Bruce Raymond, owner of Raymond’s Auto & Truck Repair, in Plainfield, Ind., follows a certain mantra in how he views the training he brings into his shop—he not only offers it free to his employees, but also to the surrounding shops in his area.
“You have to raise the lake level, not just the boat,” says Raymond.
Profitability is a vast topic, and can be comprised of countless factors, including: car count, ARO, technician efficiency, sales closing ratio, and more. But by focusing on small specific processes and procedures, the surrounding lake level can rise, and your shop is able to safely float.
Ratchet+Wrench sat down with five automotive repair shops, who proved their profitability success in the 2019 Ratchet+Wrench Industry Survey results, to speak on the isolated factor they have been able to master, and what processes and procedures they have put into place to ensure their overall profitability.
Below is a breakdown of the five most influential profit factors according to the 2019 Ratchet+Wrench Industry Survey.
Factor No. 1: Car Count
When you wear multiple hats, it can be difficult to find a balance in your business. For Scott Browne, second-generation owner of Dave’s Automotive LLC in Stockertown, Pa., working multiple roles in the shop—including working on vehicles and answering the phones as the owner—started to catch up to him in 2011.
“Doing everything myself became very hectic and I was starting to burn out,” Scott says.
Additionally, Browne’s three children (with wife, Christa), were nearing their college years, which posed strain on how the family could afford their children’s education. To combat stress, Christa joined the business to extend a hand and answer phones.
It wasn’t until a leadership bootcamp that the duo came face-to-face with the shop’s underlying cause of stress: they were understaffed.
“[We] needed to be open to change,” Christa says. “We took the leap when we had the opportunity to go to a business boot camp with one other coaching company, and we took a leap of faith and invested in the business and ourselves.”
Since the class, the business has bloomed over the last seven years. In 2011, Dave’s Automotive LLC had 1,570 vehicles come into the shop and, in 2018, the business saw an increase to 4,218 cars.
Both Christa and Scott share what they did to invest in the business as well as how the change has allowed them to become more forward-thinkers at the shop.
Prepare for change.
It was important to prepare the business for sudden change as Scott morphed into more of a management role in the shop. According to Scott, it was critical that the shop hired the right staff members—whether it was technicians or service advisors—before they could really focus on growing the shop.
“If you don’t have the right people answering the phones and the right procedures in place, then you’re just going to shoot yourself in the foot,” Scott says.
It’s important to have the right people in the shop before it can fully focus on growth. For Scott and Christa, one of the first hires the duo made for the business was a service advisor.
Fill open positions.
Up until the decision was made to hire a service advisor, one of Scott’s hats included filling that position up front.
“At the time, I was turning the wrench, so I became a lead tech in the shop, which I didn’t even have time to do when I was answering the phones,” Scott laughs. “It worked out well for our business that I was able to be a lead tech in the shop and pick up some of the cars that came in.”
He worked in that position because it was a family business, Christa says, and he was the face of the shop. When it was decided to bring a new hire onboard, both Christa and Scott questioned how the customer base would react.
“It was that mindset of, ‘How is the customer base going to react to a service advisor telling them what their needs are?’ and, ‘Are they going to be the right person for the job?’” Christa says.
According to Christa, the first hire the business made in the transition is still working today. The hire not only understands what the company’s vision is, but works to make it a reality day-to-day, she says. Scott’s role has evolved in the business since the change, but he still helps out when the shop is short-handed.
“My role is much less in the shop and much more management,” Scott says. “It’s evolved.”
Pay tribute to marketing.
After the shop’s first service advisor was added, the business realized there was more time to focus on other elements of the business such as marketing, Scott says.
“We were doing some acquisition [marketing], but it wasn’t heavy,” Christa says.
Within the next year, both Christa and Scott were comfortable enough with the new business’ path that they could focus more on marketing for the shop. According to Christa, within a year, the shop realized that they needed to add a second service advisor.
In 2014 and 2015, the business focused heavily on acquisition marketing, Christa says, which led to a peak in the shop’s success. Christa says there wasn’t one sole marketing approach that the business focused on, but they did utilize direct-mail, Google AdWords, Facebook marketing, Yelp, as well as focusing on retention marketing for return customers.
“The peak year was 2015,” Christa recalls. “From 2014-2015, we had an 824 repair order increase and almost $200,000 in revenue, so that was where it just catapulted.”
According to Christa, the shop’s peak year doesn’t surprise her, as the business was able to obtain a full staff and put an emphasis on marketing.
“We’re still looking to grow,” Christa laughs. “We’re not done.”
Factor No. 2: Average Repair Order (ARO)
After making the transition from owning four gas stations with service bays, to opening up a shop doing solely auto repair, Scott Osborn started to notice more money come into his bank account. Surprised at the unexpected influx of cash, after such a business model restructure, Osborn turned to his tax accountant and asked what was going on differently, to be met with the answer, “Don’t worry about it, just keep doing what you're doing.”
That answer wasn't good enough for Osborn. He wanted to be able to pinpoint exactly what factors were driving the success of Osborn’s Automotive Inc. in Redondo Beach, Calif., in order to isolate and recognize when the influx of money isn't there, how he will be able to fix it. This search for business management knowledge drove Osborn to a series of continued management trainings, and later, a series of coaches. The changes of awareness and management skills have helped Osborn get his small shop, of only 1,000 square feet, to an annual revenue of up to $1.25 million per year.
A specific factor Osborn has been able to isolate and systematically improve, is the shop’s now-doubled ARO. Throughout the years, tweaked processes, and new tools, Osborn’s Automotive Inc. has raised its ARO from $325 to over $600, with some months reaching $700.
“It all comes down to processes, procedures and keeping your finger on it,” says Osborn.
Spend time with the right customers.
One of the biggest pieces of knowledge Osborn picked up while working with management consultants, is that his shop doesn't have time for everyone.
“Spend your time with the [customers] you want to, and value what you provide,” says Osborn.
He also emphasizes the importance of spending more time with customers that are truly willing to take care of their cars. Osborn says this change in how Osborn’s Automotive defines its customer base has grown the shop “leaps and bounds.”
Once focused on customers willing to care for and invest in their cars, ARO will continue to grow.
Become more hands-off.
Osborn attributes a good amount of the success of his shop, to the staff he has been able to hire and trust with parts of his business. Before hiring an employee to manage and run the day-to-day operations of the shop, Osborn said he tried to be everyone’s friend instead of their boss, he was also working hands-on in the business.
After bringing on a manager, Jamie Sanders, to come in and manage Osborn’s Automotive, things began to shift. Although he hired a manager, Osborn had trouble giving up the reigns. Jamie ended up giving Osborn an ultimatum—he was going to have to let her actually lead the shop, or she was going to leave.
“It was time for me to let the shop go to someone who could manage it better than I could,” says Osborn.
Although he says it has been tough for him to let go, becoming more hands-off has allowed both Osborn and the shop to grow.
That was roughly six years, and Jamie is now learning the business, in the hope that someday she may take over the shop. During her time managing Osborn’s, she has implemented multiple processes that have helped the shop’s profit and ARO.
Use digital inspections as a tool.
Osborn says the top reason behind the doubled ARO, is the use and monitoring of digital vehicle inspection tools.
“Too many guys say, ‘Oh, I got to have digital inspections,’ but they don’t do anything with it,” he explains.
Osborn has turned using digital inspection tools into a process, and has written up SOPs on them. He also does something different surrounding digital inspections: he monitors recommendation percentages—the number of times services are recommended.
“So many times, inspection recommendations are based on time and mileage, and nothing gets sold,” explains Osborn. “If the technicians were to find a problem, and base their recommendations on that issue, then they’ve got something to work with.”
Base recommendations on condition.
Before implementing condition-based recommendations, Osborn is able to look at his reports and see that a technician in his shop recommended a brake fluid service on 95 percent of the cars on which he worked. He asked the tech what he based his high brake fluid service recommendations on and the tech answered by saying he solely looked at whether the mileage was over 45,000.
“Well every car that we work on is over 45,000 miles,” Osborn says, with a laugh.
He explains that when a tech recommends a service to 95 percent of cars, the service advisor doesn’t believe what they see, so they don't try to sell it—out of that 95, maybe 3 or 4 will actually be sold. Osborn has been able to bring that tech’s recommendations down to 28 percent by implementing condition-based recommendations. They then began being able to sell half of what he was recommending.
“So, the sales jumped from 3 out of 100, to about 15 out of 100,” says Osborn. “Because he went from basing his recommendations on condition rather than just mileage or time.”
The shop continues to monitor recommendations and results. The staff meets every two weeks to review the past 45 days to gain a rolling average and monitor certain habits, as well as how they can be corrected.
Factor No. 3: Technician Efficiency
Similar to Scott Osborn, in the 1990’s, Steve Mancinelli switched his business model from being a gas station with service bays to solely a repair shop—but instead of being met with an influx of profit, he was met with a new set of challenges. Mancinelli’s Auto Repair Center in Denver ended up losing 50 percent of its client base after the switch because they were no longer able to sell the convenience of both providing fuel and repair services, as well as the ability for customers to use gas charge cards to pay for their service and repairs.
“It was basically like starting out in business all over again,” says Mancinelli.
He says the first three to four years after the transition were difficult, but were also the push Mancinelli needed to begin looking into management training.
“That’s when I knew it was time to get educated,” he says.
Through being involved with management training, Mancinelli was invited to join a new 20 Group. He says that’s when his business started to turn around, and he saw success. After being involved in the 20 Group for a period of time, Mancinelli stepped back from the group and went back to quietly running his shop.
From 2003–2016, he operated his shop with the same principles he learned back in the ’90s. But soon, he began to sense updated strategies and information passing him by, and decided he needed to do something about it. So, he got back into management training and industry communities, and since has made some tremendous changes in how he runs his business.
“When you start talking to shop owners from around the country, you get a lot of good information, and that’s the real value in those groups,” says Mancinelli.
He’s implemented a lot of those learned processes and procedures in how he runs his shop, including how he is able to have such a high technician efficiency percentage.
“We look for a minimum technician efficiency percentage of 125 percent,” says Mancinelli, “and ideally we want 135 percent.”
Get your techs on board.
One of the procedures Mancinelli put into action was having his technicians start timekeeping—but implementing this new task wasn't easy.
“It was like pulling teeth,” Mancinelli jokes.
But he was adamant in getting his technicians to start doing it, and he put them all in a technician time training class. He believes the hesitation came from them believing that time keeping was some sort of way for Mancinelli to police them.
To help get his technicians on board, he explained to them that the reason for the change was not as a way to police, but simply a form of keeping track of checks and balances. He told the technicians that they would both get a copy of the time sheet, which would showcase exactly what hours they were paid on. Mancinelli’s copy was in order for him to make proper decisions on whether or not extended efforts needed to be taken to step up training in specific areas for certain techs, to get them where they need to be.
Mancinelli also points out the importance of involving technicians in training and equipment decisions. He says that they may have different and new ideas, partly from being new to the industry. Along with fresh ideas, this also helps make the technicians feel like they contribute to the business as a whole and are heard.
Make a schedule.
In order to streamline the scheduling and dispatching of work, Mancinelli has put a daily schedule into place, of what and when procedures get done. This strict allocation of when certain works gets performed and completed is something that has been implemented at Mancinelli’s Auto Repair Center since the very beginning.
Each day at Mancinelli’s, technicians are expected to complete the specific tasks of performing oil changes, inspections and diagnostics, from when they walk into the shop up until the afternoon. In the evening, technicians are then in the back turning out the rest of their work.
“[This is] where a lot of the efficiency comes into play,” explains Mancinelli.
Throughout the daily process, there is a strong expectation that each task will get done in a timely and accurate manner. Overall, Mancinelli says this 25-year-old process has been a huge help with their productivity.
Implement standard processes.
Mancinelli not only puts a strong emphasis on when certain tasks are performed, but also on how they are executed. Every service that is done at Mancinelli’s Auto Repair Center has a process written down, broken up step by step. Mancinelli wrote each process himself back when he was still a technician, and focused on how each service can be completed quickly and thoroughly, without missing any steps.
The procedural manual is given to each employee, so they know what is expected. Mancinelli says that the standard processes are simply not a negotiable situation, and must be appropriately followed by every employee.
“The step-by-step procedures for the specific services are for making sure [technicians] are effective and efficient and turning out good numbers,” says Mancinelli.
An in-depth quality inspection is also implemented with each job, which includes everything down to the floor mats of the vehicle in order to ensure that even the smallest detail of every job is perfect.
Factor No. 4: Sales Closing Ratio
It’s not about how many customers come into your business—it’s about who those customers are. For Bret Berglund, service manager of Import Car Center in Grapevine, Texas, he had a few ideas on how the shop could better improve the business when he joined the shop in 1997.
“It took a few years after I started,” Berglund says. “I had to convince the owner in investing in the business to bring better clients and technicians [in].”
With 29 years in the automotive industry, Berglund has an associate of applied science in automotive degree from Texas State Technology College, and has held positions working as a technician, vehicle salesman and parts manager before joining Import Car Center in 1997.
“We are providing a service that our clients need,” Berglund says. “With the size of the shop now and the four guys doing all they can, I have hit maximum capacity.”
Today, the shop has a sales closing ratio of 90 percent or higher.
“My closing ratio has always been high,” Berglund says.
In the past 10 years, the shop has not only physically remodeled the business, but also paid attention to the way technicians work and what customers come into the shop for service. Berglund shares how the shop routinely nails a high sales closing ratio.
Create reading material.
According to Berglund, customers will take away more from reading information rather than hearing it. When writing up a service report, Berglund tries to make the information as detailed as possible because it builds trust, he says.
“A person will retain more when reading than the conversation over the phone,” he says.
According to Berglund, a detailed report builds trust and makes it easier for clients to understand what issues are occurring with his or her vehicle. The detailed report also eliminates confusion for the customer as all of the information is presented in text.
“After they had time to read it, I have the client call or email any questions they may have,” he says. “I go over [questions with them] and then start asking for the sale.”
One method that Berglund does is bring up a date that it could be done by, he says.
“[I’ll ask], ‘If I have it done by Wednesday does that work with you?’” he says. “There are many different ways to go about asking for the sale over the phone or in person.”
Learn your client.
In efforts to create a high sales closing ratio, it’s important to know who your client is to begin with. According to Berglund, it’s essential to learn about your client—good or bad.
“Some will complain about spending money and take up all of your time,” he says, for example. “Those are the ones that I weed through and avoid making appointments for in the future.”
When Berglund runs into a client that may cause fuss or have objections, he’ll flag the account so notes about the customer will be visible to any employee calling that customer in the future.
It’s important to utilize your time by applying it to good customers and follow up with past services of those customers, he suggests.
“In time, good, happy clients refer others like them,” Berglund says. “[It’s like the saying] ‘Birds of a feather flock together.’ You’ll build a good reputation pretty fast.”
Stay on top of training.
It’s important to train employees who might not be updated on industry techniques or are brand new to the market. If a service advisor has no previous sales experience, Berglund suggests looking into attending a course on the subject.
“Many years ago, I went to a Neusbaum school for closing on the phone,” he says. “I did pick up a few things and the instructor asked me to help out the class with live calls within the room.”
Keep the customer in mind when you’re making a sales call, Berglund suggests.
“Remember, the guy on the other end has a need or concern,” he says. “You have to decide if you want it or not within a few seconds, and then get him to commit to bringing in the car.”
Another trip that Berglund suggests with closing a sale is getting the customer’s name and phone number on the call.
“It helps with commitment,” Berglund says.
Factor No. 5: Annual Revenue
A shop in the middle of an Indiana town, with 15 other repair shops in walking distance, brings in over $2 million per year with little to no advertising.
How?
Bruce Raymond says it’s all word-of-mouth. But the town’s positive talk has to come from somewhere—and that “somewhere” is the strong emphasis Raymond puts on his shop’s staff, and their unique and specific training that extends past shop walls.
Raymond has been in the repair business since 1984. He owned his first shop in 1995—a small 30- by 40-foot building that has since lead him on a journey to his current large facility in Plainfield, Ind. Raymond’s Auto & Truck Repair focuses on general repair as well as trucks and racing cars. With a total annual revenue of $2.3 million and an average monthly car count of 480, Raymond’s localized training, style of leadership, and camaraderie with competing shops in his area has driven the shop’s success.
Although a high annual revenue can be a sign of profitability, like Raymond’s shop, smaller businesses with fewer employees and lower revenues can still have a high profit in relation.
Provide training for all.
Roughly three years ago Raymond decided to bring training to Plainfield. He gutted out the old offices in his building and made it into one large training facility, including a big monitor screen. The facility holds trainings three times throughout the year, and the training subjects are chosen based on the new procedures with which the team are not yet familiar.
Raymond not only pays for the staff at his shop to attend the training sessions, he also pays for the training for anyone around the community who wants to attend, including his “competitors.”
“You have to raise the lake level, not just the boat,” says Raymond.
Raymond is passionate about creating a better environment for the community of auto repair shops—and dealerships—in his area. He says that quite a bit of betterment can lead from the training sessions in his shop, not only extended repair knowledge but also the comradery of the community of auto repair around him.
“We’re not bad-mouthing shops down the street: ‘so-and-so did this and so-and-so did that,”
says Raymond.
He says that putting down other shops’ work is a large issue in the industry, and is destructive to everyone involved. Sometimes, customers will show up at Raymond’s Auto & Truck Repair with an issue from a previous visit at a different shop. Instead of bad-mouthing the work, Raymond will simply call up the shop and ask if they would like him to either send the customer back to his or her shop, or fix the car himself.
This unique view on training helps the employees at Raymond’s Auto & Truck Repair become more well versed in new techniques and skills, as well as creates a community and a space where surrounding shops can come together and help one another out.
Raymond also jokes about the notion that if employees from other shops decide to quit and look for another repair shop to work at in the area, hosting trainings and showcasing his value of education might bring them over to work at his business.
Stay in your lane.
Raymond partly attributes the success of his shop to “staying in their lane,” not only when it comes to the services the shop provides, but also how he allocates work to his employees.
Each shop has employees that each have their own unique talents and skills—and generally, one person can’t do it all, and do it well. Raymond recognizes this, and is careful to not cross employees and their skill sets. He stresses keeping people in their lane.
This notion continues to what services Raymond’s Auto & Truck Repair provide to their customers. Raymond knows that his shop’s expertise is not in German and European cars, so they choose not to service many.
“You have to choose, because you can’t be everything to everybody,” says Raymond. “Know your limits.”
He says if the answer to a potential repair is, “Sure, I can fix that,” they shop is better off to not even take the job.
“Know your piece of the pie,” says Raymond. “Don’t add a service and say, ‘We’ll figure this out.’ The software could be too expensive for the payout if it isn't perfected.”
Create a desirable workplace.
Raymond is passionate about letting his employees own their positions, this creates a sense of accountability, and pride in what they do. Each tech position at Raymond’s shop is compensated differently depending on his or her experience, this gives the younger techs a path to look forward to and strive for.
Each technician is flat rate: young technicians start at $15 per hour with an added 25 cents per aces task, and master technicians make $21 per hour. Employees are also offered good insurance benefits.
To add to the culture of the shop, Raymond also hosts monthly cookouts with his staff and, arguably even more morale boosting, Raymond’s Auto & Truck Repair is closed on the weekend.
“You can try and do flex schedules, but nothing is like leaving Friday and coming back on Monday,” he explains.
Beware of micromanaging.
In his earlier days of being a shop owner, Raymond admits to being a hands-on micromanager—and getting to where he is now, as an owner and leader, has been a “heck of a transition,” he says.
After buying a Good Year store in 2002, Raymond thought he could run multiple locations, but this taught him that he could no longer be micromanaging Raymond’s Auto & Truck Repair. Four or five years later, he sold the Good Year and reinvested in Raymond’s, but the lesson in management stuck.
Now, Raymond has key employees that he meets with to discuss how the shop and the other employees are doing. If individual employees have an issue, he has them meet with their supervisor instead of with him. He has also given procedure manuals to each employee, so there is no confusion in expectations or how things should be done.
But Raymond isn’t totally removed from his shop—he’ll come into the shop and shake all of his employees’ hands, as well as talk to customers about topics not related to auto repair.
This took time for Raymond, years, he says. But the shop’s structure is now set up in a way where everyone can succeed, and Raymond can breathe a bit.
