2022 has tons of challenges in store for us, parts price and delivery questions, overall economic woes but more importantly, increasing opportunities for The Digital Shop to provide transparency and convenience for Motorists. Join Rita and Gerardo Luna – Owners of multiple locations – Concours Motors Auto Repair, and Tim Phaler -General Manager – Import Auto Clinic, to share their approaches and plans for 2022 with Bill and Uwe.
Episode Transcript
*This transcript was generated using Artificial Intelligence. Errors may occur. If you notice an error, please contact [email protected].
Bill Connor (00:06):
So good morning, good afternoon. I’m Bill Connor and you’ve reached a Digital Shop Talk Radio where we gather on Wednesday afternoon to go ahead and share some wisdom from our panelists. Today I’m here with Rita and JR Luna, owners of multiple locations of Concours Motors Auto Repair in the California area, I believe, if I’m not mistaken. Cool. And also we’ve got AutoVitals very own Chief Innovation Officer here to go ahead and keep us steered in a proper direction. Today we’re going to be discussing the future and without a crystal ball, we’re going to have our panelists share with us. So 2022 has lots of challenges in store for us. Parts pricing, delivery questions, overall economy woes, and a whole lot more. But more importantly, what we’re going to talk about is taking things that we learned in 2021 or a little bit prior in leveraging them with the digital shop to provide transparency and convenience for the motorists. We’ll cover methods that these folks have used for continuous growth, what our panelists plans are for continue leveraging the digital shop for growth of the business in 2020, 2022. And you’ll take away some great information to put the digital shop to work in your shop. As always, you learn from our great panelists that we have here every week, operating shops just like yours. So if you wouldn’t mind, let’s go ahead and start these folks off on our episode today.
Uwe Kleinschmidt (01:30):
Thank you. Thank you Rita and JR for joining. For the audience. We also want to mention, we had another panelist lined up, but Covid made him stay with the business and we hope we are going to have him on another time. We will have more episodes like this because we found out it’s really interesting to have different general managers and shop owners on the podcast to talk about in those trying times. What do you learn from 21 and what do you do for 22? So be ready for more in upcoming, but today we have Rita and JR. And I don’t know whether you remember the episode when we talked about how couples run businesses. That was very inspiring. So I assume we’re going to have the same today. So let’s kick it off with exactly the question. Bill posted earlier, how was 21 for you guys? There was a forced location in the making times did not stop being trying. What were the highlights and how did you master it? The 21?
Gerardo Luna (03:13):
Well, a lot of it was came from 2020. First of all, Connor Uwe, thank you for inviting us to your podcast. It’s honor to be here with you guys. 2020 showed us a lot, twisted our hands and made us do things different and think outside the box. And we were very pleasantly surprised that with the technology we had going on through AutoVitals, through text to pay, through email capturing that we’ve done for years, we were in a perfect position for Covid. Well, not perfect. We were getting prepared, right? We were getting prepared. So when that came, we were ready to go with all the technology we needed to serve our customers. And we didn’t stop. We did things differently. We did pickup and delivery in 2020 and that continued into 2021. People that felt very comfortable. And I don’t know if it was just comfort, it was also convenient that I don’t have to leave my housing, come pick up my car. Great. Well, what we found out is that most of those cars had a bigger average because the customers were committed. I don’t know that it felt compelled to spend more money or to say yes because we’re doing them such a big favor. So 2021 was a record
Uwe Kleinschmidt (04:35):
Year. So can I interrupt you there? Sorry. Yes. This is amazing, an amazing finding to me. Is there another chance that a waiting customer or somebody dropping off the service advisor feels more pressure and is not educating the whole estimate? And that is why the ARO might be higher otherwise?
Gerardo Luna (05:03):
Well, I think it lowers the stress levels of everyone because the customer wants to, it’s like, oh, I can only get pick can only get a ride right after school or right after work. And if I don’t catch a ride with Cindy, then I’m not going to be able to get my car. So no, don’t do Twix today. I need it today.
Bill Connor (05:21):
What’s even more interesting is you probably had a shuttle service for years to drive people home. Yes. What is the psychological difference between shuttling a customer home when they’re at the shop and going picking up their vehicle and bringing ’em back? Something changes in their mind.
Gerardo Luna (05:36):
Absolutely. Well, the psychological effect is that the customer still has to come. They still got to drop everything they’re doing and come to the shop and go back home. And if that’s 15 minutes each way, plus they’re in the shop five minutes paying their bill, that’s 40 minutes.
Rita Luna (05:52):
Especially in a woman makeup your hair that takes time in your car, go drop it off.
Bill Connor (05:59):
Tina, JR Didn’t mention having to fix his hair,
Gerardo Luna (06:04):
Not today, but all those things slower, the stress levels and the anxiety that I have to go pick up the car and once it’s like, oh, they’re going to bring it to me, it’s no big deal. It’s kind of like the Amazon effect, I would say. The car’s just going to come and do whatever you want to it. I have the time. So I think that’s a big factor. Also, the service advisor feels like I can deliver it whenever I’m ready, not whenever you want to come pick it up. So that also plays a role in.
Bill Connor (06:34):
And so does the offset, the average IRO being hired, does that offset happen to send two people to bring it and pick it back?
Gerardo Luna (06:42):
Well, we do a seven mile radius. That’s the only we stick to. I mean, it’s not a policy in stone. Obviously we would go much farther for repeating customer or somebody we like and know, but the average is seven miles and sometimes we uber there. It’s more convenient, more cost effective if we’re busy. So
Bill Connor (07:04):
Just one person from your shop, Uber’s there picks up cool. Yeah, yeah.
Rita Luna (07:08):
It would be a
Gerardo Luna (07:08):
$10. It would be a $10 Uber versus 20 minutes out of the job or 30 minutes out of the job. And we’re busy. So we’re missing opportunity. Cost will cost us more if we leave somebody else out the job.
Bill Connor (07:21):
And you don’t have to pay benefits on Uber driver,
Gerardo Luna (07:23):
Right? That’s right. Insurance or gas, all those things. So that’s one of the things that happened in 2021 that set us up for success. And like I said, we had record years in all the shops and we started looking at the fourth location in 2020. We just happened to close in 2021, but it was a great deal. It was an existing shop and it came out of the gate swinging real good. And obviously there was challenges and obstacles because whenever you, they’ve been doing it a certain way for 40 years, then you come in and try to give everybody a tablet. They barely wrote things down. You can imagine the fight that was, but it went well. Today we’re only nine months or 10 months into it and they’re all digital, they’re paperless, and it’s just another day at the office for the shop. They don’t miss that.
Uwe Kleinschmidt (08:25):
So how did you do that? I mean, can you go into the next level of detail? What are the typical resistance topics apart from we’ve never done it this way.
Gerardo Luna (08:38):
Well, yeah, we just had a meeting yesterday and one of my things was that the whole staff was very kind, very nice. And I told them that I was pleasant to know that the very nice and welcoming people that met 10 months ago were not a facade. You guys are the real deal. They were really kind, really nice. And they said, well, we had the same feeling from you. Were you this nice because you’re buying the building or are you for real? It’s this kind and polite and professional. And one of the things that I, well, we did a whole cleanup of a shop and me working there and getting, not working, but orchestrating the cleaning of the shop and rearranging of the computers and office. And we did a lot of makeover and paint and things like that. They got bought into like, wow, this guy means business.
(09:35):
He’s not just going to show us. I mean, he’s not just going to tell us, he’s going to show us. But the thing that sold it was that I got everybody in a van and we went to our prime location where there’s epoxy floors and the walls are white and it’s just a really well oiled machine. A clean friendly environment, right? Yeah. We took them there. Yes, we took ’em there and they saw everybody using the iPads and they saw the processes and they talked to the service advisors and they saw the numbers that the technicians produce and the numbers, the hours that the shop produces and the customers are happy and testimonials and all that stuff. And they just said, okay, I can tuck in my shirt. Okay, I can do this. Do you
Bill Connor (10:23):
Think that staff at the other facility, they actually checked out your reviews and stuff before they decided whether they’re going to hang with you?
Gerardo Luna (10:30):
Probably. I haven’t asked, but I would think so. They told me they were very hesitant about me coming in. Who is this guy? I don’t know what’s about, but going there. And then I made it a point to leave them alone with the staff like, oh, this is Bill. Bill, this is John. And then I walked away so they can feel that I’m not influencing their conversation because we really have nothing to hide. We think that we’re very fair and genuine and I wanted that to come across from their horse’s mouth, so to speak.
Uwe Kleinschmidt (11:05):
That is cool. And so can you say how long it took until they got it? And were there events where they said, man, if I had known this earlier, it wouldn’t have taken so long? Or was it really was this event, hearing it from their peers, basically the light bulb. And then they tried to emulate what was going on
Gerardo Luna (11:38):
Before. Well, before I bought the shop, we had this trip and we’re going to close a week from today let’s say. And we took that trip. They knew that we were going to start with a new point of sale system with a new inspection system. And when we got back to the shop, they took it. They were complaints and never to me, but they were like, oh man, this is, but I never paid attention to it. I said, how you doing? You like it, right?
Bill Connor (12:10):
Right.
Gerardo Luna (12:11):
That’s very helpful. But I did share the vision with them that I clarify and I shared a vision that I’m big in analogies and I told him, how would you like to go to the dentist? And he cleans your teeth and he only tells you about the front one that is got a decay. You can see it not about the back cavities that you have on your molars. And you come back when it hurts and you ask the doctor, didn’t you see this last time I was here? I was just here six months ago. You’ll be upset. Well, that’s their customer. A customer needs. They didn’t do whole thorough inspections before and now digitally they’re even better. And the fact that we can show the customers the whole health of their vehicle and put it into that perspective and doing analogies and sharing stories, they were more, they’re just bought into the vision because not everyone sees it. Right. They see it as an inconvenience sometimes. And especially technicians, they tend to think one bay at a time, one car at a time. So when you share the bigger vision for goals that we have for the shops, things that we want to do as a company, as a shop that matters and those little things, that’s how they can contribute to obviously in production, but that is the start of their contribution.
Bill Connor (13:38):
So you said yesterday when we talked that initially when you were just a smaller operation, you discovered early on that sharing your vision was kind of a key to your success. And we kind of equated that as being to the captain of your ship, you’re telling everybody where we’re going to go and it’s going to be palm trees or whatever when we get there. And then you’ve used that and leveraged it going forward. So did that make it easier for you to change from a non-digital paper type shop to a paperless? Yes. Did you use that same philosophy when you onboarded that?
Gerardo Luna (14:15):
Yeah, so they know that I believe everybody in my staff knows that we’re trying to achieve perfection. And I know we’ll never get there, but we’re always going to chase it and try to be as innovative and up to speed on all the technology that is out there. Otherwise we’re going to die or stop growing and shrink and and go away. So yeah, that is one of the things that sharing the vision and making sure, what I like to say is we’re going to roll out to that. If we’re all on a canoe, we’re going to roll out to that boat that is out ship that is out there, but we’re not only going to roll to the ship, we’re going to roll to the ship to the door on the right hand behind the ship, exactly where we’re going, not just a general area. And we do that with numbers, we do that with numbers and also a greener pasture picture.
Rita Luna (15:19):
In order for us to grow, we need to be up with technology. So this was part of it,
Uwe Kleinschmidt (15:28):
And I’m now trying to think whether that can be even applied to single shops where if for example, you would be willing to open your shop and have other shops and their staff talk to your staff, whether that would be as effective, assuming divisions align between yours and the other shop owner.
Gerardo Luna (16:00):
Yeah, absolutely. I mean, I’ve been in coaching companies for most of my professional career, professional career, and other shops do call us. Other shops do come visit and we will go out to lunch or something, I’ll show ’em around. Most people are givers. I’m a giver and if I can help anybody, I’d be happy to.
Uwe Kleinschmidt (16:25):
So that’s a good takeaway for everybody who is looking to go digital all the way and not just dabble in digital inspection, to find somebody like you and post the question on the Facebook forum and say, who’s willing to have me visit you? That should be, and my staff. That seems to be the most important thing. It’s not just owners looking, it’s take a van and take your whole staff.
Rita Luna (17:04):
Correct. And it seems like this new era, people love emails, they love to see the pictures, they want to see all of that. So our customers are also happy.
Bill Connor (17:16):
So if I’m a single location shopper, even a multi shop location in things have gone, okay, I’ve survived 2020, 2021. I’m doing okay, I’ve had a little bit of growth. Is there still some reasons if I’m not digital, to go ahead and be digital and how would I go ahead and introduce my team that I don’t want to rock the boat, that this is what we need to do? How do we paint that picture for,
Gerardo Luna (17:43):
Well, in my opinion, this is just a wave of the future. I will tell you about five years ago or so, we went to a dealership, read about a new BMW years ago, and we took it in for a free oil change and we had some other warranty complaints about the car and the car needed tires, and I knew that, and Rita got an email,
Rita Luna (18:13):
A text that was the owner. So I got the text and they showed me with red lines everywhere, you need new tires. And
Gerardo Luna (18:22):
I’m like, unsafe,
Rita Luna (18:23):
Unsafe. They put their little comments.
Gerardo Luna (18:26):
So I remember the day we dropped off the BMW, we went out to lunch and because we were just going to wait for it, it was cosmetic things that were going on with it and we’re having lunch. And then she gets a text and starts looking at it very intently. And then she goes, they should have showed this to my husband. Look. And she puts the phone in my face saying that she was going to die and that she carries the kids around
Rita Luna (18:51):
Unsafe car. Right?
Gerardo Luna (18:54):
What the hell am I thinking? And I mean, I knew she needed tires. It wasn’t life or death, but to her getting that text, she was mad at me that I would let her around with tires that are, I’m unsafe, right? Or rear replaced.
Bill Connor (19:11):
You just perfectly described a phenomena that we’ve seen early on motorist research time where a motorist research time goes up, then it stops and then all of a sudden it starts going up again. She just exactly described what happens in those cases,
Gerardo Luna (19:24):
Right? And began, she told me, do you know anybody that works on cars that can put tires on my car?
Rita Luna (19:35):
But it’s a good tool. It was tool to be aware of what is needed,
Gerardo Luna (19:40):
And I would just sell the idea that technicians are going to be able to be more profitable, they’re going to be able to sell more work, and they’re going to be able to defend themselves when things happen. We have used this tool not only to sell work and be more profitable, sell more labor times and increase our average ro, but to also defend ourselves saying, you never told me this happened. It’s like, oh, we showed you a picture, we took it, or a ding or a scratch in a car or the check in your line was not on when you came in. No, check this out. I sent you this picture. It’s timestamped and it’s a tool that serves many purposes and it also buys, like we were talking before we started building, you needed to go back and look at a car. Well, you went back there to sell with your two feet on the ground to sell the oil leak that you saw and you feel confident about selling. Well as a service advisor, you see it. You see the same thing the customer is going to see. So there’s no doubt in your mind that that car needs an oil pan or whatever, valve cover gasket, whatever that might be. And you can sell it with total confidence that it’s needed. I saw it and you’re going to see it. And there’s no question in my mind that I can sell it with my two feet planted on the ground.
Bill Connor (20:54):
Well, I’ve always contended that really when it comes to the digital inspection and educating the people, we could do it more clearly for them with the digital inspection that we can with taking them out to debate. Because we could take a picture, we could draw an arrow right to it. We’ve got the text on the picture, we’ve got reference videos on there explaining to them a topic. Those are things that we really couldn’t provide in debate. So to me, I really think that we do a much better educational job digitally than we ever could with the customer looking at the car in the bay.
Gerardo Luna (21:25):
Yeah, that is true. It saves the same purpose in my mind.
Uwe Kleinschmidt (21:31):
I would add we have gotten so accustomed to do research online
Gerardo Luna (21:40):
That
Uwe Kleinschmidt (21:42):
It’s almost like a Google. The inspection result is almost like a Google result for my specific car,
Bill Connor (21:50):
Right? That’s right.
Uwe Kleinschmidt (21:51):
You don’t need to go anywhere else, but it’s presented in a similar format, but just for my car. So for me, that’s the big step forward that everybody who’s used to doing all the research online doesn’t need to go through 17,000 search results and find out what’s right.
Gerardo Luna (22:18):
Absolutely.
Bill Connor (22:19):
And even if the customer doesn’t look at everything that you send them, just the transparency created by the fact that you’re providing them everything, you’re not hiding them anything you want them to know everything that they care to know, and if they don’t want to, that’s fine, but you’re just serving it up there on a platter form.
Gerardo Luna (22:36):
Yep, that’s exactly right. One more thing that I wanted to add. I was starting to remember as a single location, having some success, one of the hardest things that our coaches or my coach will say, work on the business, not in the business. And it almost never made sense to me as much as I thought just listening to it. It was probably a year into coaching when I got it, the light bulb went out. And so if I’m always under the hood and I’m always talking to customers, it’s hard to see, engage the effect that introducing a new program or on inspection system like this would have on the business because you’re so busy, you’re thinking you’re doing all you can. So that’s working in the business and working on the business, like seeing per se, from a 30 foot view of what’s going on in your shop, you can see that if you went digital, you can sell more hours, you can increase your average ARO by, I think you got a number, right?
(23:39):
Like 40% or something like that. You can increase your average ARO, you can become more profitable, seeing the same cars, seeing the same customers, and not working a lot more harder, working a lot smarter. Those are the things that sometimes when we’re a single operator and we do where to cook the dishwasher and the server we miss. And to me, that was one of the probably key moments in our career that I noticed that, oh, I get it. I can actually steer the ship much better if I’m able to see it from a third person, like you said, or a 30 foot view of the battle. And that is one thing that will benefit people. Bill,
Bill Connor (24:23):
You have a tip for a shop that has a really high car count and a really low ARO. They got shops, techs that are frustrated because they’re having to touch eight or 10 cars per day to go and work on. So can you give them some tips on using the digital platform to actually slow the process down and not wear out their equipment and their staff by going ahead and having these high turn of vehicles?
Gerardo Luna (24:46):
Absolutely. That’s probably got to be one of the most frustrating things for a technician to walk to get into 10 cars a day and only sell four hours. That’s got to be frustrating. Yes. My tip to them will be that in our company, our service advisors will sell about 43% of everything that gets presented from the technician. So if a technician complains, I’m not making enough hours, the first thing we do is like, well, let’s see your average recommendation. How much money does it yield? How many recommendations per car do you have? And I can tell you 99% of the time, there’s a very low recommendation rate. There’s not a good inspection that they’re doing, therefore they’re not allowing the service advisor to fully present a well written estimate and a good one. So I would monitor and police the inspections and make sure they’re doing them as best as possible. And perhaps if you’ve got to slow the car count down, well then you’re going to have to slow the car, count down, see 10% less cars. But I introduced 10% more to the inspection to start at least there. I’m sure today’s American fleet is the oldest it’s ever been, so there’s really no excuse for having a $500 estimate. It’s got to be higher than that.
Bill Connor (26:14):
So your tip for the technician is do a thorough inspection, document it properly. So we get them doing their thing now they’re doing their thing, they got pictures, they got notes, they got editing, and now it’s went to the service writer and the service writer. What do you do to go ahead and get them to make sure they estimate and present everything? Because if they don’t, if it’s not worked as a teamwork type effort, things can fall apart pretty quick.
Gerardo Luna (26:38):
Well, you can see it on the stats on AutoVitals. You can see what gets presented, how much gets quoted out, and obviously you need to police that as well, your manager or somebody that can oversee that. But you can see it on the, I lost my train of thought on the business control panel. Control panel, yes. You can see it there. What gets percented and how much of it,
Uwe Kleinschmidt (27:08):
Can I go back to 2021? What else did you guys find which now deserves to be honed for 2022?
Gerardo Luna (27:25):
Well, we had to grow as a company. We added a fourth location. And this fourth location, it’s a little bit more than a, it’s probably, it’s more than just a fourth of the company. It’s more like a third of the company. It’s a big shop. Well, so we grew in three processes. When we made the decision to buy a separate location, we grew our limit cap grew that we can accept more risk, our pain tolerance if you will, rose. So the owner grew and then our departments grew, so we needed a more robust accounting system. We added a person in our accounting system, and then we added to our marketing team, we went ahead and added to the marketing team because you can’t grow if you don’t have the departments that are robust or big enough to accommodate the traffic. So we grew our footprint or our base, per se, of what we can carry.
(28:33):
And then the last thing, personnel. So today we have four locations. We have a floating service advisor and a floating technician. And when you have four locations, that comes very, very handy because as you know, people get sick and then we can send reinforcements there and if a service advisor is sick, we can send somebody to help out in the front. So that is a win-win. And that’s something, one of the minute thing of having a multiple location that you can afford those things because reality is that people are going to call in sick, they’re going to go on vacation, and we’re going to need somebody.
Uwe Kleinschmidt (29:14):
And have you thought about going even virtual with a service advisor? That’s exactly
Bill Connor (29:21):
What I was just going to ask. Yes, you got to send a technician there, but can the service advisor do it from wherever they happen to be purchased at?
Gerardo Luna (29:28):
Well, we’re actually building, well, I’m glad you asked. We’re building a remote facility at one of our larger buildings. We’re adding pretty big desk where each, he’ll have eight monitors per se, and each station will be each shop, and he’ll be able to do write up tickets, answer the phones, the phone. We use voiceover ip and he’ll be able to answer the phone from any shop. And as of now, he’s going to help us build tickets. One of the, as we begin to hire more service advisors, there’s a lot of customer service talented people that don’t know anything about cars. In reality, they don’t have to. So if we can have somebody assist them, create the more difficult jobs, build those difficult tickets, that’s one of the new ventures that we got going on. We’re going to try it. I don’t know if it’s
Bill Connor (30:30):
Going to work. Sounds like a remote production manager. Remote estimator. It works really good because for the service writer, it takes all the emotional aspect out of creating a profitable estimate, especially if they’re relatively new to the industry. They might be shocked by prices, but if that information’s coming from somebody else and all they’re doing is presenting it, they can handle that all day long.
Gerardo Luna (30:53):
Well, that’s, we’re probably going to go live with it here in about a week, so I’ll let you know how it works.
Uwe Kleinschmidt (30:59):
Wow. We’ve been
Gerardo Luna (31:00):
Planning it for months though,
Uwe Kleinschmidt (31:02):
Bill. I think we have to, this seems to be a trend. We know of quite a bit of shops who are doing things virtual in remote and combine that with the specialization into estimating to free up the sales capabilities of the service advisor. We should have,
Bill Connor (31:26):
I see a podcast about it, certain three, an outside company that basically all as they do is contract with shops to perform estimating process form.
Uwe Kleinschmidt (31:35):
Wow. Yeah.
Gerardo Luna (31:36):
Wow.
Uwe Kleinschmidt (31:36):
That would be the next step.
Gerardo Luna (31:39):
I like your idea,
Uwe Kleinschmidt (31:41):
But Bill is founding a company in the background as
Bill Connor (31:44):
We speak. I’m not at liberty to say, right? Yeah.
Uwe Kleinschmidt (31:50):
Oh, that is cool. That is really cool. Anything else? Fifth location in the making,
Gerardo Luna (31:59):
Fifth location. We’re not per se aggressively looking for it, but I know there’s opportunities coming down the pipeline. And I hope that we’re, we’re still building our processes and solidifying our foundation to make sure that we are able to keep growing general managers. And it’s my next move because I’m the general manager right now, and I realize that doing a lot of things kind of not as good as I should at a lot of things. So general managers to the next thing, our next step. And I’ve always been a proponent of delegate and elevate, give some of my tasks to somebody else. It doesn’t mean that I can sleep in a little bit more or I can go on more vacations or anything like that. It just means that I can do other things better. And it means the same for them. When you delegate something to somebody, we should see it throughout and make sure they’re fully, fully understand what they’re being asked to do.
(33:03):
Not only the task, but the beingness of it. When you said, when you tell somebody to greet somebody, you got to project friendliness, not just smile and say hello. So all those things of being a good manager, being a good service advisor, there’s an essence to it and not just robotics to the process. And I think takes training. Rita and I are big people, persons and we like people and me out going out and about hanging out with the guys at the shop and listening to their conversations and being part of their conversations and their meetings. I get up and do that every day with a smile on my face.
Bill Connor (33:45):
So I’m betting that the checklist you have when you’re looking to acquire another shop would be similar to what I would look for in a shop that actually needs to go digital friendly employees. They’re doing okay, they’re open to new ideas even if they got to be poked and prodded and shown the deal. So what are the things that would actually go ahead and be dissimilar when you’re looking for a new location that you would use to go ahead and tell somebody that your shop is actually right to go ahead and make this type of change?
Gerardo Luna (34:15):
Yeah, I would agree with you a hundred percent. It’s definitely one and the same. And I think even if the shop that you’re looking to go digital is having some challenges, going digital will help you in many ways. Not only in customer satisfaction, not only in efficiency with the technicians, but also to be able to manage the shop. There’s so many key metrics in there that will tell you technician, behavior, service advisor behavior, consumer behavior. I mean, it is just really a set of gauges that you can really utilize at any time of day.
Bill Connor (34:58):
So years ago when you first started your shop, was your position in the marketplace pretty much that I’m here to fix what the customer comes in, is broken, and then it kind of evolved to, look, we really need to go ahead and give an overall vehicle look in there. And now really today we’re actually at the point where our job is not to fix vehicles. It’s to provide safe, comfortable, reliable vehicles and we have to take the whole vehicle into account.
Gerardo Luna (35:24):
That’s exactly what we did, Bill. And my Christmas peach, I added that. We had worked on 9,500 vehicles throughout the 2021, and I estimated about 10,000 miles or a little less than that per car because someone, ’em come back twice a year, so on and so forth. So anyway, a rough number would be 90 million miles that we fixed. And my message to the crew was that we don’t just put a water pump on, we take people to Disneyland, we take people on vacation and these moments that they spend on a car, on their rv, on their truck, pulling their trailer, whatever they got to go, those are memorable experiences. We’re also taking little time to school, getting groceries for grandma, taking somebody to the doctor, all those things. We don’t put water pumps on. We create memories, we create memories. We create delivery for people to have autonomy in their lives and go places. Not just replace a tire rod in. That’s not how we got to look at things. We got to look at it as a safe, reliable vehicle for them to be for so they can have their freedom. And when you look at it that way, things change because now you’ve got to look at the whole vehicle.
Bill Connor (36:40):
And that’s a great way to look at it. And the other thing is, those memories can also be a two-edged sword. So if you create an ugly memory, not only are they going to remember, they’re going to share it with other people, so you might as well create a wow experience that’s a positive. Wow.
Gerardo Luna (36:54):
Right? Absolutely. Absolutely. But yeah, those are some of the great things. Oh, I want to ask, share this with you guys for if you’re going digital, one of the great successful action that we did, we created a game where if a technician averaged, I don’t remember exactly the numbers is years and years ago, but say 15 pictures, full recommendations per car. I don’t remember some of the other key metrics, but if they achieved that per week, they got a ticket and we put those tickets in a jar and at the end of the week we raffle a date night. So it was a gift card to a restaurant and two movie tickets, and it was a game to get technicians to get accustomed to doing a good inspection. And that stopped some of the griping and moping and it got everybody excited about it. Yes. Before you knew it, the game went away and they stuck with the habit of doing it that way. So it was a good thing.
Uwe Kleinschmidt (38:06):
So it was to go to the next level of detail, it was reaching certain KPI values, not who is best, right?
Gerardo Luna (38:16):
Is that correct? Right. No, no. And so once they achieve certain KPI values, they got a ticket and then we put the ticket to the jar and at the end of the week, or I don’t remember exactly when, but we pulled a ticket and that’s who the one, whoever achieved those KPIs and whoever didn’t or they missed the week or whatever that happened, they didn’t play it and everybody wanted to play it.
Uwe Kleinschmidt (38:40):
I’ll
Bill Connor (38:41):
Throw another a twist on that. Go ahead and hit your parts suppliers up for some swag and use that for their gifts.
Gerardo Luna (38:46):
Yeah, there you go.
Uwe Kleinschmidt (38:49):
And how long did you need to do that until it became so routine that you didn’t need to stimulate it anymore or replace it by another game?
Gerardo Luna (38:59):
We did it about eight weeks, about two months.
Uwe Kleinschmidt (39:02):
Oh wow. That’s not very long.
Gerardo Luna (39:04):
No, no, it was not on it.
Uwe Kleinschmidt (39:08):
That’s awesome.
Gerardo Luna (39:09):
It was good.
Uwe Kleinschmidt (39:11):
I love that.
Bill Connor (39:12):
How do you detect in your shop when the technicians and service writers, when this just actually clicks in their head and it becomes something that they would never consider doing without?
Gerardo Luna (39:23):
Well, about three months into it, we were getting feedback from customers, service advisors saying how much the customers loved it and how were they able to sell more because of the pictures they took and sharing this, just continue to continue to promote the buy-in from the technicians. I mean, I’m sure you have stories, but I remember a story from a rather old driver that he thought his Toyota Avalon was going to be the last car he was going to drive. He got a picture of a bushing that was cracked and he said, I have no clue what this bushing does, but it is very clear that it’s broken. Replace it, please. And when a service advisor share those stories with the technicians, they’re like, oh man, you just got me six hours out of that picture. Okay, I’ll keep doing it. So it reinforces itself sharing those stories. We had a weekly meetings, a weekly meeting, and some of those stories were shared all the time, and that’s when we announced the winner of the date and everybody wanted to participate. It was a great thing.
Bill Connor (40:29):
So when you go from digital, when you go from paperless to digital, sometimes service writers kind of get upset that they’re not having to sell anymore. You move your position, your service writers position where they feel they have to sell to their educating and the customers buying instead. Any kind of a thought process on what you do with the service rider, if they’re not comfortable with that,
Gerardo Luna (40:51):
Well, there’s always something to sell. They can sell the ticket. If I never had somebody just buy everything without calling, I mean that happens, but service advisors still need to engage the customer. They still need to educate the process that they’re going to get an inspection mailed to them. We still got to communicate and update the customer where their vehicles in the process of the repair or the service. And if anything else, you can sell ’em to give us a good review. I mean, there’s something, something to deliver to a customer at all times, in my opinion. Even those cookies that we get on Christmas day and the gifts we get as the customers, those are bought by the service advisor who deliver great service. So unless your counter is flooded with gifts all the time, there’s something to sell kindness or customer service, you have a
Bill Connor (41:46):
Formal way that you introduce a new customer that’s never been to your shop before to the fact that you’re a digital shop and what that means to them. What does that conversation sound like?
Gerardo Luna (41:56):
Well, we took it out of the processes and procedures that AutoVitalsprovided to us early in the game. We have a laminated inspection sheet and we get it out and we show ’em like Mr. Customer, we do a digital inspection and this is what it’s going to look like. You’re going to get a text from us and then you’re going to get a second text with the inspections after we go through the whole spiel and they understand that and they’re waiting for it later on that day, it’s, it’s a great conversation. We even do shop tours as well. Not only do we tell ’em about our digital inspections, but if they wanted to go on a shop tour, we welcome them to the back and they’re very excited to one out of tens take it, but they’re very excited to go to the shop and see how things work and press on a button that raises the hoist or pull on a lever or something like that. And they’re very intrigued and it actually buys a lot of buyin that you met Bill, and Bill says that you need eight coils. It’s like, did Bill say that? It’s like, yep. It’s like, okay, go ahead. It just buys a lot. Buy. And
Bill Connor (43:07):
They walk back into a shop that looks like an operating room. It takes care of a lot of the questions. Right off the bat,
Rita Luna (43:14):
We also introduced a mechanic who’s going to be working on their vehicle.
Gerardo Luna (43:19):
We give the credentials. We just enhance the transparency.
Uwe Kleinschmidt (43:26):
So in the pickup and delivery times when everything is digital, how do you deal with first time customers there? It’s a little more difficult because they never show up at the shop.
Gerardo Luna (43:46):
Yeah, we still take ’em through the process over the phone, and then we text them a lot. So we text the updates instead of calling them. We try to do that more and more. And man, I think for my liking, I think we over communicate, but customers love it. So obviously we’ll
Uwe Kleinschmidt (44:07):
Probably tell you if you do so don’t worry. Yeah.
Bill Connor (44:11):
So you’ve told them right from the beginning what to expect, and then you go ahead and fulfill them expectations on it. So that’s actually huge. If they know they’re going to be communicated to digitally and you’ve told ’em it’s going to happen and then you make it happen. I mean, that’s a perfect scenario.
Gerardo Luna (44:28):
Yeah, absolutely. There’s not a lot of, I think we’re so digital now. We’re so capable with our smartphones that it doesn’t take a whole lot of convincing or explaining to do. Just the fact that you’re going to get an inspection on your phone, go through it and then call us back. It’s very self-explanatory. We hardly have to do anything more than that.
Bill Connor (44:52):
One of the questions that we get quite often is the last frontier seems to be exit scheduling customers. And we keep talking about that. Shops are exit scheduling customers for their next oil change service or their next mileage. And we’ve been talking lately about wouldn’t it make more sense to go and exit schedule them for their next vehicle health inspection instead? So do you have lean one way or the other in that particular group?
Gerardo Luna (45:18):
That’s something we have not been very successful at. We do schedule recommended repairs. When a customer tells us that I can do the stretch today, then we ask ’em, do you want me to remind you in 30 or 60 days? And then we schedule that and that populates in our schedule, and we call ’em 30 or 60 days whenever they want it. But as far as their next service, we have not been very successful at that. We started a few years ago and that didn’t follow through. I don’t have an answer for you there, Bill.
Bill Connor (45:50):
Cool. I often wonder when everybody says that we’ve tried it and didn’t work, what are the barriers? So if you go to a dentist or a doctor before you leave, you’re going to know when you’re coming back. So I always wondering why that our industry seems to be so hard to go and get into that. And most of the time when you start asking questions, it boils down to the service writer, which is actually tasked with doing it, really doesn’t believe in it. It doesn’t fit their belief system.
Gerardo Luna (46:18):
Right. Yeah. Something that we have not mastered yet. I would like to one day, but it’s a big hassle. We’re going
Bill Connor (46:26):
To have to automate that process so it happens automatically, right?
Gerardo Luna (46:29):
Yeah. There you go,
Bill Connor (46:30):
Uwe. You got that on list.
Gerardo Luna (46:31):
Well, we kind of do. We sent the reminders already, but
Bill Connor (46:36):
A reminder is a lot different than exit scheduling the customer because the sense of obligation comes, even though they know they can change it, they’re more obligated to do it than not.
Gerardo Luna (46:48):
Yeah. I think some of the feeling is also when a customer leaves, I mean, most of our, well, not most of our customers, but I hear it almost every day. They say, thanks guys. Thank you for everything. I will say, I hope to see you soon, but I don’t. And then they leave, even though they’re happy and they’re being sarcastically, maybe the spending money on their car is not something they look forward to. I don’t know.
Uwe Kleinschmidt (47:15):
Actually, this is a good point, and Bill and I are pretty passionate about changing why customers should come back because exactly for the reason you just mentioned. They just spend X amount of dollars for you to make the car ready to go and save for hopefully ever. And so a message of I need to see you back is kind of counterproductive and not intuitive, but nobody is going to question that. There’s wear and tear and stuff can happen. So instead of exit scheduling for a service interval driven next visit, which is super abstract, I believe, and it gets longer and longer and longer with modern cars, right? Schedule the next inspection saying, look, there’s wear and tear. You are aware of it. We just want to be preventative and would love to schedule the next inspection, six months, nine months, whatever you guys feel comfortable,
Bill Connor (48:39):
Even if you’re preventing a squirrel nesting in your car, because they can pop up overnight,
Uwe Kleinschmidt (48:43):
Right? So instead of implying there is another repair and another cost, right? We just want to check your car
Gerardo Luna (48:55):
Perhaps if it was worth less a free health check.
Uwe Kleinschmidt (48:58):
Yes,
Gerardo Luna (49:00):
Exactly right. I’m going to put you down for a six. Or
Bill Connor (49:01):
We can adopt Brittany’s program where that we have this long warranty, and in order to keep it in effect, we need to see your vehicle for his next vehicle health inspection on X.
Gerardo Luna (49:12):
Got it.
Uwe Kleinschmidt (49:13):
But I don’t think the warranty makes it, takes it to the next step, but I think it’s completely clear. If you go for a checkup and it doesn’t cost me anything. It is maybe inconvenient, but I just paid a lot of money to keep my, or bring my vehicle back to health. If I can do something to keep it there, that should be
Gerardo Luna (49:43):
Right. Well, those are all
Uwe Kleinschmidt (49:47):
Logical ideas.
Gerardo Luna (49:49):
And one of the things that I noticed that dealerships doing is that they’re selling packages like two year packages of maintenance. And that’s something that I think we got to, I’m looking into competing with because what they’re selling, it’s like, I think Toyota, I saw Toyota, it was like $200 for the next two years of oil changes, up to four oil changes. And what they’re really buying is it’s
Uwe Kleinschmidt (50:15):
Loyalty,
Gerardo Luna (50:16):
The loyalty of the customer for the next two years, not really. Oil changes.
Uwe Kleinschmidt (50:20):
Yes,
Gerardo Luna (50:22):
I doubt a busy consumer is going to remove, go to the dealer, remove the, and take it at your shop because it needs transmission flush. He’s going to get done there.
Uwe Kleinschmidt (50:31):
But really, I mean, for me, it’s still a different concept to go with the inspection because the service in the world base, the oil changes. There’s always, yes, you need to get your oil changed. Although that is true, it’s just somebody needs to work on my car instead of let’s check whether there is something to work on or not. I feel the message is less intrusive. Like I said, oil change in the world, go now to, I don’t know, what’s the highest oil change in the world? 15,000 miles.
Gerardo Luna (51:12):
15,000. Yeah, 15,000 miles that I’ve seen
Bill Connor (51:15):
On my car.
Uwe Kleinschmidt (51:19):
Now
Gerardo Luna (51:20):
You know what we got to you? You’re absolutely right. But the thing that we have to fight is that for decades,
Uwe Kleinschmidt (51:27):
Yeah. Oh, I know.
Gerardo Luna (51:28):
We have trained customers that are all changes, the ultimate caring for love in your car,
Uwe Kleinschmidt (51:33):
But it’s all education. And as long as, look, we got the digital inspection where is now? So I’m not afraid of taking on new challenges, as
Gerardo Luna (51:41):
You know. And I think as an industry, we did that
Bill Connor (51:47):
As an industry, we need to go ahead and be putting out the customers at a condition based inspection, based by a skilled professional that has your interest at heart to keep that vehicle on road as inexpensively as possible, versus the OEM that has to sell you new car every three to four years to go ahead and stay in business. That’s where we need to go. Condition-based inspection by skilled professionals. And your car is telling them what it needs. I mean, you wouldn’t go to the doctor just because 65 years of age you need a bypass. And that’s just it. OEM says, I mean, that’s crazy.
Gerardo Luna (52:19):
Right? Right. Absolutely right.
Uwe Kleinschmidt (52:23):
You were the expert and nobody else.
Gerardo Luna (52:25):
That’s right.
Uwe Kleinschmidt (52:26):
Absolutely. And the health inspection will reveal anything that there is, and no computer in the car will have that
Gerardo Luna (52:38):
No
Uwe Kleinschmidt (52:40):
Spectrum.
Bill Connor (52:42):
We got about five minutes. Let’s see if we can’t go ahead and get them to go ahead and share some things that everybody should. Maybe two or three things that people need to go ahead and start doing tomorrow to go ahead and help them have a really, really healthy 2022.
Gerardo Luna (52:58):
Well, the first thing is to create a vision. And once you have created that vision, put it in paper. And the most important thing is that you share that vision with your crew. Because believe it or not, everybody can read our minds and we might think that they want the same thing we want, but they have no clue sometimes what we want. So lack of communication of our goals, of our is one of the lack of production. It is very counterproductive in our shops. And then we get frustrated with employees and it’s because we haven’t told them what we wanted. And second of all, and Rita can allude to this, but hanging around with people that are like-minded, super lucky. I’m the luckiest person in the world to have a spouse like Rita. She’s not only beautiful, but she’s also very intelligent, very gifted when it comes to accounting. And early on, if when I wanted to open a shop or a second location, if she would’ve told me, what the heck are you thinking? You can barely do one shop or you’re having so much trouble with the one, if I would’ve shared my vision with her and she would’ve doubted me, I would’ve said, yeah, you’re right, honey. What the heck am I thinking? I’ll just keep doing, go back to work for somebody or I don’t know, just not having,
Rita Luna (54:22):
Well, in my eyes, we’re a team, so his success is mine, my success is his, so why not unite? And I have my skills, my talents, he has his, and let’s put ’em together to work. So that’s what we usually do. And then for me, it’s a goal. Without a plan, it’s only a dream. So always have a plan for your goals. What I live by or what we live by is profit first. Right? It’s not how they taught us in school sales minus expense equals profit for us is sales minus profit equals expense. And that’s how we live by, right?
Gerardo Luna (54:59):
Yeah. One of the greatest things that I was taught by Profit First and the coaches early on was to remove some of your money from your account. So when you look at your account, you barely have enough for the bills and to continue to live. And that will create an income demand and that’ll get you out of your seat and go do things and changes your mindset in a way that you got to produce more income to fulfill your obligations, but you’re already removed part of that into a profit account, and that’s how you save. Those are one of the key things that we started early, early on that made the difference in the world for us to buy our buildings and to open other locations. And I guess lastly, I’ll share not to celebrate mediocrity, to really strive for the best. There’s a difference between celebrating sales that, oh yeah, we did this much.
(55:59):
That’s great, but we could have done this much. So knowing what we’re capable of and what, so everybody doesn’t get a trophy in your shop? No. So knowing what we could have been capable of is a key thing. We had a good week this week, but what was really our capabilities, and those are really the numbers that we strive for. Getting a coach has been one of the biggest successful actions we’ve had because it catapulted us 10 to 15 years into the future with coaching. So I recommend everybody get a coach because you cannot see it all as good as we think we are. We know it all. We need it. And being a perpetual student, always reading the books, always hanging around with people that are better than you and are doing things that you want to be like, it’s another successful action that I got.
Bill Connor (56:57):
So understand your profit needs first. Use the digital tools to deliver that wow experience so that way you can charge for the profit that you know have to make and just keep trucking down the road. So we’re up against the end of our time. I’d sure like to thank both of you for sharing a lot of wisdom and a lot of information that others can go ahead and take back and use with us. I’d like to encourage people to go to AutoVitals.com/radio and join us live or take a podcast like this, or we’re on episode 151, take one of them and send ’em to a shop around you that’s struggling them and introduce them to some of our panelists, peers just like them that can help them along in the process. So Uwe, do you have anything you’d like to add before we go ahead and exit?
Uwe Kleinschmidt (57:45):
Yeah, I just want to say thank you and I’m inspired by you being each other’s sounding board. I think that’s a big factor for success. Thank you. Thank you for sharing.
Gerardo Luna (57:59):
Thanks guys.
Bill Connor (58:01):
Appreciate it. Thank you. So for our guests that are listening to us today, go out there and make some money and wow your customers.
