MYOB: Just the Facts, Ma’am

Jobbers must be more astute these days to have credibility with their customers, yet too many jobbers fail to understand the facts about a service provider’s business. This is unfortunate, because it is only when these facts are known that you can have credible information to evaluate the potential of building, or enhancing, your business relationship with them.

It is an inescapable fact that your jobber profits will go up in direct proportion to the quality of your relationship with your customer. An important part of any relationship is understanding; in business that means looking at the numbers.

Recently we completed our semi-annual survey of automotive service providers in Ontario.

From our survey, consider the following facts and ask yourself how you can assist your clients in enhancing their business by knowing these facts.

Fact:

As many as 79.75% of shop owners have grade 12 or less as their last year of formal education. From there, most went on to trade school to learn to be a licensed technician.

Questions:

Where in high school did your client learn about shop gross profit management? Where in high school did your client learn how to measure and manage shop productivity? Where in high school did your client learn how to read and interpret a balance sheet? Where in high school did your client learn shop inventory management? Can you help?

Fact:

Some 51.9% of shops do not have a customer follow-up system and 71.0% of shops do not have a customer service reminder system.

Questions:

If the average shop does not build a relationship with its customer and take responsibility for managing its customer’s vehicle, then what processes are in place to assist the shop in securing the future maintenance work required on that vehicle? Can you help?

Fact:

The average shop has 4.98 bays with 3.87 hoists; 54.4% of shop owners do not have any plans to expand their facility within the next five years.

Questions:

If vehicles are becoming more complicated, and getting to the point where more equipment is required to service those vehicles with any kind of competency, where is the equipment going to be placed? If more diagnostic time is going to be required due to the technical complexity of vehicles, that would mean the vehicle would be in the shop longer, occupying bay and hoist time. So how is the shop’s current customer base going to be served? More space is required. Your customer needs short-term and long-term financial goals and planning. Can you help?

Fact:

The average independent shop has $23,341.50 in accounts receivable, of which 46.13% is tied up with commercial accounts.

Questions:

The customer is not paying in full each month. Do you have a mechanism, or program, you can take to your customer that would greatly assist him in reducing his receivables forever? Can you create a program that your customer’s customer would buy into? Can you help?

Fact:

The average shop has 68% of his aftermarket parts purchases going to one, first call supplier.

Questions:

You should want, and need, 85% to 90% of your paying customers’ aftermarket parts purchases. What is the real issue with your customer as to why you don’t? Is there a relationship problem or a trust problem? Are you capable of sitting down one-on-one in a quiet, uninterrupted environment to openly discuss this issue? Can you help to change?

Fact:

The average shop carries $16,115.50 in parts inventory, $926.79 in battery inventory, $3,902.04 in tire inventory, and $1,884.89 in oil inventory. To maximize the return on investment of a service provider’s inventory, the inventory should turn a minimum as follows: parts, 6 times; batteries, 5 times; tires, 4 times; and oil,13 times.

Questions:

Is your customer stocking properly? Do you clean the lines to insure your client is using his money effectively within his business? Can you help?

Fact:

Technology is an issue, as only 56.7% of the shops in the marketplace are connected to the Internet at their shop.

Questions:

Your customer relationships are important to the future of your business. Communications are key to building any relationship. Communication efficiency can be enhanced with the Internet. Are you doing everything possible to communicate effectively with your customers to secure that relationship? Are you up to date with your office technology? Are you promoting effective office technology to your customer base? Can you help?

Fact:

Over half, 55.7%, of independent service provider shops have a financial statement prepared only once a year by their accountant. The rest have semi-annual, quarterly or monthly statements prepared by their accountant.

Questions:

To measure and manage a business, one must have accurate and timely information. Is the software program that your customer is relying on to tell them the numbers on their business giving them the right information they need to know to manage the shop? Is it accurate? Can you help?

If your customer doesn’t know how to run his business, are you willing to help?

Jobbers today must look beyond just selling parts to their customer base. They must get involved and understand their customer’s business. If you are one of those jobbers who spends most of his day chasing money from your customers because they are always behind and way past due, please take note: Your customer doesn’t know how to run his business. Can you help? Probably, but the real question should be are you willing to help?

If you know that you cannot discuss any business issues with your customer “because they don’t want to,” you must then accept the fact that they don’t trust you. Don’t blame your customer; look at your own organization and ask yourself how you built that image.

Without effective communication based on knowledge and facts, two-way relationships cannot be effectively developed. One-sided relationships don’t work and don’t last.

So the final question must be asked. What is your future as a jobber, and what are you doing about it?