MYOB: Embrace a New Vision of Your Business and a Clearer Understanding of Your Customer

Pushing every button, grasping at every opportunity, working with every tool at your disposal to help move the independent installer to a new level of professionalism and enabling them to conduct their business in a confident, profitable fashion are very worthwhile goals as we leave the ’90s behind.

The results of accepting and moving forward with this challenge will lead to higher volumes per installer customer, at better margins for both parties and payment in full to the jobber each month. To go there, however, requires the jobber to “step out of the box” and understand why a problem exists, and what solutions can turn difficult situations into new opportunities.

Let’s step back and consider a simplified version as to why the average jobber has problems with a typical installer with price issues, low individual volumes, and lack of full payment each month.

Consider that the majority of the companies the installer is exposed to working in the automotive aftermarket industry, the manufacturer, warehouse distributor and the jobber, deal with and run their business based on a commodity: the hard part.

The scenario is a familiar one to you. The manufacturer is concerned about price for its commodity and the amount of volume it sells to its warehouse distributor customers. The volume can reduce the manufacturer’s total costs per product line, so both parties (manufacturer and warehouse distributor) talk about price and volume commitments. The warehouse distributor is concerned about price for its products and the amount of volume it sells to its jobber customers, to ensure it moves out the volume product lines to accomplish its purchase commitments made to the manufacturer, achieve the best possible margins and the right inventory turns. Each party in this equation understands each other’s issues about volume, inventory management and margin.

The jobber is now concerned about its volume per product line purchased from the warehouse distributor and wants to insure that its inventory is managed well, coupled with the right margins to guarantee a profitable business is created. To do this, the jobber goes to market based on price, and makes price and volume the issue with its installer customers.

The installer reads and hears the manufacturer talk about price, reads and hears the warehouse distributor talk about price, and reads and hears the jobber talk about price. Now the installer, who was originally a highly skilled mechanic with no practical business experience, perceives and learns from the businesses in the industry that he is exposed to that price is the issue when it comes to business. The installer thinks he had better go to market at the cheapest price because everything he has been exposed to in this industry tells him it is price and volume driven.

A huge mistake has taken place in this business equation of the industry.

Levels of the industry have failed to understand that the installer business is a technical service, a knowledge-based business with a labor component, and it cannot be run on price and volume like a commodity business. The installer business must be run based on quality of workmanship combined with the right products with a focused level of service to a defined customer base. If it is not, then most likely the owner has bought him a job, because it is not profitable enough and potential failure of this part of the equation in the industry becomes very real.

Consider what has taken place over the history of our industry. The warehouse distributor and jobber understand and communicate very well with each other on their commodity issues. However, the jobber, the warehouse distributor, and the manufacturer have not really understood today’s installer issues, or today’s business, in terms of how the installer should make his/her money or grow a successful, profitable business. Approaching the installer and discussing the price of spark plugs, or wiper blades, or buying a volume of batteries is not helping the installer address today’s issues at all.

The installer level of business has changed so dramatically in the past eight years, it has reached the point where installers who have been in business 10 or more years find that their biggest challenge is surviving to get them to the end of the race (retirement of some sort).

Each level of the industry has, in essence, failed to learn and truly understand how the front lines of the industry work and what is required to be successful at that level. When the front line of the industry grows profitably and becomes successful, then each level of the industry behind those lines can grow and succeed. Without properly trained and skilled troops, the generals cannot win the war.

Some important issues for the installer that he needs help with, and should be addressed by the rest of the industry to help the installer succeed, include:

How to find, and keep competent technicians

Staying on top of technology to serve the installer’s clients’ vehicles properly and professionally

How to make the installer’s business more efficient and professional with, and by understanding, “office” technology

Learning and understanding the new guidelines on how gross profit and net profit is made within the installer business today

Managing business growth

Determining what the customer/client needs, where to find them, and how to market to them

How to build a longterm relationship with customer/clients, ensuring the installer is getting all the business

Educating the public on proper maintenance required for today’s automobiles

Marketing to change the public perception of the automotive maintenance and service industry from a “trade” to a highly technical skilled “profession”

Changing the education system’s attitude towards this industry so they see it as a “profession” (as is perceived in Europe) and not a “trade,” in order to attract the brightest students who are capable of handling today’s and tomorrow’s technology.

If the installer is not profitable and does not manage the business professionally he cannot pay his bills. Not understanding the installer business of today forces the installer to run the business based on price, instead of quality and enhanced valued added services at the proper price to ensure a career is built and not just a job.

The installer’s problems create a new opportunity for the jobber to now develop professional relationships with the right installer, working together and solving the installer’s problems. By taking this approach and making it happen, whether the installer pays $1.29 or $1.89 for spark plugs is not an issue.

Step out of the box and consider the opportunity in front of you.

Every level of this industry needs each other more than ever before. Now is the time to push the right buttons, open up the communication floodgates, get rid of the mistrust, and do your part to move our industry to a more professional, profitable level. There is simply no alternative.

Robert (Bob) Greenwood is president & C.E.O. of E. K. Williams & Co. (Ontario) Ltd., which has six offices across Ontario specializing in business consulting and training in the independent installer sector of the automotive aftermarket. Bob also works with jobbers to understand the installer side of the industry and address what is required from both parties to set up a relationship that grows future business. E. K. Williams (Ontario) Ltd. is on the Internet at www.ekw.ca. Questions and inquiries can be made in full confidence via fax c/o Jobber News (416) 442-2213 or via e-mail to aross@southam.ca.