FOUR WAYS

INDEPENDENT
AUTO SHOPS CAN
COMPETE WITH
DEALERSHIPS
Four Ways Independent Auto Shops
Can Compete With Dealerships
Table of Contents

01 INTRO
02 #1
IMPROVE CUSTOMER SERVICE
& MARKETING

06 #2
FOCUS ON YOUR STAFF

10 #3
PAY ATTENTION TO YOUR NUMBERS

13 #4
STAY CONNECTED WITH CUSTOMERS
 Four Ways Independent Auto Shops
Can Compete With Dealerships
INTRO
Attracting and retaining new customers is never easy in the
auto repair business. But for shops that are ready and prepared,
the competitive landscape is changing in three crucial ways.
First, more Americans are driving older cars that require more
maintenance and repairs. The average car on U.S. roads is now
more than 11 years old, the oldest average age on record,
according to IHS Automotive.
Second, as many Americans put off investing in new cars, they
will have more money to spend on the cars they currently have.
The Gallup U.S. Daily Survey, which tracks overall consumer
spending to estimate a monthly daily spending average, found that
Americans’ spending steadily increased from just $59 in March
of 2009 to $86 in March of 2015, suggesting that Americans are
feeling more economically stable and more willing to spend money
when necessary.
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Third, as more Americans drive older cars, the number of vehicles
no longer under warranty increases, meaning customers who
previously preferred dealerships for maintenance and repairs due
to warranty guidelines may be exploring new service options.
Independent repair shop owners who want to make the most
of these opportunities must set themselves apart from the
competition. While that can be difficult, particularly when
competing with large dealerships that have economies of scale and
marketing budgets, several factors are working in the independent
shops’ favor: they just need to know how to take advantage of the
opportunity. Here are four ways independent shops can get potential
customers to notice them, come in, and keep coming back.
HERE ARE FOUR WAYS INDEPENDENT SHOPS
CAN GET POTENTIAL CUSTOMERS TO NOTICE
THEM, COME IN, AND KEEP COMING BACK.
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 Four Ways Independent Auto Shops
Can Compete With Dealerships
#1
IMPROVE CUSTOMER SERVICE
& MARKETING
Dealerships have a natural advantage over independent shops
because of the amount of advertising and marketing they can do.
While smaller shops don’t have the financial means to invest in
wide-scale marketing campaigns, they can market themselves
another way: by providing great customer service and getting happy
customers to do their marketing for them. If customers believe that
your shop provides professional, fair, quality service, they are going
to tell their friends, family, and coworkers about it.
A 2013 survey on auto repair conducted by AutoMD.com found
that independent repair shops already have a solid foundation
when it comes to making customers happy. The survey found that:
• Consumers trust independent shops over dealerships
two to one
• 80 percent of consumers feel they have been overcharged
for a repair at a dealership
• Most consumers believe they have better relationships
with mechanics at independent shops
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To successfully stand out as an independent shop worthy of
consumers’ dollars, you must continue to retain and build on this
image of a trustworthy, relationship-oriented auto repair service
provider. Here’s how:
Improve the customer experience
Often, since customers aren’t familiar with the technical aspects
of auto repair, they will judge your shop based on the experience you
provide. Everything counts, from the way you answer the phone to
the attitude of your employees to the appearance of your shop.
The most successful independent shops are spotless — not only in
their waiting rooms but in their service bays, bathrooms, and behind
the counter.
And while customers may not judge you harshly if you aren’t using
technology in your shop, they are going to recognize if you are.
The more your shop uses technology, the more innovative and
professional it will look.
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 Four Ways Independent Auto Shops
Can Compete With Dealerships

#1
IMPROVE CUSTOMER SERVICE
& MARKETING
Some shops, for example, use digital customer profiles into Show customers they are your priority
which customers can input their vehicle information, their contact
A great customer experience also comes from how easy it is for
information, and their preferences, such as what time of day they
them to use your shop. Make it clear that you prioritize their needs
prefer to be contacted and by what method, such as a phone call,
by allowing them to schedule appointments online and by offering
text, or email.
flexible hours. Also, offer various payment options, such as payment
by credit card or payment by installments.
Others are using digital invoices that reside on a tablet at the
front desk. When customers check out, they can review their
invoice on the tablet, and then the shop can offer to email the
invoice directly to customers, who are grateful to have a record Customers will judge your shop
of their service that they can easily retrieve, if needed, without
having to rifle through their glove box. (If this sounds like the based on the experience you provide.
Apple Store experience, it is.) As an added bonus, customer Everything counts, from the way you
information stored electronically is easy for shop owners to
sort through the information and use it in the future for answer the phone to the cleanliness
customer follow-up and tracking.
of your waiting room to the attitude
of your employees.

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 Four Ways Independent Auto Shops
Can Compete With Dealerships
#1
IMPROVE CUSTOMER SERVICE
& MARKETING
Market to your core audience
Since much of your success will come from whether your
current customers make referrals to you, think carefully about
your typical customer profile and what they are looking for in
an auto repair shop.
Increasingly, women are taking on the role of managing the repairs
and maintenance of their household vehicles, and they often
value different things in an auto service provider. For instance, a
clean waiting room and bathroom is important to them, as is the
cleanliness of your staff. Your staff should wear clean uniforms,
their shirts should be tucked in, and they should wash up before
interacting with customers and after working on vehicles.
Another critical element to consider is how your technicians and
sales representatives approach women. Women want to feel
respected and acknowledged in their role as the decision-maker
in these interactions.
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Don’t just tell customers how much their repairs will cost; explain
the service associated with that cost. Your customers want to feel
that they are being educated about their vehicle, not that they are
being sold unnecessary repairs.
Make your presence known online
Ensure potential customers can easily find out more about your
shop online. Make sure you have a website that looks professional, is
easy to navigate, and includes key information such as your location
and hours, photos of your shop, and customer testimonials about
the positive experiences they have had with you.
Also, claim your “Google My Business site,” a free Google listing
that puts your business information at the top of search results
when potential customers Google the name of your shop. On your
Google listing, include as much information as possible. Often this
listing may be the first impression potential customers receive of
your business, so make sure it’s a good one.
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 Four Ways Independent Auto Shops
Can Compete With Dealerships

#1
IMPROVE CUSTOMER SERVICE
& MARKETING
More ways to delight customers To further ensure your current customers are sending others your
way, offer an incentive for customers to make referrals, such as a
Here are some others ways to provide a top-notch customer
free oil change or 10 percent off their next visit.
experience that could result in new business:

• Create a script for how employees should answer the phone

and respond to various customer service scenarios. To foster To foster a personal connection,
a personal connection, make sure employees share their name
with customers, ask for the customer’s name, and use the make sure employees share their
customer’s name frequently during phone conversations. name with customers, ask for the
• Distribute a tablet to waiting customers and ask them to customer’s name, and use the
fill out a customer satisfaction survey. This will help you
identify customer service areas you need to improve, and it customer’s name frequently during
will make it clear that you prioritize the customer experience. phone conversations.
• Create checklists that your front-office employees must
fill out daily, such as whether they have restocked the coffee
table and cleaned the reception area.

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 Four Ways Independent Auto Shops
Can Compete With Dealerships

#2
FOCUS ON YOUR STAFF
Effective and customer-oriented employees will improve shop highly paid technician to work that could be handled by a
productivity and increase customer satisfaction, both of which will B-level technician. Once you do this, you may find that you
have a positive effect on your bottom line. Here are a few things don’t have enough work for more than one master tech, if that.
to focus on to ensure your staff is helping you retain your current
customers and attract new ones: • Prepare to pay for quality. We know money is often tight,
but hiring and retaining highly qualified technicians comes with
Hire right a cost. The median income for a master tech is more than
$35,000 a year, but experienced techs can make as much
A great staff starts with finding the right people, so a strong hiring
as $60,000. Take some time to understand what master techs
process must be your top priority. Qualified master technicians
make on average in your area, and offer a bit more. You also
are in high demand in most areas of the country, and most of them
need to offer the usual perks that highly skilled workers
already have jobs. That means shops are usually competing to
expect to earn these days, including flexible scheduling, a few
grab each other’s master techs. Unfortunately, there’s no perfect
weeks’ paid vacation, and health benefits. Finally, master techs
solution to that problem. But here are some tips:
expect their income to be consistent. If their pay fluctuates
• Know how many master techs you need, if any. Master techs with your car count, you can bet they’ll bolt the minute a more
are necessary for diagnostics and complex repairs, but not for reliable offer comes along. Such pay and benefits do get
oil changes, fluid exchanges, brake inspections, and many other expensive. But losing and then trying to replace a technician
basic maintenance items. So take a hard look at your mix of could cost you 20 percent of that employee’s salary, and then
services, and be sure you’re not assigning a highly trained and you’re at square one with the new person.

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 Four Ways Independent Auto Shops
Can Compete With Dealerships

#2
FOCUS ON YOUR STAFF
• Grow your own master techs. If there’s a young, ambitious Evaluate performance
B-level tech already working at your shop, consider training
Make sure your employees have clear job descriptions so that they
him or her yourself (if you can), or paying some or all of the
know what you expect of them. Then, hold quarterly performance
cost of training classes. (You can find accredited programs near
evaluations with each of your employees. Before these evaluations,
you here.) And because modern cars are getting ever-more-
determine whether the employee is fulfilling every responsibility
technically advanced, your existing techs will need ongoing
listed on his or her job description. This will help you determine
training too, so offer them continuing education opportunities.
what strengths and weaknesses to discuss with the employee
If you’re worried you might be paying to train techs to work
during evaluations.
elsewhere, consider fronting them the money as a loan that
they pay back in installments via small deductions to their
future paychecks. (You’ll want to make sure you consult an
attorney to set a program like that up.)

A great staff starts with finding the right people, so a strong hiring process
must be your top priority. Qualified master technicians are in high demand
in most areas of the country.

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 Four Ways Independent Auto Shops
Can Compete With Dealerships

#2
FOCUS ON YOUR STAFF
When discussing employees’ weaknesses, help them identify how Just as it’s important to share specific examples when praising
they can improve in those areas and ask for their input regarding employees during evaluations, it’s crucial to share specific examples
that. Remember, it’s just as important to acknowledge specific when sharing criticisms. For instance, rather than saying, “You are
areas in which the employee shines during the evaluation. At this always late,” say, “You’ve been late three of the past four days.”
point, be as specific in your praise as possible. Rather than saying,
“You interact very well with customers,” for example, say, “I’ve
had six customers come up to me this month to share the positive
interaction they had with you.” Pointing to specific examples When discussing employees’ weak-
makes it clear to employees that you are present, engaged, and
fairly evaluating their performance.
nesses, help them identify how they
Hold staff accountable
can improve in those areas and ask for
While performance evaluations are a great opportunity to identify
their input regarding that. Remember,
general areas of weakness an employee needs to improve, don’t it’s just as important to acknowledge
wait to address larger performance problems when they crop up.
As soon as a problem arises or escalates into a broader issue, speak
specific areas in which the employee
to the employee about the problem privately. shines during the evaluation.

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 Four Ways Independent Auto Shops
Can Compete With Dealerships

#2
FOCUS ON YOUR STAFF
After discussing the problem, make it clear to the employee that Consider creating a digital inspection form that technicians
you are willing to work with him or her to resolve the issue. Ask can use to document repair issues based on the severity of the
“How can we help you get back on track?” An employee who is problem, upload pictures, and even link to videos explaining the
engaged in identifying the solution will be more likely to follow basics of the vehicle’s needs. (Tip: Have an electronic library of
through with the plan for improvement. YouTube videos organized by repair topic so that technicians can
quickly find relevant videos).
Train well
If the inspection form is completed electronically, technicians
It’s critical to establish an ongoing training program to ensure all
can also offer to email the report directly to customers. Even if
employees — not just the technicians — are trained appropriately.
customers don’t elect to take care of all the recommended repairs
Front-desk staff, of course, should focus closely on customer
at that visit, they then have the report as a reminder of future work
service and billing; while technicians should know how to complete
that is needed. Later, your shop can follow up with customers about
an inspection and how to explain repair needs to customers.
these needs, and offer to resend the report if customers misplace it.
One key training area is customer education, particularly
among technicians who must explain repairs, inspection results,
and maintenance needs to customers. Often, visual tools can
help technicians explain what repairs are needed and why.

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 Four Ways Independent Auto Shops
Can Compete With Dealerships
#3
PAY ATTENTION TO YOUR NUMBERS
A third area that can make your shop stand out from the competition
is by making it clear to customers that they are getting more for
their money at your shop.
That doesn’t mean you need to lower your prices. It means you
need to make sure your service far exceeds the competition. That
way, customers will be willing to pay the fair, competitive prices you
charge. If you follow the methods recommended above to create a
great customer experience, customers may even be willing to spend
more money for repairs and maintenance received at your shop.
But thriving financially is about more than just customer service.
You also need to pay close attention to your numbers so that you
are making the most of the money that is coming into your business.
Make sure your service far exceeds
the competition.
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Consider gross profit
A common mistake shop owners make is looking just at their total
sales and checking account balance when assessing financials. But
that doesn’t give them the full picture. They really should look at
gross profit: How much they have left each week after paying for
parts, technicians, taxes, and so on.
To ensure you are meeting your financial goals, you should
determine your weekly gross profit goals and work backward from
there. Gross profit is what’s left over each week after you pay for
parts and labor, but it doesn’t include your fixed costs, such as rent
and insurance, so you’ll typically want to keep that gross profit
number at 50 percent or higher. To increase your gross profit, you
either need to increase sales or reduce your costs, or both. So pick
a few things you want to work on in both areas, and then track your
weekly process to see whether you are meeting your goals.
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 Four Ways Independent Auto Shops
Can Compete With Dealerships
#3
PAY ATTENTION TO YOUR NUMBERS
Price right
Shop owners often believe they need to bring in more customers
to increase their top line. But you must also price correctly for
both your parts and your labor. If your margins are too low, you
won’t likely be able to grow your way out of that problem with new
customers since each new customer is another one whom your
profit margin is too narrow.
To set your parts and labor prices, divide your real cost by the
difference between the margin percentages you’re aiming for
(typically, at least 40 percent for parts and 70 percent for labor) and
100. For example, if you paid $100 for a part, and you’re looking
for a 40 percent margin you’ll divide $100 by 0.6 to get $167.
If you’re average hourly labor rate is $25, and you’re aiming for a
70 percent margin, divide $25 by 0.3 for an actual rate of $83.33.
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Track and monitor performance
One key area to look at when making these decisions is how you
are compensating your service manager. He or she should be
responsible for controlling sales and costs, so that means you should
base compensation at least partly on how close you are to achieving
your gross profit goals each week. It’s your job as the shop owner
to help him or her stay on track, so you should be measuring gross
profit each week and sharing the results with your manager.
Another way to increase efficiency and therefore revenue at
your shop is to hold staff accountable by running a production
report every week to ensure they are on track. If they meet your
production expectations, praise them; if they don’t, help them
make a plan for improvement.
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 Four Ways Independent Auto Shops
Can Compete With Dealerships
#3
PAY ATTENTION TO YOUR NUMBERS
Approach sales strategically
Finally, arrange for some additional training regarding how your
staff members should approach customer sales and work orders.
If they write the work order in a specific way, you are likely to sell
customers on more repairs and maintenance needs.
Make sure that the first item on a work order is the item that the
customer originally came into the shop to address, as it’s very
likely the customer is going to invest in that item. The next items to
include on the work order are those related to vehicle safety, since
customers will usually spend money on safety-oriented repairs.
The last items to include on the work order are the maintenance
and cosmetic items. Those items tend to be of lower value to shops,
so they are the least important to your overall bottom line.
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Defend your prices
When customers push back on prices, empathize but don’t
negotiate. Acknowledge that it’s expensive, sometimes, to keep a
car working properly and safely, and present yourself not as a
“salesperson” but as a genuine service advisor. It need not be your
goal to recommend that the car be kept in “like new” condition, which
is usually the approach the dealership service department takes.
Instead, be entirely honest about what you found: Let them know
what items can probably wait and what items are more urgent, then
let them make the decision without pressure. Most people want to
take good care of their cars, and they’ll appreciate you letting them
know how they can do that without breaking their budgets.
Establishing a long-term bond of trust with your customers is far
more important to your business than any incremental increase
you might gain by talking someone into more than they really
wanted to spend.
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 Four Ways Independent Auto Shops
Can Compete With Dealerships

#4
STAY CONNECTED WITH CUSTOMERS
While it’s important to attract new customers, remember that the And if you document inspection reports via a mobile app, it will be
bulk of your business comes from the customers you already have. easy to include that report in the letter or email so that customers
Be careful not to forget these established customers when you are can review additional repairs or maintenance that may be needed.
attempting to reach new ones.

Check in with customers two days after each visit to thank them
for their business, ask how everything is going, and follow up about
additional repairs. Then, one month later, send a letter or email
While it’s important to attract new
thanking them for their business. customers, remember that the
Use technology to help bulk of your business comes from
Remember to use technology to your advantage when attempting the customers you already have.
to better connect with customers, improve customer service,
boost staff performance, and monitor your financials. Mobile
Be careful not to forget these
applications available at Canvas can help you accomplish many established customers when you
of these tasks. If you ask customers to fill out and update their
customer profile via a customer profile app, for example, it will are attempting to reach new ones.
be easy to sort through your customer database at the end of
each month to identify which customers to reach out to.

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 Four Ways Independent Auto Shops
Can Compete With Dealerships

#4
STAY CONNECTED WITH CUSTOMERS
Mobile apps can also help you monitor your staff’s performance Once the goals are set and you and your staff are using the right
and your financial performance. For instance, you can create a mobile forms, you can easily monitor performance over time,
production report mobile app so that all of your information can regularly email updates to your employees — and most importantly,
be updated, monitored, and stored electronically. Tracking and identify when you reach your goals so that you can celebrate with
monitoring performance via a mobile app is also a great way to your staff.
engage your staff. Since all of the information will be stored
electronically, it will be easy to email reports, such as the weekly
production report, to staff members, identify where production Try It Free
is lacking, and set improvement goals.

The best way to get started is to download the Canvas app to

your phone or tablet, then sign up for a 30-day free trial. From
there, you’re free to explore hundreds of pre-made forms for
auto repair in Canvas’ Application Store — or make your own
using Canvas’ app builder.

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14
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