How Low Can You Go?

Foreign.

To your Friday drive by where we answer the pressing questions on your mind. Now, if you have a question, the way to get through is dial this number, 8333 ask SDR. That's 8333 ask SDR and we will answer your question. Hopefully we don't answer all the questions.

We can't. Yeah, and there are some that aren't even questions.

I'm Chris Collins and this is Chris Joan.

Hello everyone.

Let's get right to the question how.

Low can I go with the labor rate to help the customer out and also to help the dealer out that the dealer is not losing and the customer is getting a decent price.

So Chris, thanks for the question. I would need more information in order to be able to answer that because I would need to know what your profitability is. So is the department profitable or not? What is your effective labor rate? I would need to know those answers. But most of the time when you're discounting, if you, if you're discounting 10% off the top.

You'Re discounting 15 plus percent off the profitability. So you're giving away the profit most of the time because you, the, the thing to keep in mind is when you discount an hour of labor, you discount a part. The technician isn't going to do the job for less. So if your technician is making $35 an hour, the technician isn't going to now do it for 27 or whatever it is and the rent isn't going to go down and the phones aren't going to be less and the uniform expenses are going to be less. And so most of the time, you.

Know, the uniform expense can be less. Instead of having 742 mats, you only get 38. That would reduce the uniform expense. Go ahead, continue.

That's a reference to uniform companies. After you sign a contract loading you up with mats in the spirit of safety. Every door at the entrance, every walk coming and going has a, has a rug. They're rugs, aren't they?

They're rugs, Matt.

Rugs. Yeah, it's so funny. So that would be a hard question to answer without having the actual numbers. Next one.

Hold on, hold on, I'm not ready yet. We're also, we're not kind of addressing the big elephant in the room that he's like, what can I do to make sure my customer gets a decent price? And maybe that's the wrong question. What it should be is what can I do to make sure that the customers see value in what they're buying, Right? How often is it.

When I was an advisor, I felt like I should be able to charge more than the other advisors.

So this is what I'm saying.

My customers never question the price.

Right. So what if we had him do a mindset shift where he felt like he was worth way more than to give somebody a discount? The truth is that if they pay full price, you have to work into yourself where they're actually getting a deal. It's a high value to pay whatever we say. And then let's say that it's $500 that you charge somebody. If you give them $600 worth of value in service and make them feel really good before they go, they'll pay way more. Right. The joke that I always make when I'm doing boot camps and stuff like that is like, when's the last time somebody walked into Tiffany and asked if there was any coupons available?

By the way, that's not the only joke he makes.

I have a series of jokes and they're darn fine too.

Yeah, I remember when I was an advisor in a customer's car. It was a clutch, I think, on a van again. And they'd had it towed to us from an independent downtown by the Space Needle. And I called down there and was talking to them about what the story was, trying to get some info for my tech and our Labor. It was 85, they were charging 125. And I instantly thought I should be charging 145. If these guys are independent right downtown, they can't even fix it. They're sending it to us to fix.

So I always, yeah, I always thought that there was a value to what I was going to do for a customer that was higher than the others around. So. Good point. Okay, next question.

I work for a Hyundai dealer right now, and everybody knows the issues that Hyundai's are going through with motors and all that. It does seem in my area that all of our Hyundai dealers are just very packed and very overbooked. My dealer in general, we only have two technicians and we probably get about five or six tow in. Five or six tow ins a day for motors. Our techs can't keep up with it, but my advisors are always hungry. So I try to lower the schedule so we can get to all the cars that we still need to get to. But I don't know what the right solution is. You know, I would. I would feel that we would completely slow our schedule down just so we can catch up on all the motors. But it Seems like nobody really wants to do that. And I just didn't know how you guys would go about doing that or fixing the issue where it's time to catch up on the stuff that we have.

Hyundai dealership.

Lots of work, can't get all the work done, has two technicians. Should we cut back the amount of work we take in?

No.

That's the question, though.

Yes. I'm answering it for him, though. No, no.

You would say turn it up.

I'd turn it up and get more people to do the work. Yes.

Yeah. So this is a, this is a common. When somebody's anonymous, we should give them a nickname. So I want to talk.

Oh, yeah.

What would the nickname be for this gentleman?

Bart.

Bart. Bart.

Like Simpsons.

Yeah, I like the name.

Bart. Bart.

This is a common thing in our industry and for some reason we, we don't think about the technicians and the stalls as production. But let's just say you have four stalls. You, you could run. Well, first of all, you could get stalls somewhere else pretty cheap probably. But.

You, you're only limited by your imagination. I would say you should. You know, if you have two techs, you should have eight. Hire more techs. The, the rent's going on 24 hours a day. The other thing to understand is those heavy duty techs can work off site to do those engines too.

Especially if they're tow ins. The customer never sees anything.

Yeah. So you can find stalls places or a warehouse you can put stalls in, which is really, really easy. But you need, you need more tax. That's it. More text. Yeah, it's the only thing that fixes it. You're gonna burn the text out that you have.

Do you want to add anything to that or just. No, Bart. No.

Well, I, I said no for sure. I meant it. No, I just think that I will say that for sure. Lately this is. He kind of alluded to, like this is a pretty common thing with the Hyundai thing, Hyundai, Kia going on right now. And he's absolutely right. And the answer's always about capacity at the end of the day. But we think it's about trying to slow it down so that the customer, you know, isn't waiting for as long or anything like that. But like their engines are broken. So the answer is to get the engines fixed faster, in my opinion.

What? So here's a trick question.

Okay.

Because I've always looked at things this way and I don't understand why people don't think this way. But let's say that because in, in Bart's mind, he might think, oh, well, it's just a recall. And then when it's over, we will have people standing around. But what is the flaw in that theory.

That those people are going to need to come back again? We should be retaining them.

Well, people that need it are going to call around and the first person that can take them, they're going to go. And now you have the chance to retain them.

Yeah.

And so we've seen this with Honda and other brands where they have these huge recalls and the departments that are ready in scale end up grabbing more customers, selling more cars. Because you're going to retain them when they can't get it anywhere else.

Your competition is going to lose them. If you can take them and you make an impression on them and make them feel good, well, you're a chance to gain market share.

And you're starting off with really good momentum now that you're kind of saying that. So let's say that the average Hyundai store in Bart's area is booked out 20 days. And then if I'm a Hyundai customer and I call them like, hey, I got a check engine light. My engine is making funny sounds. Everything like that. They're like, okay, we can get you in on December 14th. And I'm like, okay, set the appointment. I hang up the phone and then what do I do right after that? I pick up the phone and I call the next place. And then if you get three twenties and then you call Bart's place and he says, we can get you in on Thursday, automatically the customer has a favorable opinion of you coming in because they're like, oh, you're better than all the other stores. So it's actually, you don't even have to work as hard to build the value in your thing because you're already doing business differently than everybody else. That's a huge opportunity to gain advantage in the marketplace. That's great.

The other thing, Bart, that nobody asks when they're calling trying to get their Hyundai in, what is the question? They never ask.

They don't ask what the labor rate is.

That's funny.

I don't know how many markets out there we have clients that the labor rate is $40 more than the market. But they're booked out tomorrow, and nobody's. Nobody knows the difference. So we can pay technicians, we can have the best technicians. Because it's about getting in, it's not about the labor rate.

Yeah, that reminds me of truck for sure. Same opportunity. It's all about how fast you can get the vehicle in and get out.

Production.

That's right. Good stuff.

Which, you know, one thing you might want to think about there, Bart, is our technician tree course might be a good one for you to help you kind of set that up and think about that. You know, there's a couple things in there. One is getting the techs, but the other part of that is the financial aspect and how it works and then retaining them. So that might be something that would help you out and give you some ideas and inspire you a little bit. Thank you so much for, for the question was a great one. And remember the numbers 8 3-33-ASK-STR and we'll see you next time on Service Drive Revolution. Thanks for watching this week's Drive By. I hope we gave you something to think about over the weekend. 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. That's 8333 Ask SDR. For special deals on our books and training, head over to offers.chriscollinsinc.com now that's offers.chriscollinsInc.com I'm Chris Collins, and I'll see you in the next video.