EPISODE #55 • Feb 12th 2020
Using KPIs to Examine
Causes & Consequences
Using KPIs to Examine Causes & Consequences [Ep. 55]
Cause and effect is a basic concept, but is tried and true when it comes to diagnosing pain points and growth areas in your shop. On this week's episode of Digital Shop Talk Radio, host Tom Dorsey has Sergio Garza (Rick & Ray's Auto Plaza, Fort Worth, TX) on to discuss how Sergio sees causes and consequences through the lens of KPIs. Tom and Sergio will also discuss how he and his team use stats to manage outcomes in every aspect of their shop including workload, car count, output and so much more. As Sergio will tell you, running a shop in this fashion reflects the transparency customers receive and appreciate from a Digital Shop like his.Posted by AutoVitals - The Creators of The Digital Shop on Wednesday, February 12, 2020
Read the Transcript of "Using KPI's to Measure Causes & Consequences [Ep. 55]"
Host: Tom Dorsey, AutoVitals
Guests: Sergio Garza and Ray Konderla, Rick and Ray’s Auto Plaza, Fort Worth, TX
[Tom] – Good morning and good afternoon! Welcome to this week’s edition of the Digital Shoptalk Radio. I’m Tom Dorsey, this is episode 55, and I got a good one for ya! I’ve got Sergio Garza and Ray Conderla from Rick & Ray’s in– Where are you guys at? Fort Worth?
[Ray] – Fort Worth Texas.
[Sergio] – Fort Worth Texas, yeah.
[Ray] – Cow Town.
[Tom] – All the way from Cow Town! So what we’re gonna be talking about today is kinda how you troubleshoot, how do you use that business control panel and your metrics to get down into the nuts and bolts and find out what are the root causes of the challenges or the problems that you might be trying to solve. So thank you very much, Sergio! Thanks, Ray, welcome!
[Ray] – Glad to be here, Tom!
[Sergio] – Thanks for havin’ us.
[Ray] – Thanks for the invite.
[Tom] – Yeah man. So you guys are pretty inspirational, you know. Haven’t seen you since conference out there. Two years ago, you guys won Top Shop, right? Shop of the year?
[Ray] – Yeah!
[Tom] – At Digital Shop Conference?
[Ray] – It was very surprising, humbling. Sergio of course gets a big head when we win awards like that.
[Tom] – His head looks bigger!
[Sergio] – I had to get different headphones!
[Tom] – Barely fits on the screen now!
[Ray] – He has to get bigger headphones!
[Sergio] – It’s three feet across at the top.
[Tom] – Yeah, at least! That’s an easy place to set a place down, you know, when you’re busy and need an extra hand. And just going over your– I think you guys are probably close to a 50% ARO increase or something like that since you’ve been with AutoVitals?
[Ray] – Little bit over 50%, yes sir.
[Tom] – Yeah, really phenomenal. And so that’s what we wanna talk about, and help folks that are maybe new to the program, or struggling to get to that level on the program.
[Ray] – Sure.
[Tom] – Because as we start to learn in the digital shop, it all comes down to the metrics.
[Ray] – Yeah.
[Sergio] – You know, there’s no more of that kind of gut feeling, gut reaction, reaction to a fire. Using our metrics, we can eliminate fires, right?
[Ray] – Yeah.
[Tom] – Proactive instead of reactive in the shop. So what do you guys, I mean what’s a regular program? Are you doing regular reviews of KPIs and then you have shop meetings to talk to the crew about them on what you discover? What does that process look like?
[Sergio] – Well, I’ll take this one, Ray. What happened was, Ray came in and said he had purchased AutoVitals, we did not invent anything. All we did was we followed the picture policy you guys published. You know what I’m talkin’ about?
[Tom] – Yeah, oh yeah.
[Sergio] – So we followed that religiously. So over the course of the next year, we created a really good courtesy inspections, uniformed courtesy inspections. So as Ray went ahead and audited myself and my service writers, and he was able to find that we were inconsistent in what we were offering our customers. We had a good picture policy, a good inspection program and procedure, but we had a less than perfect way of monitoring what we were offering our customer. So what he came up with was something very, very, simple, and it was something we called the Checklist. Or the Nowhere to Hide Form. That’s what the ATI calls it. And because of that checklist, there were two or three other consequences that were born of that cause. We had a good picture policy, we were now building tremendously large estimates. And I’ll let Ray take over from here.
[Ray] – We were a repair-only shop. You bring your car in, you bring it in for a water pump, we do the water pump, and we’ll see you next time. There was no follow-up, no checkin’ out the rest of the vehicle. The benefit of the digital inspection report is you get time to– One, you spend time and actually get intimate with the vehicle and see exactly what it’s gonna need now and then the stuff it’s gonna need in the future. Going back to your original question, Tom, the way I have to measure the service writers, what they do is we have a daily tracker and it’s a one line that gives me an RO, gives me mileage, gives me what we sold today, what we estimated today, and then we carry that forward to the next step. Any declined repairs are scheduled for an exit appointment. So that’s how we measured it. Sergio was talking about the Nowhere to Hide form. We thought we were all that about givin’ good service until we started really diggin’ into a customer history, of a client we’d been servicing for three or four years. And then we realized that we weren’t really recommending a lot of the maintenance items because we were a repair only shop. We weren’t really focused on maintenance. So we really took the digital inspection, allowed us to reinvent ourselves and we are a repair and a maintenance shop. And it really allowed us to focus on that. Sergio brings up the idea that once we started getting a lot of pictures then we started to break the digital inspection down into estimates. Our estimates went from maybe $600-$700 to $3,000 estimates. And then we had to be concerned about how we presented it. Everybody in the entire history of the industry has always had a, “let’s do this now “and this other stuff can wait.” And it becomes a later pile. Well, later piles end up in the trash if they’re not processed properly, right. So we kind of took that a step forward. But going back to your original question, the checklist, the digital inspection, the photo policies and procedures that we have. We take 21 pictures, specific items on every digital inspection. And then the service writers have to make sure that the technicians follow the policy. If the pictures aren’t there then it’s up to the service writers to submit that back to the technician with the instructions. “I don’t have pictures on these 6 items. “I can’t call the customer until I have it done completely.” So it was a very team-oriented thing where everybody held each other accountable and we were able to implement it and be very successful.
[Tom] – And that’s critical, right. One thing sets the other thing up. You mentioned the Nowhere to Hide form from ATI. Those images and being able to capture all of that and being able to show that over time and also then set a goal as for an exit schedule. And if you get them committed at the exit schedule, it’s like you said, it is later, but you’ve at least got the commitment, you’ve got the reminders going out there, you can show them the commission and reinforce the need for them to get in and to actually show up for their next appointment. And you see that appointment rate increase, right?
[Ray] – Yes.
[Tom] – See that commitment increase.
[Ray] – Yeah.
– Brother Ray he says substitute, because as Ray describes it, it’s not as fluid as we’re makin’ it sound.
[Tom] – No, it’s real easy!
[Sergio] – So Ray says to us, “we work on the 90% and not the 10%.” Because for everything you want to implement, there’s always gonna be someone who says, “See, that didn’t work!” It takes all the air out of your effort. We had one or two reviews that actually specified that we were checkin’ everything out, that we were givin’ a long list. And it fed our trepidation as service writers for that particular day. But then we got over it, we continued to do what we were supposed to do. Because it takes Eric– Eric is our coach.
[Ray] – Eric Twigs.
[Tom] – Oh, Eric Twigs, you’re lucky!
[Sergio] – Yes, we’re blessed. And he said to me one time, it’s always the one thing you take away, he said, “you have to have intestinal fortitude “to do this, because it is kind of tough, “and we don’t deal on the 10%, we deal on the 90%.” When you have that attitude, you implement these things. It’s not always 100%, but what happens at the end of the month? Your average Average RO just went up 50%. So what we’ve done is we started measuring things. We would go to these conferences. We would go to these classes with ATI. We would meet other owners and we would hear, even in our 20 groups, “My service writers have a 70% closing rate.” Well, that’s terrible! We didn’t know it was terrible until we started measuring! At 70% or 80% closing rate, you know what you’re doin’? You’re only fixing what’s broke!
[Ray] – Yep.
[Sergio] – You know, so why don’t we design a checklist. And then Ray and I ran into, is it a belief system? Is it an education system? Ray and I went round and round about power steering flushes. And it wasn’t until I went to a class on power steering fluid that I was able to understand the importance of that fluid. It was a belief system. Then after that, it’s just kind of automatic. Something that has to be done at certain mileages. So you’ll find that in your shops as you try to implement the picture policy. And then from the picture police, the Nowhere to Hide. The Nowhere to Hide, the daily tracker, which means today’s list, and not tomorrow or later, but February 27th, March 22nd, and April 15th. Those are dates of appointments and items we’re not doin’ today. It’s a pain in the ass.
[Ray] – Yeah.
[Tom] – But once you do it 10 times, it becomes second nature. And when you don’t do it, you feel kind of like you didn’t give the service your customer hired you for. Go ahead, Ray.
[Sergio] – And it pays wrong.
[Ray] – What I was gonna say is Sergio hit the nail on the head. We went round and round. The problem, Sergio and I have been working together for a long time. So my voice gets old. And I’m not a good communicator. So the good thing about education, going to some of these basic classes, is you get a different voice with a different presentation. Most of the time they’re good communicators, because that’s what they do for a living. So that helped tremendously with Sergio, and my other service writers. Going back to the belief system. If my technicians don’t believe it needs to be done it’s not gonna get recommended. If my service writers don’t believe it’s a need it’s not gonna be recommended. We had an issue with struts. When did we do struts? Do we do them 10 years? 100,000 miles? What’s the standard in the shop? And then what’s the benefit to the customer? Some of us believe that our struts were a convenience. They were a comfort. Some of us believed it was a safety issue. So we had to really hone down, as a shop, and decide, what is the standard we are gonna suggest struts at? And why are we suggesting them? Fortunately we had a brake class that came in and he spent 20 minutes talkin’ about struts. Talkin’ about the safety triangle. Suspension, tires, and brakes. All three of those are critical for safety. And so until we had that class, we just didn’t agree upon what was needed at what time. And so it took a while to buy in. Once we had buy in it was easy.
[Sergio] – And that’s something in your shop, there’s always gonna be that one or two guys. And they could be shop leaders, and they could be the guy who just kinda changes oil, but it doesn’t take a lot to poison a shop. And sometimes we, Ray and I, we love our employees, we love our brothers out here, and sometimes we don’t make good decisions. And it takes a while for us to make a good decision, and once it’s made, you’re always like, “Man, we should have done that eons ago.” It’s not a simple process. But if you measure the right thing, we decided on measuring not just average RO, not just car count, we measure something called Declined Repairs and Lost Sales. And we’re able to calculate that and we’re able to assign how much did the service writer– If you have a service writer who’s recommending, on average, $3,200, and you have another service writer who’s recommending $1,200, something’s wrong. You need to have a conversation.
[Ray] – Yeah and that’s actually a great KPI to use to measure success. To say, “what is my decline rate?” Because if you have a higher decline rate– Something to go back that you said in that 20 group meeting, I can go in and say, “I got a 78% close rate, “I got an 80% close rate at my front counter.” But if they’re only recommending two jobs per inspection, your 78% close rate ain’t payin’ the bills!
[Sergio] – Right.
[Tom] – And so there’s the flip side of that, it’s the other part, it’s the how many recommendations are you actually presenting to the customer. That’s where that decline rate comes in. You got a high decline rate, that’s not necessarily a bad thing. It means that you’re presenting the full story to somebody and then you can go from there. So tell me a little bit about how you kind of drilled down. On your daily tracker, you see that ARO might be dropping, maybe decline rate is increasing, so, okay, maybe– Let me ask you this, let me not even– You tell me, on your daily tracker, decline rate increasing, ARO decreasing, what do you look at next?
[Ray] – So, our average RO has actually increased consistently the last four and a half, five years.
[Tom] – Oh yeah I know. But I’m just sayin’, hypothetically right, if we’re troubleshooting and we’re seeing a dip. Let’s just say it’s for one guy, right. The other guy’s kickin’ butt and he’s growin’ the ARO, but we got this one guy.
[Ray] – Okay, we do have a guy. One guy that does provide a lot of estimates. And so the problem I had with the one guy is we weren’t holding him accountable. He’s got seven different hats he wears in the shop. And when he handles an RO, he wasn’t handling it properly. So what we did, Sergio and I both sat down with him and said, “this is the expectation, “I wanna see a checklist on every work order that you handle “and if you’re not gonna handle it right, “give it to somebody that’s going to. “Because we’re losing money “if you’re not handling it right.” So we started holding him accountable. He started doin’ the checklist, he started writin’ estimates, he started settin’ appointments, and it took a while. He’s one of the longest employees I’ve had, but because he wasn’t dedicated as a service writer, he wasn’t takin’ that role seriously. And until we started holding him accountable, he wasn’t progressing. Since we started holding him accountable, he’s starting to write big estimates, he’s starting to make good sales. It wasn’t that he couldn’t do it. It was we weren’t holding him accountable. So if you don’t have a way to measure and hold somebody accountable it’s never gonna get better, right?
[Tom] – No.
[Ray] – Or if you don’t have the fortitude to hold somebody accountable it’s not gonna get better. So there is accountability’s big and the ability to measure is big and if you don’t have those two factors in place then it’s always just gonna be BS. “Well, I couldn’t do this because I was busy “or this happened, or that happened.”
[Tom] – You’re in a little rowboat goin’ to a big waterfall.
[Ray] – Yeah, certainly.
[Sergio] – What we’re doin’ well, Tom, when the shop is doing well you feel good. Sometimes you get slow and you start second-guessing everything that we talked about, and you start lookin’ at each other, and you say, “you did this!”
[Tom] – Yeah.
[Sergio] – It’s a team effort. One thing that we were workin’ on– I lost my train of thought there ’cause I just yelled. Go ahead, Ray, let me catch it again, it’s gonna come back, someone just walked by and distracted me.
[Ray] – The idea that it is a team effort. We started doin’ videos of our sales presentation because until you start seeing yourself and being able to critique yourself or somebody else being able to critique you, we as a team, it wasn’t a beat up on Sergio moment, or a beat up on Gary moment, it was, “You did this really well.” And I’ve got a grading scale that I do. There’s seven different categories I grade from 1 to 10. On the control of the conversation, did we present all the needs, did we present the Why to the customer? What’s the benefit of the customer doing this? Seven different categories, and we as a team would sit down and critique each other. I’d pick a good one and we’d go through that video, maybe take 15 minutes to go through the video, the sales presentation, but we can see who’s doing something well and the language they used, and it’s like, “Man, that’s really good.” Or, “man, I really screwed up on this one.” And so if it’s not a threatening environment, the team critique helps because you can help each other have a conversation. This is what I normally say in this situation, this is the way I present. It helps from a team perspective.
[Sergio] – Yeah and half the time, I don’t need Raymond to tell me– I’m sittin’ with Raymond, and Raymond’s of course doing me the courtesy of going through my sales pitches. We record our sales pitches. So he’s doing me the courtesy of critiquing me. That is a great blessing, so I can’t be sensitive to his remarks and then we don’t agree on everything, I promise you, we don’t agree on everything. But you have to be open for criticism. But the funny thing that happens is, when you’re watching your own video, you see what Raymond’s seen. So you saw, “I sound like crap on that one, “I have to slow down!” So you end up improving only because you are watching the video yourself and you’re able to critique yourself. And half the time, Ray’s suggestions, I’m on it. And believe it or not, over the course of six months, you become a different salesman. Your pitch changes, your voice changes, you slow down, enunciate. There’s a lot of little details that, over the course of time, adds up to– And it’s not really average RO that Ray and I look at. Yeah, that’s a nice consequence of hours per ticket. Because hours per ticket is what we look at. And so for the longest time, Ray is another, he’s another– He’s one of my best salesman, he’s my second best salesman. He has the second best average RO, but he’s a crappy estimate builder. But he owns the shop and sometimes I go on vacation, he grabs three or four tickets so I’m able to measure that. One thing I was gonna say. Ray said, “hold your people accountable, and measure.” You have to be sure that when you add to the information on your point of sale, you make sure you only give that service writer his or her tickets. Because sometimes, like in the state of Texas, we have state inspections. You can add a state inspection to a ticket and it just waters down my efforts. It obscures what an average RO is. You can’t really work on it!
[Ray] – I’ll kind of take that through detail. State inspections, we don’t do a digital inspection on. Bring it in, we make sure it meets all safety requirements, and then they’re outta here. We do a lot of shops down the street that don’t do inspections. We have customers that get their repairs done somewhere else then they bring it here for a state inspection. The problem that Sergio’s talkin’ about is all the state inspections basically went into Sergio’s portal and he was the credited service writer on that. So when we started measuring a lot of things we’re measuring now, Sergio has 12 inspections, and every one of them doesn’t have an opportunity for a sale because we don’t do a digital inspection on it. So Sergio may handle 15, 20 mechanical repair ROs. And then on top of that there’s 20 state inspections that are put in there, so his average RO may be $600. But because half of them he can’t do a sale on, they just watered down his numbers. So we had to start making sure that we were real clear on what service writer was actually assigned and make sure that there were actual numbers. The problem with data, if you put the wrong data in, you’re gonna get the wrong data out.
[Sergio] – See, and yeah–
[Tom] – It’s really critical when you start settin’ things up that all these things that are specific to your shop that you take in consideration and make adjustments for.
[Sergio] – Yeah, Ray’s the one that–
[Tom] – Boys, that is awesome.
[Sergio] – He came up with a service writer, and his name is State Inspection.
[Tom] – Exactly!
[Sergio] – Because our writer could not help us with that. That’s the other problem that we have, is Ray and I know our writer. And there’s gonna be questions from the people in the audience who might not have our writer. It complicates everything, because we don’t know Mitchell, we know our writer! And we know our writer isn’t perfect, but there’s a lot of things about our writer that are incredible. And we’re able to– You know, the lost sales, that helped us tremendously! We monitor it. We have a KPI for it. And we’re able to–
[Tom] – I wanna kind of revisit that because I think that’s critical. Most service writers, they judge themselves on success or failure based on average RO. If you have a good average RO, we celebrate as a shop, he had a good average RO. And the closing rate. So if I’m at 80% because I sold almost everything I offered, that’s the way we typically measure stuff. The problem with that is, if I start building a big estimate, and I start getting a lot of declines, then as a service writer if my worth is based on my closing rate and my closing rate goes to 25% then what’s that say about me as a service writer? And now do I all of a sudden suck?
[Sergio] – Yeah.
[Ray] – I look at it differently. If I build a $3,000 estimate, I expect all $3,000 of that estimate to be done. And it may be broken down in four visits, right? So I’m still getting close to 80% close rate but it may be stretched over three or four visits. But if I build a now and later pile, and I leave it as a later pile, and it gets pushed off into the trash I have no marketing follow up because it’s a later pile. I have no way to track the return visit if they came in to fulfill any of those declined repairs. So what we did is instead of doing an all or nothing proposition, you’ve got $3,000, I can get it done by Thursday if you wanna go ahead and do it. There are a lot of customers that will walk out if that’s the options they have. “Do it all, or do nothing!” Right?
[Sergio] – Sure.
[Ray] – That’s not a good presentation. So before Sergio or any of the service writers even make a phone call, they have a plan B. Of course we want them to do $3,000 today, right? But the likelihood of that happening may be low. So I wanna break this estimate down in the highest priority to the lowest priority. And I’m gonna spread it out over maybe six months, if I have six months. But the thing I don’t wanna do, if my tires are 4/32nds, and my brakes are at 4 millimeter, and they came in for a water pump leaking, I don’t want to ignore the brakes and the tires, right, because they will need to be done. They don’t need to be done now. They told me they only have $1,000. Let’s get the water pump done, thermostat, and the cooling system flush. The brakes and the tires don’t need to be done today, but we cannot wait for two months. So I’m gonna schedule that on an appointment for the end of March. That’ll give you plenty of time to pay the water pump off and you’ll get an email reminder that that appointment’s due and these are the items that need to be done.
[Sergio] – With pictures!
[Ray] – With pictures.
[Tom] – With pictures.
[Ray] – And so what it allows them to do is I can still get it done in one day service because I schedule it on a day I know I’m slow, right, I only have three appointments that day.
[Sergio] – That’s big.
[Ray] – If I wait for them to bring it in when it’s convenient to them I might have seven appointments! I can’t get it done today! Now it’s inconvenient for them because they need it back this evening. So I wanna control when we’re gonna see that vehicle again based on the highest priority and how quickly they need to see it back. And then second, I wanna schedule it on a day I know I can get it done in one day.
[Tom] – Exactly.
[Ray] – So the why for the customer is big.
[Tom] – Exactly.
[Ray] – They’re not gonna fulfill appointments unless you give them the why, right?
[Tom] – Yep.
[Ray] – So Tom, I don’t know if you know our story. A year and a half ago we really started working on appointment fulfillment. Our appointment fulfillment, even when I include the 5k services that we regularly do, was 12%, okay. That’s awful. I mean you can close your eyes and throw a dart on a–
[Tom] – Fall down into 12%.
[Ray] – It’s way bad, right? The problem was we weren’t explaining the why to the customer, right. So once we start explaining the why– And it was a belief on our service writers. Service writers, if you ask 100 service writers, 80 of them are gonna say, “Customers don’t like appointments,” right? That’s bullshit! We know that’s not true! The reason customers don’t like them is because we don’t explain the why to them, the benefit to them. One, they’re not gonna forget about it, right, because they’re getting an automatic email. Two, if that date doesn’t work for them, a week before their appointment, they get it, and they can either confirm or reschedule. If they click reschedule, then I call them back and reschedule it for them, right. Three, I can get it in and out in one day. I’ve got transportation waiting for them. A loaner car, rental car, whatever. I’ve got financing available.
[Sergio] – That’s a big one.
[Ray] – They’ve got financing available that’s already set up. So they drop their keys off and they pick it up that evening and it inconveniences their life at a very minimum. As minimal as possible, we inconvenience them. So the why to the customer is huge.
[Tom] – Much higher likelihood that they show up, right?
[Ray] – Yes!
[Tom] – So what KPIs are you guys lookin’ at to know that that process is being successful?
[Ray] – So I look at my appointment fulfillment now compared to what it used to be. My appointment fulfillment was at 12%. It was about an average of 320 average RO. Now my appointment fulfillment is 62% and average RO is over 800.
[Tom] – Wow!
[Ray] – So it’s a beautiful thing.
[Tom] – Clear the moon, Alice!
[Ray] – Right! It was ridiculous! And what was really cool is my service writers all of a sudden are like, “Man, my customers like appointments!”
[Sergio] – This stuff works!
[Ray] – Yeah! The other benefit to the service writer. If I do all this work, right, I build an estimate, I source parts, all that stuff, and I break it down. If I don’t set it for an appointment, the next time they come in, I’m gonna have to do all that work over again. Or I might have to go back in and do un-declines and transfer, whatever your point of sale system does. If you do it on a procedure of setting all declined repairs for appointment, all I gotta do is I know the customer’s coming in Tuesday, so Monday night I click the Order Parts. All the parts show up magically the next day! Customer comes in, they give you keys, and $1,000, and say, “I’ll pick my car up at 5,” right? My technicians are like, “Man, that car came back,” right? One thing that really irritates a technician. They give you a laundry list of things that need to be done, and you come back and say, “All they wanna do is a water pump.” What does that do to the technician’s morale?
[Tom] – Yeah.
[Ray] – Man, it crushes it, right? If you come back and say, “Today, they’re doin’ the water pump. “April 2nd, they’re comin’ in “to do the brakes and the tires. “May 22nd, they’re comin’ in to do the rack and pinion.” All right. Then it gives them hope, right? And it’s really cool, ’cause the tech’s like, “Oh man, I checked that one out, “he came back for all this stuff!” It’s really reassuring for the technician, instead of being deflating, right?
[Tom] – Yes.
[Ray] – So another thing to consider when you’re dealing with tech’s egos.
[Tom] – Yeah that’s a great point. Because that’s it, you put in all that work, you wanna get paid for it, right?
[Ray] – Mm hmm.
[Tom] – You wanna feel like the work that you did was valuable. And a lot of times it’s just, tie the knot, do the next step, hit the send button. Set the expectation, go for the exit schedule.
[Ray] – Right.
[Tom] – Because so many people just refuse– Because it’s assume the sale! Once you got the pictures and the technician notes and your story straight in your digital inspection program, you assume the sale! “What do you mean, you’re not comin’ back “to get this stuff done?!”
[Ray] – Right.
[Tom] – “You didn’t look at those pictures?”
[Sergio] – There are consequences to the successful exit scheduled appointment. And Ray and I deal with that. For example, Ray, he does a $1,200 estimate, and it comes in and there is no declined repair on that exit scheduled appointment because that person has a third appointment a month later. So believe it or not, that actually affects my service writer’s average estimate declined repairs. But we’re happy with that!
[Tom] – Oh, yeah.
[Sergio] – Believe it or not, there’s consequences even to good causes that are negative but we can live with them. And that’s why–
[Ray] – It’s not really negative, it’s the way you measure, right?
[Sergio] – Yeah.
[Ray] – So on the daily tracker, they, instead of writing over on the side the next three appointments, all they do is they write in exit appointment fulfillment. So that way I know when I’m lookin’ at the daily tracker, I can say, “Okay, that came in for $1,200, “the estimate was already built. “We sold $1,200.” Normally I would say, “Why didn’t we set any exit appointments?”
[Sergio] – That’s right.
[Ray] – But because they noted, “this customer came in “to fulfill an appointment that we made back in December,” right? So it’s a success, it’s just on how you measure.
[Sergio] – Yeah but here’s the deal. At the end of the year, for example, we found over the course– Because I understand Excel, so I’m able to sort and copy and monitor, and I come with these reports all the time to Raymond, you know, “Raymond, check this out.” This is when I found out that we were losin’ money by having certain people not do the process, right? And that’s one of the points that we have. When we have a report for a month, or a report for a week, or a report for a year. It doesn’t tell you who’s who. It just tells you a shop average RO, a shop parts margin, and a shop car count. That’s not good enough! Well, Auto Writer doesn’t really help us with some of that. AutoVitals does, but Auto Writer doesn’t. So we kind of pinned it down to service writer. This is why it’s important to assign only what that, the service writer– So at the end of the week, for example, this is when we found that last year my average RO was 944. And my sales closing rate last year was 28%. That tells you how many estimates I built above that so my average estimate was in the ballpark of $3,500. So once you get that status, or that statistic, you’re able to see what the other service writers are doing, and they start shootin’ for those numbers. And at the end of the month and the end of the year, your average RO went up. As a consequence to making sure you’re measuring correctly, you are holding people accountable, you have a process in place, and then Ray comes up with these other ideas because Ray has a different perspective because we’re in the trenches. We don’t see what Ray sees. He has kind of a drone view and he’s able to see things that we don’t. So he was able to come up with the checklist. He’s able to see, listen, Ray came up with something called the incoming interview. Ray, go ahead.
[Ray] – So one of the problems we had when you get a new customer, you don’t know long they’ve had the vehicle, you don’t know how long they plan on keeping the vehicle, and you don’t know if they even understand the recommendations the shop makes to them on any maintenance items that may need to be done. So all of these things were questions. Plus, customers sometimes they’ve been going through an independent shop that believes in repair only. They were goin’ to Rick & Ray’s Version One, right? Where we really sucked at maintenance, or sucked at any type of suggestions. So unless I have a conversation with them before they leave, I’m gonna hit them with a big estimate because it has 120,000 miles on it, right? Shocks are original, I don’t know if the spark plugs have been done. They’re due now.
[Tom] – Yeah, everything’s due!
[Ray] – I don’t know that the flush has been done, it’s due now. All these things, they need new tires, they need new brakes, you know. So what we were doing in the past is we were scaring customers away because we weren’t setting the table on the drop.
[Sergio] – There you go.
[Ray] – So what we did now is every new customer comes in. It takes probably two minutes to fill out two forms. As a matter of fact it’s on my website.
[Sergio] – Sure is.
[Ray] – Under “New To Us”, you can do it digitally, right. What it allows me to do is it allows me to have a conversation. There’s a checklist. And it’s a health checklist. All my flushes, spark plugs, brakes, battery, fluids, filters, struts and shocks, either they have been done, they haven’t been done, or unsure, right? So I don’t care if anybody just goes down and clicks a bunch of unsures.
[Tom] – Just like the form the doctor gives ya!
[Sergio] – Yeah!
[Ray] – Exactly. And so because they fill this out, before they even leave the shop, I’m able to have a conversation. If you’ve done nothing on this, but on the form they circle they want to keep the car for 15 years, and they think they can keep it for 200,000 miles, and it’s 120 and they’ve done no maintenance, well I get to have a conversation! “Either you need to start lookin’ for another car, “or we need to start doing some maintenance, right?”
[Tom] – Yeah, and that’s where that canned job scheduler comes in, right? Because you introduce the concept from that canned job scheduler that says, “In my shop, we flush this every 50,000 miles, “we change these every 75,000 miles. “This is how it rolls. “This is why. “Because you don’t wanna replace your car “every 4 or 5 years. “You wanna get some–
[Sergio] – “And here’s the pictures!”
[Sergio] – We get pictures with that, too, so that really– if you can’t do it that way, like I said, the checklist created the cost, and then Ray came up with the consequence of an interview. And let me tell you something, it’s not easy. Yesterday we had a customer who didn’t leave very happy because we bombarded them with “All these things that I don’t need,” because I talked to him, established a relationship. He’s a dentist, I’m really good at that.
[Tom] – He does the same thing to his patients! Right?!
[Sergio] – I didn’t do the interview! So you gotta hold people accountable. Hey, listen, we work on 90%, remember that. There’s gonna be 10% that don’t fall in that category, but we’re okay with that. So we have the interview, and then we monitor the estimates. We exit schedule the appointments. And so those are the KPIs that we monitor, that Ray monitors. And believe it or not, we’ll run into something else. Ray also came up with a booklet to help us get commercial accounts. And we were doing so well with everything else that we kind of put it on the back burner. But there’s always work to be done. If you’re a shop owner, and you’re in the trenches with your service writers, you don’t have that perspective, you don’t have that time to actually work on your business. So we’re blessed that I have Ray, he’s upstairs. He’s in his office right now. And Ray has me! So it seems to work out really, really well. I just wanted to kind of add that to the conversation.
[Tom] – Teamwork makes the dream work! And that’s great, you guys have that culture, you’ve got that transparency, and the digital shop just makes it more efficient, more effective.
[Ray] – Oh, yeah.
[Tom] – Because now you get to share through that digital medium that dynamic that you’ve created between yourselves and your team to your customer.
[Ray] – Oh, yeah.
[Tom] – You could never do that in the past, right?
[Ray] – No.
[Tom] – And that opens up so much more credibility and loyalty from a motorist perspective. And like I said you guys have it down, right? You use that tracker, you follow your process, your intake process, your picture policies, your exit scheduling process, and you assume that sale. And just like you said, when you bring them in on that new customer intake, and you say, “Here’s how we do stuff at Rick & Ray’s. “And I’ll tell you what, you can make a decision right now “to keep goin’ down the road.”
[Ray] – Amen!
[Tom] – “To some shade tree guy, you knock yourself out! “But if you’re gonna be a customer here, this is what to expect.” And you know what? That is how you fire the customers that you don’t really want to do business with and you focus on the customers that you do because they’re coming in three, three and a half times a year. And they’re spendin’ that money. They’re finishing out those $3,000 ROs that you’ve presented to them. And like you said, over time you collect the whole kit and caboodle. You don’t have to put the pressure on them to do it all right now today. Why? Because they’re gonna come back to your shop. You don’t have the fear of losing them to somebody else because you’ve got that relationship. And they’re goin’ to you for more than just price. They’re going to you for value and customer service.
[Ray] – Yep, that’s it. And Tom, you brought up a good point. You’re not afraid to recommend stuff because some service writers are afraid to present a big estimate because they might walk out and not do the water pump, right?
[Tom] – Exactly.
[Ray] – You go to a doctor, and you’ve got a toe infected. They start with blood, they check your heart rate and take your blood pressure, you’re not there for any of that! You’re there to fix your frickin’ toe, right?!
[Tom] – Right.
[Ray] – The doctor doesn’t ask you, “should we check this “or shouldn’t we?” He has to look at you as a whole holistic approach, right? So if we take that same thing, I can tell you this, if the doctor didn’t check your heart, your blood pressure, and didn’t check your heart, and something happened then that’s malpractice, right? So Serge and I, the term that we use is, “We do not practice malpractice.” I don’t care if a customer wants us to look at safety items. We’re gonna look at safety items, right?
[Tom] – Yes.
[Ray] – Because it’s my responsibility as a professional to make sure they’re vehicle’s taken care of even if they didn’t ask me to check it. Now some customers might say, “I don’t want you to do anything.” You know what? I’d rather they say that now instead of me spending an hour and then them not appreciating what we did for them. So like you said Tom, you fire your customers if they don’t want to do it your way. Because you know your way is the best way for them. They may not appreciate a good service. They’ve been getting crappy service forever!
[Sergio] – Well who’s the professional?
[Ray] – They don’t even recognize good service. Who’s the professional, exactly!
[Sergio] – Yeah, who’s the professional? I’m not gonna call and tell my plumber how to do his job. I’m not gonna tell my electrician how to do his job. So we’ve had a couple of those, like, “If you don’t want us to do this, “I apologize for taking off your wheels, “but if you come back next month, “I’m taking off your wheels again.”
[Tom] – Exactly!
[Sergio] – That’s just the way we do things.
[Ray] – If you don’t want us to do it, don’t come back! Because we’re gonna freakin’ do it! We run our business the way we run our business. And if the customer doesn’t appreciate that level of service like you said they can go to the shade tree guy down the street. They can get crappy service down there. But I’m not gonna get sucked in to doing crappy service.
[Sergio] – Sayonara!
[Ray] – We do exceptional service.
[Tom] – Let me give you a coupon. Let me give you a coupon for the guy down the road!
[Ray] – Refer your friends!
[Tom] – Well man, we gotta jump, we’re out of time. We’re a little over but that’s okay because that was a great conversation, man. You know what? You guys have my wheels spinnin’, I gotta tell you, I’m thinking about how we can further improve, and I know who’s gonna love hearin’ this, buddy, how we can further improve some of the metrics that we’re trackin’ through the BCP to serve that better and make it a little bit easier on how you guys are trackin’ that. Brilliant discussion guys, I really appreciate your time! Lookin’ forward to havin’ you both back on, boy, ’cause I’ll tell you what, time flies when you have two passionate operators like you two on this show, and I guarantee you, man, you helped a lot of folks reconsider how they’re approaching things, thinkin’ about taking the next step on gettin’ that drop off script down, gettin’ their processes put in place, gettin’ that picture policy implemented, goin’ for that exit schedule and sellin’ that whole ticket. And what an outstanding, like you said, what an outstanding motivation it is for your technicians to see that their work is actually being appreciated and carried forward.
[Ray] – Yes.
[Tom] – So reach out, we really wanna get you guys back on. Maybe cut a few months out and give you some time to get some of that stuff, some more metrics in place, and some more stuff for us to talk about. Thank you very much. Again, tune in next Wednesday, same time, same place, 10:00 am Pacific, 1:00 pm Eastern Standard Time. You’ll find us live streaming on Facebook. Also hit that Subscribe button on the podcast. You can go to AutoVitals.com/podcast and hit the subscribe. That’ll give you a notification alert when the show’s about to start so you don’t miss anything because, as we saw today from these two, you don’t wanna miss a single episode, because you take home nuggets of gold every single time. Sergio, Ray, appreciate you guys, thank you very much!
[Ray] – Had a good time.
[Sergio] – Bless you guys.
[Sergio] – Hello, Uwe!
[Ray] – Thanks for the opportunity!
[Sergio] – Yep! Until then, get out there and make more money in 2020!
[Ray] – Yes sir.
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- PODCAST: Raising the Stakes By Refining the Process [Ep. 53, Jan. 29, 2020] - February 14, 2020