Shop Owner, September 2014

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 Working Smarter

 Boosting Shop ‘Sellability’

Learning From Customers September/October 2014

It’s more than just fixing cars

Automotive Specialist Finding Success … Close To Home

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September/October 2014

Shop Profile 20 Automotive Specialist, Lisle, IL 42 Osborn’s Automotive Redondo Beach, CA

20 Shop Profile: Automotive Specialist

Features 6

Technology: Finding Lost Time

10 Shop Management: Working Smarter 28 Buying/Selling: Determine Your Shop’s ‘Sellability’ Score

Sponsored by:

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Buying/Selling: Your Shop’s ‘Sellability’ Score

Shop Profile: Osborn’s Automotive

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Departments 34 38 48

Shop Owner Staff

Leadership: Fuel Shop Growth With Adaptable Leadership Skills

Publisher

Jim Merle 330.670.1234, ext. 280 jmerle@babcox.com

Editor

Mary DellaValle, ext. 221 mdellavalle@babcox.com

Graphic Designer

Cindy Strubbe, ext. 231 cstrubbe@babcox.com

Advertising Services Director

Cindy Ott, ext. 209 cott@babcox.com

Contributors

Chris Crowell, ext. 268 ccrowell@babcox.com

Shop Branding: Building Customer Loyalty

Shop Operations: Learning From Customers

Tim Fritz, ext. 218 tfritz@babcox.com Andrew Markel, ext. 296 amarkel@babcox.com Subscription Services

Maryellen Smith, ext. 288 msmith@babcox.com

Babcox Media, Inc. 3550 Embassy Parkway Akron, OH 44333-8318

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President

Bill Babcox bbabcox@babcox.com

Vice President/ Chief Financial Officer

Greg Cira gcira@babcox.com

Vice President/ Group Publisher

John DiPaola jdipaola@babcox.com

Controller

Beth Scheetz bscheetz@babcox.com

In Memoriam

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Founder of Babcox Publications

Edward S. Babcox (1885-1970)

Chairman

Tom B. Babcox (1919-1995)

䊚2014 by Babcox Media, Inc.

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|Technology|

by Uwe Kleinschmidt, CEO, AutoVitals, www.autovitals.com

Finding And Recovering Lost Time Simple Steps For Increasing Shop Productivity

The first step to increasing productivity in many shops is the introduction of Digital Inspections and Shop Workflow Worksheets on tablet devices that help to eliminate or minimize the use of paper in the shop.

A perfect example of this is NAPA AutoCare Center Craig’s Car Care in Allen, TX, whose owner shared with us that they save at least $1,200 a year on paper and ink cartridges alone.

A combination of professional-quality inspection reports, in conjunction with educational videos and detailed information about the service, make it much easier for the service adviser to guide the motorist to the right decision regarding necessary

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vehicle repairs. These easy steps can boost the average repair order to unprecedented levels, and technicians like the higher productivity levels because it puts more money in their pockets.

Even the paper rack can be eliminated and replaced by touch screens or big TV screens that show the entire shop workflow by displaying each vehicle in its current stage of repair (e.g., Inspect, Waiting on Approval, etc.). Additional details about technicians’ billable hours can be contrasted with completed hours and their time budget, so technician availability for new jobs is determined in

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Figure 1: Technician View in ‘SmartFlow.’

seconds. This gives shop owners and service advisers the ability to take decisive action because critical information is available at their fingertips and updated in real-time. Figure 1 above illustrates how easy the information can be digested.

In this example, vehicles are processed along the shop specific workflow, and we are able to measure a few key performance indicators with impressive initial results. These results are impressive because only a few data points can tell a powerful story.

Established habits are identified easily and positive workflow change can be implemented and monitored.

Check out the report snippet in Figure 2 on the facing page that shows where process improvements can be made.

1. The first column captures the time the workflow step was entered.

2. The second column lists the workflow step.

3. The third column shows the work order value at the beginning of the workflow step.

4. The fourth column displays the amount of time that the vehicle stayed in the workflow step.

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This is a pretty standard workflow at first glance. The only exception is that while work is being performed, an additional authorization by the motorist was detected.

Let’s review the details. The initial work order was worth $181, including the inspection that took two hours.

Under standard conditions, a job worth $181 shouldn’t take that long, so it’s worth finding out if it was a longer “diagnose and test job” with a road test included. (Our technician efficiency report would be listing the details, but in the interest of our focus on the workflow, this topic is not discussed in this article.)

Despite the inspection delay, the service adviser did a great job of guiding the motorist to authorize additional work in the amount of approximately $1,200. The use of digital inspection reports and images, combined with the technician’s notes, contributed to that process in a big way.

Let’s now look at the two most time-consuming repair-related steps besides working on the vehicle.

Waiting on approval is no small feat (See A. Waiting on Approval). It was either really hard to reach the

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customer or the service adviser has simply put this work order on the back burner. As you can see, this created a chain reaction: It was late during the day, so the parts couldn’t be delivered in time for same-day delivery (See B. Waiting for Parts) and the motorist had to wait one more day.

This is unfortunate, since only a few small changes in policies and execution as part of a review with the service adviser could yield significant improvements.

Assuming this report isn’t an outlier, the following best practices will improve the overall shop productivity: • Make reaching the motorist a priority over all other activities.

• Find out the best way to reach the motorist at vehicle dropoff. The service

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Figure 2 also displays a brief time period between finished work and vehicle pickup (See C. Pickup). The phone call for additional authorization, which was declined, has been used to notify the customer that the vehicle is ready for pickup.

While it’s a small report with just a few numbers, it gives you great insight to help you run the shop more efficiently. Additional reports that give you the important details to run your shop more effectively, even remotely from wherever you are, include: • Technician efficiency (how long does a job take to be finished by tech and vehicle type?); • Technician effectiveness (identify sweet spots technicians have when inspecting the vehicle, including the detection of pencil whipping and

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Inspect Waiting on Approval Waiting on Parts Work Waiting on Approval Pickup (ready) Invoiced

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$181.00 $181.46 $1,382,49 $1,382.49 $1,382,49 $1,382.49 $1,382.49

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2h 3 mi 2h 52 min 14h 17 min 5h 51min 2 min 36 min 5h 35 min

A B C

Figure 2: Workflow Progress Report in ‘SmartFlow.’

adviser should ask for the best way to reach the motorist and record that phone number. In addition, he or she should ask about the possibility of text messages or email alerts to have alternate means of reaching the customer.

• Make vehicle repair the motorist’s priority. Do so by developing a script with the service adviser on how to politely, but firmly, create urgency while talking with the customer over the phone.

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over-recommending); and, • Shop effectiveness (how many and which technician recommendations make it to the estimate; how many canned jobs are used; estimate value vs. invoice value, etc.).

Reports like these provide enough detailed insight so that you don’t need to be in the shop all the time in order to know which positive changes to implement to make your business run more efficiently and profitably. SO

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Shop|Management|

by Terry Keller, shop owner and CEO, Auto Profit Masters

Working Smarter Increasing Efficiency And Productivity

How many hours have service writers everywhere lost because of a missing wheel lock? How many frustrating hours have been wasted on getting the wrong parts because of incorrect VIN numbers? Little stuff like this really adds up!

As a shop owner, I know from personal experience how easy it is for service writers to lose between 20 minutes to an hour on every repair.

The really discouraging thing is, this is only one area of the shop. The breakdowns in efficiency and productivity can happen at every stage in the repair process.

And it’s not just the shop that loses hours each day; customers lose those hours, too.

When the service writer loses an hour of time fixing a mistake, it slows up the tech and, ultimately, slows up the customer. All of the little things cost the customer time and money, and cost the shop time, money and customers.

The problem is that the busier we get, the more rapidly our systems can break down.

For years, our systems would break Article continues on page 14.

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Corporate|Spotlight|

Why 40 Is The New 100: How ACDelco Expertise Can Power Your Business In 1974, the AC Spark Plug and United Delco divisions of General Motors formed to create ACDelco, uniting two auto parts powerhouses with more than a century of expertise.

Forty years later, ACDelco honors the “independence” of the independent aftermarket with high-quality parts, unmatched business support and training to help you grow your business.

Parts: We offer nearly 90,000 across 37 lines.

We’re also the only true GM Original Equipment parts brand, so with more than 67 million GM vehicles on the road, that’s opportunity in every bay. ACDelco also offers extensive coverage for non-GM vehicles with the same focus on quality – for example, no one does more brake testing than we do.

Business support: Fully participating ACDelco Professional Service Center Program participants receive more than 350 additional customers on average from our digital marketing, and there are over 1,100 shop-location inquiries daily on the acdelco.com locator. Our marketing support helps keep customers coming back, and our Roadside Assistance and Consumer Assurance programs offer them peace of mind.

Training your techs: Last year, technicians completed 113,539 hours of training across 600 ACDelco courses. This free training for qualified shops helps keep you current on the latest technologies. As an OE parts provider, you get the same OE training the dealers get. ACDelco also provides free training to future techs enrolled in qualified programs.

These services and more are why ACDelco led NAPA, Wagner, Champion, Wix, Interstate and Motorcraft in brand tracking studies by a respected independent market research company.

Learn how ACDelco can help drive your business by visiting www.acdelco.com, or call 800-ACDelco.

ACDelco www.acdelco.com

ADVERTISEMENT

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down every time we tried to grow to a new level. As our car count increased, one by one, the systems would grind to a halt. The technicians would start to pencil-whip inspections, service writers would stop fully advising customers, our customer service would plummet, and we’d end up losing our best customers in the effort to bring in new ones.

Acting as a fire fighter to put out each of those burning problems didn’t stop a new one from cropping up wherever full attention wasn’t being given.

By the time our shop hit $1.5 million, we were easily losing $50,000 per year because of broken systems.

Each busy day, we had communication problems, inspection breakdowns, poor service advising and pitiful customer service. And our average repair order reflected all of these problems.

Does any of this sound familiar? It doesn’t have to be this way! Your shop doesn’t have to go through similar growing pains. It took years of painful growth, sleepless nights, trial and error — and later, a dedication to measurement, tracking, training, adjustments and accountability — before we were able to find the key to making the shop more productive and efficient.

The Right Policies & Procedures How do you fix these problems with efficiency and productivity? How can we begin to work smarter in our shops?

That requires a bigger answer than a single article can cover, but if there’s a place to start, it’s here: communication is critical.

If your techs and service writers need to have a face-to-face conversa-

“It took years of painful growth, sleepless nights, trial and error — and later, a dedication to measurement, tracking, training, adjustments and accountability — before we were able to find the key to making the shop more productive and efficient.”

And this happened every time our car count grew. We were stuck in old habits and old ways of doing things. Even when we were working hard, we couldn’t keep up with the increased load because we weren’t working smart.

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tion in order to process a repair order, your system is broken. How many minutes does it take to talk about each part of an inspection or repair?

You could easily spend 20 minutes to an hour for each RO just talking! And that doesn’t even include the time it

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leak, it’s going to be obvious where the next leak will crop up.

If your techs consistently have to get more information from the customer, create a checklist your service writer can follow when checking in customers. If one stage of the inspection gets lost or skipped, create an inspection form to keep techs on track. If papers, keys and service bulletins are getting mixed together or lost, start using folders or bags to keep each RO organized.

Getting these systems in

“There is no one-step solution. There is no easy button. You have to look at the situation in your own shop and apply solutions based on your needs.” actually takes to perform the repair.

Think of your auto shop as one of the cars in your bay. Unless the individual components and systems are working properly, it won’t run smoothly.

In other words, in order to start working smarter, you need to have the right policies and procedures in place.

There is no one-step solution. There is no easy button. You have to look at the situation in your own shop and apply solutions based on your needs.

When a new problem arises, choose a solution that fits. Compare it to a leaking hose — as soon as you plug one

place and sustaining them will help you work more efficiently. Fewer mistakes, faster repairs, and better service — you’ll be able to work faster and get more done.

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September|October 2014

Empowering Employees Finding the right policies isn’t enough.

A good system is nothing unless your employees are willing to follow procedures and work within those limits.

You can share all the training you have, use every form you can find, but if your employees are pencilwhipping their training or ignoring

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your policies, you won’t make any progress.

Part of the problem is that policies too often seem like a negative, a “do what I say or else!” doctrine handed down from the powers that be. Leading like a dictator usually means things are done exactly as you want when you’re there, but those systems quickly fall apart when you’re not.

Instead, when you introduce policies, explain why they’re there to protect everyone involved: the employees, the company and the customers.

For example, conducting a thorough inspection and taking the time to address every concern helps keep the customer safe, helps them trust the shop more and helps keep them coming back.

After you teach the why, you need to empower your employees. Let them

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know that they have responsibility, and hold them accountable. Measure the results for each individual and consider establishing incentives for achieving results.

Measurement, Training, Accountability Of course, the idea isn’t just that you measure the employees, but that you listen to what the measurement tells you. More than once, I’ve had to remind our shop owner clients and myself: the numbers don’t lie, and they don’t get emotional.

In other words, you don’t have to go through emotional gymnastics in order to hold people accountable for following your procedures. Do the numbers say they’re following your policy or procedure? Then, react to

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the numbers, rather than how you feel about the person.

Accountability isn’t about them; it’s about their performance.

But that means you have to measure every day because you have to keep score to even know if you’re winning. Finding out your service writers were neglecting your policy or procedure well after a month is over doesn’t do you any good. Unless you know daily how your team is performing, you can’t make

I learned where to look for answers.

Eventually, between knowing where my shop stood each day, and finding an expert in accountability (like my business partner David Rogers), we built sustainable systems. We built the policies and procedures that enabled us to work smarter.

Even though those spreadsheets have grown into an entire online measurement and accountability system, it comes back to a simple idea: address problems when they come up with solutions the team understands, and make sure those

“Unless you know daily how your team is performing, you can’t make adjustments daily, can’t make good decisions daily, and can’t hold them accountable daily.”

adjustments daily, can’t make good decisions daily, and can’t hold them accountable daily.

For me, that ultimately meant taking a night course in Microsoft Excel so I could learn how to start tracking my own numbers.

And then it took daily measurement and hours of looking over the numbers before

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solutions are working by measuring, tracking, training and holding your team accountable daily.

In other words, the numbers don’t lie. Pay attention to them. Learn from them. And start working smarter.

SO Terry Keller is a shop owner, service writer and AMI-Approved trainer for auto repair shops. He is also the President of Auto Profit Masters and creator of the RPM ToolKit™, which integrates with shop POS software to help owners identify problems in their shop and get one-click training solutions. Reach him at contact@autoprofitmasters.com or (303) 795-5838.

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Shop|Profile|

Automotive Specialist Finding Success ... Close To Home

Some people seem to have an uncanny ability to find professional success without venturing too far from home. One such individual is Dennis Fourreau, owner of Automotive Specialist, a six-bay automotive repair facility in Lisle, IL. Located barely three miles from where he grew up, Fourreau has built a thriving business in a town where he knows most of his customers and has been repairing their cars for years — even generations — one might say.

“When I see a car pull into my shop,” said Fourreau, “I know immediately whose it is before the driver even steps out of the vehicle, and because I have known most of my customers for many years, everyone trusts us and treats us like friends.”

While establishing his business in an area he was completely familiar with provided him a ready-made customer base, Fourreau realized another benefit that came with the purchase of the shop in 1999. The shop was an authorized Bosch Car Service center.

Bosch Car Service centers in North America are part of an international network of shops that have met the company’s strict standards for service and repair. Most importantly, these shops are qualified for access Dennis Fourreau, owner, Automotive Specialist, has built a to exclusive training, flourishing service and repair business in Lisle, IL — close to where he grew up.

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Staying up-to-date on the latest automotive technology keeps Fourreau and his technicians busy working on a variety of makes and models, from minivans to Ferraris.

marketing tools, service information and equipment from Bosch. Currently, there are nearly 1,900 Bosch Car Service centers in the U.S. and Canada.

Close To Home Fourreau made a business decision to stay with the program. His youthful

ambition, combined with “a ton of hard work” (he said) and his partnership with Bosch, helped him establish a flourishing business — close to home.

“The training and technical support that we can get by being a Bosch Car Service center has helped us keep up with the growing complexity of technology in today’s cars,” Fourreau said. “Besides, it has proven to be a good selling tool for the business because my customers understand that Bosch is a respected brand in many industries,” he said.

At Automotive Specialist, Fourreau

Dennis Fourreau’s youthful ambition, combined with “a ton of hard work” (he said), and his partnership with Bosch, helped him establish a flourishing business — close to home. www.ShopOwnerMag.com

September|October 2014

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and his team repair all makes and models of cars, SUVs, light duty trucks and diesel vehicles — from minivans to Ferraris. Apart from their business and customer service duties, Fourreau and his general manager/service adviser, Dave Walk, both ASE-certified Master Technicians, frequently get their hands dirty repairing cars alongside the two other ASE-certified full time technicians on the staff.

State Of The Business When asked about the current state of the business, Fourreau observed, “People bring their cars into the shop less and less frequently. It is probably because vehicles are better built nowadays. On the other hand, since there are a lot more electronics in these vehicles, many of the repairs we

now handle are electronics-related.”

Another change he sees is a result of the extended oil-change intervals specified by manufacturers. According to Fourreau, motorists are not getting their oil changed as diligently as they did in the past, and they also do not check the condition of the oil in their vehicles between changes as they routinely did a decade ago. This concerns him. “If you do not use synthetic oil in your vehicle and do not check and change the oil as regularly as you should, you are setting your vehicle up for engine problems down the road,” he said.

Regarding inventory management, Walk, who has been with the shop since 1989, said, “Inventory management is very different today. With modern vehicles, the parts are so specific to the vehicle and the job

Being a Bosch Car Service center, Automotive Specialist communicates the message of top quality repair to its customers who recognize that Bosch is a respected brand in many industries.

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Technician Mike Fregeau is seen here repairing an axle on a customer’s car.

“When I see a car pull into my shop, I know immediately whose it is before the driver even steps out of the vehicle, and because I have known most of my customers for many years, everyone trusts us and treats us like friends.”

that there is no need for us to maintain a large parts inventory. I simply order the part when I need it. Being in a major metropolitan area allows for quick deliveries, multiple times per day.”

station which he later ran as an owner. When Shell wanted to add a car wash and a mini mart, Fourreau opted to sell out, purchasing Automotive Specialist instead in 1999.

Starting Out

Automotive Specialist Gets A Facelift

Fourreau started his automotive career at an early age. By the time he was 12, he had already developed a keen personal interest in cars. This was not inherited from his father, he emphasized. His father, who was a messenger, drove many miles and frequently wore out the clutches and brakes on his car. Fourreau often helped him in repairing them, also performing simpler jobs such as oil changes and tune-ups.

When he grew up, he got his first job as a mechanic at a local Shell gas

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Fourreau and Walk’s goal to serve their customers well recently took an interesting turn. Bosch approached Automotive Specialist to be the model for its new global branding concept, giving the shop’s interior and exterior a “facelift.”

“I was aware that my shop needed some work in terms of design and look,” Fourreau acknowledged, “so when the opportunity presented itself, I immediately agreed to redesign both the interior and the exterior.” Accord-

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From L-R: Shop owner, Dennis Fourreau; Dave Walk, service advisor/general manager; and technicians Dave Smith and Mike Fregeau.

ing to a member of the Bosch design team, you rarely come across such an enthusiastic participant as Dennis Fourreau.

The project took approximately three months to implement and

Fourreau partnered with Bosch to redesign both the interior and exterior of his shop.

Seen here is the dramatic change to the front desk area after the project was completed.

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was not without some disruption of daily operations. While continuing to service his customers’ vehicles, Fourreau remained calm. “We knew this would ultimately help us so we worked around it, trying our best to make it easy The shop’s new seating area for customers is modern, for our technicians to do comfortable and inviting. their jobs, and not to inconvenience our customers,” he said. done right the first time,” Walk said.

Customer Service

Final Thoughts

Automotive Specialist’s general manager, Walk, is closely involved with all aspects of running the business. This includes communicating with customers, figuring out their

So what advice would Fourreau give to a young, aspiring shop owner/technician who is looking to break into the business?

“It takes plenty of hard work and

“Our primary goal is to satisfy our customers and maintain the trust that they’ve placed in us. That is why the majority of our customers have been with us for at least five years and some even for generations, continuing to refer us to their friends and family members.” repair needs, delegating and assisting with work, ordering parts, confirming completion and invoicing.

He recalls one occasion involving a customer with a disabled child. Rather than asking her to arrange to bring the car to the shop for service, Walk said, they picked up the car at her home, repaired it and returned it by end of day. The customer never had to leave her home. “That is the kind of shop we like to be; one that is sensitive to our customers’ needs and gets the job

then some, plus the ability to hang in there,” said Fourreau.

“Both Dave and I believe in getting the job done right the first time,” Fourreau said. “Our primary goal is to satisfy our customers — many of whom live down the street — and maintain the trust that they’ve placed in us. That is why the majority of our customers have been with us for at least five years and some even for generations, continuing to refer us to their friends and family members.” SO

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Buying & Selling|An Aftermarket Business

by Art Blumenthal, MBA, CBI

Do You Know Your Shop’s 1 of a 2-Part ‘Sellability Score?’ Part Discussion If This Is A New Concept To You, And You Plan To One Day Sell Your Business, Read On...

Most of us know the FICO® score is a critical element lenders use to determine such things as our personal creditworthiness and corresponding maximum available loans and interest rates. Of course, a number of other factors such as debt-to-income ratio, employment history, general credit history and other specific underwriting policies may also be used by lenders to decide the amount and terms of credit being extended.

We also know that we may be able to increase our FICO scores over time by practicing responsible personal financial management.

But there is an even more significant score for shop owners

contemplating a sale of their business called the “Sellability Score.”

Just as the FICO score has evolved in its significance as a factor in the credit process, the Sellability Score is being utilized by a growing number of prospective business buyers to determine whether or not an asking price is justified.

Are You Running A Valuable Business?

It’s fun to imagine how much your business is worth.

It’s not as much fun when you find out that for all the energy you poured into it, a business broker or potential buyer can’t see the value you can, or thinks your number is unrealistic.

“Sellability” is a powerful indicator — regardless of whether or not you have any 28

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intention or interest in selling your business today — because it points directly to the underlying issues in your business that may undermine your value. Those same issues are probably causing mounting frustration for you — the feelings of being overwhelmed, working too many hours, dealing with inconsistent customer experiences and the difficulties of managing cash flow.

Whatever your personal and financial goals are for your business, as a responsible business owner, you simply have to be able to answer these questions: • If you wanted to, could you sell your business today for a number that you’d be happy with?

• Is there anything that you could be doing each day to make your business more valuable?

• What steps can you take to reduce the number of hours that you work, while simultaneously boosting the profits and the sellability of your business?

The “Sellability Score” can assist you in answering these questions.

Whether you want to sell next year or a decade from now, or pass the business to a family member, you strive to build a branded asset that someone would value monetarily — otherwise, you just have a job, not a business.

The Sellability Score is an interactive tool offering a comprehensive assessment of the “sellability” of your business. In just 26 minutes, this absolutely free and confidential selfassessment tool will score your business in a number of key areas and tell you just how sellable your business is.

Thousands of business owners worldwide have benefitted by participating in this free questionnaire.

To make the Sellability Score even

more pertinent to the automotive aftermarket, I have supplemented the standardized online questionnaire with an additional set of questions designed specifically to examine the key factors used by buyers to determine which auto service business to buy and how much to offer. Each questionnaire takes about 13 minutes to complete.

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September|October 2014

How Does It Work?

All you need to do is visit my website www.art-blumenthal.com and click on the button for the Sellability Score.

You will see links for both the standardized and the aftermarket specific questionnaires.

When you complete the two parts of the Sellability questionnaires, you’ll receive: 1. A standardized Sellability Score that ranks your business among all other businesses, and 2. An aftermarket Sellability Score that evaluates the sellability of your business compared to other automotive service businesses.

The standardized Sellability Score, a scale of zero to 100, is based upon key drivers of sellability, which are statistically proven to increase the value of your company. The developers of the tool studied 6,955 businesses and correlated the positive and negative attributes of each business with their ultimate selling price compared to similar businesses.

The aftermarket Sellability Score drills down deeper into the details of your business and pinpoints key elements that are most attractive to aftermarket buyers. Your responses, as well as other publicly available data about your area and location will be analyzed to provide an assessment of how your business compares to other

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automotive businesses in terms of sellability. The aftermarket sellability key factor analysis is based on my 37 years in the automotive aftermarket and successfully selling dozens of automotive businesses.

Last year, I represented a seller whose business was so sellable it was under contract with a buyer in two

1. Financial Performance: Your history of producing revenue and profit combined with the professionalism of your record keeping.

A buyer sees buying a business as paying today for a stream of profits in the future, which is why companies are generally bought and sold using a multiple of cash flow. Buyers look at

Achieve a Sellability Score of 80+ out of a possible 100 and, based on research from thousands of test cases, your shop may be worth 71% more than the average business. days, with a 10% premium over what the seller thought it was worth. Other less sellable businesses took two years to find a qualified buyer. The higher your Sellability Score, the less time it will likely take to sell your business and the more money you will get for it.

The Science Behind The Score The Sellability Score algorithm was developed using a quantitative survey of business owners and is continually refined, based on the thousands of business owners who get their score each quarter.

Is your business your largest asset?

Achieve a Sellability Score of 80+ out of a possible 100 and, based on research from thousands of test cases, your shop may be worth 71% more than the average business.

Your overall Sellability Score is derived from your performance, based upon your answers to 32 questions, on the following eight attributes that drive the value of your company: 30

|Shop Owner|September|October 2014

your historical financials, but they are really buying what they think the cash flow will be in future years. If there is a growth trend in your sales and profits, your business will score better. If there are opportunities for profit growth that you have not capitalized on, then convincing a buyer that they are realistic will increase the value of your business. If the buyer perceives that your automotive business will not grow in profits, or that there is significant risk of a decline in profits, then you are likely to get a lower offer for your business.

2. Growth Potential: Your likelihood to grow your business in the future and at what rate.

Buyers typically pay the most for businesses with the potential to grow.

Your score on the Growth Potential attribute reflects the extent to which you think your business can grow in the future by expanding your automotive services to your existing customers or by acquiring new customers, such as increasing your fleet business or doing

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target marketing to an expanded geographic area.

3. The “Switzerland Structure”: How dependent your business is on any one employee, customer or supplier.

The sellability of a business requires that the business not be overly reliant on any one customer, employee or supplier. The name “The Switzerland Structure” was inspired by Switzerland’s focus on neutrality and not being dependent upon other countries.

Buyers will perceive risk in your business if you have multiple family members or key employees who may not continue with a new owner. Also, if you have a few key customers or fleet accounts which contribute a sizable percentage of your revenue, then this dependency may negatively impact your Sellability Score.

4. The “Valuation Teeter-Totter”: Whether your business is a cash drain or a cash spigot.

The Valuation Teeter-Totter reflects the impact your cash flow, gross margin and profitability have on the value of your company. Imagine a playground teeter-totter that can move in only two directions: when one end goes down, the other must go up. The same is true of the value of your company as it relates to your cash flow: the more cash a buyer must inject into your company when taking it over, the less that buyer will pay for it.

The inverse is also true: the less cash your buyer must deposit into your business, the higher the price he or she will pay.

If your building and equipment is up to date and well maintained, then a buyer will not feel that they have to www.ShopOwnerMag.com

make a huge capital investment if they purchase your business. If the buyer believes that the cash flow will be positive as soon as they take over, then you will get a higher price for your business.

5. The Hierarchy of Recurring Revenue: The proportion and quality of automatic, annuity-based revenue you collect each month.

Businesses with a sizable percentage of monthly recurring revenue, such as software companies your shop may have contracts with, would achieve a high score under this particular driver of sellability. It would be nice if you could charge your customer’s credit card $150 each month for a service contract to do their oil changes and routine maintenance, but I have not heard of a repair shop that was successful at implementing such a program.

However, to the extent that you have marketing programs that encourage regular visits for routine maintenance services and safety inspections, you are more likely to benefit from consistent revenue from a customer base that makes multiple purchases over the course of a year.

6. The Monopoly Control: How differentiated is your business from competitors in your industry?

Billionaire Warren Buffett is famous for investing in companies with a protective “moat” around them. The deeper and wider the moat, the harder it is for competitors to compete. In addition, an enduring competitive advantage also gives an owner more control over pricing, which increases both profitability and cash flow.

Unique and meaningful business differentiation means thinking less about September|October 2014

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how to compete on price and more about what differentiates your business from its competitors. If you’re not sure what your point of differentiation could be, focus on finding something that is both unique and meaningful to customers, and stake a claim to it.

Questions you might consider to develop differentiation of your business include: • Is there a layer of service you could add to differentiate your offering, such as loaner cars or a shuttle service?

• How can you better brand your products and services, such as an improved warranty?

• What is the one thing that auto service customers care most about?

7. Customer Satisfaction: The likelihood that your customers will re-purchase and also refer you.

Most business owners know intuitively how satisfied their customers are, but as their companies grow, some owners lose touch with their customers. Do you have an objective way of regularly measuring the satisfaction of your customers?

Many shops do internal customer surveys to measure customer satisfaction. A potential buyer of your business is most likely going to check out your consumer reviews on Yelp, Yahoo, Angie’s List and Google.

Having good online reviews gives a buyer comfort that your existing customers will return again and you will attract new Internet savvy consumers who make their initial buying decision based upon the experiences of others.

8. Hub & Spoke: How your business would perform if you were unexpectedly unable to work for a 32

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period of three months.

This factor measures the extent to which your business can thrive without you. Few sellers of an automotive aftermarket business stay on after a sale to work for the buyer. One of the key drivers of sellability is having a solid team of well trained employees who know how to do their jobs independent of your constant direction.

You may have created a highly profitable business, but if your key employees are not capable of running it without you, or if your customer base will bring their vehicles elsewhere if you are no longer there, then a buyer will factor in the risk of a post-closing sales decline when they formulate their offer price.

To be valuable to a buyer, your business must be able to succeed and grow without you at the hub of all activities, and your employees must be more than mere spokes that cannot operate independently of you. And the more your customers need you and ask for you personally, the harder it is for you to scale back your hours, take a vacation or eventually sell your business.

Your business is significantly more valuable if you are successful at building a “brand,” not simply a place where your own reputation and your personal handling of customers is what brings them back. It’s the difference between thinking of yourself as having a “job” that requires you to show up at work to make money, versus creating a “business” where the brand is more important than the personality of the founder.

The majority of buyers who contact me don’t want to be a slave to the business and work every hour that the business is open. In fact, many buyers already own a business and are

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looking to supplement their income by purchasing an additional business where they will provide part-time supervision and marketing and business acumen. These buyers will pay a premium for a business that can clearly demonstrate its ability to run profitably without the seller as the critical hub.

Building An Exit Plan Using the Sellability Score When you spend a lifetime trying to build a successful business, it leaves little time for much else, including thinking about an exit plan; but even if you are planning to pass the business on to family, you want to ensure you are offering them a valuable business. Whether you are creating an exit plan for the short term or years into the future, it’s never too late or too soon to start understanding — and increasing — the value of your business.

Seventy percent of all business owners in today’s market plan to sell or pass their business on within 10 years. But 76% don’t have an exit plan, and many do not know the value of their business.

A well thought out exit plan can: • Protect the legacy of your business; • Build value for your business; • Provide financial security for your family and your stakeholders; • Make it easier to deal with any unexpected events (illness, accident or death); and • Help to prepare you and your www.ShopOwnerMag.com

business for the future.

Both the standardized Sellability Score questionnaire and the customized, aftermarket-specific questionnaire are available for free at a link on my website www.art-blumenthal.com.

Each is easy to use and takes about 13 minutes to complete.

After completing the questionnaires online, you will immediately be provided with a raw score for your business and a summary of what the score means. Meanwhile, based upon your questionnaire answers, I will develop and provide a comprehensive report for your business which we can later review together.

Look for Part 2 of “Do You Know Your Shop’s Sellability Score?” in the November/December 2014 issue of Shop Owner, where we will delve deeper into aftermarket-specific key factors of your “Sellability Score” and how buyers use them to determine whether or not to offer a premium price for an automotive service business. SO Leveraging more than 30 years of experience as both an aftermarket business owner and aftermarket technology executive, Art Blumenthal LLC provides business intermediary and advisory services to both buyers and sellers of industry businesses of all sizes. Art is a member of IBBA (International Business Brokers Association, Inc.). For more information, or to initiate a no-obligation confidential consultation, visit www.art-blumenthal.com.

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|Leadership|

by Chris Crowell, managing editor

The Path To Shop Growth

Is Adaptable Leadership And Customer Service

The key to running a better shop is improving customer service and employing a motivated, professional team, with strategic leadership as the foundation.

Strategic or “situational� leadership comes down to understanding others and adapting both service levels and management styles to accommodate each individual personality, says Kim Trochlil, national account manager for Leadership 3p (www.Leadership3p.com), Minneapolis, MN. This is certainly no small task, but she provides a framework to consider.

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Improving Customer Service First, remember that customers usually dread buying vehicle repair services and walk in ready to receive no gratification, which already puts your shop at a disadvantage service-wise.

Trochlil said to start by moving away from the concept of customer satisfaction and toward the concept of loyalty.

Satisfaction implies that a customer got what he/she paid for — no more, no less. Will this customer return or refer your shop to someone else?

Maybe. But a customer who makes a positive emotional connection with your shop is more likely to be loyal, return for service and consistently refer your shop.

“What you do and sell is not rare; it’s everywhere, and I can go to anyone at any time. Why would I go to any of you?” Trochlil asked. “The world is built on trying to grab your attention; the only way to fight that is with loyalty.”

tomer or, potentially, a dissatisfied customer.

Directors are open and direct. They are strongwilled, practical and efficient.

They prefer control and would like choices. Deal in facts, be clear and get to the point.

Relaters are open and indirect. For them, it’s about trust and care. Be casual and slower with a relater. Interact with their kids, be sincere and don’t rush them.

Thinkers are private and indirect. Thinkers are about the process. They’d like to analyze and see the facts.

Stick to business and provide evidence. It’s best to avoid being too casual.

loyal customer Trochlil divided people into four basic, broad categories: directors, relaters, thinkers and socializers. After a customer walks in your door, successfully grouping him or her into one of these categories, and then matching your approach to their expectations, could mean the difference between a loyal customer, a merely satisfied cus-

Socializers are also open and direct, like Directors.

But, this is the person who tells you their life story within five minutes. Ask their opinions, get to know them and quickly make it fun. Don’t get too technical and cold.

Trochlil said each of these four categories repre-

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sent an equal, one-fourth of the population. Keep this in mind when mapping out best practices for your service approach.

Improving Managerial Skills Trochlil summed up situational leadership like this: “Understand the situation you want to influence, adapt your behavior to meet the needs of the situation, and communicate in a way people will understand and accept.”

Trochlil also sees situational leadership in four quadrants: telling, selling, participating and delegating.

Telling is a high-task, lowrelationship approach, often the approach you’d

Delegating is low-relationship and low-task. You can basically golf everyday and know everything will be fine.

“Just because you are a manager doesn’t mean you are a leader,” Trochlil said. Management is a title, focused on goals and forecasts, something she called position power. This person is just a boss. She encouraged moving the line more to personal power when possible, where trust develops between the boss and the employee.

Each of these approaches depends on an employee’s experience level. Are they an enthusiastic beginner? A developing learner? A challenging performer? Trochlil noted that situational leadership means you might

leadership have with brand new employees.

Here’s how this is done, here’s where this is, etc.

Selling is a high-task, highrelationship approach. The employee understands the process, but now you’ve added more conversation.

Participating is a high-relationship, lowtask approach. Hopefully the employee has progressed to the point where you mostly check in on the work, while having more conversations about life and interests.

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need to move from a participator to a seller if there is a new process, or if that employee has started slipping.

“To do all of this, you need leadership — moving away from command and control to a developmental approach,” Trochlil advised. “How can I help you today? What’s the challenge today, and I’ll find a way to make it right.” SO Chris Crowell is managing editor of Underhood Service, Brake & Front End and ImportCar and plays an integral role in the print, digital, web and social media initiatives for these brands. Chris can be reached at ccrowell@babcox.com.

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38-41-Brand Building 9/16/14 7:57 AM Page 38

Brand|Building|

by Todd Westerlund, president and CEO, Kukui Corporation

Brand-Building Efforts Solidify and Boost Customer Loyalty If you think you’re too busy running your shop to focus on branding, you might want to think again. Thanks to longer service intervals and better-built cars, your customers don’t have to visit you as often as they did in the past. They also have more choices when it comes to service — from specialty providers to dealerships to chains that seem to have shops on every corner.

Having an established brand could certainly help you fend off the increased competition and build loyalty, despite slowing demand for repair services.

So where do you start? That’s a good question and one I often get when I talk to shop owners about branding. Developing a brand isn’t an easy or quick

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process, but once you create an identity, you can use that brand to not only guide your marketing efforts but also other aspects of your business, including hiring and training staff.

The first step is to craft a mission statement. Remember, the statement should reflect the values of your business and the

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benefits you provide. Think about why you’re in business and what your goals are. Developing a statement shouldn’t happen fast and you shouldn’t sit around a table and simply say you want to be the best shop in the area.

Being the local business that works on everything for everybody is not where you want to go. Instead, narrow in on what makes you special.

I know one shop that’s message is focused on serving as the area’s top-

mission statement. Generally speaking, a super elaborate logo isn’t the best option. I always advise shop owners to choose something that’s simple, catchy and clear. If you’re an eco-friendly shop, it makes sense to feature the color green in your

Once you have your compelling business statement and eye-catching logo, you might be tempted to take out a full-page ad to blast your new brand out to the world. While that might sound like a worthy investment, I urge you to define your audience first. quality Mercedes service shop. That’s very specific, but that shop is very busy. Say you don’t specialize in a particular make, another option is to target your statement to appeal to a specific market. For example, you could target parents by pledging to be the shop that teaches youth to drive safely and maintain their vehicles.

As a parent, I can tell you that if you take good care of my kids, you win my business. Whatever you choose should be the first thing that comes to mind when people think of your business.

The next step is to create a compelling logo that will reinforce your

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logo. If you call yourself the area’s auto repair wizard or the car doctor, consider using a wizard’s hat or a stethoscope in your logo. Remember to have fun. There’s a shop in New Jersey called Sunny Sunoco, which has a logo featuring a “too cool for school”-looking dog holding a wrench. Well, when you visit Sunny Sunoco, you are greeted by a shaggy dog, who serves as sort of an unofficial mascot for the shop.

Incorporating him in the logo was a great idea because it reflects the shop’s light-hearted personality.

Once you have your compelling business statement and eye-catching logo, you might be tempted to take out a full-page ad to blast your new brand out to the world. While that might

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sound like a worthy investment, I urge you to define your audience first. After all, how can you figure out the best methods for advertising your brand until you know who your potential customers are?

Some shop owners may already have a clear idea about whom they want to target. In Washington, for example, Subarus rule the roads, so focusing on Subaru owners should yield positive results.

For others, figuring out which group to target may not be as clear-cut. If you’re a new shop owner, your audience might reflect the cars you most like to work on. If you’ve been in business for awhile, check your database to see what types of repairs you’re performing most often and

when a consumer searches for Ford F150 auto repair, your name comes up.

The majority of sites I look at have one splash page and a lot of those are really focused on general repairs and display vehicles that are not in the target market.

Avoid that mistake by ensuring your site is search optimized and truly highlights your specialty.

The highest conversion rates occur when a consumer finds what they are looking for at your site.

Another key to building your brand is to cultivate fans. I use the word “fans” instead of customers because someone who is a fan of a brand is much more likely to be loyal and committed.

One way to

Consistently spreading your message is the best way to connect your brand with consumers and separate yourself from the competition. which vehicles visit your shop most frequently.

When it comes time to spreading the word about your brand, one of your best communication tools will be a user-friendly, search-optimized website that speaks directly to your target audience. If you’re branding yourself as the most trusted name in truck repair in your area, it’s crucial that

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develop those types of relationships is to become more involved in the community. Integrate yourself into the activities and events that are most likely to attract your fans. Sponsor youth soccer or adult bowling leagues and make sure your name is listed on players’ t-shirts or signage wherever participants play.

Set up a booth at a local festival or tradeshow. Arrange for a staff lunch

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outing each week where you can be seen spending money supporting another local business. If I see six people in the same shirt in the same place, I’m going to remember who they are.

Try to recruit fans to become ambassadors for your brand. Branded license plate frames are a great way to accomplish this goal. Provide a certain percentage off of a

one tips about their brakes. Instead, talk about what you might have in common. That translates into posting about your community. Let’s say I’m sponsoring a local team, so every Sunday I post scores from the previous day’s games. Ask about the weather or local news events.

Staying current and community-focused will show fans that you’re interested in more than just selling repairs

Another key to building your brand is to cultivate fans. I use the word “fans” instead of customers, because someone who is a fan of a brand is much more likely to be loyal and committed. service or offer another incentive to fans willing to display your brand on their license plate. If you’re successful, you’ve effectively turned your customer base into mobile advertisers for you wherever they go.

Referral programs also help you turn customers into advocates for your brand. Providing discounts or gift cards for referrals will cost you less than what you would spend attracting a new customer on your own. Plus, customers who visit your business thanks to a referral often view your shop with more credibility than those who come through other channels.

Don’t forget about the role social media can play in building a dedicated fan base. Social media is like a party, so you have to approach it as you would a stranger at a party. You wouldn’t just walk up and give some-

and service.

As I mentioned earlier, branding takes time and the process doesn’t end once you’ve created an identity and defined a target audience. Consistently spreading your message is the best way to connect your brand with consumers and separate yourself from the competition. SO

www.ShopOwnerMag.com

September|October 2014

As the President and CEO of Kukui Corporation, Todd Westerlund promotes the company's marketing platform and keeps industry leaders informed about product enhancements. He also sets Kukui's growth strategy, which includes planning educational events for shop owners and leading industry sponsorships and partnerships. He is a sought after speaker on automotive industry marketing strategies.

Todd can be reached at todd@kukui.com.

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Shop|Profile|

by Debbie Briggs, contributing writer

Osborn’s Automotive Good Things Come In Small Packages

Can an independent repair shop still be successful with only limited space? Just ask Scott “Oz” Osborn, who makes the most of his three-bay shop in Redondo Beach, CA. Square footage comes at a premium in Southern California, and Osborn prides himself on providing quality service and making every square foot count.

Shop owner Scott “Oz” Osborn

“In a small shop, productivity is huge,” Osborn explains. “We have 1,000 square feet and only one bay per tech. But we have rolled out as much as $1.25 million in sales in one year. Everything has to be done right: appointments, greeting the customer, writing up repair tickets, vehicle inspections, esti-

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mating the job, sales, parts ordering and final presentation.

If one of the processes falls apart, the cost in time and production can easily exceed the job we’re working on.”

To prepare for inevitable hiccups during the repair process, Osborn says that a walk-through from the cus-

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tomer’s vantage point is completed periodically.

“We actually walk it out from the customer’s perspective of coming in the door, see what they see, where they stand, and where equipment and supplies are stored in the bays,” he says. “We’re constantly tweaking it to make working in the tight quarters a little smoother and to enhance the customer’s visit.”

He’s also careful to not let productivity take away from the customer experience, which is critical to wordof-mouth advertising.

“We’ve looked into automating the process of customers dropping off their car, but we want it to be a personal experience where we can ask questions and make it a personal relationship,” Osborn says. “Customers never tell their friends, ‘They used real good quality parts,’ but they will say something like, ‘Wow, they really made me feel comfortable.’”

Placing importance on the cleanliness of the facility also goes a long way with customers; after all, first impressions do matter.

“I’ve always had a clean shop,” Osborn says. “It’s the first thing a customer can judge you on. You can tell them how good you are until you’re blue in the face, but if the sales room, front counter, bays or even the trash dumpster look dirty, it’s a big negative.

There’s no such thing as too much lighting or too clean of a wall or floor.”

While satisfied customers have done their part in telling friends and family about their positive experiences at Osborn’s Automotive, TV commercials starring Osborn himself have also helped attract attention. He says that rather than a serious take on his business, humor has been his most successful route.

“We do a lot of advertising. Our TV commercials are constantly out there, and we’ve learned that they have to be memorable to be effective,” Osborn explains, adding that “we’re the best shop around” and “we fix it right the first time” tactics just didn’t resonate with viewers. “As soon as I switched it up to doing corny things like licking the dipstick

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to check the oil’s condition, or racing around town in our ‘smart car, people started talking about the commercials.

If you’re going to spend the money on TV ads, you better make it something people can laugh at!”

able source of income and stability than the customizing and racing field.”

Osborn managed several shops after that and owned six different locations that included gas stations with service bays, as well as convenience stores.

Osborn sold those 12 years ago, and Long History Osborn’s Automotive was born at its Osborn actually started his first autocurrent location on Redondo Beach’s motive business in 1979, banking on Pacific Coast Highway. It may be specialization at the time. Oz’s Tiger small, but Osborn is quick to point Service focused on the repair of Sunout that there is plenty of parking — beam Tigers — a blast from the past something that’s tough to come by in Southern California!

Osborn also has a long history of industry involvement, with memberships in organizations such as ASA, AMI, BNI and ASCCA. Most of all, AAA has helped build customer trust and rapport.

“We’ve been AAA-certified for 25 years and won the From left: Paul Cross (porter); Keith Cordero (Master Tech; been organization’s with Osborn’s for 19 years); and Jaime Sanders (manager).

‘Achievement that proved quite profitable for a time.

Award’ twice now,” Osborn explains.

“You don’t see many of those “I’d have to say that AAA has been the around anymore, but I was one of the most effective for building my cusfew guys who knew what made them tomers’ trust. We’ve been part of its tick and had a great following,” he approved battery programs, its used says. “I ran into some problems with car inspection programs, and every my lease and ended up moving on to year we sign up for its oil change a general auto repair shop at another specials. I know that AAA has location. I soon learned that maintechanged considerably over the years, nance and repair was a far more reliand I have seen a decline in the value

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to its customers, but it’s still a positive relationship.”

Having three bays does limit the shop

locate a good tech with a strong work ethic.

“I’ve seen a decline over the years of kids in school taking shop classes, or anything other than college prep,” he continues. “It’s a shame that more

to three techs, but Osborn employs several support staff, including a younger apprentice who handles most of the oil changes and a skilled porter who washes all of the cars and keeps the shop clean. All of his techs are certified, and Osborn is a Master Tech with a current L1 status as well.

Staffing is still critical, and Osborn says it’s getting harder all of the time.

“One of the hardest jobs we have is finding good employees,” he says. “I had one employee leave awhile back, moving to the Philippines to be with family, and I’m finding it very hard to

people don’t realize the benefits of working with your hands and actually feeling the success of a job done right. We’re left with growing our own employees from the apprenticeship level, recruiting on dozens of websites, or even going out of state and offering moving incentives.”

Employees at Osborn’s Automotive stay current on the latest in automotive repair through online tutorials, YouTube videos, local auto parts sponsored seminars and DVD lessons.

“It’s tough to send one tech from a three-tech shop away for a few days,” Osborn explains. “That cuts productivity by a third, so we have to use whatever we can get ahold of in terms of local training programs.”

Technical Focus

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Osborn himself isn’t exempt from training, as he takes advantage of all the knowledge he’s gained through management groups and applies it to improve shop productivity.

“Currently, I’m a member of Bob Cooper’s ‘Elite Pro Service’ group of 90 of the best shop owners in the country,” he says. “I’ve been through Management Success, ATI (Shop of the Year in 2006) and RLO Training.

I’ve gained something from every one of them, but I’ll stick with Elite until I retire.

“I’ve learned that shop profitability is a combination of pricing your services correctly, getting paid for what you know, and especially what you do, as well as making sure your parts margins are correct,” he continues.

“The biggest gain to profitability comes from watching your expenses, though. I believe in keeping equipment up to date and buying only quality equipment. My dad taught me years ago, ‘Buy it once, and buy it right.’ That’s definitely true for our business!”

honesty. Whether it’s just filling up someone’s tires with air or writing them up at the service desk, the customer knows they’re important to us.”

A good rule of thumb, Osborn says, is to treat every customer as if he or she were your mother having her car serviced. Would you lie to your mom?

Osborn hopes not!

“Always make sure that customers have options when making decisions on repairs,” he says. “When someone is told that they need to spend ‘X’

In the end, it all comes back to the customers: Are they satisfied with their repair? Did they have a pleasant experience at the shop? Were employees friendly and helpful? If the answer to any of those questions is “no,” Osborn says they haven’t done their job.

“Follow up calls, personal notes in cars and having cars washed on every visit is big, but none of those would mean a thing if we had a lousy attitude toward the customer,” he says.

“Our employees know that they are the heartbeat of our service, and they treat everyone with respect and

amount of dollars on a brake job, they automatically think of what else they could do with that money. Unless I give them a choice of jobs, with different warranties or prices, they instead think of getting a second opinion or saying no.”

Also offer a great warranty and stand behind it — Osborn does.

“My customers know that if they break down on the road, and it’s because of something we did, I’ll get on the phone and find them a reputable shop to have it repaired and pay for it,” he says. “I’ll work out the details later, but the customer knows they’re going to be taken care of.”

So can an independent repair shop be successful with limited space?

Osborn’s Automotive is proof positive that it can. SO

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Customer Focus

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48-50-52-Shop Ops, Learning 9/11/14 3:40 PM Page 48

Shop|Operations|

by Bob Cooper, president, Elite Worldwide, Inc.

A Step-By-Step Guide To Learning From Your Customers

Learning from our employees is relatively simple. All we need to do is pay attention to their passing comments and engage them during our employee meetings and reviews.

Learning from our customers, on the other hand, may take some extra effort.

So, within this article I’m providing a step-by-step guide that will help you do what every successful business owner does — learn from your customers.

First and foremost, you need to set customer satisfaction goals, as well as minimum levels of acceptable performance. For example, your goal would be 100%, and the minimum level of acceptable performance would be set at 96%.

Learning from your customers may take some extra effort. The first step is to set customer satisfaction goals.

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Let your employees know how you will measure results. It’s your call, but I would encourage you to categorize any type of customer dissatisfaction as a failure, regardless of the cause. For example, if the customer says they felt the price of the repair

Implement a companywide reward program that is based on customer satisfaction scores, and make sure all of your employees are able to participate. This will help incentivize the team effort you need.

If you want to build a more profitable, successful business, there are two rules that should always be at the top of your list: Never put money ahead of people, and listen intently to your customers.

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was too high, it would be a failure because the service adviser did not do an adequate job of building value in the service.

Now, I understand that there will be some occurrences (such as a part failure) where the employees would feel they should not be held accountable for the customer being dissatisfied. It’s those rare occurrences that cause us to set a minimum level of acceptable performance. In essence, by setting a minimum level of acceptable performance at 96%, those rare occurrences are taken into consideration.

Decide who will be making your customer follow-up calls.

Although there is tremendous relationshipbuilding value in having your advisers follow up with customers, the downside is that your customers may not be candid with them. Add to that, your advisers will have a conflict of interest if you are providing them with an economic incentive.

I’ve found that the best person to

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make these calls is someone with the right personality, and who believes in you, your company and your people.

When I was still operating shops, I found that the perfect candidates were the customers who loved us, and who were looking to earn a few extra dollars a week.

Decide “how” you will compensate the person you hire, and where the calls will be made. Ideally, you will pay your representative a flat hourly rate, ensuring that they will invest adequate time on each call. I also believe, when possible, the calls should be made from your shop.

Not only will this allow your customers to see your phone number displayed on their caller ID, which adds to your professionalism, but if customers have a question or concern, they can be immediately transferred to your staff.

Decide “who” you will call and when. At Elite, we believe that all firsttime customers, and all repair and/or warranty customers, should be called within 72 hours. Out of respect for their time, we do not endorse calling repeat customers who had simple maintenance services performed. While these calls should never be perceived as “sales” calls, if a customer declined a major safety repair, we do encourage the representative to ask customers if they’ve had the repair performed, to ensure their

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safety and well-being.

Ask the right questions. I realize most dealerships, franchisees and independents ask a series of questions about the behavior of their staff, the quality of repair, promised-times, etc. At Elite, we look at it differently. Our position is that you should say something as simple as, “I just wanted to follow up with you and ask, ‘How did we do?’”

Our reasoning for this open-ended approach is rather than leading the customer with specific questions, it will allow you to learn what’s important to your customer. If it’s important enough to be at the top of their mind, then without question, it’s exactly what you need to hear.

Put the information to work. Share all of your discoveries with your entire crew, and solicit their recommendations as to what can be done differently based on what you’ve learned from your customers. Not only will this allow you to build a more successful shop, but it will show your employees that you value their feedback as much as the feedback you receive from your customers.

If you want to build a more profitable, successful business, there are two rules that should always be at the top of your list: Never put money ahead of people, and listen intently to your customers. SO

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