A look at the Independence conundrum
Sometime in the 16th century, a fictional Danish prince mused: “To be, or not to be? That is the question.”
Now, when Shakespeare wrote those words, our famously brooding Hamlet was trying to decide whether or not to kill his uncle, and not whether his independent auto shop ought to remain independent, or to join an umbrella organization. But with that said, the decision faced by garage managers on a near daily basis can be framed in remarkably similar terms. Is it better to remain out on one’s own, suffering whatever tough times the roll of the dice might throw one’s way? Or is it better to join a collective group, to take arms so to speak, against the troubles that can define the independent service business?
The answer to such questions is certainly a tough one to ascertain. As the popular saying goes, there are three sides to every story.
Independence within banner programs
One question that often comes up when someone is thinking about a banner program is the issue of independence. There is something undeniably valuable and even romantic in running your own show, and having the flexibility to call the shots as you see them. So, shop owners are wary of relinquishing that control in any manner, perceived or real.
Karen Barkin, marketing coordinator for Best Buy Auto Parts in Mississauga, Ont., and the banner program Best Auto said an ideal program is supportive of the service provider while being flexible to that automotive service provider’s needs.
“The service provider needs to set the tone and determine how they wish to involve a banner program,” she added.
Jeff White, owner and manager of the Orangeville, Ont.-based Autopro has been a member of several banner programs over the years, and for the past decade he has been a member of the NAPA Autopro banner program. He has seen little interference from his corporate suppliers.
While White did note that some independent service providers end up frustrated with their banner program, he has found that the benefits of a good banner program often outweigh the implied obligations.
“I need to try and support my local NAPA guy for most of my front-end stuff like brakes and other components,” White said. “But other than that, I can do what’s best for my business.”
Actually, what’s best for White, is being part of multiple banner programs. Apart from being part of the NAPA system, he is also an ACDelco Road Scholar, an arrangement that he says is best for his shop, despite frustrating the suppliers.
“I don’t think the NAPA guys like it all that much,” he said. “They won’t franchise anyone who has multiple programs, but I’m not interested in franchising, so they let me continue with it.”
However, like any successful corporation, many independent service providers value their sovereign right to make personal business decisions, no matter what. To that effect, not everyone has had a rosy experience with his or her banner program, in terms of threats to that independence. As a result, many service guys across the country have been in and then later opted out of the various programs.
Dan Trudgeon, of True-Tech Automotive Service Inc. in Shelburne, Ont. spent the better part of a decade in a banner program.
“Initially, I wanted to try it, because it made some sense to me,” said Trudgeon. “To be honest, I also just didn’t want other guys in the area getting the program either. I think most owners can identify with that feeling.”
But unlike some, Trudgeon said he found the loss of independence troubling. “They are going for a real franchise look,” he said. “That’s not really what I wanted. I’ve worked for years to try and establish the True-Tech name in the area, and in only a few years, I nearly lost it in all of the other stuff. That’s not why I got into this business.”
The cost-benefit of a good banner program
Most banner programs from the major providers involve several layers of payments and reimbursements, which in the end produce an overall benefit package for the service provider who joins. Like newspaper delivery or a golf membership, there is usually a “subscription” cost, which can range anywhere from $100 to $250 per month. After that, many of the benefits that can be attained are usually tied to parts orders and spending.
For example, White, a member of both ACDelco and NAPA Autopro, spends somewhere between $350 to $400 a month for his memberships.
“Based on the costs,” he said, “I get much more out of the program in discounts, savings and incentives than I put in. The monthly cost ends up being pretty negligible.”
According to Bob Bobert, general manager of Base Automotive Warehousing Limited in Toronto, the sort of success that White has seen with his experience with banners, is most likely due to his committed participation.
“The garage owner is the one that has to buy into a banner program. If there is no serious commitment from the owner, then the banner program is destined to fail,” he said.
The various banner programs certainly follow this line of thought, and maintain that the numbers, once crunched by the independent service provider, will come out in that provider’s favour.
In fact, despite the initial monthly costs, Karen Barkin said, “Best Auto offers an easy and affordable solution for shop management and technical information for the independent service provider affiliated with us.”
Others still, like Trudgeon, simply never really saw the benefit for dollar equation as coming out in his or any other independent service providers’ favour. “I can commend them [parts manufactures] for the idea, because it is great for them,” he added. “But I think the service providers really lose their buying power as a group, when we’re in the banner system.”
Like many other aspects of the automotive business, the cost to dollar advantage ratios will depend largely on how an independent service provider operates their business. It is clearly an equation that is highly beneficial to many across the country, but may not be as lucrative in certain situations.
Banner program successes, pitfalls
“Ultimately, it is up to the service provider to meet their customer’s needs and offer superior service,” Barkin said. “A banner program enhances the professional image of an automotive service center. It provides preferential rates on a number of key services that affect operation overhead costs, which will save garage owners money directly on their bottom line.”
Different banner programs offer different levels of service and benefits, usually based on the dollars committed to it, by the independent service provider. However, such an analysis only really takes into account the tangible or financially demonstrable elements of any given program. In reality, many shop owners across the country cite different aspects, which they believe are that program’s greatest attributes and most beneficial to their operations.
White said the biggest benefits he gets from the Autopro banner program are advertising dollars, identifiable signage, and a continental warranty on any of the work he does in his shop. All these benefits have a direct impact on White’s bottom line.
“It’s nice to have a national affiliation with a national entity, in that it gives me the ability to reach out more to my customers by way of marketing, and I think that makes a difference in terms of my sales,” said White.
However, Trugeon said it was such often-cited benefits his banner program-provided, i.e. warrantees, marketing support, and affiliation, etc. he found the most irritating. Starting with the notion of a warranty program, Trugeon said the banner program warranty system in the program he was once part of was not handled well from the administration side and the benefits were always changing.
“They would try something for a while, and then change it,” he added.
For example, Trudgeon cited the extended warranty package the banner program offered, which he said was a big deal for his store.
“We had a lot of interest in the extended warranty package. It was a great thing for our customer retention, but then they [the banner program] just dropped it,” he continued with evident frustration.
On the advertising front, the banner program question really exposes a major rift in strategic thought when it comes to the daily operation of an independent shop. It seems as though some owners really like to see an expansive approach, and want their marketing contributions put towards lavish, nationally recognized campaigns.
As Bobert pointed out, many shop owners simply can’t make that happen. “Garage owners, for the most part, do not have the resources to do a professional job of marketing their business,” he said.
However, some owners prefer a more targeted approach, which is sometimes sacrificed in large marketing programs. So, while White said he liked the idea of being part of a broader, national marketing program, Trudgeon said he found the execution and overall concept of the campaign misdirected.
“In the auto-service business, we’re community oriented,” he said. “We don’t draw from a large area, so I didn’t see the benefit of the big national campaigns, for the money I had to contribute. It would have been better if it went to more regionally based ads, but we weren’t allowed to use it for that.”
Another ancillary benefit offered by nearly every banner program is training. The logic being, if your mechanics learn more, do more, and do it faster, then this can’t help but indirectly improve your bottom line.
“Training is a big benefit, and being part of two different programs, my guys get even more of it, either during business hours like with AC/Delco, or in the evenings with Autopro,” White said.
However, seeing as most shops already accumulate points with the various parts suppliers for their purchases, affiliation is not necessarily required in order to take training sessions.
“I’m still a member installer,” says Trudgeon. “So I don’t have to be a part of the banner program to get the training session; we simply join in through the use of our loyalty points.”
Banner or independent depends who you are, what you want
In the end, it appears as though the answer to age-old question of “to be, or not to be,” is still as personal now as it was then. Companies like ACDelco, NAPA, Best-Buy and others will constantly sell the virtues of their banner program to an independent service provider. Ask each who has the best banner program and each will point to the sign on their door. Therefore, as per usual, this decision, like countless others, needs to be made the only way many in this business would have it: independently.
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