Episode 8 - The KPI Shops Ignore When Car Count Drops - Tom Zoebelein - Hero Group

Hey guys, for today's podcast I'm bringing Morgan back because I wanted to discuss something that we talked about on an earlier podcast, but I don't feel like I really got into it far enough, which is close ratio. As a former marketing agency owner, you know, getting leads to shops, I really feel like most of the time when shops feel like they have a marketing problem, they actually have a sales problem. Basically, it boils down to this: if you are writing estimates and the phone's ringing and you're not— your shop's empty, you're not meeting your numbers, then you've got a sales problem. But if the phones aren't ringing, cars aren't showing up, and it's just crickets out there, then you definitely have a marketing problem. And there's two paths to go down, but I think the majority of people have a sales problem, a close ratio problem. And I'm starting to see it more and more in shops as we're developing our and launching our new product Reclaimer into the market. We're actually starting to study people's close ratios because it has a sales, uh, tool component to it that's kind of unique to the industry. And so I wanted to revisit the Close Ratio a little bit, and so with this episode, it's going to be me being interviewed by my co-host and coworker Morgan. So we hope you enjoy this episode.

Hi, I'm Morgan Felschner, back with Tom Zoebelein for the week. We introduced this podcast a few months ago with me interviewing you about the industry and your experience. Then you were off and running talking to some really interesting shop owners who shared their tips and tricks. This week I'm here again because we wanted to dig into your experience, expertise a bit more. You ran a marketing firm for years and learned that no marketing plan can outrun a low close ratio. So let's start there. Shops are struggling, car count has dropped. What's the first step for an owner? Which, what should they do?

Yeah, so the reason I wanted to revisit this is because, um, You know, it seems like across the board right now, even the big, the big consolidator MSOs are kind of all fighting for the same customers. Like there's— I talked to somebody that's at one of the big consolidators that was a former client that got purchased. And he said that we're just trying our best to capture what, what is out there, you know, the work that's out there. So this is not a problem that's unique to independent shops. It's, you know, the whole, the whole industry, I think, is feeling this, this car count, you know, and it comes and goes, right? It ebbs and flows. But right now it seems like it's in some areas it's getting tight again in big areas like Texas and things like that. So, so I wanted to revisit close ratio. We talked about it with, with Shane Orlando. But I have a lot more thoughts on it that I didn't get into because I was interviewing him and I wanted the opportunity to be able to kind of talk about some of the things that I think about with this. But, you know, if basically if your, if your close ratio doesn't improve when car count goes down, then you're gonna have less cars to fix. So the focus always turns to marketing and marketing, marketing, but I think that there's only so many cars to fix. Fix right now. You know, for whatever the reasons are— economic reasons, people are afraid to go to their insurance company because they don't want their rates to raise— this could be temporary, this could be long-term. Maybe it's the ADAS stuff, is less cars— whatever it is, it's, it's not improving right now. It doesn't seem like— although I do talk to some shops that are busier than they were, but So basically the thing is, if I don't think you can— you can market the deficit, but you can, you know, sales fixes everything, right? That's the— that's always the, the quote is, you know, sales fixes everything. You have a revenue problem, increase your sales, and then the cash flow comes in, and then you have the revenue to start fixing the other problems that you have downstream. So focusing on close ratio and increasing it, but the surprising thing is that it doesn't take much to fix it. And I have some real examples of that too. But it doesn't take long to fix it and it doesn't take much to fix it. Like we're talking sometimes just closing 1 or 2 more people a week is the difference between you making, making ends meet or not, you know, or hitting your, your revenue and profit goals or not. So, so yeah, that's what I wanted to focus on.

So when you were in your marketing firm, you know, you were getting these calls, I'm sure, from, from shop owners saying, "Ah, our car count is down. Help. We need to spend more money and get more cars in the door." And I'm sure you were happy to take their money for marketing, but there was probably a lot of frustration that went with that because you were delivering leads, but then they might have been just sort of falling flat. So what's your biggest frustration when it comes to the, you know, this issue with body shop owners?

Yeah, so, um, you're right, it was a— like, it was always good for business. Low car count, good for business. You know, busy shops, bad for business on the marketing side of things. And it's a knee-jerk reaction that car counts down, I got to get cars, I need to hire a marketing agency. And the reason for that is because we do have this insurance component and, and this reputation component to body shops. So there are shops out there that, that don't spend a single dollar on marketing. They don't even have websites. Even in 2026, there's— they don't have websites. Even, even pretty decent shops, or shops that have been around since, say, the '50s, they don't have websites. I always found that shocking because I believe that it's a convenience thing to your customer. And if you care about your customer the way you say you do, at least have a website. But, you know, With Google My Business pages and, and having your phone number and address and photos of the shop, you can get away with not having a website. You can get away with not having a digital presence because Google provides one for you. Um, but so it's a, it's a weird thing selling marketing to the collision repair industry. It's not like roofing companies where that's their whole gig is to just market, market, get cars, or attorneys, or— there's a whole lot of verticals that I could have gone into, but I only know you know, cars and collisions. So that's why we started the marketing agency there. But, um, but because of that, people feel they can turn on and turn off marketing, and they feel like it's an instant switch, like a light switch. Like, oh, I got this problem, I need more cars next week, let me just hire this marketing agency and they'll perform a miracle for me, and the guys will be busy and I don't have to lay anybody off. It just doesn't— it doesn't work like that, you know. It takes us time just to get a campaign up, and then let alone having it dialed in and producing results. So we, we always— the barest minimum we had for a client was like, I need a 90-day commitment. I need 30 days to get it up and running. I need 30 days to monitor it, make tweaks, and any 30 days to show you that they're consistently producing for you. And, uh, you know, obviously we wanted them for longer than 90 days, but, but it's a 90-day minimum commitment. It was also my way of weeding out people that were looking for like some desperate quick fix. But I can't tell you how many times we got people on and they would just light up our phones every day like, where are the cars? Where are the cars? Where are the cars? You know, it's like, hey, you hired us last week. What do you know? Like, give us some time here, right?

Yeah.

So, so yeah, that's, that's the thing. Like, you know, marketing can fix some things, but sales fixes everything, you know?

So let's, you know, I think, I think you're hitting on something that is, that is interesting there. With marketing and what the marketing firm actually does before we get into, you know, you've handed them a bunch of leads and now it's their turn to take them and run. Can you explain to us what the marketing firm actually does when you bring in an agency?

Right. Yeah. So, I mean, it kind of depends on the marketing agency. There are a few that service the collision repair industry specifically. Specifically. And those are probably the better picks because, you know, like my, my agency that I sold, Stratosphere Studio, we still serve the collision repair industry. There's, you know, Mickey Woods has a marketing agency, Daniel Burkholder has one. There's several focused, you know, Phoenix Solutions. There's several names that people know. If you don't have to teach your marketing agency the collision industry, then typically they can kind of get going. But if you're bringing somebody in that's like a local— because that would be the other thing that I would see is they, they would hire like a local company, you know, like a guy that serviced, you know, Greater Boston area or something. Right. And they did a little of everything. They weren't specialized in anything other than regional marketing. Not saying there's anything wrong with those guys, but they— there's a learning curve. They're going to have to learn that you can't just market like you can an electrician or a plumber and your ads land and get leads at the same proportion because, you know, you're trying to— you got to get to people that are in market for something that is very specific and it's insurance-driven. You know, your first move when you get into an accident is to call your insurance company. Who is starting them down the path? You get a roof leak, your first thing is to start searching for a roofing company. So that's where marketing connects you to a prospect a lot faster and, and at a higher percentage than it does in collision repair because, you know, we've got DRP programs, we've got insurance companies that are guiding the hand of the consumer. So the, the trick to digital marketing for collision repair is to get in front of that customer, figure out how to get— how to identify them and get in front of them and then serve them messaging. And our messaging was always just We assumed that they've already spoken to Caliber or Gerber or whatever, and so we offered, our whole marketing pitch was a second opinion. It was very effective. You know, our clients stayed with us for, some of them since the day they started. We had a lot that were just there for the whole run until maybe they sold the agency, sold their company or sold their shop or I sold the agency. So when you hire a marketing agency, again, it kind of depends on the marketing agency. So if the first one, the non-collision specific, they're going to want to do discovery call. They're going to learn about the industry, learn about your business, learn about this and that. And then they're going to go back and kind of figure out some campaigns and they're going to figure out what to— what budget you should spend and where your customers probably are. They're going to learn about— you're going to have to educate them. You know, if hiring a marketing agency that specializes in collision repair, you don't have to do that. They're going to just get started on messaging and tactics. And most people have their own approach to it. We were heavy on geofencing. I believe heavily in geofencing. We had a lot of success with it. There are companies that are SEO agencies where their focus is on search engine optimization. I, I never— we did SEO as a, as a piece of what we were offering, but never the heavy lifter. That was never the horsepower behind our marketing thing. And for— because I— first of all, most, most body shops are kind of ranking pretty well anyway, unless you're in a really heavy, heavy market like you know, Mesa, Arizona, and there's just tons and tons of shops, or like in the Los Angeles area. But if you're, you know, because, because the radius around your shop is fairly small, you know, like people aren't going to drive unless you're in a specific model, like you're in a Rivian and you're going to go to a Rivian shop, you may actually go across state lines even. Um, but if you're driving a Toyota, you know, you know, or, or a Ford or something like that, you're not going to go you know, 40 miles away to a body shop. So you're— when you do a near me search, you're showing up. I mean, there's just not a lot of body shops. If you're a mechanic, different story, you know. You know, it's like 4 times the number of mechanic shops for every, every auto body shop. So, so I, I never really believed in SEO as, as the, the right thing. And I also felt like SEO was a bit of snake oil. Um, you know, there was always like these companies in India that would do an SEO package for $500, and, and I would compete, have to compete against that. And I would always ask these guys like, what could you do for $500? You know, like, how good do you think this is? You know, forget that it's in India even. Like, what do you, what do you think you're really getting here? You know, they're going to go on the back end and they're going to fix some headline text and stuff like that, and they're just going to bill you that $500. Because they know that you don't know what they're doing. There's no way to double-check their work. And you're going to Google a body shop near me while you're sitting at your desk in your shop and you're going to pop up because you're the, you're the closest body shop to where you're searching from because you're searching from your body shop. So I feel like SEO is a little bit snake oily. I don't love it as a main lead tactic. The second reason for that is AI is changing all this stuff too. I mean, I Google, I don't know about you, Morgan, but I Google and Google much like a lot less. Even, even in my, when I do Google, I'm using the AI Google in, in my, like my phone or whatever. I'm skipping over the actual Google bar anymore.

So it's changing everything. Yeah.

Yeah. And the, and the problem with that one too is that's chasing the wind, right? Like you ask it 5 times, Best Buy shop near me is going to give you 5 different answers. Whereas if you did that with Google, it's going to be the same results over and over. Yeah. Ask it 100 times. So the— I'm glad I'm, I'm kind of not in the agency space right now because of the AI SEO, because that would be a real challenge. I don't think anybody really knows what, what the secret is. I don't know that there is a secret. I don't know that there's a way to crack the code on this. Now, there are some things that you can do. There are certain places to be, you know, have some content in. But if everybody goes and does those things, What's going to make you any different, you know?

Right.

So I think it really comes down to reviews, reputation, number of reviews, you know, things like that. I think it pulls heavily from that, makes a decision. But it's, it's— whereas Google was very algorithmic, like it had very consistent outputs. You put in this, you consistently got this. With AI, it's not algorithmic like that. It's, it's totally different. So, so anyway, back to your question, like what, You know, I think you have to do paid ads. I mean, I just think that whether it's Facebook ads, geofencing ads, pay-per-click ads, but even then, you know, like the pay-per-click ads with the fact that we're not searching the way we used to, I don't even know if pay-per-click is, although, you know, now the AI is starting to run ads. So, you know, and then, and also in certain markets, like things like Yelp and stuff like that are, are kind of like, like in out west, like Yelp is used a lot more than we use here on the East Coast. So, you know, so there's a, you know, then there's like those like neighborhood, you know, what's the thing like, what's it called? Nextdoor. Yeah, Nextdoor. That was an area that we never marketed in. Probably not a bad idea to throw a few bucks in there and see if it generates anything, but But anyway, so a marketing agency is gonna have their kind of recipe of what they think is right. Now, we started out with our recipe. It was geofencing heavy, Facebook ads secondary, Google AdWords tertiary, and then a little bit of SEO if we felt like you just really were just not showing up at all. You know, like I had, usually for me it was when you changed the name. Like you were once this and now you're this and I needed to get the— I need to get Google kind of seeing the name. And so we would do some SEO work there and put you in all the directories and things like that, or a brand new shop. Um, so, so that, that was our formula. And then what we would do is we would monitor those numbers and then we would change tactics when we saw one thing doing better than another. That's the other thing too. It was never 100% consistent. You know, like if you do these 3 tactics, it's always going to produce this. Well, some, some areas I think maybe it had to do too with the nature of the demographics of where your shop is located. Like, um, what's the place in Florida that has like, like an older retirement community? Um, The Villages. So we had clients in The Villages, right? And a lot of the digital marketing stuff didn't work at all there, so we had to change some things around, you know. Um, so, so demographics I think can drive the results. So a good agency is going to be fluid, you know, ability to change tactics and monitor it. Like, that's what we did. We monitored those numbers every single week. We had dashboards that— I spent $35,000 building the dashboard that ran Stratosphere Studio. And so that was Brazil dollars too, so in the US it would cost me I don't even know what. So that, that pumped all the data in. It made this master dashboard and we could see our clients like what was, what was moving the needles and when it was dropping. And then when we needed to make changes, because I never wanted a client to call me and tell me, hey, the phones aren't ringing. Like that's the thing that kept me up at night is, you know, a phone call that the phones aren't ringing.

Yeah.

Dead shop. That's a different story. And that's what we're going to talk about on this episode. You know, I got no cars to fix. That's, that's a whole nother story. But The phones aren't ringing. That's the scariest phrase you could ever tell a marketing agency person.

Right, right. So they've chosen their marketing shop. The phones are ringing, but it's still not getting better. And I think that's sort of the central thing here is marketing can't outrun a sales problem. So, yeah. So how do you fix it? Where do owners start when it comes to close ratio?

Yeah. So I'm going to walk you through an observation that I made on multiple occasions. So as you know, Morgan, I spent a lot of time in body shops, weeks at a time sometimes with these guys. You know, part of it was when we were building, um, Voltonic, and I was just— I would embed myself in shops because I wanted— we were testing the scheduler, we were studying parts, or we were whatever we were working on. So I've been in dealership shops, I've been in independent shops, I've been in MSO shops, I've been in shops that most people, if I mentioned their name, they would know, "Oh, I know those guys," right? And I would shadow people. I would shadow the parts guy. I would shadow, you know, I would follow the production manager around. And then one of the things I did was I shadowed the front office people and I watched them sell and I listened a lot when I would be sitting there. I'm going to walk through a real story, real life observation. So there's a shop. I'm not going to mention the name or where it's located. And they have 3 estimators and the owner, 2 main, 2 main estimators, and then like a main estimator slash insurance liaison kind of a person, general manager type. And so I walked out when, uh, you know, customers started showing up at the shop. They are a heavily OEM-certified shop. That is what brings the— they're a fully independent, non-DRP shop. So every customer coming to them came to them because they researched them and decided that this is a shop that I want to fix my vehicle. So, um, and Tesla being one of them, and they fix a ton of Teslas. So I walked out with, um, with this front office person, and they, uh, Tesla pulls up, hit in the back, as they all, almost all of them are. And, uh, you know, the, the customer comes out, they go outside, they look at the vehicle, um, the CSR leans down, kind of looks at it, you know, kind of touches on the bumper a little bit and says, yeah, I think there's probably $7,000— you're looking at $7,000 to $12,000 on this. 'Have you filed a claim yet?' And the person was, 'No, I haven't done that yet.' And then they would say— their response was, 'Okay, well, I'm going to need you to do that. So go ahead and go file the claim, and when you've done that, call me back and I'll get you in and we'll get you a real estimate here.' And so that person gets in that Tesla and drives off the lot. That happened one time. Then A couple hours later, another Tesla pulls up. Follow the person out again. This Tesla was so brand new, I could smell the new car smell as this woman pulled up. And she, she pulls up right to the bay doors. You could literally see into the shop. And, um, same thing, you know, look at the car, look at this, hit in the back, pressed on the bumper, you know, look down inside. You're looking at from here to here. And have you filed a claim yet? Again, no, I haven't filed a claim yet. Okay, well, I really can't help you now. So, you know, I'm paraphrasing here, obviously, but like, I can't, I can't really do anything until you get that started. So when you go get your claim filed, call me back and I'll schedule you in for an estimate. So both times I followed this person in and they went to their desk and they put a note in the CCC and I said, well, what's the next step here? Oh, I'll follow up in a couple of days and make sure that they filed a claim. And, um, and that was the end of it. So let's say that those were $12,000 jobs. That was $24,000 worth of repair work that I saw that, that CSR basically say, I can't— you come back when you can help me, when I can do my job, instead of like, how can I help you? How— so here's, here's how I would have done it. So the first thing I would have done, the first customer is, you know, I would, first of all, I would just engage them in an icebreaker conversation, something like, you know, this is a really nice Tesla. I love these cars. Why did you decide to buy a Tesla? You know, and just get them talking about the vehicle. Then I would use that to, whatever they said, oh, the safety, the reliability or whatever, fuel mileage, you know, the— not fuel mileage, but the range or whatever, you know, not, not ever having to buy gas again, whatever they said. I would then turn that to say, you know, um, those can be compromised, um, if you don't have it repaired properly. Let's just, let's just pick safety, you know. You know, the safety, the safety can actually be really compromised if it's not repaired properly. Fortunately for you, we're OEM certified for Tesla, which That means that all of our guys in this, in the shop back here, all trained, uh, Tesla repair people. In fact, just look down this row of cars here. You see all these Teslas here that have been dropped off? And then if you got a second, just poke your head in the, in the, in the door there. You see all the Teslas that are in there? There's a reason all these Teslas are here. This is where people come to get their Tesla fixed in this town. And now let's talk about the claim. So have you filed a claim yet? No, I haven't filed a claim. Well, no problem. I can help you with that. I do this every day. Why don't you come into the office here? I have a seat. I'll get you a bottle of water and let's call your insurance company together. Let's see if I can get you leaving in a rental today. Let's get this thing done now. And then get the customer in, call the insurance company, get them to file a claim, hand them the phone, whatever, you know, ask permission to help them, you know, on their behalf, whatever you do at that moment to get the claim going. And then, and then see if you can get them leaving in a rental depending on what insurance they have and all that stuff. And the second person, same deal with that brand new Tesla. I would have said, my God, it's a brand new Tesla, you know, you know, why'd you buy it? Why'd you, why'd you choose this car? Again, walk them through the same thing. Just kind of get like a, get a reason why they are attached to this vehicle and leverage that in the, hey, if you don't You know, there's a difference in who fixes your vehicle, and this thing that you care about on your car could be at stake if not repaired properly. Fortunately for you, we are the experts in this. You are in— what you want to know is that they are in the right place. You, you chose wisely, sir. You know, you're here, you're, you're, you're where this problem comes to, to disappear, right? And so, so that, that's, that's the difference. And then that, that, you know, that particular shop, that particular person, their close ratio was like in the 30% range. And just to get them from 30 to even in the 50% range, guess what? Just 2.5 more customers a week would have got them in the 50% range. 50%. Of, you know, getting everybody, all the estimators, to a 50% close ratio in a year's time would have put almost $1 million into that shop without having to get another— without having to spend a penny in marketing. These are people coming to the shop because of this Tesla. They're, you know, the hardest thing I think in collision repair is to convince a customer to not go to the DRP shop. And this shop had 2 people standing right there with the car right there Like, that's, that's, that's the, the, the goal, right?

Right.

And they both times said, come back when I can do my job. So that what happens is the human, you know, like we all get into a groove with our job, you know, and we forget like these people, the customers coming in, you forget that they're customers and this is their first time. This is your 1 billionth time. And so you go into this robotic procedure. The human nature is you got to kind of remember to knock yourself out of that, right? Like, treat every day at work like it's— so yeah, treat every day at work like it's your first day, you know? How do you, how do you get your people to do that? That's a, that's a tough thing, you know?

Right. So you got to fix that problem. Obviously, you've got to make sure that your, your salespeople are actually, you know, saying and doing the right things when, when the car is literally there for them to take. Once you fix that, how can they track it? You know, how can they fix sort of some of these other problems? How can they make sure that even if they did let the person walk out of the shop without some sort of agreement that day, how do you make sure they're actually calling them back and doing all the follow-up and stuff like that that they need to do?

Yeah, so that's when you got to be a manager. You got to put on your manager pants, you know, and be a manager. The problem is there's the tools— there aren't any tools out there except we're fixing that, um, which I'll talk about in a second. But, um, there really is nothing, you know. Everyone has a management system, but the management system, it's a CRM, but it's not really built as a CRM. It's more of an estimating platform and a production, um, data collector, you know. It's like where all the data— it's where the parts go, it's where the schedule goes, it's where the customer insurance information goes. It's where the notes go. But there's nothing— it's not— and I'm talking specifically CCC here, but, you know, I don't know Mitchell as well, but, you know, like a typical CRM, like, like if I, if I'm a salesperson, you know, like HubSpot, right? We used HubSpot in my marketing agency, and, you know, I had salespeople working for me, and I had— we had a CRM and had every customer and what stage they were at, and I could go in there and I could monitor, and it would send reminders and all that stuff. This kind of stuff. The management platforms don't really have that, at least, at least to my knowledge they don't have it. And if they do have it, I have yet to see a shop really use those tools. Now I know there's things like Buy Shop Booster that promote themselves as kind of like a sales CRM, but I, I don't see anything that's like putting, you know, they used to call them when I, when I sold trades, like tickler files, you know, like put the tickler on there where it sends you a note like, hey, it's been 3 days, you need to call this person. I don't— they're not— they're definitely not CRM first, right? So there's a need for tools to keep this front and center. And, you know, it can be very basic. Like if you ever buy a car, this is the example I always give. You buy a car, you walk in and you start kind of like, hey, I want to look at this Mustang, right? And boom, you hand that driver's license over and your name's going on a whiteboard. You know, Sucker Zobel right here, you know, like Mustang.

They're never leaving you alone again. Yeah.

Yeah. And that, and that name doesn't come off that board until probably the end of the day. Right. And there's that on that same board is the number of cars they're trying to sell for the month and where they're at for the week and how many opportunities they've got on the floor right now. I guarantee you, you'll see this at every dealership. And so they're at a minimum having something like that, right? Like having some kind of, I don't care if it's a spreadsheet or what, but if you can put every, you know, the last name, vehicle, year and make, and, you know, Jones Tesla, you know, Jones '22 Tesla, uh, you know, working, right? Like you're working that deal, and the estimator's name. Um, that, that, that alone, I think if you, if you got your people to do that and we're vigilant about monitoring that and staying on that and, and getting with— like, it's, it's a, it's like Working out, it's a muscle you're going to have to pump up. You know, you're going to have to get into the habit of doing that. That's the probably the most basic, free, cheap way of doing it because, because, you know, close ratio is such a problem. So that same, that same shop that I was telling you about, that owner called me beginning of the year asking me to help them get information on on, uh, like insurance steering. They, they said, listen, I'm really, uh, you know, cash flow is, is a problem right now. I feel like I'm being steered heavily and I need to sue these, you know, people, right? I need data, you know. And so they had a meeting with the Department of Insurance and they were going to try to solve that problem. Via solve a car count and cash flow problem with the DOI. Well, it's just not going to happen. Like, that's just, that's just not what they do, right? They're not going to investigate it. And then, you know, and even if they did, let's just pretend that in a magic wand that DOI could solve this problem for you, or suing the insurance companies would solve this problem for you. That's not a today fix, that's a year from now fix. The— so I, I— CCC has a report, it's called the— and I, I'm going to cobble the name together here, but it's basically something like a Closed Opportunity by Estimator Report or something like that. It doesn't sound like close ratio report, but it's something like that. And what that'll do is that'll export out all your opportunities, estimator name opportunity count, closed count, and it has, you know, percent on there. So that, that— I, I grabbed that sheet from this, this owner and I ran the math for him and I said, listen, if you could get these two estimators right here from 37% and 42% close ratio to just 52%— and 52% I'm plucking out of the air, that was what Shane said that he thinks the real close ratio is, which that's a whole nother thing we talk about, is like what perceived close ratio is. But, um, but if I said, if I, if, if you could get these two people to get from here to 52%, you would, your shop would be making, and I, I don't have the numbers in front of me, but I want to say it was another $160,000 a month in revenue. And I said, would that solve this problem today? It's absolutely, it would. And I said, well, to get there, this person needs to close 1.8 more a week, and this one needs to close 2.5 more a week. So like 4 more customers a week. So I said, do you think, do you think you could, you could do that? I mean, and the thing is, these are not, you need to go find 4 more opportunities. These are just 4 opportunities that need to have say yes, I'm handing you the keys to my vehicle. And, um, and get that car in the door. So the car that was in the door, you just need to get them to commit to you is really what, what it boils down to, right? So that's— I said, so that's all you have to do. You don't have to spend a dollar in marketing, you don't have to spend a dollar in anything. Just if you think you could ride their asses a little bit and track this even with a spreadsheet. And so, um, so I, I, uh, so they And this, this was like a couple of hours of like trying to talk this guy down from, I need to sue the insurance companies. The insurance companies are my problem to realizing that, no, you're, you're, you are your problem and your people are your problem. And so I ran the math. The one person was, was literally costing the business $462,000 a year by not being at a 52% close ratio. The other one was in the $300,000. So between the two of them, We're talking almost— it was around $800,000-ish in that they're costing the business. And when I say costing the business, because they're not performing at at least a 50% close ratio.

And you think closing every other customer is like a standard, you know, it's sort of a the low end of a benchmark or—

I mean, Mike Anderson says it should be 75%. I, if you could talk to— because again, these are people that have the, the, you got to understand where you are in the sales cycle too, right? So this is not like a discovery. Like if I was to sell, um, like selling software, right? So you do a discovery and it's like, you know, or even selling my marketing services. So we would do like a call, right? And so it was a discovery call. We want to learn about each other, you know. Here's, here's, you know, tell me about, tell me about your shop, tell me about your challenges. What have you tried that doesn't work? Here's what we offer. Here's how we charge for it. Here's, here's how fast it works. And here's customers I've done. So that's discovery call. So then, then it moves to the next thing and the next thing, right? You don't have to do that inclusion. The car— a customer came in, in the car, you're looking at it, it's damaged. You just got to get them leaving in a rental or leaving and leaving the car there, right? Or signing a contract. Like, we interviewed John Brown on here. He gets them to sign a contract. He didn't care what happens at that point because they've signed that legal contract to have them fix the car so they can leave in it, come back when it's ready. But they've basically— they can't get steered against what— at that point. So he doesn't have to worry about the insurance company convincing this person that, no, come take it here, we're not going to, you know, deal with that guy. So he's— he has sold the job at that point, right? So, so that, that, that, that's what the it boils down to is, is, you know, raising that, that close ratio. So, yes, the 52% number, I think it's easy to get to because you're already sold. They're already here, right? They're— it's really not that hard to, to move them to the next, to the next step. And so as an example of that, that same shop owner, I called him a week later to check in on him, see how it was going. He said the shop is slammed. He spent one day calling back all the leads in the pipeline and he booked in enough work that he slammed the shop. It fixed it in one day. Right. And so now the trick is to stay consistent with that. And so, so, so that night, actually, I went on Replit and I built a leads, a close ratio tool. Right. I was just so frustrated with his frustration. I was like, I can fix this for you. And so I built this tool that you just upload the— you pull that report out of CCC. It's a PDF or Excel or whatever it comes out in. You upload it into this free tool and we'll put a link here in the notes. And it'll show you your close ratio by estimator and where they are to 52%. And what, what, how much money they're costing you by not being at 52%, how many cars they need to, how many customers they need to close a week to get to 52%, and what your real number is going to be when they're at 52%. Then it's got a little slider you can play with. Well, what if I can get them to 62%? What's that number look like? What if I can get them to 82%? What's that number look like? So it'll, it'll calculate all that out. Now, one of the things that it will do, but we didn't make this piece of it live yet, is has that leaderboard. So it— where you can— because we felt like shops are gonna use it for a minute and then it's just not going to be a muscle that they use, you know. And so they're not going to be consistently putting the names up there. So what we are doing now is we have— with, um, if you are a Reclaimer customer, as we're launching the Reclaimer here in the next couple weeks you'll have access to this tool and it will pull all your leads into it. So it'll have that leaderboard for you and it'll be completely automated. So you don't have to, um, you don't have to, you know, put anything in it. It'll just run. And then you just want to check where you're at every week, every day. And then it'll track over time your, your estimator's close ratio over time. So if you want to see, you know, are things improving sales-wise, you'll be able to see that. It tracks all that for you.

Yeah, that's great. I mean, it's really— I think with all sorts of sales, it's really the same, but especially with your car. They bring you your car, they want to know that you're going to take good care of it, do a good job, and that you're going to follow up. And so making sure that that's happening can really increase the close ratio. You don't know until you're tracking it.

So yeah, you had to measure it.

Helpful. Yeah, you have to, you have to measure it. So, so we know you've got this tool and I think that really feeds into something that we see a lot with body shops, which is the perceived close ratio. Can you, can you talk about that a little bit?

Sure. Yeah. So whenever I would do a call with a client, you know, that was, you know, concerned about car count and needed more leads, I would ask them about, you know, the close ratio and they say, listen, man, just get them here and we close almost everything that, you know, we capture those keys, we close almost everything that comes through the door. And I think that that is the perceived reality. But I think that if you were to study all your— well, if you study this report, it'll tell you what the real reality is, you know, that close ratio report. But I, I think that you're gonna— you'll be shocked to see that's a lot lower. Like, I— to me, I perceive when you— we close everything would mean that you're in the 80-plus range, um, which I think is doable. Again, for the same reasons, if you're an independent shop and they're on— or they brought you the car, like, the heavy lifting is done. That's, that's the thing that shops need to walk away understanding. Like, if they're here, you're like— you should be able to close 80 to 100%. Like, it should be very rare that you don't get somebody. There's a few shops— Mid-Island Collision in New York, you know, Larry Martinez and those guys— they, they close everything. They put those people on a rental car and they're keeping that car there. But that is not the norm, you know. What is the norm is like, you think you're closing everything and until you're hiring a marketing agency because the shop is dead and you're you think, well, it can't be our people. It's got to be something else. It's, you know, not enough cars out there. And again, if you— if the, if the pool of cars to fix is shrinking and your close ratio stays the same, your car count is going to shrink. But if your pool of cars is shrinking and the car— the pool of cars is shrinking, but your close ratio increases, you're going to have the same as or more work to do, you know, cars to fix.

Yeah.

And it doesn't require a dollar, a dollar of marketing, you know.

Right.

So, so, so that, that's that. And so I think, again, perceived close ratio is, is disproportionate to what your real close ratio is.

Well, knowledge is power. Once you know and once you actually dig into it, and I think that's, that's really It's fascinating, and also human nature to think, well, it's not my people. My people are doing great. And to us, it seems— I mean, I think probably to everybody, it seems like if the car is there, they drove up in the car, it should be easy to close. And if that's not happening, then there's clearly a problem. So that's why, you know, tracking it, whether with this tool or on a board or however, is so important, because, yeah, having that knowledge is power so you can make some changes. But, um, yeah.

And also on that, um, on that tool, when you mark— so I talked about how it has the leaderboard on there. You can mark, um, uh, won or lost, and then you have to mark why. So this tool uses AI. It also has an AI thing where it's going to start studying the why. So that you have to mark, you know, went to a different shop, said we were too expensive, um, you know, whatever the reason is, whatever they tell you why they're not choosing you, ghosted us, whatever, doesn't matter. It'll start to study and then start to give you suggestions on how to fix your close ratio problem. So it's not just an identifying tool, it's a, it's a helping tool. Um, and like when we had the marketing agency You know, we— there's a lot of churn in any business, right? But in marketing agency, it's pretty brutal. It's one of the reasons why I actually wanted to sell, you know, is just because it just got— it's just a— can kind of feel like a treadmill a little bit sometimes, you know. You land new business, you lose business, land new business, lose business. And you do it for the same reason, like shops get busy. Well, we don't need this right now, or You know, we're not even looking at the leads. But the other frustrating thing would be when a customer would say, like, I would get a call. This is actual. These guys just sold their shop. But they, you know, the shop that I worked with for— I mean, I built this whole— branded the entire shop, you know, logos. Like, I was there from day one when they started this thing, 6 years. And, you know, I get a call from, hey, you know, Tom, we're just not feeling it with the marketing. Well, really, what does that mean? Yeah, we're just not feeling it. Just don't feel like it's really working. And so I said, okay, well, let me pull the— let me pull your latest report and then we take a look at it. And then I look at it and say, well, it says here you got, you know, 23 leads last month and, you know, 18 the month before and, you know, whatever the count was. And so you're telling me that these people, not one of these people became an actual customer. These are leads that came. So I should I should mention one thing too, a little bit unique to our agency, but not unique, you know. We had a lead gen tool. We basically built our own little piece of Body Shop Booster where you could send photos or book an appointment. But what we did with that tool is it had a, what's called a unified tracking metric, a UTM. And that UTM was tied back to whatever ad we were running. So if it was a geofence ad, it would show up in that big dashboard that I built as, you know, Joe Smith, Toyota Camry, geofence ad. Joe Jones, you know, whatever, Facebook ad. So I had, so, you know, a lot of marketing agencies, they will deliver you these reports and it's like clicks and, visits and things like that. And the really bad ones will do stuff like they'll say like, well, what's your close ratio? Oh, it's, you know, 75%. Okay, great. What's your average repair order? It's $4,500. Okay, so here's, you know, you know, 250 clicks to your website. So, you know, you close 75% of those for this amount of money. This is, this is your ROI on what you spent with us. They try to convert clicks to somehow close sales.

Yeah.

And I can't tell you how many marketing agencies I saw that we delivered names on a page. I always told my people, if you can't deliver a name on a page, it's, it's all BS work. It's why have us, right? It's, it's irrelevant. They want to know who did you bring us, not what, like who, who did you bring us? So I would have those names at the ready and I had names and phone numbers and where the leads came from. You know, these 10 came from geofencing, these 5 came from Facebook ad, these came from whatever. And they only got there because they went to landing pages that you could not access through anywhere else on the website. So I, I, I would say, okay, well, you're not feeling it. So these 23 people, they just never showed up or, you know, like they're not— they had cars you couldn't fix or, you know, like trying to diagnose like what's going on here. And so they would say, you got 23 leads? I say, yeah, 23 leads. And then 17 the month before that. And, you know, whatever the month before that. Well, let me see those numbers. Let me see those names, you know, and I— because I would say they're not in your CCC. Give me your login. Let me check. Let me see these numbers. So go through the thing, send them the numbers, and then get a call a week or two later. Yeah, we're just— we're going to cancel. We're just— I'm just not feeling it. So, okay, so those numbers, you called all of them. Not one of those people showed up at the shop, right? No, I just, I just didn't, I didn't get around to it, but I would just want to cancel, right? And so that is the owner saying that, let alone what his people were doing, right? So that, that's the, that's the other thing in this is, um, if you're, if you're an owner and you're hiring a marketing company and you're not policing that your leads are getting followed up on, you're pissing money away, right? You're just burning cash because what your people are going to do is they're going to call the ones that are coming in through CCC. You know, if it's an open shop assignment and you do open shop assignments or they're walking in the front door or whatever. But if, if, if it's a lead coming from a third party, like we were a third party being a marketing agency, that's not on their that's not what they do, right? It's that you have to build the culture around that. This is, guys, this is— I'm paying money for this. I'm, you know, and by God, you better be calling these people. And so that was the, you know, like, make sure that you're— that if your marketing agency is good enough that they can deliver names on a page, make sure that your people are calling those names on a page. Make sure that you're calling those names on a page. Because those are your leads. Those are people that, that we found from going somewhere like that. Those leads, those would be people that went to a Caliber. We were, we were geofencing people that were at another location. That's how they were seeing our ads. They were, they were— if they were Caliber or Joe's Body Shop down the road or whatever, that's what triggered our ad campaigns. So these are people that were at another shop, saw, were captured and triggered an ad campaign. The campaign said, "Getting an auto body repair? You deserve a second opinion. Click here to start." They followed through, they clicked the ad, they clicked the landing page, they sent the photos, and they showed up in our reports. And I handed 'em over to you automatically, actually they automatically went, and your people didn't call 'em.

[Speaker] No one called.

No one called them. Yeah, but it's my fault. It's my fault. And you're going to cancel with me. And that— how do you, how do you fix that? If I had to do it all over again, Stratosphere Studio would have been half marketing, not even half, 25% marketing, 75% sales focus, like sales consulting, you know, like because the marketing is not even half the battle, right?

So the close ratio is you know, boil it down here, you know, it's yes, do your marketing, hire your marketing firm, but it's not going to fix all your problems unless these other things are in order. So hire your marketing firm, call the leads that they actually give you, and track the close ratio. And those 3 things together can get more cars in the shop.

And Morgan, I'm going to tell you, this is not unique to collision repair. Like, I'm not pointing the finger at body shops. So before getting in the marketing agency world, I was in the trade show world, right? So we would do these giant trade, trade show booths. I did Under Armour's trade show booth, a half a million dollar exhibit. It would cost them almost $100,000 every time that thing went to a show. And they did shows all year long. Right. And the— at the booth, they have these little lead machines, right? And you swipe your badge and then it would print out this little receipt. And so the booth, the booth would, the show would close, the booth would come back. It would, you know, sometimes take a week if it was in Vegas and it came back to our office in Baltimore. Um, and then it wouldn't get touched again until it was going to the next show. Could be next month, could be 3 months from now. So the first thing we would do is we'd pull that booth, the, all the crates out. We would inspect for damages ahead of time, make sure we didn't need to touch anything up or fix anything. And lo and behold, what do you think we would find in those crates? All the leads from the trade show. It didn't matter if it was a cancer oncology show. It didn't matter if it was SEMA. Didn't matter if, I'm trying to think of some of the industries I worked in, the CES. Didn't matter. These, the leads, they just don't get followed up on. So it's not a collision repair problem. It's just a problem. You know, and I, I don't know that I have the full answer to it other than what we're doing with Reclaimer, with not just the sales, um, uh, tracking tool, but we have this really cool thing that's going to be completely unique to the collision industry where, um, it's going to help you sell an estimate, right? So when you, when you do get that customer and you call that customer and they come in and you go through the whole ring roll and you finally get to the point where you're handing them off an estimate. What does an estimate look like to a customer? It's just a bunch of lines and a big scary price tag, you know, $12,000, $5,800. And it's just like, I don't know, it's just a bumper, like I just got tapped by my neighbor, like what? I don't, you know, I don't know. And then you got the insurance company in your ear saying, yeah, it's expensive, don't go there, go to Caliber, it'll be half the price, right? And so So that you— everything's working against you. Even getting them in the door and all that stuff, handing them that estimate is not enough. It's the close ratio doesn't end at getting them to the estimate point. It gets— it ends when they have dropped that car off and that, that has gone through that, that first real teardown estimate, and they, and they're committed now. That car is in the, in the work process. It's not going to get steered out. So that's, that's when sales's job ends. So this tool that we built with Reclaimer, it takes that estimate and makes it a visual explainer. It's like a, what, a 5-6 pager? Takes every line item and it makes like a graphical image with an explanation. But the beauty of that tool is we did that, we're doing that for your estimators. Like, nobody has to create that. It does it automatically. It pulls the estimate in automatically, creates the sales explainer automatically. Um, it's just a function of the product, and shops, you know, can try it free when we, when we get it launched here in a few weeks. But, um, so that, that's the other thing I want to talk about. Close ratio, beyond tracking it, is to know when, when does the sale end and then customer service start. The customer service starts when those parts are ordered and that car is moving into production. It's, it's bodywork has begun. That's when, that's when the handoff— same guy, same person, you know, doing it, right? Same CSR updating the customer on status that was selling it. But, um, when you're hiring for front office people, you need to think and interview for sales type roles. You need to find— and I also have this tool, this free tool also that we built, is a human resource tool that it will help you build out questions to ask on an interview. So if you are looking to hire a front office person, CSR, estimator, or whatever, you want to make sure they got good sales chops. That tool will get for free, help you match the questions to ask to probe for that, and then we'll grade that custom— that prospect's job, job candidate's answers, you know, on that. And it's a lot of psychological stuff built into it. So, um, that's AI-built too, you know, AI-driven too. So it'll build those questions based on your shop, your culture, your specific job needs. But if you put in there that this person needs to sell, sell, sell, it'll help you create interview questions to ask your candidates. So that's another free tool that we built to help shops with this problem also.

So Tom, I'm not sure we solved the problem today, but we at least came up with the 3 easy steps to help the owner solve the problem for themselves. But I think that's all the time we have for today. I'm sure I'll be back in the future, but next week you'll get Tom again with— or next time you'll get Tom again with some other shop owners.

Yep.

And that's it for today. Thanks for joining us.

Yep, thanks guys.