Fuel for the future

You would find few who would dispute that John Watt is one of the preeminent representatives of the independent automotive service sector in this country, and he has done it without slogging away in the bays. Watt has served as the manager of Petro-Canada Certigard and Automotive for the past 15 years, having joined Petro-Canada in 1985 after 10 years with Gulf Canada.

During that time he acquired a detailed understanding of what drives service, consumer satisfaction, and the bottom line for the automotive service providers (ASPs) in the Certigard franchise. Watt has also been very involved with a variety of industry initiatives, such as the Canadian Automotive Repair and Service Council, but one of his particular focuses has been the Motorist Assurance Program, and he has made frequent presentations to the industry on the subject. He brings this experience to his year-long term as the chairman of the Automotive Industries Association of Canada.

“As a chair, I don’t believe you can be passive. I think you need to bring some passion with you. The passion is probably going to be based on things you are [already] aware of. And maintaining that awareness and passion within the AIA is valuable to the direction being followed.

“The one initiative that has been given a lot of air time, and rightly so because of what it means to the industry, is the Right to Repair.”

Obtaining proper access to repair information and tools for the independent aftermarket — currently there is only piecemeal, voluntary access from a few automakers in Canada — has meant extensive communications with government and grassroots awareness activities for both consumers and the industry. Yet it continues to struggle to attain a high-profile position among individual ASPs.

He believes that the lack of a larger outcry among service providers stems from the fact that the magnitude of the issue is simply not well understood at the independent shop level.

“You have heard the expression that ‘you don’t know what you have till it’s gone.’ In this regard, the business being lost will not be noticed from one day to the next. The majority of the aftermarket ASPs are in that situation.

“They are not ignorant or avoiding the issue. They are hardworking, busy people, and they are so focused on what they have to achieve today and tomorrow that they are not thinking about what is not knocking on their door right now.”

Right to Repair is simply not on their radar right now, but efforts to continue to raise the awareness will continue under his watch.

“Any chair going in would have to focus on it, but having said that, I bring a dimension that asks, ‘What happens after Right to Repair?'”

Let’s assume, he says, that the AIA, or some other group, is successful. (“If some other organization ends up being that method of solving the right to repair, thank you very much, end of story. All we need is for it to be resolved.”) Then what?

“There are 29,000 independent service providers out there who are going to have to buy diagnostic equipment, they’re going to have to know how to use it, how to subscribe to information, and to pay for it, and communicate to the consumer exactly what they are doing.

“So even though you might acquire the right to repair, there is a big step after that. How do you implement it? How does the aftermarket make sure that our skills and abilities are up to par?”

But even beyond this is the imperative that the industry not look to right to repair as a panacea; on the contrary, there is enough business to be had from the cars already arriving in the service bays to cure many of the industry’s woes.

“Fundamentally, until a service provider performs a proper inspection, properly communicates the results of that inspection to the consumer, and concludes a transaction that includes repairs that the consumer may not have known were wrong with the vehicle, you cannot get a multiplier effect,” where the ASP, the jobber, the WD and the manufacturer all see the benefit.

This is where Watt really hits his stride.

He says that data from a variety of sources estimates that independents leave about $100 on the table with each transaction.

“Take 29,000 ASPs, times seven transactions a day, times 250 days they are open, and suddenly you can see the magnitude of the issue.” It represents $175,000 per shop, or an astronomical $5 billion-plus for the industry as a whole.

“What it all boils down to is that if the aftermarket started getting the work that is actually needed by the consumer, the ripple effect would be humongous. It would provide better revenues for the ASPs; they would be able to afford to pay their techs top-notch dollars; they could also have the latest equipment that the newer vehicles need; and start having money left in their pocket.

“And of course they would be able to invest in technology and training of their technicians.”

How much money? Watt says that it can be helpful to put it into local market terms. He recently did just that for the Okanagan Valley.

“If there are 120,000 vehicles off warranty that each have the potential of $300 more work per year, that equates to $36 million in added business.

“That’s a big number for the Okanagan Valley, and that is where people open their eyes and realize what it means in their own backyard.”

Watt says that breaking it down to the local impact is critical to getting the message across; when people think in billions, it is hard to relate to their own business.

And he goes further, breaking it down to hundreds of extra dollars a day, arrived at for little or no investment.

Factor in these added revenues, he adds, and it goes a long way toward making the industry more attractive to work in, and for young people to enter, because it is an industry that has career potential, and provides strong financial rewards.

“We need to communicate to those small independents out there how they can find this work. And once they do, how they communicate this to the consumer. First they need to believe that this potential is there, but once they do, I think they would be hungry to find the solution.”

And that is where the AIA can play a role: by first, providing research that makes it clear what the independents are missing out on, and by providing guidance to these shops on how to get their share. Plans to deliver that data to industry are already well underway.

The beauty of the current situation is that the benefits to be gained do not flow from investments in tools, or even facilities. It’s about process: specifically, the process of performing inspections on vehicles, and knowing how to communicate those findings to the customer.

Talking about this is where Watt is most comfortable. “That’s my expertise. The bottom line is that if there is

that much potential, why haven’t they found it? There is pro- cess, the day-to-day process that is not acknowledged. Someone can say that they believe in customer service, but if you ask what they do to increase customer service, you don’t get definitive answers.

“Everybody believes in customer service, but they don’t all ante up to deliver something that is unique and different.”

But you have to start with a vision.

“Unless you have a vision that you are going to be the unbelievably best in your market area, I can guarantee you that you are probably just as ordinary as everyone else.”

He says that implementing such a vision is not something to take lightly, that it requires some significant management skills, and requires a buy-in from the staff.

“It becomes very interesting that if you want someone to have a better process, they need to have a vision of what that means.

“This will sound a little corny, but the AIA can play a role to get 29,000 shops out there to establish a vision on different things like process, customer service, profitability, proper employee management.”

He says that, on the basis of countless
conversations he’s had, service providers often associate giving deals or freebees with high customer service, and therefore, strong customer satisfaction. He says this is wrongheaded thinking. Real-world examples exist on how to increase average transaction dollars while generating high customer satisfaction.

He has to look no farther than his own Certigard organization.

“I don’t suggest that a car that needs work should have someone proposing more work be done on it. What I am professing is that what a car needs is what a car needs. My people have a process and an ability to find out exactly what that is. And it happens to be more than what is currently done at most independents. Parallel to that, I also have customer satisfaction ratings that put my organization at the top of the list.

“What that really means is that we find more and sell more and people are more satisfied with us. I am not talking about once in awhile. I have that going back half a dozen years and with different people and consistently have the same outcome. Yes, we sell more. I didn’t say we charge more. We sell more, and yes, people are more satisfied with our performance. And Certigard has consistently the highest average transaction of anyone in the survey.”

Now, not every shop in the organization is a leader, he says, and those that are not profess the same shortcomings as any shop in a similar situation, regardless of its association.

When challenged to explain their poor performance — low technician productivity, low profitability, low transaction values — they often fall back on what Watt calls their “crutches.”

“Most often, it’s not about neighbourhood, the weather, or customers. It could be about the person on the front counter, the lack of a person on the front counter, or because the owner spends half his time in the bay, and the other half on the counter.

“These shops do not wake up in the morning with the intention of leaving $100 per transaction on the table, but that is what happens.”

And he emphasizes, once again, this is where the AIA can play a role by providing a set of industry benchmarks that remove the potential confrontations where veteran shop owners might feel they are being criticized on how they run their business, but instead provide them with highly focused data on where they might be missing out, and allow them to judge for themselves.

“That is going to be a challenge,” he says. “It is not an easy fix. The content has to be meaningful and understood. And we have to look at where this channel goes for information.

“It has to start with that core acknowledgement, and right now it’s not in people’s minds. They don’t wake up with this great opportunity on their mind. And that is where I think this has to start. The message has to be clear, concise, and repeated often.

“Where the AIA can really earn its stripes is being able to demonstrate what is in it for the ASP and to work towards that outcome.

“It is all about money. It’s not trying to take it out of people’s pockets unnecessarily. It is about providing a service that is in step with keeping people’s cars safe, having them operate efficiently, cause less pollution and use less gas. It is all honourable work. The integrity is 100% there.”

He says that getting large-scale shifts started is going to require change not only at the ASP level but also at the WD level, to have banner programs that incorporate appropriate changes in their messaging to jobbers and the ASP sector.

“As the chair of the AIA, I am not there to tell people how to run their business. But internally, through some of the meetings, I think that there can be enough seeds laid to start turning more attention toward business management focus and training, and to capture that unperformed-work market opportunity.”

It is, he says, a game of inches, as it were, but a game with a tremendous payoff if taken up by the industry at large — a billion-dollar payoff, in fact.

“I am not exaggerating. And instead of asking for lower prices from the suppliers, ASPs should be earning more profit from each consumer.”

It would, he says, turn the industry focus from a market-share battle to market growth, and winning business from the dealer.

“That’s a solution. And gradually our automotive aftermarket world changes.”

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Independents leave about $100 on the table with each transaction. This unperformed work represents $175,000 per shop annually, or an astronomical $5 billion-plus for the industry as a whole.