COMMENTARY: Welcome to the new aftermarket

By Bob Greenwood, AMAM

Isn’t it amazing how much change has taken place in our industry just in the past three years, and how much disruption is entering the aftermarket?

Change and disruption will challenge shop owners at a truly fundamental level. How you react is a good test of whether you’re clinging to old-and-dying business model or thriving with a new and vibrant one.

Not sure which side of the equation you’re on? This quiz might give you a clue.

* As the owner of your business, are you still working in the bay?

* Is your shop understaffed by at least three people: one in the bays, one at the front counter, and another in the back office?

* Do you look at wages as a cost to your business?

* Do you continuously watch total shop sales, always looking for a higher car count and only feeling good when the shop is busy?

* Do you measure mainly sales per repair order as the key measurement of improvement?

* Do you like to put on specials and seasonal sales?

* Do you attend an all-day business management class once every two to three years?

* Do your techs average only 20 to 30 hours of technical training per year? (And is that training always local and only at night?)

* Do you inspect vehicles with the number one goal of finding work?

* Do you take only one week of vacation – and consider yourself lucky to get away for that long?

* Are you open six days a week?

These are but a few traits of the old-and-dying business model. It was quite common in what we should start referring to as “the old aftermarket.”

The new aftermarket, on the other hand, is characterized by high-technology and a much more professional attitude. It demands a very different approach to business.

Shop owners that are pursuing success in the new aftermarket have recognized the need to transition from being simple managers to true CEOs.

They have moved out of the bays and away from the front counter. They spend all of their time working “on” the business rather than “in” it. They recognize that having a competent staff is not a cost, but an investment that pays healthy dividends in net profit.

They have realigned their staffing levels, with a service advisor for every two technicians, and two bays or lifts for every licensed technician. They’ve increased the size of the back-office staff with a dedicated person to work with the technicians, focusing on managing the client base.

They’ve made changes in the front too, giving counter staff authority and responsibility to monitor the shop’s numbers. They know that gross-profit dollars are earned in the bay, through productivity. They know that sales numbers are a much less revealing statistic, measuring activity, not profitability. Activity is the “busy-ness” that creates top-line sales, whereas productivity creates gross profit, which leads to net profits.

Most of all, they understand that success in the new aftermarket hinges on conducting comprehensive vehicle inspections once a year on every consumer’s vehicle, and twice a year on commercial vehicles. Service advisors cannot adequately counsel on safety, reliability, and efficiency if the vehicle file is incomplete.

This last point is a key one indeed. Service advisors don’t have to sell work, they just have to connect with clients and understand how the client uses their vehicle and what they expect from it. By being the expert who can help clients achieve their goals for their vehicles, the work sells itself.

Those working in the new aftermarket have learned the math and they know that cut-rate pricing and discounts will destroy a shop’s bottom line and attract the wrong kind of customers. Success is not about being busy; it’s about being steady. When the shop is steady, the team has a fighting chance to execute smoothly and exercise complete control over the day’s work.

These new and vibrant shop owners attend six to eight days of business classes a year to stay on top of constantly changing management issues. And they make sure their technicians are at the top of their games too.

Techs need at least 100 hours of development a year. They should be thinking now about what classes they’ll need over the next 12 months. Plans should be made to ensure there’s no disruption in the shop while the techs are at these classes – either by booking fewer clients for     those days, or getting additional help in. The classes you and your staff need could very well be in another city, or in the United States.

Distance can no longer be a deterrence to career development.

The biggest challenge for CEOs in the new aftermarket is ensuring consistent execution by their staff, consistently positive experiences for their clients, and steadily improving financial returns for their businesses. The mental strain can be exhausting, so it is extremely important for them to get away from their businesses from time to time. In order to keep their heads clear and maintain their creative energy, I recommend they take at least four weeks of holiday per year – and preferably six.

Sound like pie in the sky? The math proves that shops should be able to manage their clients’ vehicles fully and professionally within a normal five-day work week. In fact, respecting everyone’s down-time so they can enjoy life, spend time with their loved ones, and recharge their batteries, is just good shop policy.

Everyone – shop owner and staff alike – should be able to enjoy every weekend, all their statutory holidays, and ample vacation time throughout the year.

And the money is there to support that. The average independent shop is missing out on more than $25,000 in net profit per bay per year from the current business coming through their doors. Top shop owners have learned where the profit is in their business, and they’re going after it!

The new aftermarket is an exciting place to work. However, it does require change and self-discipline to relearn the business, execute at a higher level, and start measuring new metrics.

The new aftermarket is a true profession with all attendant perks and benefits.

If you insist on staying in the old (and dying) aftermarket, you’re destined to stay in the trade.

Bob Greenwood is an Accredited Master Automotive Manager (AMAM) who offers personal business coaching and ongoing management training for aftermarket shops, focusing on building net income. He can be reached at 1-800-267-5497 or greenwood@aaec.ca.