done mechanic work, car sales, and has been a service manager, store manager and service advisor. In 2015, he opened his Durham location and has been expanding ever since.

HOW IT WORKS: Huh says that each month he would end up throwing hundreds of quarts of oil out and that the different weights of oils available meant that he needed to buy many different options, which ended up taking up a lot of space in his shop. When a representative from Campbell Oil Company, a CAM2 oil distributor, came and showed Huh the E-Pack oil rack, he thought it would be a great way to save money and space and that eliminating the plastic quarts would be better for the environment.

The oil rack that Huh uses in his shop houses quart boxes of oil. The rack holds six boxes at a time. Underneath the box is a pitcher that catches all of the oil. The boxes have a faucet-like attachment that pours the oil into the pitcher underneath. Huh explains that once the pitcher is filled up, it can be

removed from the rack and taken and poured into the car. This replaces the funnel that he had to use before.

THE REVIEW: Huh says that by storing the oil in boxes, he’s able to get every last drop out. He says that before, there was often leftover oil in the bottles that would inevitably be thrown out. Huh estimates that on average, roughly 5 percent of the oil would be thrown out with the bottle.

By storing the boxes on a rack, he’s also been able to save space in his shop. Before, Huh explains that he would just stack the bottles on an empty wall. Now, the shop looks more organized. Another benefit is the fact that the pitchers prevent oil spillage.

THE RETURN: The cost savings from switching from the boxes to the bottles was reason enough for Huh to purchase the oil rack: A quart box of oil is only $2.68 compared to the $3.99 the shop was paying for a bottle. Huh also adds that by using all of the oil, the shop saves even more money on materials. At an average of roughly 200 oil changes per month, that cost savings really adds up.

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Columns

STRAIGHT TALK Joe Marconi

IMPROVE EMPLOYEE ENGAGEMENT The problems with today’s workforce and how to fix it

THINKSTOCK, MICHAEL HOEWELER

I’ll always remember my first day at Randy’s

Service Station. It was the spring of 1976. I was a young mechanic, eager to learn and get my hands dirty. Randy took me aside and said, “There are three ways of doing things around here: the right way, the wrong way and my way. Follow the third way and we’ll get along just fine.” It might not have been what I wanted to hear, but if you were from my generation, a baby boomer, you didn’t question it. You were focused on your work and the boss. … Well, he was the boss.

Today, the nation’s workforce is comprised of multiple generations, with the millennial generation becoming the dominate force by 2025. Sadly, according to a recent Gallup poll, less than one-third of the total

American workforce today is truly engaged at their jobs. Engagement is defined by those employees that are truly passionate about their careers and are dedicated to the success of the company for which they work. Poor worker engagement leads to higher turnover, lower production, poor quality work and poor customer service, which all ultimately results in lower profits.

As shop owners, we are all faced with the same dilemma: how to improve employee engagement in order to run a successful, more profitable business.

There are two main reasons for poor employee engagement: It’s either due to poor leadership or you have the wrong employees. You, the shop owner, are

Joe Marconi has more than three decades of experience in the automotive repair industry. He is the owner of Osceola Garage in Baldwin Place, N.Y., a business development coach for Elite Worldwide and co-founder of autoshopowner.com. j.marconi@eliteworldwide.com ratchetandwrench.com/marconi 0 6 .17 / R + W / 3 3

STR AIGHT TALK / JOE MARCONI

no different from the coach of a professional ball team. Fancy stadiums don’t win championships; great players and great coaching do. Assembling a team of superstars must be one of your top priorities. Since the success of your shop rests on your shoulders, this article primarily deals with you, the shop owner. It’s important to recognize the reasons for poor employee

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engagement and ways to improve it.

Lack of engagement occurs when employees don’t understand the vision and the mission of the company for which they work. It’s when work becomes nothing more than a job. It’s when the work your employees perform is not meaningful or rewarding to them. Your employees may be showing up on time, and doing their

assigned tasks, but if they aren’t truly engaged, long-term team success will be difficult to achieve. If your employees are watching the clock all day and can’t wait for 5 p.m. to arrive, you better get a handle on what’s happening.

Employee engagement all starts with leadership. Everyone is watching the boss.

You may not think they are, but trust me, they can read you like a book. Your demeanor sets the tone for the entire shop.

The shop owner’s attitude has as much to do with the success of the company as any skill he or she possesses.

As the leader, you must communicate a strong, positive vision of the future. You also need to set clear expectations for your employees and hold them accountable by recognizing their accomplishments and giving them feedback on their performance.

Leaders must promote the team concept.

We are all social creatures; we need to interact with others around us, and we also need to feel we contribute to the success of the group. If our work goes unnoticed or unappreciated, feelings of isolation sets in, which separates us from the group and dismantles any hope of building relationships. Strong relationships build team spirit. With high team spirit, the entire shop benefits. When people care about each other, they perform better because they don’t want to let their teammates down.

Lastly, don’t micromanage. Give employees discretion in how they do their work.

Micromanagement is nothing more than interfering, which leads to worker stress. And stress leads to anxiety, which hurts morale. It also sends a message that you don’t have trust in your employees to do the job they were hired for. If your employees think you don’t trust them, they will certainty not trust you or any message you convey to them.

I’ll never know if Randy really meant what he said on my first day or if he was joking. But he did teach me a few lessons on employee engagement. Each morning around 9 a.m., Randy would run to the diner and buy everyone coffee. We would gather around his toolbox as he told us stories about the Great Depression, serving in World War II and his early days as a mechanic. He would always mentor us, teaching us the tricks of the trade. Whatever we needed, he was there to help. Randy always had our backs, and our high production was proof we appreciated it. Randy may have been old school, but in some ways, he was years ahead of his time.

WHO WE ARE

Auto Job Central is a job board dedicated only to the auto repair industry.

WHAT WE STAND FOR

Connecting shop operators with qualified techs, advisors, managers and more in one centralized spot.

autojobcentral.com

FREE LISTING

Contact us at info@autojobcentral.com or 727-497-6565 x3349.

2 0 1 7 S H O P T E C H N S U R PAG E

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OUR ANNUAL, IN-DEPTH LO O K AT T H E TECHNOLOGY DRIVING TO DAY ’ S AUTO REPAIR SHOPS B Y

B R Y C E

E V A N S

O LO GY V E Y SPONSORED BY

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THINKSTOCK

he rapid advancement of technology is progressively changing the way those in the automotive industry operate—particularly those tasked with repairing and servicing vehicles. Ratchet+Wrench’s second annual Shop Technology Survey, sponsored by Bolt On Technology, sought to evaluate how shops across the country have adjusted.

And, by our numbers, they’ve made great strides.

More shops utilize electronic management systems, digital inspection sheets and subscribe to repair information services today than when the first edition of this survey ran in 2016. More facilities have adopted streamlined processes with diagnostics—and many more have added to their arsenals of scan tools.

The pages that follow serve as a high-level overview of the data we uncovered through nearly 500 respondents to this year’s survey.

(For the complete results, visit ratchetandwrench. com/2017shoptechsurvey.) And, as you’ll see, those that have adapted already are reaping the rewards.

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THE T YPICAL SHOP In all, 446 industry professionals completed the Shop Technology Survey, and, while they were evenly dispersed across all U.S. markets, the majority of respondents followed a distinct demographic pattern that also closely aligns with our overall readership:

JOB TITLE

SHOP TYPE

WORK TYPE

92% 91% 69%

SHOP OWNER, EXECUTIVE OR MANAGER

SHOP SIZE

INDEPENDENT, SINGLELOCATION REPAIR BUSINESS

B AY S

GENERAL REPAIR

LIFTS

39% 28% 31%

2,000–4,999 SQUARE FEET

S TA F F S I Z E

3–4

3–4

M O N T H LY C A R C O U N T

ANNUAL REVENUE

29% 41% 25%

3–4

50–149

AV E R AG E R E PA I R O R D E R

49%

$200 - $399

$1M–$2.49M

R E PA I R -T O - M A I N T E N A N C E R AT I O

58%

30–40% MAINTENANCE/60–70% REPAIR

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TECH: FRONT OF THE SHOP Much of the talk these days when it comes to industry technology centers on the advanced computer systems and capabilities of modern vehicles. Yet, on the shop level, it’s the front of the shop that has seen the largest changes.

According to our report, 81% of shops now use an electronic management system (up ever so slightly from 80% in 2016), and 35% use an electronic inspection sheet (3% higher than in 2016).

Electronic Management Systems Of the 82% of respondents who utilize an electronic management system, the majority tend to produce at a higher volume than shops that don’t.

% of shops that DON’T use an electronic management system

% of shops that use an electronic management system

I S T H E R E A N M S O A D VA N TA G E ?

Annual revenue above $1 million

12%

50%

Monthly car count above 150 vehicles/ month

13%

47%

ARO above $400

34%

INDEPENDENT, SINGLE LOCATIONS

88%

Utilize an electronic management system

81%

94%

Utilize an electronic estimating system

81%

44%

Utilize an electronic inspection sheet

34%

63%

Utilize CSI software

33%

66%

Utilize CRM software

40%

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Electronic Inspection Sheet Similar to with an electronic management system, higher-volume shops tend to use electronic inspection sheets. Although, a higher ARO may indicate the effectiveness of the software.

% of shops that DON’T use an electronic inspection sheet

% of shops that use an electronic inspection sheet

43%

Annual revenue above $1 million

24%

54%

Monthly car count above 150 vehicles/ month

39%

52%

ARO above $400

42%

THINKSTOCK

MULTIPLE-SHOP OPERATIONS (MSOS)

36%

I S T H E R E A N M S O A D VA N TA G E ?

MULTIPLE-SHOP OPERATIONS (MSOS)

TECH: BACK OF THE SHOP The rapid progression of in-vehicle technology has forced many in the industry to put a greater emphasis on repair information and advanced diagnostic work.

95% of respondents subscribe to a repair information service, and 99% own at least one diagnostic scan tool.

Scan Tools

INDEPENDENT, SINGLE LOCATIONS

99%

Subscribe to a repair information service

95%

81%

Have access to OEM repair information

87%

47%

Use at least one OEM scan tool

56%

47%

Have three or more aftermarket scan tools

53%

78%

Charge for diagnostic work

90%

TOTAL NUMBER OF DIAGNOSTIC SCAN TOOLS

NONE 1–2 3–4 5+

1% 32% 36% 31%

TOTAL NUMBER OF OEM DIAGNOSTIC SCAN TOOLS

NONE 1 2 3+

3% 29% 33% 9%

Repair Information 80% of shops that subscribe to a repair information service have an ARO in the $200–$599 range; that number drops dramatically to 48% for those that don’t. ARO wasn’t the only KPI that varied drastically among those that do and don’t subscribe to repair information—annual revenue and monthly car count are also greatly affected.

ANNUAL REVENUE

Subscribe

11% 32%

Don’t subscribe Annual revenue below $250,000 Annual revenue above $1 million

29% 19%

TOTAL NUMBER OF AFTERMARKET DIAGNOSTIC SCAN TOOLS

NONE 1 2 3+

3% 14% 31% 52%

MONTHLY CAR COUNT

Subscribe

12% 45%

Don’t subscribe Less than 50 vehicles/month More than 150 vehicles/month

57% 10% 0 6 .17 / R + W / 41

Struggling Online

17% STILL DON’T HAVE A WEBSITE (A NUMBER THAT WAS IDENTICAL IN THE 2016 SURVEY)

25% DON’T USE ANY SOCIAL MEDIA PLATFORMS (A 3 % I M P R OV E M E N T F R O M 2016)

TECH: ONLINE WEB PRESENCE The majority of our survey respondents have an active web presence:

73% 51% 76% HAVE UPDATED THEIR WEBSITES IN THE LAST TWO YEARS.

USE SOCIAL MEDIA TO PROMOTE THEIR BUSINESSES AT LEAST ON A WEEKLY BASIS.

USE FACEBOOK TO CONNECT WITH CUSTOMERS.

I S T H E R E A N M S O A D VA N TA G E ?

HAVE A WEBSITE

UTILIZE SOCIAL MEDIA

MSOs: 100%

MSOs: 82%

INDEPENDENT SHOPS (2017): 82%

INDEPENDENT SHOPS (2017): 74%

INDEPENDENT SHOPS (2016): 64%

INDEPENDENT SHOPS (2016): 54%

THINKSTOCK

The simple answer to this question is yes. But, independent shops are making rapid strides, and just since last year’s survey have shown a marked improvement.

42 / R + W / 0 6 .17

Training & Certifications

THE INVESTMENT One of the largest hurdles for shops to overcome in adopting new shop technology can be the considerable investment. Yet, the majority of our respondents have made that leap.

82%

SAY THEY PROVIDE TECH/ TOOLS TO THEIR TEAMS.

OF THOSE...

93% 11%

PROVIDE DIAGNOSTIC SCAN TOOLS AND DATA SUBSCRIPTIONS

PROVIDE ALL TOOLS AND EQUIPMENT

ANNUAL TECHNOLOGY, TOOLS AND EQUIPMENT INVESTMENT

% OF SHOP’S ANNUAL REVENUE

<1% 1–5% 6–10% 11–15%

THINKSTOCK

16–20% 21% + NONE

3% 29% 33% 9% 4% 1% 22%

78% 58% 21%

OF ALL RESPONDENTS PARTICIPATE IN INDUSTRY TRAINING HAVE AT LEAST ONE TECH WITH AN ASE DESIGNATION HAVE EARNED ASE’S BLUE SEAL STATUS

DOES INDUSTRY TRAINING LEAD TO A GREATER EMPHASIS ON ADVANCED TECHNOLOGY?

Shops that have earned Blue Seal certification

Shops not in the ASE program

88%

Participate in non-ASE industry training

56%

94%

Provide various tools, technology or equipment for technicians

82%

91%

Utilize an electronic management system

64%

91%

Utilize an electronic estimating system

68%

41% 51%

Utilize an electronic inspection sheet

22% 20%

60%

Utilize CSI software

Utilize CRM software

29%

52% 97%

Subscribe to a repair information service

19% 74%

87%

Have access to OEM repair information

82%

63%

Use at least one OEM scan tool

48%

66%

Have three or more aftermarket scan tools

35%

97%

Have a website

69%

91%

Utilize social media

65%

Utilize KPI software

0 6 .17 / R + W / 4 3

TELEMATICS Only 6% of all respondents offer telematics services, which actually came in slightly below last year’s number (8%). The trend is negligible, but it does demonstrate that, as this form of technology advances, independent shops haven’t found ways to work it into their service offerings—yet.

The Shops | WANT MORE ON TELEMATICS?

It shouldn’t come as a surprise that those offering telematics services tend to be more advanced in terms of other technology as well. 96% make technology and tools purchses for their techs, and roughly 48% have a tech/ tool budget greater than 6% of their annual revenues.

Our May feature, "Telematics Trendline," covers the ins and outs of how the technology has progressed—and how it affects shops like yours.

Read more online. ratchetandwrench.com/telematicstrendline

HERE IS A BRIEF SNAPSHOT OF WHAT THESE FACILITIES LOOK LIKE:

4 4 / R + W / 0 6 .17

UTILIZE AN ELECTRONIC ESTIMATING SYSTEM

The Services

UTILIZE DIGITAL INSPECTIONS OF THE 6% THAT OFFER TELEMATICS DEVICES ...

SUBSCRIBE TO AN INFORMATION SERVICE HAVE ACCESS TO OEM REPAIR INFORMATION HAVE DIAGNOSTIC SCAN TOOLS HAVE AT LEAST THREE DIAGNOSTIC SCAN TOOLS

52%

36%

32%

either install, program and repair devices or educate customers about the technology.

do so through a third-party aftermarket product (Mechanic Advisor being a popular choice).

use it to regularly update customers with service reminders

HAVE FIVE OR MORE SCAN TOOLS HAVE AT LEAST ONE OEM SCAN TOOL

GET THE COMPLETE RESULTS To purchase the complete survey results, visit ratchetandwrench.com/2017shoptechsurvey

STAFF GRAPHIC

92% 88% 56% 100% 96% 100% 84% 52% 88%

UTILIZE AN ELECTRONIC MANAGEMENT SYSTEM

OVER THE ROAD Digital Inspections On The Go

For Mobile Mechanics Focus on your fleet and residential vehicles...

Not sloppy handwriting or lost time and efficiency.

Stop losing sales to ineffective communication.

Get the most from your service process, on the road.

INCREASE GAIN SHARE ACCESS

BoltOnTechnology.com

ARO Revenue Customer Trust

SEE A LIVE DEMO

100% Accuracy More Tech Productivity

610-400-1019 (press 2)

Inspections with Customers Photos via Text Message

the14.me/over-the-road

Repair Info Diagrams & Wiring Charts

ON YOUR COMPUTER

RANSHU

JUNE 2017

WE CAN SEND: A TRUCK LOAD

SHIPS IN 2 TO 3 DAYS DEPENDING ON CONTENT

A PALLET

A PART

SHIPS SAME DAY

SHIPS OVERNIGHT IF REQUESTED

800-628-0474

S

T

O

R

Y

GET THE COMPLETE COMPONENT TO OUR SHOP TECHNOLOGY SURVE Y

In this issue, we summarize the results from our shop technology survey, but that only scratches the surface. There is much more information that we simply canâ&#x20AC;&#x2122;t fit within the confines of these pages.

Our Complete Report contains 100% of our survey data from numerous types of shops.

Know where you stand. Identify opportunities. Lead your shop into the future with confidence.

GET THE WHOLE STORY

R ATCHE TANDWRENCH.COM/2017SHOP TECHSURVE Y

CASE STUDY

CLAY TOPORSKI

Top-Notch Service Lou Murante's shop was seeing below average customer attrition rates before the owner decided to overhaul the customer service process.

— PAGE 54

M A K E

M O N E Y / S A V E

M O N E Y / W O R K

S M A R T E R

0 6 .17 / R + W / 4 9

Regularly Scheduled Maintenance Meets Surgical Precision

The ASE Certified experts at NAPA AutoCare offer complete diagnosis and repair for a fast recovery. And with access to over 1600 online and in-classroom training courses through the NAPA Autotech program, our members stay on top of all the latest procedures.

VISIT NAPAAUTOCARE.COM/BENEFITS TODAY.

T O O L B OX / S H O P A D V I C E

Implementing a Shuttle Service Offering a shuttle service is a great opportunity to showcase your brand around town and keep customers happy After years as a technician, Tim Lanier didn’t jump right into the role of business owner. Instead, he spent three years researching best practices and creating a business plan before he opened his first shop in 2002. Within the business plan, Lanier outlined his plans of creating a high level of customer service, one aspect of which was implementing a shuttle service.

Lanier has had a shuttle service since the first day of owning his own business and has kept it going with his current shop, Killian Automotive in Canton, Ga., since its opening in 2006. Lanier says that his shop sees 475 cars per month and he estimates that the shuttle is used 30–40 times per week, which means that roughly one quarter of his customers take him up on this service. The following are five-star reviews awarded to the shop: “We’re very happy with the service.

They accommodate us with transportation to our home and back while our car is being serviced.”

“Great service and very customer oriented. Their service options are a savings and being that we own one vehicle, Killian’s always provides a ride both ways when my car is there for an extended repair/service.”

Lanier says that his customers love the service and that it’s been a selling point for certain customers who may have been on the fence about where to bring their car.

Lanier says that there are times when a customer doesn’t have any way to get to the shop and that the shuttle simplifies the process for them.

A S T O L D T O K E L LY B E AT O N

THINKSTOCK

When selecting a vehicle to use,

I think it’s important to consider your budget and your brand. The shuttle is a good opportunity to display what your business is all about. People will see it driving down

the road. I looked for a vehicle that would be able to accommodate vinyl lettering or a partial wrap that I could use for advertising. I knew I wanted a vehicle that was 3–4 years old and that had low milage. I decided on a Ford Flex. It’s comfortable and our elderly customers can get in and out of it with ease.

When you’re driving down the road, you only have a few seconds to see

People won’t be able to read tiny blurbs so I decided what was most important to my brand and put that on the shuttle: the logo, the fact that we’re a AAA shop, and a photo of our facility. something.

Your shuttle is an indicator of the work

People will notice if there are papers and trash in the vehicle. Keep it clean, make sure the dash is dusted and keep up on regular maintenance. We make sure to clean out the vehicle at least once per week.

Your customers won’t feel comfortable that you’re working on their vehicles if you don’t take care of your own shuttle. you do.

When I started out, it was just me and a technician, so my father volunteered to drive the shuttle. My business has since

grown and we now have 13 employees.

My assistant service advisor is in charge of driving the shuttle. If he’s out for any reason, I can take the customers or a service advisor is able to. I want to make sure whoever is driving the shuttle is someone that I am comfortable having interact with the customers. When my assistant service advisor makes the transition to full-time advisor, I’m going to hire someone whose job is to drive the shuttle and help out with various jobs around the shop.

We offer the shuttle service as soon as the customer calls in and indicate that

the service is available on the website.

That way, we know ahead of time if a customer will need a ride. We’ve also labeled the vehicle as a customer shuttle in our system.

We try to schedule our appointments on the hour so our shuttle usually

Since we usually know ahead of time whether or not a customer will need the shuttle, we can plan ahead. Sometimes we have walk-ins that want the shuttle and we always try to get them home. We offer the shuttle right away if it’s available and someone can drive it, otherwise we just explain that they may need to wait 15–20 minutes. They’re usually fine with that. leaves around then.

The area that our shop is in is mostly residential, so we typically drive in a

Anyone that needs a ride further than that has typically set up their own transportation ahead of time.

7–10 mile radius.

Customers that have small children will take the car seats out of their own

I have the customer install it, just so they’re comfortable. That’s another reason that I choose the Ford Flex—it’s an easy car to put car seats in. We’ve had a few customers that have come in that use a wheelchair.

In that case, we’ll drive them home with their own vehicle and then drive it back to the shop. vehicles; we don’t provide those.

We insure the vehicle through our ga-

The cost is relatively low. Fuel cost is less than $25 per week and the maintenance cost is under $8 per week over the last three years.

So far, maintenance has included a new set of tires, oil changes, and a temperature blend door actuator repair. rage owner's policy and fleet plan.

0 6 .17 / R + W / 51

Protect Your Shop from a Cybersecurity Breach What shop operators need to know to protect their businesses from the growing threat posed by hackers B Y K E L LY B E AT O N

Donny Seyfer, chairman of the Automo-

tive Service Association and owner of Seyfer Automotive in Wheat Ridge, Colo., tours the country teaching shop owners all about connected cars. And, while he would love to quell their fears about the possibility of cybersecurity breaches associated with modern vehicles, he can’t currently do so.

Instead, Seyfer prepares shops for the growing threat posed by hackers.

“Sometimes shops don’t even know if they’ve been hit,” Seyfer says, in regard to breaches in cybersecurity, in which vehicle or customer information is compromised.

5 2 / R + W / 0 6 .17

“So really, what this is all about is being proactive.

“We’re just trying to stay ahead of the curve as much as we can, before something really nasty happens. … We just think it’s going to get worse and worse.”

High-end vehicles in 2015 averaged more than 100 million lines of software code per car, according to data research firm Information is Beautiful; Facebook uses just over 60 million. Additionally, according to market intelligence firm VDC Research, the average new car in 2015 came equipped with 30 microprocessors,

and “the cybersecurity of those embedded systems is severely challenged by in-vehicle Internet connectivity.”

“A lot of shop owners,” Seyfer says, “still have that [mentality], ‘Why would [hackers] be interested in me? There’s all these big things they could get, like credit cards and things like that; I don’t keep any of that information.’

“But it’s amazing how much information you actually do keep.”

Consumers are aware of the threat of data hacks, but they’re largely ignorant to how such breaches happen, Seyfer says.

In his observation, most consumers are under the impression that information is compromised through crimes like vehicle break-ins—when, in reality, the issue is far more wide reaching than that.

Fortunately, Seyfer has thoroughly studied how shop owners can limit the chances of a cybersecurity breach within

THINKSTOCK

T O O L B OX / T E C H +T O O L S

their facilities. He’s eager to offer tips, too. But first, he explains how data hacks typically occur in the industry.

HOW ISSUES ARISE

What, precisely, causes an infestation of software-related “bugs” in the auto repair industry? Often, it’s sophisticated foreign hackers, Seyfer says. And, on occasion, it’s your own shop employees or customers.

These days, professional hackers are often looking to place malware (software that’s intended to damage computer systems) on open systems; i.e., systems with no password protection like those that are all too prevalent at auto shops.

“They’re trying to place a piece of malware on servers that appear to have interactions with cars,” Seyfer explains.

“The most pervasive risk that can happen is the threat that comes from spywareinfected cell phones walking in and being

connected to your network. The goal is to infect a car through an open port, either on a scan tool, TPMS, the car’s Wi-Fi or Bluetooth. The shop can be completely unaware this has happened.

“It is believed that that this type of attack is looking to use the car as a mobile means to connect to more important information,” Seyfer says.

One noteworthy incident of malware rearing its ugly head occurred recently when a platform typically used in Dodge Charger police vehicles—FCA products—was compromised. Homeland security discovered the threat and required all of those vehicles to receive an update to their center stack software, Seyfer notes.

“Usually these are timer-based applications,” Seyfer says, “where they’re all looking to happen on the same day, when they can really cause some trouble.”

Now to those unwitting accomplices: In 2017, data breaches often occur because consumers’ cell phones have rather weak, four-digit password security, or those devices have been used to visit non-secure websites. Seyfer notes that this can often happen with employee or customers’ devices.

“They’re walking in with the hack on the phone, or on a machine that they carry back and forth to the shop,” Seyfer notes. “Maybe they’ve got a piece of scan tool software.

They take it home, and they’re on fantasy football or fantasy baseball or whatever, and some of those sites are not all secure.”

Of course, sometimes shop owners only have themselves to blame for leaving their facilities susceptible to a cybersecurity breach. Seyfer suggests taking a look around your shop and securing technological devices that may have an open-share setup, for example.

“A lot of us have got printers that, by the way they’re built, are set up so that anything on the network can attach to them,” he says. “A lot of times there’s a server, or a machine that accesses that printer, that’s got an open share going on. So that can basically be a portal from outside right through to your network.”

PROVIDING PROTECTION

If you’re a shop operator guilty of the above cyber oversights, know that you’re not alone.

Seyfer sees plenty of similar offenders during his travels for ASA.

In Seyfer’s opinion, these are the best ways to can brace your shop for cybersecurity threats: Break your network up. To protect key information, Seyfer suggests utilizing a firewall, and breaking your shop’s data network into segments that are independent of each other.

For example, in Seyfer’s shop, he sees to it that nothing goes on the scan tool network except the facility’s scan tools. Then, his staff asks customers to work off a dedicated wireless connection. Additionally, the shop’s technicians use the guest network for their cell phones, along with any devices that they bring from home.

“You want to have separate networks for these machines to live on by IP address,” Seyfer says, “... so that the shop management system and scan tool network are not exposed.”

Rein in your Wi-Fi reach. Seyfer has noticed that many shops have Wi-Fi network reaches that extend for seemingly the length of a city block. That can expose your network to far more people than necessary.

“We limit it to our property,” Seyfer says, in regard to his Colorado shop, “because we found people were using our Wi-Fi when we were not well locked down.”

Seyfer says adjusting your Wi-Fi set-up’s reach “is a job for an IT specialist. Higher quality access points and wireless routers often have the ability to adjust the strength of the signal. We take a device to the edge of where we want our signal to go and adjust the signal.”

Change your passwords often.

This is a fairly obvious, though often neglected, rule of thumb: Changing your business’s passwords periodically can limit the risk of a potential data breach. Similarly, Seyfer says it’s important to run any and all suggested security updates on your Window or Mac devices.

Seyfer suggests changing passwords at least twice per year—ideally at unpredictable intervals—as well as whenever there is personnel turnover in your shop, or when anyone affiliated with your business is the victim of identity theft.

“If every shop in the country simply solved their Wi-Fi and their wired networks, and put some good security passwords on them,” Seyfer adds, “that would be a huge improvement.”

0 6 .17 / R + W / 5 3

T O O L B OX / C A S E S T U DY

5 4 / R + W / 0 6 .17

A T T R I T I O N F R U I T I O N A revamped approach to customer retention cut Murante Auto Repairâ&#x20AC;&#x2122;s attrition rate by 20 percent

BY TR AVIS BE AN P H O T O G R A P H Y B Y C L AY T O P O R S K I

Customer Minded After spending years focused on the production side of the business, Lou Murante decided to reinvest in the customer service experience and find ways to improve customer retention.

0 6 .17 / R + W / 5 5

T O O L B OX / C A S E S T U DY

A

fter 13 absent months, most people would assume the customer had moved on—a dissatisfied customer, displeased with the provided service, gone forever.

Then again, Lou Murante isn’t “most people.”

“I called [the customer] up,” says Murante, owner of Murante Auto Repair, “and said, ‘We’re updating our files, and I just want to make sure you’re still in the area, since we haven’t seen you in a year. Is there anything I can do for you?’”

“Actually,” the woman responds, “I was just thinking about you.”

After several unsuccessful visits to the area dealership, the woman was desperate to have the vibration in her brand-new vehicle diagnosed. Just a few days, one new axle and $1,700 later, Murante had not only obtained a new job, but had re-established this woman as a regular customer.

That level of customer care accounts for his Nazareth, Pa., shop’s 34 percent attrition rate—meaning, for every 100 customers, 76 of them are “active” and return visitors, while 34 choose another shop.

If that attrition rate sounds high to you, consider this: The participating shops in Murante’s 20 Group have crept above 50 percent, 60 percent, and even 70 percent— which included Murante five years ago. Improving customer retention involved several dramatic changes for the 38-year industry veteran, such as defining the right customers for growth, improving follow-up with customers, and retooling his shop’s projected brand.

THE BACKSTORY

Until 2012, Murante’s business approach hadn’t changed much since 1979 when he opened his shop in the small town of Nazareth, nudged between two corn fields and several dealerships and MSOs. That includes some occasional body work, which Murante focused on heavily when the shop originally opened.

“We only still do it because I enjoy it. I’m in a succession plan with my service advisor, and he will not continue with body work,” the 65-year-old says with a laugh. “This is just a ‘me’ thing I’ve continued to do because I enjoy it.”

That unshakable attachment to the “old” ways of doing business perfectly captures Murante. For years, he embodied the classic working-in-your-business mentality, involving himself in the repairs, the service writing, the accounting, the parts ordering.

Financial stagnancy coincided with that schedule, with annual revenue sitting at just $300,000 in 2011.

And when the grind became too difficult for Murante five years ago, he was forced to evaluate what was holding his business back—which included lagging customer retention numbers.

THE PROBLEM

Murante didn’t religiously track attrition 5 6 / R + W / 0 6 .17

rates until it became a focus item at his monthly 20 Group meetings.

“For years, all we had discussed was best marketing practices,” Murante says. “And then you realize: You’re spending all our money on getting people in the shop, only to lose them.”

The average attrition rates in Murante’s group were bad—really bad. Everyone was investing in marketing and obtaining new customers—yet, on average, they were losing about 60 percent of those customers.

The culprit of high attrition rates varied from shop to shop, but Murante knew exactly why his sat around 50 percent: He had become disengaged with the customer on every level, and interactions with them had become more of a routine. He heavily focused on production, accounting, service writing, and repairing cars, meaning he rarely made time to improve the live customer experience and ensure people come back to the shop. But as customers aged and younger generations moved out of town, his detached daily routine revealed why he was losing customers.

THE SOLUTION

Murante’s revamped approach was built around one goal: Winning over the new economic order (NEO), an acronym signifying target customers.

A NEO—which Murante learned about after researching reports from social scientist Ross Honeywill—is socially active, believes in making high discretionary choices, and, most importantly for Murante Auto Repair’s turnaround, prefers quality over competitive pricing.

Murante, who competes with shops offering competitive prices, realized he had appealed to the opposite of NEOs for years: the traditionals, who have conservative social attitudes, spend reluctantly and invest only when necessary.

Murante’s multifaceted approach for improving his attrition rate branched from brainstorming sessions at his 20 Group and consultant meetings and included revamping the following: THE PREFERRED CUSTOMERS. A high retention rate depends on one obvious factor, Murante says: Only certain customers are willing to invest in your business.

Murante realized altering prices to compete with area shops would not improve profits because the customer connection had been lost. That’s why he started to market his quality service and certifications, through both his traditional advertising methods (direct mailers and email newsletters) and his interactions with customers.

“Traditionals are about 55 percent of the population, but NEOs spend about 75

Expert Advice

EVALUATING CUSTOMER ATTRITION TRENDS —

RLO Training/Bottom-Line Impact Group facilitator John Wafler has analyzed customer attrition rates recently, and has come up with some very interesting observations. Here, he details some of the factors at play and what shops need to focus on to improve their customer retention performance.

MURANTE AUTO R E PAIR

Location: Nazareth, Pa. Size: 2,500 square feet Number of Lifts: 5 Staff Size: 6 Average Monthly Car Count: 170 Annual Revenue: $850,000

percent of the money,” Murante says. “And they’re responsible for almost 100 percent of the profit.”

“So if people weren’t invested in making responsible decisions for their cars,” he continues, “I don’t waste a lot of effort in trying to keep them as regular customers.”

THE RIGHT SERVICE ADVISOR. Murante wanted to ease out of service writing, which meant hiring a service advisor that carried the quality-over-price attitude. Luckily, he found Thomas, who not only bought into Murante’s approach and had a calm, approachable aura around customers, but also possessed deep technical expertise to boot.

THE FIRST IMPRESSION. As Murante revamped the customer experience, the environment changed with it. Changes involved evaluating the shop layout and brainstorming new ideas with employees and his consultant. One of the best suggestions he received was cutting down a divider wall in the front of the shop and turning it into a counter for his service advisor.

He arranged his front office so that both Murante’s desk and his service advisor are in full sight to customers. That way, if either of them is busy, the other can greet the customer immediately. Murante even created an SOP for greeting both new and return customers.

“Even if we’re busy, we’re going to look

up and acknowledge the customer,” he says.

“We’ll put a finger up if we’re on the phone: ‘We’ll be right with you.’”

THE FOLLOW-UP. Murante likens losing customers to a conveyor belt.

“After the twelfth month, they fall off the belt and they're a lost customer and you don’t have them anymore,” he says. “Those are the ones I call.”

Seriously. One of Murante’s best strategies for improving attrition rates has been cold-calling customers. Through his consultant, he utilizes a program that informs him when a customer hasn’t returned for 12 months. Often, he just ends up conversing with the traditional customers—however, as noted at the beginning of the story, he wins back many people and creates new return visitors.

THE AFTERMATH

Five years into his new approach, attrition rates are way down to 34 percent. So, out of 100 customers, roughly 15 have gone from lost business to loyal spenders.

On top of it all, his improved reputation has spread word-of-mouth, and he’s attracting more and more business from surrounding NEO customers. He’s increased staff and invested in upgrading his shop floor, leading to a $550,000 increase in annual revenue (it stands at $850,000 today).

For many years, the auto repair industry has assumed average attrition rates in most independent shops at 20–25 percent. With better tracking systems implemented, we are actually measuring rates as high as 50–60 percent for many independent shops If you start the year with 1,000 “active” customers in your database, and you don’t add any new customers, you would end the year with 500–600 active customers. An average “active customer” spends about $800–$1,000 per year on service and repair. So, losing that many active customers is a significant threat to long-term business success and forces you to acquire more new customers just to maintain your customer base.

What we are also seeing is that almost 70 percent of all lost customers have less than four visits in total. After four visits, they are 70 percent more likely to remain active customers, so getting them to the fourth visit should be a key focus of your retention marketing.

Another alarming measurement is that over 50 percent of new customers never return for a second visit. Identifying new customers and putting a “focused” firsttime customer retention strategy in place is a key to growing your active customer base. Also, effective marketing to attract the “right customer” for your shop significantly improves long-term retention rates and growth.

Many shop CRM programs rely too heavily on electronic communication. The problem is that shops aren’t consistently capturing customers’ email addresses, and less than 30 percent of sent emails are opened. In the Bottom-Line Impact Groups, many members are having better success with personalized customer follow-up programs like handwritten thank you or reminder cards and phone calls to communicate with their customers.

THE TAKEAWAY

Focusing on customer retention has provided so many tangible improvements for the shop, but Murante continually addresses the most rewarding lesson he’s learned almost 40 years into his career.

“If you have a passion for the business, you’ll keep looking to do better. You never settle for traditional. You embrace new ideas and listen to others,” he says. “And that’s where I’m at—I’m really ready to jump to another level at this point.”

0 6 .17 / R + W / 57

T O O L B OX / E D U C AT I O N +T R A I N I N G

Ensuring your shop places a strong emphasis on digital inspections will help you grow your business.

BY K AT H L E E N S A N D OVA L

According to Jeremy O’Neal , president

of AdvisorFix and owner of Freedom Auto Repair in Hesperia, Calif., gone are the days where shops write out vehicle inspections on paper. Since shop owners are already digitizing other aspects of their businesses, incorporating digital inspection software comes as a natural next step.

O’Neal, who has won awards and received national recognition for his sales and service advisor training, has owned Freedom Auto Repair for a little 5 8 / R + W / 0 6 .17

over a year and one of the first things he did upon opening the shop was add digital inspection software. By migrating to digital inspections, he’s seen immediate improvements in KPIs such as efficiency, average repair order and customer retention.

Echoing O’Neal’s push for more shops to adopt digital inspection software are John Cooper and Nate Winston, owners of East Coast Performance (ECP) Auto Repair & Service in Cuyahoga Falls, Ohio. Cooper’s shop is a small operation,

generating roughly $512,000 in annual revenue, and he was looking for ways to make his team more efficient. That’s why he decided to add digital inspection software a year ago, a move from which he’s already witnessing the immediate impact.

“Our profit margin went up 35 percent overnight,” Cooper says. “Turnaround time is so much quicker. Our AROs are 30 percent higher than what they were by the end of the year. It’s amazing, almost like it’s too good to be true. But this didn’t happen overnight.”

Ratchet+Wrench spoke with O’Neal and Cooper to learn what it takes to successfully implement digital inspections into a shop’s processes.

Getting Educated and Trained

As a shop owner, you need to figure out

KATE HAUS

The Ins and Outs of Digital Inspections

Going Digital Digital inspections can be an efficiency boon in the shop, but only if carefully and thoughtfully implemented.

which technology will work best for your shop and get some training on it, O’Neal says. This could mean speaking with a consultant and scheduling a demo in your shop, during a 20 Group meeting or going to a trade association’s event and speaking to vendors.

Educating your staff is the next step.

It may be an uphill battle, O’Neal says, as some technicians might be deadset in the old ways of paper processes. However, demonstrations and training will ease their concerns. Have a consultant come in and provide your staff with an in-depth tutorial of the software. The training you provide to your staff needs to be easy to explain and understand, O’Neal says, as a technician or service advisor will then have to explain it to a customer, who has no prior knowledge of industry terms or processes. For example, if the digital inspection software works best on a tablet, get your staff comfortable with

navigating the user interface. If a customer is confused on where to get information on his or her vehicle, your staff will know exactly where to find the answer.

Once vehicle inspections become digitized in your shop, O’Neal notes, take time to make your way around the shop and commend staff for following the correct process.

Provide a form of constant reinforcement, so this process becomes a habit and integrates with ease.

Building Trust in the Technology

Both Cooper and O’Neal agree: Once you’ve educated your staff on digital inspections and the software your shop uses, the next step is to engage your customers and foster trust in your system.

Look at digital inspections through the lens of a customer: How do they benefit from it?

For one, O’Neal asserts, digital inspections improve the lines of communication during the vehicle repair process. The customer can clearly see the condition of the vehicle and the software also provides visuals for additional items the customer was previously unaware may need attention. The customer can then work with the service advisor to prioritize repairs.

There are two essential aspects customers need to know about digital inspection software, says O’Neal: what it is and how to navigate it. Start off by having a service advisor give the customer a rundown, and explain that he or she can navigate the car’s inspection through pictures and the notes provided by the technician. The customer also needs to know that digitizing this process offers more honesty and engagement throughout the process.

The bottom line, O’Neal says, is that when the customer leaves your shop, they should be able to run through the interface themselves with little guidance. With the proper education, the user can navigate the interface and click through images and video of the vehicle and decide what services to add on. In most cases, customers can accept the estimate with the click of a button.

“We don’t peer pressure people into buying, but we let them know when the future things are coming up,” Cooper says.

“When presenting a sale to customers on things they needed, a couple of times we’ve forgotten to check the cabin filter, and then the customer will look at the photos and

just ask about the cabin filter: ‘Can you change that too?’”

That is why proper training for your staff is essential, he says. If the software is too difficult for staff to understand, then they won’t be able to explain it and transfer their knowledge to customers.

Communicating with the Customer

O’Neal notes that shops will only see 40 percent engagement—which refers to the number of customers using the software to track their vehicles’ repairs—if the shop doesn’t communicate with customers and explain the process to them.

Another vital aspect to making sure digital inspections are successful in your shop is to maintain an open dialogue with your customers about the repair process, Cooper notes. By getting techs in the habit of providing updates—either through pictures, video or documented notes—to the customer, you are building trust and easing any anxiety. Cooper’s technicians have made this a common practice as they go through the repair process.

“Our technicians can take pictures,” Cooper says. “Instead, before when brake pads were bad, I would have to go out and check personally and make sure we’re doing right by our customer. But now, they take pictures and I can see exactly how bad they are.”

Technicians at ECP Auto Repair & Service utilize the digital inspection software to add pictures and videos of trouble areas within the vehicle as they run through a vehicle inspection. After adding in images and video, the technician can go in and circle particular things within the picture to highlight a concern they have.

The shop can then send text notifications and emails to provide updates or request action from the customer.

Within the vehicle inspection module, the technician can go through the different parts he checks during the vehicle inspection and use canned responses. For example, when checking fluid levels and colors, there are pre-filled out notes he can add, aside from his or her own recommendations, or different colors that indicate the condition of the part.

“If I need to ask a customer something, I shoot them a text. They respond pretty quickly and it shows up on my computer,” Cooper says.

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Columns

THE BOTTOM LINE Mitch Schneider

WHAT’S IT WORTH? Breaking down the five most common business valuation formulas

gagement in Las Vegas. The presentation was entitled “The Elephant in the Room” and was all about succession planning, exit strategies and the need to have both in place.

It was about your responsibility as leader to ensure your business is as profitable as you can make it so you have something of value to sell when the time comes.

It sounds logical enough, and yet, it is estimated that fewer than 20 percent of all businesses have made the effort or invested the time necessary to create either a succession plan or an exit strategy. Even if you aren’t thinking about exiting the business any time soon, determining what your business is worth is a critical exercise you can use to keep score of where you are and where you 6 0 / R + W / 0 6 .17

need to be. This can be especially helpful if you are re-organizing, re-financing or preparing your estate.

To help you understand, here is a brief explanation of the five most common valuation formulas: ASSET VALUATION The presumption here is your business is worth at least the number shown as owner’s equity on your balance sheet. It is neither the most popular nor the most accurate method because it generally uses depreciation and historical costs, rather than current market value.

There are mitigating factors, however, that can be used to impact the asking price, like the fair-market value of the equipment, leasehold improvements that

essentially become part of the property, and discretionary cash.

This could be the basis for a bareminimum asking price for your business and/or the starting point for some serious negotiation.

ASSETS AND EARNINGS VALUATION This is the prescribed method most commonly used by the IRS when they valuate a business with estate and/or gift tax issues and many accountants gravitate toward it if they feel the valuation may result in an audit.

It starts by recasting your financial statements to show the business without your salary, perks, and benefits and should probably be averaged over a 3–5 year timeframe.

THINKSTOCK

I just returned home from a speaking en-

considered the market value.

Mitch Schneider is a fourth-generation auto repair professional and the owner of Schneider’s Auto Repair in Simi Valley, Calif. He is an industry educator, author, seminar facilitator, and blogger at mitchschneidersworld.com. mitchs@schneidersauto.net

MICHAEL HOEWELER

ratchetandwrench.com/schneider

The starting point for this valuation method should be the net value of your assets as they appear on the recalculated financial statement.

• Owner’s reason for leaving the business • Years of continuous operation • Degree of risk associated with this type of business • Profitability • Location • Growth history • Competition • Barriers to entry • Customer base • Technology

CAPITALIZATION OF INCOME VALUATION This method of business valuation is more appropriate for service-related businesses because it is focuses on a number of variables that are far more intangible in nature than the physical assets of the business.

These intangibles can be listed and then assigned a rating based upon a scale of one to five, with five being the highest rating. The average score can then be multiplied by the buyer's discretionary cash to establish market value. These factors can range from:

If you add up the total of the ratings assigned to each topic and then divide by the number of topics, you will have a number that you can use as your capitalization rate.

This number is then multiplied by the buyer’s discretionary cash and the result can be

OWNER BENEFIT OR HISTORICAL EARNINGS VALUATION The owner benefit method utilizes a standard multiplier of 2.2727, which is based upon a 10 percent return on investment for the buyer, a living wage equal to 30 percent of the owner's benefit, and a debt service of 25 percent.

Historical earnings valuation is based upon both the assets of the business and the goodwill. Once again, this method is based upon a set of recast financial statements with the owner's salary, perks, and benefits removed.

These calculations begin with the company’s net earnings, including a reasonable owner’s salary minus capital improvements and working capital increases, with the depreciation figured back into the equation. You then multiply this number, which is generally referred to as free cash flow, by the number of years it will take to pay off the loan required to purchase the business.

Subtract the down payment, and what remains is what will be left to make interest and principal payments on the loan, plus a moderate return on investment for the new owner.

MULTIPLIER OF MARKET VALUATION The problem most people have with this method is that it does not reflect just how different two businesses in the same industry can be. It is based upon what businesses like yours have recently sold for and is generally figured as a multiple of gross sales.

The formulas can use a multiple of anywhere from 0.75 percent to 1.5 percent of annual net profit plus inventory and equipment in a retail business.

To determine what the correct multiplier is for you, call your local association headquarters or a broker specializing in the automotive service industry.

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“I’M NOT AFRAID TO DO ANYTHING I ASK OTHERS TO DO.” Repair Life

K E N G A MB L E O W NE R N O R T H HIL L S A U T O M O T I V E

P H OTO G R A P H Y BY PAT R I C K C OX

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Learning to Delegate Ken Gamble has found a happy medium between being an active participant in his shop and being able to take a step back and loosen the reins.

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R E PA I R L I F E / K E N G A M B L E

Back in 2014, Ratchet+Wrench connected with Ken Gamble as he and his son, Jacob, worked on renovating his shop, North Hills Automotive in Greenville, S.C. (ratchetandwrench.com/northhillsauto).

Since then, Gamble has taken a bit of a step back from his involvement with the two-shop operation. He’s cut his work hours in half—a big departure from his past 12-hour workdays.

Gamble feels at ease with his operation; the shops net approximately $3.7 million in annual revenue and that is due in part to Gamble’s vigilance of each shop’s KPIs. With more than 30 years of experience, Gamble’s deep roots in the industry began with his grandfather opening a shop in 1918. Following in his footsteps, Gamble opened his own shop in 1986. By using lessons learned from his grandfather, Gamble has molded himself into the type of leader that would make his grandfather and father proud.

And at 62 years old, Gamble continues to pass that on to his son, who runs the day-to-day operations.

Gamble is still very much involved with the shops. Whether it’s on the business’s website or its social media channels, not only is Gamble’s attention to detail evident, but so too is his desire to appeal to customers as more than just another repair shop.

A S TO L D TO K AT H L E E N S A N D OVA L

My job is to look out the window and see where the industry is heading. Where

do we want to go? We want to stay relevant—always.

We feel like our competition is new car dealerships. They are particular about quality, just like us. And, we are careful that our customer is not just another number.

The business is based on relationships and that has been our philosophy for the last 30 years. You can’t service your customer if you don’t know who the customer is. When you come here, you have a name.

We work on a first-name basis because we want to win your trust.

I usually get in around 9 a.m. The bulk

of my day is spent at our corporate office looking at the daily numbers, KPIs, making projections for the month, giving managers goals to hit and talking to customers and addressing any concerns they may have. We are very process oriented.

I start off by checking bank activity and communicating any questions I have about deposits and debits with our controller, Lauren Canady. She gives me a list of payments she’ll make that day. She then produces the KPI report from the 6 6 / R + W / 0 6 .17

previous day’s business, which I review.

Most days I can run through the KPI checks very quickly because the numbers are very consistent. Each shop’s performance is listed in a tracker or Excel sheet that breaks down each of the measurable KPIs per day and then the weekly total. We also do a combined tally of both shops.

We track net sales, number of vehicles, average ticket, gross profit, shop efficiency, courtesy checks and more. For the first week of April, we had a total of 209 vehicles come in for work and our average ticket for both shops combined was $380.72.

Every number must pass what I call the “reasonability-ness” test. If I see a number that is out of range I focus my attention on that category. For example, if our warranty work (for which we have a lifetime parts and labor guarantee) was unusually high one day, I ask for the details behind the number and find out why we had a high number. I ask whether it was due to a failed part, a technician error or some other cause.

We also have a 21-point employee handbook in place for handling the vehicle

maintenance process. Our handbook

models the 21 steps our staff needs to take to make sure customers and vehicles are handled correctly throughout the repair process. By having something like this in place, any time there is an issue, we can go back to that step where we faltered and correct the problem. It’s part of our company culture now and it works well for us.

I stay at my desk for the most part. I

take coffee breaks, though. During the afternoon, I set aside time to focus on social media and emails that come from the website.

I check our social media accounts and review ad performance, answer messages from customers and decide if additional ads should run, create content and photos/videos to use. We have more than 2,200 collective Facebook likes for both stores. What really matters to me is how many people are actually engaging in the content and interacting with it.

I try to get out into the shops and take pictures of maybe an engine, something with an obvious problem, and then I post it on Facebook. This type of post requires a response from the reader. Social media is more about awareness. My job through

NORTH HILLS AUTOMOTIVE

Location: East Butler and Augusta, S.C. Size: 12,000–12,600 square feet (East Butler); 4,400 square feet (Augusta) Staff: 21–22 Average Monthly Car Count: 1,000 Annual Revenue: $3.7 million

social media is to show people what goes on in the shops every day. This is the face you deal with at the counter.

My other son, Rob, is currently studying business marketing at the University of South Carolina , so once he graduates, I

will put him in charge of the shops’ social media and marketing efforts. Another aspect of the business that Rob will need to look after is maintaining the sports sponsorships we have for our local schools, which helps build relationships with the community.

I also write articles for our website.

On our website, there is a Q&A portion known as “The Driving Line.” Customers can go there, use #AskKen to ask me questions, and I will respond. This segment of our website was derived from a radio show I used to do where people would call in and ask me a number of questions regarding auto maintenance.

Intertwined with monitoring social media, I take phone calls, visit customers in the lobby to say hello and thank them for coming in. While I take coffee breaks, I

stroll through the shop visiting techs and managers, boosting morale with small

talk. I like to stay closely connected to the techs and managers. The problems they face working on cars and with customers are sometimes the least of their worries, so keeping up with their family life is an important part of leadership. They know they can come to me anytime and talk. The rest of the day is spent returning emails, writing for our website, reviewing capital improvement needs and assigning tasks to management.

I also work on putting out any fires, customer problems or shop issues. If there is

a problem, we will take care of it before it leaves the shop. We rarely have any customers that I need to speak to personally because my staff follows our processes so well.

When your staff trusts the system, they will adapt to it that much more easily. Following the process ensures that everything is done correctly. And, with these processes in place, you will make both your staff and company more profitable.

I’m not afraid to do anything I ask others to do. For me, in a leadership role, I have to go out of my way to make sure I treat people the way I want to be treated. I’m not a hardnosed sergeant barking orders. I’ll go the extra mile for any of my employees.

You lead by example. Respect other people and they will respect you. Try not to let anyone down. Try to be consistent every day.

I always tell my staff, “You can’t get fired for making a mistake, but you can get fired for lying.” Integrity is the name of the game. I expect our technicians to be transparent with our managers and I expect managers to be open with me, too.

I end my day around 2:30–3 p.m. I de-

cided that after all these years of working almost 12-hour days, it was time to spend more quality time with my wife. I’m even looking into transitioning our shops to a cloud-based system, so I can work from home when I want to.

Ever since the early days of ownership I have found that much more can be accomplished if I am a good delegator of responsibility. That’s the key. I must trust the people that I have assembled around me to do what I’ve asked them to do. That way all I should have to do is follow up on what they are doing, hold them accountable and watch the machine run. Accountability is the biggest piece of that pie.

Meeting regularly, whether in person or virtually, and insisting on daily reporting keeps everyone on their toes and their assigned tasks top of mind.

The more I have delegated, the less I’ve had to do myself. I’m at the point where it only takes a minute or two for me to review each person’s daily activity and contribution to the company.

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Columns

CUSTOMER CENTRIC Audra Fordin

THINK LIKE A MILLENNIAL It’s time to accept the millennial mindset

MICHAEL HOEWELER

The auto industry has a terrible reputa-

tion. I spent the ’80s and ’90s accepting this. Sticking your head in the sand is so much easier than facing a harsh truth and wondering what’s next. Back in the day, subliminal messages used to be more commonplace but today, this is no longer an appropriate response.

Maybe you’ve made the same mistake?

I won’t judge you; I experienced it myself. I do want you to know there’s a better way. A warning, though: When you become aware of this solution, you won’t be able to play dumb. You will have to act.

Failing to acknowledge a driver’s fears doesn’t do you any favors. Whether you believe all auto shops overcharge drivers or not, there’s no denying the fact that people are afraid of this possibility. Accept it! Life is about choices; you could choose to be defensive but that’s not a great choice. Customers don’t want to have a debate. They want you to listen with compassion and show them why you’re different. Simply put, there’s no way to ease a customer’s concerns until they “get it.”

Hear their concerns, be a professional and fix their problem. Telling a person they’re “wrong” is the fastest way to alienate them. Shut up and let drivers speak their minds. That’s a better choice, even if your gut instinct is to defend the industry to which you’ve devoted your life.

According to AAA, “overcharging” is a ridiculously common customer complaint about auto shops. You might think this is all one big misunderstanding. It doesn’t matter.

Perception is reality. If drivers—our customers—believe overcharging is a problem, then it is a problem. End of story!

Forty years of denial is not an effective problem-solving technique. At some point you have to wake up and smell the coffee.

You must do everything in your power to make customers feel comfortable in their vehicle and understand the responsibility

about investing their hard-earned money in auto repair and maintenance. It’s painful to pay for a service when you don’t understand how it benefits your life.

Imagine you go to the doctor for your annual checkup. He recommends a diagnostic scan. You think, “Well, he’s an expert, so surely he knows best,” and hesitantly agree to it. A few weeks later, you receive a bill for $1,000 with no explanation of what this scan was meant to accomplish. How would that make you feel? Bad! It sucks to spend so much cash when there’s no tangible benefit.

Maybe that scan was super important, but the doctor didn’t tell you why, so you had a poor experience. Now your perception of the medical community is tainted.

Audra Fordin is the fourth-generation owner of Great Bear Auto Repair in Flushing, N.Y., founder of consumer advocacy initiative Women Auto Know/Drivers Auto Know (womenautoknow.com), and author of “End Auto Anxiety: No Fear Car Repair and Maintenance for Busy Women.” audra@womenautoknow.com

“HAVING AN UNCOMFORTABLE CONVERSATION NOW IS BETTER THAN LOSING A CUSTOMER’S BUSINESS LATER.” AUDRA FORDIN OWNER GREAT BEAR AUTO REPAIR

It’s a tough way to live by always being on guard. What if it didn’t have to be that way? What if the millennial is right?

What if there is a better way to connect in a way they understand and to which they can relate? If you can provide a fun, fast, value-packed, positive, life-changing experience in 15 minutes, the millennial will be your best buyer. Think like a millennial.

That means don’t tell me what; tell me why.

That’s who they are.

We’re in the service business, not sales.

Once you understand millennial thinking

ratchetandwrench.com/fordin

and accept it yourself, the secret to excellent customer service is simple: meet (or exceed) your customer’s expectations. Being upfront about pricing, maintenance, recalls, and repairs is in your best interest.

Having an uncomfortable conversation now is better than losing a customer’s business later. Make sure your service advisors understand how to communicate the benefits of auto safety. If people are aware of what you’re trying to accomplish, which is sparing them from wrecks, breakdowns, and inconvenient situations—they will be prepared for regular maintenance, in addition to what they requested.

Do you care about how people perceive our industry? If so, implement these changes in your shop now. We can’t transform the auto industry’s reputation overnight, but if enough of us become honest and open about repair pricing, we can eliminate this objection from drivers’ minds. Are you in? I hope so!

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S O L U T I O N S

SUBMIT YOUR SOLUTION Did you develop an innovative solution to improve your operation?

Let us know at submissions@ratchetandwrench.com

LAST YEAR'S SALES

TOOL INCENTIVE PROGRAM

5 YEAR AVERAGE

JA M I E DO D D H AS FOU N D A WAY TO I N C R E AS E SA L ES BY G I V I N G H ER T EC H N I C I A N S M O N E Y TO PU RC H AS E TOO LS

AUTOSMITH

BY TESS COLLINS

PROGRESS TOWARD GOAL

Creating Incentives A tool incentive program has both motivated technicians and improved sales at Autosmith.

Innovator: Jamie Dodd, CEO Location: Colorado Springs, Colo.

Size: 4,000 square feet Average Monthly Car Count: 142 Annual Revenue: $587,000

MONTH

What It Is Tool incentive program

The Inspiration At Jamie Dodd’s shop, Autosmith, technicians are paid an hourly wage, between $10.25 and $16, depending on the skill level. Dodd wanted to inspire her team to hit specific goals by providing each tech with some sort of incentive.

Her front office staff has a sales goal incentive, but she wanted something to inspire her technicians. Dodd considered numerous incentives until she settled on tools.

“In this industry, people are expected to pay for their own tools,” Dodd says. “It’s a lot to ask.”

That’s when she decided to implement an incentive program that would award her staff money for tool purchases when sales goals are met.

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What It Does

How It's Made

Dodd sets a sales goal for the team at Autosmith each month, which she says is typically a 10 percent increase from the same month a year prior. She then posts each day’s sales in a bar chart that is made available to the entire staff. The sales from each day are added to the cumulative sales for the month so the staff can watch it increase. If the team meets its goal for the month, Dodd buys the entire team lunch. If the team meets its goal for three months in a row, she writes each of her technicians a check for $250 that can be used for tool purchases.

“If we’ve done $48,000 in the month and their goal was $49,000, then they haven’t met their goal,” Dodd says. “Since we started over a year ago, there’s only been one month that they haven’t met their goal.”

Dodd explains that the one month that the goal wasn’t met was a month where an employee change occurred. Dodd says that the team loves doing it and that it gets everyone in the shop invested in meeting sales goals.

In order to track progress, Dodd prints out a chart that shows the sales progress and updates it daily. That way, the team can see exactly how close they are to hitting their goal. Dodd decided $250 would give her staff enough money to buy a few tools or make a down payment on a more expensive tool.

“One hundred dollars wasn’t enough and $500 was too much,” Dodd explains. “I felt $250 was a nice number down the middle.”

If the staff achieves its goal for the third month in a row, Dodd pays the tool vendor the $250 directly and then the staff has that money on credit.

The Cost Apart from the $250 checks she writes if they reach their goal, there is no cost.

The ROI Dodd says that when she compares her sales from January/February of 2016 to the same period in 2017, Autosmith has experienced a 22 percent growth in sales.

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