Do you need a banner program for your business? For most independents, the answer to that question depends on several factors ranging from the mix of benefits offered by the program to the less tangible sense of independence service entrepreneurs enjoy in running a successful enterprise. Successful independents may not need to embrace a banner family, but there are reasons to give it serious consideration.
Profit is the reason for running a business, and financial management for shop owners is a focus of all banner programs. Kevin Patterson, marketing manager for AutoSense (Auto Logic Service Expert) describes a common situation: ‘I think they need to learn business skills. They need to understand communications skills with their customer base, retention of customers, and we also teach financial management skills.” Patterson notes that owner/managers are still spending a disproportionate amount of time in the bays: “The owner should not be the one out there turning the wrench; he should be managing the business. You’re a manager; you should be earning a salary of 60 to 75 thousand dollars a year and working on your clients. We try to get them to build a relationship with their banks and accountants. And don’t be afraid to choose your customer.”
Training is the key
One reason to look to banner programs for training support is the threat from auto OEM’s dealer network. Bob Bobert, general manager for BASE Automotive (Auto Value Professional Repair Network/Certified Service Centre) declares: “Without it we’re in big trouble because the car dealerships are going after our business; talk to the car dealerships and you find that their technicians are trained on a regular basis. Our competition right now is the dealership. They’re doing everything that they can to get the customer back in for the repair, and if we don’t do something about it, they will. The sooner we get this off the ground, the better off we’re going to be. There’s going to be some fallout along the way. Some of the shops that don’t want to change and don’t want to take the training, they may survive short term, but over the next five years you’ll see a lot of these guys going out of business. It won’t be out of choice, but because of what’s going on in the industry.”
Are the banners concerned? No one wins when a repair business struggles, and some industry executive contacted by SSGM expressed frustration at the reluctance of many ships to embrace business management training. One executive, (who requested anonymity) states it clearly:
“We need to get these guys back into courses. Most of these guys are good technicians, but are lousy businessmen. You almost have to make it (training) mandatory to force the guys to go through the courses. Without it their businesses are short lived. They need this more than anyone else in the industry right now whether they realize it or not. Banner programs almost have to shove it down their throats. I’d like to say “to become part of our banner program, you must attend the course”. The cost would have to be determined in terms of who pays, but I would look to subsidize the cost through the warehouse and jobber.”
Credit opinions vary
What other advantages spring from membership? Preferred financing, warranty programs, discounts and private credit cards are all available tools, but the correct mix is important to a successful installer. Karen Barkin, marketing coordinator for Bestbuy Distributors Ltd. (BEST AUTO) says: “We don’t place too much emphasis on any specific component in our mix of benefits. It’s a total package that our affiliates are attracted to.” Which benefits a member chooses is often determined by region, relates Barkin: “For example, Ontario (members) may not opt for preferred bank discount rates, because they belong to other associations where they can get comparable rates.
One feature which generates widely different opinions are credit card programs. Kevin Patterson finds private label cards to be an effective tool: “It’s all POS (point of sale). If I do banner s that say “don’t pay for six months on OAC” come and ask me how. A 1500 dollar transmission is not a pretty sight, but if I can give you six months no interest and no payments, it works. If that card is in his pocket, he’ll use it. It’s about cleaning up the receivables.” Not everyone agrees, including Glen Crewe, marketing manager for Bumper to Bumper’s One Stop Service and Automotive Service Centre: “We had it once, but we opted out of it. It’s a last resort. We use (a credit company) which does automotive repair like a credit card. If a guy doesn’t have a credit card, they’ll take him on.” Crewe notes that his member installers include a significant number of rural and small town operations where repair terms would often be worked out privately between the shop and customer. Luc Charlebois, manager, installer program, for Uni-Select’s The Specialist, also questions the effectiveness of private credit cards: “I think the transaction costs are too high for the benefit it brings.” Another factor which would seem to conflict with private card programs is the popularity of discounts on Visa, Mastercard and American Express usage which most programs not only offer, but name as a major incentive for independents to sign on. Who’s right? The truth is probably somewhere in the middle, with maximum consumer acceptance tied to time payment and customer loyalty programs.
Extended vehicle warranties are a method recently launched by UAP’s Autopro Mechanical, and although warranty programs are a given in modern banner programs, the extended vehicle warranty approach may generate traffic over and above the occasional warranty claim. Denis Bellemore, national director of banners and major accounts for UAP’s Autopro Mechanical states: “They compete with the car dealerships It ‘s a good tool for shops to put their customers on a maintenance program. If a guy buys an extended warranty, the rules state that they’ve got to properly maintain it. The main focus is to bring more traffic into the bays.” The program is designed to give shops a method to break a customer’s reliance on dealer maintenance when an extended warranty has been purchased. “People are not inspecting their vehicles; extended warranties are made to (force) proper inspection of the vehicle. And when you properly inspect a vehicle, you’re going to get work out of it. Customers are looking for choice today. There are customers in many different categories. To honor these warranties, they’ve got to keep records. Consumers are not very good at keeping records, so if their garage does it for them, they (the warranty insurance underwriter) can back the warranty. Consumers are baffled by “lifetime warranties” and this slows the process down. The next step is to get the guys to advertise locally, and a group.”
Co-op advertising is widely available
Bellemore’s “next step” is lubricated by co-op advertising programs, and like warranties, all major programs feature them. Each program is different, and within each, banners generally offer the member a good deal of flexibility. The 1 Stop Service program is one example. As Glen Crewe describes it: “We do three flyers a year. Production is paid for, and the distribution can be coop advertised back 1/3, 1/3, 1/3.” The three-way cost sharing arrangement between installer, jobber and W/D is one of many co-op services available to members of any banner, but choosing local advertising, joining the banner’s generic program, advertising as a group of regional member installers, or some combination of these requires the same business skills that work for a successful independent. An example of the need for savvy merchandising management at the installer level is the three time per year direct mailing sponsored by Uni Select’s The Specialist. In that program, the accuracy and completeness of the individual member’s customer database is the secret to success, with smart marketers enjoying as high as twenty percent recovery rates on each mailing. An average return for a direct mail campaign would normally be ex
pected at approximately five percent. As Michel Rondeau, national program director, CarQuest Canada, (AutoPlace) says: “For an installer it improves his image, and gives him someone to taking care of a big part of his marketing. It’s something they (independents) don’t do very much, or very well.”
Software not an issue
Independents looking to join a banner program should have no problem with integrating their computer systems, since none of the majors require exclusively proprietary software, and all support several of the most popular packages, such as CCI Triad, Mitchell On-Demand and Chilton. Where an installer may require software is in cases where a link with the banner’s jobber network is necessary, but in most cases the better independents are already on-line, making the addition of a communications package easy.
With the numerous banner choices available to strong independents, what criteria should they use in making their choice? Opinions vary, but according to BEST AUTO’s Karen Barkin: “I would be concerned about monthly and annual fees. I would want to retain my independence and see signage to a minimum. A true independent would want to know where the real savings are such as discount rates with Visa/MasterCard, and things like that.” And should the member expect enhanced profitability from bigger volumes, or lower costs? “A bit of both”, says Barkin. “It’s really about relationship building, especially with their jobber of choice. Relationship building is what it’s all about. To receive support and real savings.” Profitability is, in the end, the goal of any business, whether owner/operators go it alone, or join a banner program. Either superstar independent or outstanding member installer, Kevin Patterson says it simply: “They’re either going to go one way or the other. They’ll have to. SSGM