How To Present A Diagnostic Fee To Customers | SDR Rewind

Hi everybody. I've got a real nice treat for you today. We are going to do a replay of the most popular, most downloaded and most viewed drive by in SDR history. It's got two questions in it. One is about parts margin and the other is the bigger discussion which is how to present diagnosis to customers. It is a very, very hot topic and still something that we talk with clients about today. So super exciting to play this all again if you haven't seen it before and gives you a little bit of an insight into maybe how you can present information to your customers in a way that they might be more receiving of it. And then I also wanted to kind of leave you with this too because it's getting a little bit cold out and I was wondering if anybody knew what one snowman said to the other snowman.

Hey, do you smell carrots?

So with that, I present to you the correct way to present diagnosis to your customers. Thanks so much.

Welcome everybody to this edition of your Friday drive by where every Friday we put up a little something for you going into the weekend. Most of the time you it's your questions. And remember, if we play your question on the big show, we will send you some swag. And the swag's pretty fun. T shirts, hats, stuff you can't buy. You can only get service Drive revolution swag by having your question played on the show.

So easy.

Get a pencil or a pen or open your notes on your phone and write this down. You ready? It's 8333, ask SDR. So 83333 ask SDR. That's the number call. Just leave a message with your question and we will get to it. Now we have quite a few questions in the queue.

Yeah.

So we're gonna double up. We're gonna do two questions at a time just because some of these feel like they're relevant and pressing and we want to try to help you as soon as we can. So let's go to this.

Well, before that though, I have a question. Did you ever notice like if you look up in the air there's geese flying? They're in like that V. Have you.

Seen one in downtown la? Have I ever looked up Occasionally when I was a kid in like in Washington, I would see geese.

So maybe not in the metro LA area, but we're both from other places. But geese love to fly in a V. Have you ever noticed that the V is always longer on one side?

Yeah.

Why do you think that is?

There's one more bird on the other side.

Yeah. Question answered 18333, ask. SDR.

Really? That's the punchline?

Yeah.

Did I ruin the punchline?

Totally. It was great.

What was the punchline?

Well, you're supposed to say, I don't know why? And then the answer is, well, because there's more geese on that side.

Well, I've been giving you a hard time today. I need to back off.

No, I love it.

My name is Dave from Grand Rapids, Michigan. I work for a nationwide repair franchise, and I question how much should be charged for markup on aftermarket and dealer parts.

What I'm seeing with the most successful shops, they're parts that they get independently from their vendors. They typically have a higher markup on the dealer parts that they buy. But my best shops are targeting a 50% gross margin on parts all the way around. So kind of use that as a. Is a thing.

But if you're buying it for 100, you're selling it for 200.

That's exactly right. That's a 50% gross margin.

Okay, so that's probably the best answer. Dave is 50%. I was going to say 40, but.

Christian, 40, is a dealer gross.

Christian has more experience in this. Thanks for calling in, Dave. Watch out for your swag bag. And thanks for the easy question.

That was a straightforward question.

Okay, let's. Let's play the next one.

Hey there, Chris. My name is Ari. I am a very new service advisor at a Chevy dealership in Montana. I'm just now in my third month, and I do have a question for you. My dealership does still have a diagnostic fee. I know. I already know how you feel about that. But the hardest thing that I am struggling with is asking customers up front for that diagnostic fee. A lot of times I'm just getting customers that are nodding their heads, and then they come back and they say that they didn't agree to it or that they're not going to pay that diagnostic fee if they decide not to do the suggested repairs. So I'm just asking for advice on how it's best to bring that up with a customer.

This is great because it's the question that keeps on giving. I love it. And how lucky are you to live in beautiful Montana?

I was gonna say if there's a place to be at a Chevy dealership, like, apple pie, heart of America. Like, the whole thing, like, you know, a Silverado in the backdrop of the mountains, like, it's perfect.

Okay, so let's. Let's just kind of unpack this a little bit in the Sense that what's going on here, Ari, is a customer has a problem and we can fix that problem. It's going to require us figuring out what the problem is.

So we, we know what the symptom is, right? We know that it won't start or it, something cuts out or there's a rattle or there when we go over a bump, there's a clunk or whatever it is. We, we know what the symptom is, but we got to figure out what the cause is. And so you want to kind of detach yourself from diagnosis, in a sense. And what we want to do is we really want to present the fixing the symptom by figuring out what the cause is all in one. So if it was me, and I would go back to the, the thing and you can hear it in previous episodes, but I would, I would present a repair authorization. It takes a little experience as an advisor to kind of know what the range is, right? So if, if a customer says, oh, whenever I go over a speed bump, there's a clunk. You know, you kind of got to have a general idea what that range would be. If some, if a customer says, my air conditioning doesn't work anymore, you kind of need to know if it's the evap or what. You know, you, you have an experience with, with the brand and with the model, you'll start to see patterns over time. So you need a little experience in order to do this or you have to ask a technician. But most of the time, if you ask your technician, they're probably going to be a smart ass and they're going to say, write it up and I'll figure it out. They're not going to want to guess. So I like to just, you know, start with a, with a big number and say, I'm going to give myself 500 to work with. I'm going to give myself a thousand to work with. If it's more, I'll give you a call. If it's less, it's less. Right? But what, what I'm really doing there is I'm seeing how committed the customer is. I don't want to find myself in a situation where I'm telling a customer like, oh, you got to pay for an hour of diagnosis. Like, I want them to tell me at the time of write up. I'm not spending $1,000 on that piece of junk, or I only want you to diagnose it and I'm going to take it to my technician. I want to know that up front. So I'm hitting them with the number for repair authorization. I'm not talking about diagnosis in that. In that sense right now. Another thing that you could do at the time of write up that would be just as effective, but the outcome isn't as good, is you could say, okay.

Our diagnosis is $150 an hour. Whatever it is, whatever your. Your labor, it is. How much time would you like the technician to spend to figure this out?

You put it on the customer.

It's interesting. What if they say five minutes?

You say, well, they probably can't figure it out in five minutes. Probably going to want to go somewhere around an hour. And you just kind of flirt with them and guide them where. Where they need to go.

Interesting.

But if. If we want to sell diagnosis, the best thing to do is to, you know, how much time do you want them to spend trying to figure it out?

As much as it needs would be the.

I mean, think about rad damage and electrical issues and all that in the past, right? Like, customer would come in and all their lights are on and they won't turn off and what. You know, whatever. And it's like, well.

It'S gonna take a couple hours. So I'm thinking three hours. But how much? When do you want them to stop?

That's pretty funny.

And so I'm really saying that, Ari, to just kind of get you to think about it from another perspective, I wouldn't really recommend doing that. But you. You can try it if. If you want. But what I'm hoping it does is it inspires you to just kind of practice the repair authorization and go with that and focus on the solution, not. Not the symptom in the sense that they got to get it fixed. And if you give them the bigger number up front, they're going to tell you they're taking it somewhere else. They're going to tell you what their threshold is. If you were really uncomfortable with repair authorization, you could also go about that in a way of saying, well.

You.

Know, this sort of repair can. Can. Can cost a little bit of money. What, you know, when do you want me to stop and call you?

Hit 1,000.

Hit 2,000.

Just set the ticker.

Once again, all I'm doing there is I'm trying to feel the customer up.

Yeah, I think. I think it's really interesting that our industry has struggled with that so much. I always think about it like.

Like a doctor's office, for instance, and I always like to do that parallel because I think there's a heck of A lot of comparisons between doctors and technicians. Just one, the patient is the car. But you think about it like if you go in and you don't feel good and you go to your doctor visit and the doctor looks at you and says, okay, so I think we need to do this, this and this, and then I'm sending you off and have this test done, you still get billed for that doctor visit.

I think the doctor analogy is, is very applicable because I think in our, in our industry, for a bunch of different reasons, we don't respect the technician.

Enough to portray them like the doctor. But they're the only person that can solve the problem. They have specific training, they're an expert in this field. They should, in a sense, be held to a higher esteem. But the way we give away their time in the way that we, we kind of project our own, like, insecurities and beliefs on it is, is interesting because 99% of people walking around can't change a spare tire. Like, they can't change a flat tire, let alone change their oil.

You need a tech. And so, like, if you think about it from the perspective of the technician, you know, has a lot of value and their time is important. Customers got to pay for that. Somebody's going to pay for it. It's not free.

Yeah, I think that that's a, that's the best lesson as an advisor. Value your technician's time as much as.

They value their time and understand how valuable it is to your customers. Like, amen. They, they, they're not going to do it themselves. They don't have the equipment, they don't have the tools. Like, think about how much technicians invest in tools, all that. And you know, if you're a dealership, you probably have special tools also that, you know, a lot of times, you know, independent shops don't have those tools. It's, it's money. I mean, we see it in the expenses all the time. These manufacturers auto ship special tools that never get used, but you're like, what's that? $2700, you know, and so it's expensive. You know, it's expensive to be a technician as far as school and tools, and it's expensive to have a shop and have lifts and all that. And so, you know, the technician's the only person that can solve, can solve that problem. So have a little more esteem about it and your, your confidence is going to project on the customer. Just think about it that way. But thanks, Ari, so much for the question. We hope that helped. If, if not, follow up. And we will, we will try to help you in a different way. Thanks so much. And we'll see you guys 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 on the show. That's 8333 Ask SDR. For special deals on our books and training, head over to offers Chris Collins inc.com now that's offers.chriscollinsinc.com I'm Chris Collins, and I'll see you in the next video.