How Do You Pay Techs On Warranty Work? | SDR #251

Welcome, everybody, to the big show. We are excited that you're here with us. I'm Chris Collins, and this is Chris Jones.

Hello, everyone.

We have a lively debate today for you, which I think you're going to enjoy. We're going to talk about should techs get paid, customer pay, time for warranty work. Something that keeps coming up over and over again.

Interesting subject. I'm excited for that.

I am, too.

There's a lot of fun stuff in the news, and we're going to talk a little bit about a recent boot camp that we had here in the library. Our first kind of one. The way we want to do it. Yeah.

We're getting closer.

So that and much, much more coming up on this edition of Service Drive Revolution.

So we built this library because we wanted home field advantage. We want to be able to serve food in here. We want to create an experience. We have a hi Fi system.

That.

I'm deathly afraid of.

But why? You're doing fine.

But we have boot camp. So when you're a new client coming into coaching, you do some homework and then you go to a boot camp. And that boot camp is here in our office. And so I don't know, what, did we have, 16 people or something?

12. 12 people, yeah.

And then one of the things that we do is the night in between. So it's like a day and a half. The in between. We have, like, a dinner. So I come and hang out and we have a dinner and we play records here in the new office. It was the first time we've ever done it where we were playing records and music and kind of doing it the way that we imagined we would start to do it.

All right in this.

Our kitchen still isn't done. We did have food brought in, but it. It's not like it will be so fun.

Amazing people. And the way that they ate up the hi fi because they'd never heard. No one had ever heard music like that before. It was cool.

The Eagles, Hotel California. How many times do you think you've heard that song?

4 billion 6.

When I put it on in this room on vinyl, it will be like the first time you heard it.

Oh, I heard it.

Yeah. And I got a bunch of songs like that that you'll just be like, whoa. Yeah. That.

You could hear everything on that. It was so. It was so cool.

This. The stereo system in here is hundreds of thousands of dollars. It is.

Curated through lots of mistakes.

There is a graveyard of equipment for sale.

Yeah. The. The stuff that we aren't using is better than, I would say, 99 of the world uses. Wouldn't you agree?

Yeah. We need to sell all that. But we did. Like, the thing about hi Fi is you. You. You try some stuff.

Yeah.

But we are at a point where.

It. It's an experience. Listening to music in here is an experience.

And I just think there's something about this room and the way it plays so well in here too. Like, there's a sweet spot in the room. It's just magical. And it plays all the way throughout, whether you're in the back of the library or the front of the library. It just sounds awesome.

So looking forward to lots of boot camps and having some fun. I did. After the boot camp, I was texting you. I. I ordered some records because there were some records I wanted to play that I have at home. I was given the advice by our hi Fi drug dealer that sold us a lot of this equipment to have a little case, and you carry the records back and forth. But that really isn't scalable. I need to. I need duplicates of the records that blow people away.

Yeah. And it's great that he responds while he's on his private island that you bought for him.

That's funny.

I got another question for you too. So just think about this. This is a tough question, but what's red, white, and blue and brings tears to many people?

The American flag.

No. A blue jay in a blender.

Murder on sdr.

Let's do it.

What's in the news? Chris? Joan.

So one thing, really.

No, I'll tell you what's in the news. Are you down £30?

Not quite, but I.

That's. So here's. Here's Christian's getting in shape program. He eats nothing. It's called a fast.

Yeah, I can eat.

And he works out really hard.

Yeah, that too.

So zero calorie intake and lots of calorie outtake. Ends up, you don't need a diet. You can starve yourself. Is it a protest?

Like, is this a. Oh, like a hunger strike?

Yeah. No, it's not.

No.

How long can you go without eating?

Oh, I never go more than a day.

Oh. Oh. I thought it was a thing.

Yeah. But. So doing the math, though. So the. The guy that got me onto this said that.

That you pay a guide to tell you to starve yourself. Sort of.

But. But what he told me is, pay.

Me and I'll tell you to do that.

Yeah, that's true. Did you know that a pound of fat has, like, 3, 500 calories in it.

No, I didn't know that.

So pound of fat has 3,500cal in.

It now, so this midsection right here on me is what, a million calories?

Yeah. So it means that I could not eat for a really, really long time. And.

Then we would still. Actually, I'd still be okay because.

You mean how many calories a day? 2500, roughly. Yeah, yeah.

But even at 2500, I'm in a deficit.

Let's do some math, you said. So if we're 40 pounds overweight. Yeah. Let's just say.

And then just multiply that times 35.

40 times 3, 500. Can you do that in your head?

So 16 40,000 calories. 40. That's a lot. 140,000 calories then divided by 25.

What's the 25?

2500. So what's by 25 equal?

5600.

Okay. So essentially you could go for 56 days.

Oh, yeah. Without eating. Yeah.

Just drinking water.

Okay. What's in the news?

Nissan is investigating claims that the CEO put the deputy under surveillance. So put what? The. The CEO of Nissan was following around.

Other people, other part. Other members of the country, trying to find dirt on him, to fire him. But I just think it's really weird that Nissan here in the US the guy is. His name is.

Ashwani Gupta, and this picture was taken him in Great Britain, but the. The thing came out of Tokyo, so he's being charged in Japan. But Nisat's had some CEO issues over the last 20 years. Like, I don't know what that means, but you would think that when they got rid of the last person that they would have gotten somebody that wasn't going to cause issues. But. Yeah, so just essentially that there were people that work for Nissan that he felt like were messing up the slow news day. Yeah, the new deal. And so that's not news to you?

No.

Okay. Sorry. Nissan.

This will make you really happy. US traffic deaths are down in 2023, even though people are driving more.

What do we attribute that to?

I would say because I don't drive that much.

Because you walk to work.

Yeah, because I walked to work.

I was walking to work the other day.

But that's good news that people are dying less.

Why, though? It's not news if we don't know why. Just a random fact.

Yeah, just random fact.

What's the story behind the fact?

I'm gonna assume it's because more cars are driving them.

Let me just see. Yeah. It's the fourth straight Quarter where we're missing Loves.

Loves the self driving on the Tesla. Yeah.

And she's not killed anybody since she got that thing.

She's a pretty good driver. Yeah, she's put that thing in panther mode once.

It's so fun.

It's crazy. I like it. Okay, here's the question that everybody's dying to know. Christian.

Okay.

I get asked this frequently, by the way. Do you get asked this question?

I don't know, the question.

Should we pay the technicians C.P. time for warranty?

Oh, now I that question. Yes, I do get it.

Comes up all the time. Right.

How do you pay your tax on warranty work? Warranty pay sucks.

I mean. Oh, the guy across town, he's paying.

Him $5,000 an hour.

Yeah, he's paid him. He's paying customer pay time for warranty time. Yep. I've also heard. Oh the tax. They'll go work for an independent because there's a warranty. Yeah, there's no warranty. So the dealers feel like they're at a disadvantage to the independence because they have warranty and warranty historically pays less than customer pay.

Stuff manufacturers out there that, that's very true with.

Yeah. Some worse than others.

Agreed.

They don't tell you that when you go to vocational school.

No. You're going to make all the money in the world.

They don't tell you that. Hey, this manufacturer you're training to work for actually tries as hard as they can.

Your eight hour engine job pays 5.2 hours.

Yeah, right.

It's a little crazy.

Okay, so now if you had one tool to recruit technicians in your toolbox, would that tool be to pay technicians customer pay on warranty time? Do you think that that would get you more candidates.

Help with morale, retention? If you had one tool.

I don't know if it's the only the tool I would use but it. I like the tool. I like the morale of saying, hey, we're going to go above and beyond because we're. We're here for you.

Wouldn't be my. Wouldn't be the tool I would bet on.

Okay.

Feel like it's a distraction.

He.

Okay, unpack that.

What would be your one tool? If you only had one tool, what would it be?

Oh, the fact that I can pay more than anybody else because I know how to control the effective laboratories.

Interesting, interesting. So it's a power thing with you.

Well, I also think you're hungry.

Not really, but you're a control freak, power hungry dictator.

So my experience. You done? You can go. You Got it in one or two more in there. So the thing that I would tell you is when I've talked to technicians and I ask them how much they make, they always come to their flat rate pay that they get, right?

Even if there's like $10 worth of bonuses an hour, when they put their head down on the pillow, they're making the. The number they're guaranteed. So I making 25. Even though they effectively take home 35 in their head, they make 25.

They tell their wives, they tell their friends, they tell Everybody they make 25. So I would much rather be the one that can pay 45. And that's the thing that they lay their head on their pillow and think at the end of the day when, when everybody else is at 35 and they can't figure it and none of your competitors can figure out how you can pay that much, I think that's a little more effective than doing the warranty thing. But I really don't hate it as a tool, especially depending on the brand or maybe the area or whatever. It's just something to keep in mind. I think it's a really good sign of creativity from somebody trying to do something different. Because I don't want a technician to approach warranty work any differently than CP work. At the end of the day, I want them to do a really good job with it. Okay.

I think you're. I think your answer is right. Your answer might be better than mine.

It's more logical, I guess. But if I had one tool to attract technicians and retain them, I would go with the four times.

Historically, that has been our best recruiting tool.

Now when we get asked this question, are we getting asked this question by managers that are ahead of the curve or playing defense?

Both. Oh. Actually, I think that some of the more proactive people are asking the questions.

Really? Okay, so then if the question is, should you pay.

Technicians, Customer pay time on warranty work, so you're gonna. Your cost of labor is gonna go up dramatically. Right. So let's do the math here. If something. If a technician is making $30 an hour.

Mm.

And warranty is a hundred or customer pays 150% of warranty. So what is a technician going to make for that warranty?

Essentially 45 bucks for every hour.

So you're going to, you're going to be paying $15 more that you're not. Your cost isn't. Your cost is going up, but you're collecting the same amount. So your gross profit is going to go down.

You could Technically, say that's unapplied labor.

Oh, that's interesting. I wouldn't do that. But you could. Yeah, you could. And so if 30% of your labor is warranty, you're. You would be increasing your cost of labor BY what, like 30% or something?

Oh, I don't know if I can do the math in my head, but yeah, I think that's probably fair.

Yeah. Okay. The thing that I would say is the customers pay for that and you set what your ELR is. So it's relative. If there's demand, you set the pricing. Even the manufacturer eventually has to catch up with customer pay. So there might be a delay, but you control your elr. So really, at the end of the day, it's an. It's an easy thing to overcome.

Right. It just. That it can be done.

Yeah.

Is a possibility. I want everyone to know that. That, that can be a tool. Easy. Agreed.

If that's the thing that gets you technicians, it's easy. You just have to figure out your. Your. What your effective labor needs to be. And that's it.

Yeah.

Pretty simple.

That's right.

So I'm for it. I think I am too, but it's not my. It's not my original go to.

Yeah, yours is very successful.

Yeah. I would try to stay away from having to do a lot of that stuff just because it's complicated. It gets complicated. The math. But you can do it.

Yeah, I think so too.

Cool.

I just think it's a. I mean, it's a good tech ad headline. Maybe not as strong as 4 10, but I definitely think about it is like if I'm trying to recruit and then I'm also thinking about morale internally. Like if I went out and said, hey, guys, I know that these warranty times have been rough. Here's what we're going to do for you. That's good for retention and recruiting at the same time.

So I don't know. There's lots of ways to make it work.

Yeah, it's easy, really. If you understand pricing, effective labor rate, and how to get there.

It's.

You're just reverse engineering an outcome. It's easy.

Exactly. Don't be afraid of doing it if that's what works.

Well, thanks for spending this time with us. We hope you have a great week and we will see you next time on Service Driver Volution.

Thanks so much for watching this episode of Service Job Revolution. We're uploading new stuff every day, so make sure you subscribe and click the bell icon so you don't miss out. If you have a question you'd like us to answer on the show, call 8333 Ask SDR and we'll answer your question on the show. That's 8333 Ask SDR. For special deals on our books and training, head over to offers.chriscollinsinc.com now that's offers.chris collins, inc.com I'm Chris Collins, and I'll see you in the next video.

Sam.