Auto Service World
Feature   November 8, 2011   by CARS Magazine

Adapting to the economy

Chris Kennedy, owner of the Mister Transmission shop in Moncton, N.B., knows what a tough economy does to maintenance customers. It turns the three-times-a-year people into two-timers. It turns the two-timers into one-timers. And you can say goodbye to the one-timers. Theyve moved into the ranks of the breakdown customers.


 Chris Kennedy, owner of the Mister Transmission shop in Moncton, N.B., knows what a tough economy does to maintenance customers.

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It turns the three-times-a-year people into two-timers. It turns the two-timers into one-timers. And you can say goodbye to the one-timers. They’ve moved into the ranks of the breakdown customers.

And in the transmission business, which is driven by typically larger-ticket breakdown jobs, it can have a devastating impact.

“There’s a lot less money around, these days,” he says. “I see it all the time. People want to get their cars fixed properly, they need to get them fixed properly, but they can’t afford it”

The question he’s faced in the last couple of years, is what do you do if the customer can’t spring for a new or rebuilt transmission? Do you turn them away because those are their best options and you don’t want to give them anything less? Or do you adapt to the times?

Chris Kennedy chose to adapt.

“In this economy, we’re putting in more used units,” he says. “We’re giving the customers more options when they come in.”

In other words, he’s off the old script of selling only premium repairs.

“A new transmission is an expensive option. Consumers don’t want to get headlocked,” he explains. “It’s about building trust. I want people to know that at Mr. Transmission it’s not ‘my way or the highway.’ They’re having trouble scraping together $1,200 to put a used unit in their car. A $2,000 rebuild is out of their reach. So we’ll find a solution that meets their budget.”

Kennedy learned that lesson the hard way, after watching customers leave his shop in dismay because of the cost of a premium job. They’d settle for a cheaper solution down the street.

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“I had to ask myself what’s better? Offering my customer a used unit and hitting 100% efficiency in the bay? Or saying, ‘If you don’t want a new transmission, go away’? Now the shop is down to 60% efficiency or 40% efficiency.”

At a recent conference of the Automatic Transmission Rebuilders Association, he listened to a New York shop owner who had faced this exact problem.

“He had eight builders. He saw, year after year after year, his income dropping. He was rebuilding fewer units. Where was the work going? What he found out was his approach was too rigid,” says Kennedy. “That’s the guy I listened to. He was down to $725,000 in sales for the year and put it back to $1.6 million by firing four of his builders and hiring four more re-and-re guys. He started offering his customers options. That’s what turned things around for him.”

Kennedy says that approach is turning things around for him too.

“If my customer can’t afford to fix his car the proper way, the Mr. Transmission way, one-year, unlimited kilometers, if that’s just out of reach, then we switch gears, and look for something that’s within their budget,” he says. “It’s not the best solution, but in the economic situation that we’re in, it works.”

He believes one of the other transmission shops in town paid the price for being rigid.

“They took the hard-sale approach, and now they’re closed. If you talk to people in town, that’s exactly what did them in. That’s what nailed their coffin closed.”

Kennedy and his father-in-law, Gene Lewis, started the shop from scratch seven years ago. After a difficult start – a couple of locations fell through before the building they finally bought turned out to have contaminated soil – business has finally found firm footing. He’s gaining trust and work from local automotive service providers (ASPs) by making himself available to them as a driveline resource.

“I realize the key to getting work from general service garages is building relationships. We provide shops with free technical advice. We’re there to help them,” he says. “I’m not there to steal their general service work. I don’t want to steal their safety business. I don’t want to steal their brake jobs.”

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What general service work he does is usually because he’s already got the car in the air with the wheels and transmission off and, if he finds safety problems it would be unethical to put the car back together just so another shop can take it apart again.

 It’s been a slow and steady climb, finding regular customers, and building the business.

“We’re not in the red anymore,” he says. “We’re paying the bills, but we’re only one economic turn from being in trouble again. And that has been part of my reasoning. That’s why I take a more relaxed approach to selling.”

He refuses to fall into the trap of being afraid of leaving money on the table – of selling a cheaper job when the customer does have the money for a premium job and with a little work could be convinced to take it.

“Some shops take the rigid approach because they’re too scared to mention any other approach. They’re fearful that their customer might have the money for the full job and they’ll have missed the opportunity to sell it to him,” he explains. “But you can’t make his decision for him. It’s his decision to make and informed customers make good decisions.”

It’s all about communication, he says.

“I stress our five-year, 100-000 km warranty and the quality of our work. I play it as strong as I can,” he says. “I tell them, ‘We want you to rebuild the transmission here. That’s what I’d like at the end of the day. It’s the best profit for me, and it’s the best insurance for you. But I realize that might not meet your budget. So, here’s what I’ll do for you: I’ll find you a solution that meets your budget. There are options out there. There are used units. There are sometimes rebuilt units available from other suppliers. I’ll do whatever I can to get you back on the road.”

Ultimately, he wants his customers to know they didn’t get ripped off, no matter what route they went, and no matter what other shops charge. He wants to earn their trust.

“Other than being honest and transparent,” he says, “I don’t know any way to do that.”

 

 


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