Setting prices, selling services: Once you know the color scheme, the rest is all technique

March 1, 2007

Selling your automotive services may be the key to your profitability. Sell enough and you end up in the black, thanks to a lot of green. Fail to sell enough to offset costs and you may end up in the red.

Basic selling techniques may be black and white, but there's always room for more colorful, innovative ideas. Here are some Best Practices in selling from Lake Region Discount Tire and Repair and Dolson Auto & Tire, directly from the mouths of their people.

First set the prices...

Both shops told us they determine all pricing based upon two things:

* the manufacturer's "flat rate" time allowed, and

* the retail price of the parts required.

Yet they both pay their employees an hourly wage. This might sound strange, but it is done to assure the technicians aren't rushed to complete repairs. (It is one reason there are few come-backs at either shop.) None of the staffs are paid commissions, either. This guarantees no one tries to hard-sell parts or services that are not required.


Sometimes flat rate is less than the actual amount of time required and the customer wins, as in an engine exchange that pays 14 hours, but takes 16. Then there are jobs like the 0.5 hours allowed for changing a taillight bulb that balance things out. Both dealers follow the book on all labor charges.

"When there are other factors that complicate the job, like heavy rust, we ask for a little more time because we know the job will require it", says Tom Talamini, senior technician at Lake Region Discount Tire and Repair. "But these are not frequent."

In parts pricing, the dealerships share the same system. Doug Dulgarian, general manager at Dolson Auto & Tire, says counter people are responsible for checking parts costs and retail prices. "They make sure we have the parts in stock or order them right away. They also do all estimates."

... then sell the service

The repair process is never bypassed in the course of the sale, according to Dulgarian. "The first job is to let the customer talk, write down (his or her) comments on a shop ticket and assign it to a tech. The vehicle is brought into the shop and receives a safety inspection, keeping customer comments in mind.

"If the customer complained that he had a problem overheating and an engine noise, we look at all of the cooling system as well as the rest of the safety inspection. We would also listen to the water pump with the engine running. This inspection is critical to making the customer happy."

The last step in selling (and pricing) the job is to present the results to the customer along with the price, he says. "If the customer doesn't understand it, we walk them into the shop and have the technician show them the problem. Since we measure every wear-related problem, like tire rod wear, ball joint wear, universal joint wear, FWD axle wear, etc., the customer is always given the factory measurement compared to the actual measurement in fractions of an inch or millimeter. Allowing them to see the actual wear makes selling the job easy."

Both shops follow manufacturers' specifications on all measurements and service recommendations. This allows them to protect the customer's warranty and rights if there is a problem.

Selling automotive services is a matter of building a good reputation and being there when the customer needs them, according to both dealers.


Safety inspections

Before you can sell a service, you have to know if the customer needs it. So one must do a thorough safety inspection when any vehicle is raised off the ground.

"A safety inspection is critical from a liability standpoint, but it will also generate sales," says Moose Oakely, Dolson Auto's service manager. "We will not let a vehicle out of here without a safety report attached and noted on their invoice."

Adds owner Ed Perry, "God forbid if someone has an accident because their brakes were worn or damaged right after we changed tires. We would be facing serious litigation.

"A safety inspection costs money and there is no way to charge for it, but never skip it. All defects and problems are listed on their invoice, and if they choose not to repair them, that is their decision."

"We always take time to give a clear explanation about any problem," says Dulgarian. "It generates a lot of work in the shop. If they do not have the time or money, we remind them that they can come in any time. If they are skeptical we show them, on the car, all measurements or parts of the vehicle that need to be repaired.

"If they still are not ready to have the work done, fine. We never hard sell anyone."

One service job can lead to a lot of other work. A cooling system flush can result in water pump replacement, new drive belt(s), hose replacement and sometimes a new radiator or even a heater core.

The way this information is given to the customer is important. Do it with data and proof; do not ask them to take your word on it. At Dolson Auto & Tire, for example, specific measurements of wear or damage in fractions of an inch or millimeters are compared to OEM specifications for that vehicle and then presented to the customer.

"State Inspections are also a big revenue producer, even though we only charge $20, the state mandated inspection price," says Lake Region General Manager Mike Lofstedt Jr. "This generates repairs even though the customer is in no way obligated to use us to do them."

It is also interesting that during the slow months of January, February and September, both shops will accept jobs that they normally wouldn't be in a hurry to perform. When the bays aren't busy, engine overalls and other work that take longer than three hours -- what would normally be the maximum time for a vehicle to be in their shops -- help keep their expensive equipment and people busy.


Services rendered: Here's how to keep your bays full

These are the services offered by both New York dealers discussed in these articles, excluding tire or tire-related services:

* A/C Service

* Alignment

* Brakes

* Battery/Electrical

* Chassis/Suspension

* Cooling System

* Engine Diagnostics

* Exhaust

* Nitrogen

* Shocks/Struts

* State Inspections



Best Practices Tips: Buying parts

Getting parts at the lowest price is obviously a key to making a profit, but getting the parts on time and not having to worry they will fit and not fail is far more critical. Here are two places outside the jobber channel where you can get the supply you demand.

* Warehouse Distributors. You can buy from a jobber, but if your store is willing to buy a minimum stocking package, you may be able to buy directly from a WD. This can help the bottom line only if the inventory is managed properly to make sure overstocking doesn't occur. Dolson Auto & Tire has a WD stocking program.

* Car dealerships. Lake Region Discount Tire and Repair's Mike Lofstedt says he has built a good relationship with most new car dealers in the area, and they give him margin with which to work.

"Will Fit" parts are cheap and plentiful, but are you willing to lay your reputation on the line just because they are less expensive? Neither dealer interviewed will buy parts that their WD or jobber won’t back up in writing.