All the things YOU could do… If you had a little money, how would you spend it to improve your business? Maybe you’d buy the latest ADAS calibration kit, or subscribe to an workshop management system?
Okay, now let’s think bigger. If you were given all the money you had ever invested in your business and could start it again from scratch, how would you gear it up to attract customers and make it profitable? Would you build something like
your current business, or would it be totally different?
Why do I ask? Because the world changes quickly, which means our businesses are rarely set up exactly as we need or want, and we must make frequent spending decisions. We must work out how to prioritise our spending, to ensure we always offer the things of greatest worth to our customers; i.e. we maximise our value proposition.
Last month, we sought to understand our typical customer (a private vehicle owner). We saw that they have functional, emotional and social tasks to complete (jobs). These jobs have either good results (gains), or bad outcomes, risks and obstacles, related to their undertaking or failure (pains). For example, taking a car to the workshop is an extreme pain for a typical customer because it makes it more difficult for them to complete their more important jobs (e.g. commute to work or navigate the school run).
This month, we’ll use the things we learned about our customers to design our value proposition; We’ll use a repeatable technique to ensure our businesses offer the things our customers need and want. The result will be a value (proposition) map, or value map for short.
Value mapping
Anything that helps our customers get their jobs done will have value. Therefore, our products and services must aim to help them complete their jobs. If these products and services then eliminate a customer’s pains, they are pain relievers, or, if they produce gains, they become gain creators. By stating the ways in which our products and services create gains and relieve pains, we can communicate their potential benefit to our customers. Hence, by putting a list of our products and services together with the lists of their respective pain relievers and gain creators, we create a guide to the worth of our business to our customers. That is, we make a value map.
Of course, not all our products and services, and their subsequent pain relievers and gain creators, are equally relevant to our customers; some are essential, whilst others are merely nice to have. We can use these differences to help our decision making: by ranking the items in our value map in their order of relevance to our customer, we can see which can be ignored, and which can be prioritised.
Figure 1 shows example items that might be within an independent workshop’s value map, ranked in order of relevance to a private-vehicle-owning customer (a value map is targeted at a specific customer segment). As with the creation of a customer profile, there is no ‘right’ answer; this one is based on my half-thought-through assumptions, and previous business experiences. Yours might differ. Hence, we must derive and tweak our respective value maps accordingly. Ultimately, each of us would use business metrics (e.g. profit ratios and customer satisfaction ratings) to tune our value propositions to the max. But that’s a task for another time.
Products and services
We saw before that customers don’t like to waste time at a workshop; they want to go through their lives with the minimum of hassle. They crave convenience. Therefore, courtesy cars, a handy location (covered under ‘community-orientated’ services in Figure 1), extended opening-hours, while-you-wait servicing, or pick-up and returns (either vehicle or customer) all represent high value offerings. We don’t have to offer them all - they’re included in Figure 1 for reference. Likewise, online bookings and related management systems simplify engagement, bring convenience, and enhance value.
Have you ever heard a customer say they like messy and dirty workshops and technicians? I haven’t. That’s because we attach value to our health and safety: If your premises and staff are well presented, they will project professionalism, and your customers will reach their desired emotional state of feeling safe. Even better, properly motivated, well-equipped and trained staff will increase the likelihood that your customers are safe and secure. As safety fears are powerful motivators and manipulators, we must use our expertise to help our customers assess and manage their exposure to risks. They will then be in control and feel in control of their safety.
Not all customers will be seeking to cut costs all the time, but certainly all of them will want to control their costs. There are ways a business can help customers manage this aspect of their lives: clear terms of trade and fee structures; well-managed engagements with expert advice; warranted parts and labour; and a range of payment methods such as easy-pay solutions, touch-less, or credit card services.
Surprisingly, some customers want to look after their vehicles. Primarily, this helps them feel safe and secure, minimises the risk of disruption to their lives (from breakdowns), and protects the value of their vehicles. A good service history represents monetary value in this sense. This means we should be offering, high quality parts and labour, and OE-aligned servicing and repairs.
Pain relievers
It might suit your ego to think all your customers visit your workshop because of your skill, expertise and professionalism, or your friendly welcome and great (i.e. free) coffee. However, pure convenience can be the decisive factor when some customers choose where to take their vehicles: you’re around the corner; you had a spare courtesy car; you’re open; you were prepared to look at it there and then; you had the part in stock etc. Whilst this reflects the significant value these pain relievers offer to all our customers, it is the case that some of those who value convenience above all else are not able to see the worth of your other products and services. If they don’t understand that your conveniences come at a cost, then point them elsewhere. You will never please them. Nothing has the potential to sour a relationship like an unexpected bill: When my head was buried in an absorbing diagnostic job, adequate communication was sometimes an issue for me. My ‘solution’ was to swallow the costs, to avoid upsetting the customer. This was neither a solution nor a sustainable business strategy. What I really needed was the best preventative medicine of all: Great communication.
It should be no surprise that there are far more pains than gains in our value map: Servicing and repair workshops are all about pain relief; we are either trying to eliminate a current pain, through diagnostics and repairs, or carrying out preventative maintenance to avoid a future pain. Because this is our reason for being, customers find it intolerable to think our actions have caused them unnecessary inconvenience or costs. Nowhere is this more obvious than when we try to ‘help them out’ - Every time we ever tried to help a customer to control costs (i.e cut costs), by fitting a cheaper part or trying a less expensive solution, it always backfired. Every single time. Can you guess who suffered the consequences? It always paid us better to ensure the car was fixed when it left the workshop. ‘Try it and see’ tends to translate into ‘you are going to be really cheesed off next time I see you’, It also counted that we supplied quality, parts and labour.
Gain creators
When properly delivered, our products and services will help our customers have the following: An easy-life; a car that holds its value and works properly; peace of mind; a sense of feeling special at our premises; and the information from our sound advice to make good decisions.
However, for some of us, the ultimate convenience is to not have to engage our brain, so if we really want to take our value proposition to the next level, we must be highly proactive and perform our customers’ thinking for them: e.g. by sending MOT and service reminders, with easy to process ‘calls to action’ so that they are only a click away from being sorted. Then, at the allocated time, we would pick-up their vehicles from their homes to take them to the workshop, leaving a replacement vehicle in their place. I know plenty of businesses that do this. And they are successful.
Money, money, money
There are many servicing and repair options available to private vehicles owners: Independent workshops, fast-fit chains, main-dealer workshops, mobile technicians, chancers, etc. Next time we’ll see how other business types deliberately tweak their offerings (value maps) to fit specific customer segments. We need to learn to be equally deliberate and well-informed about our investment decisions. What if we don’t? Well, we might waste all our money, and lose all our customers. Which isn’t always funny, even in a rich man’s world.
https://automotiveanalytics.net
How’s the health of your business? In my line of work I meet a lot of great garage owners. Dedicated men and women, all committed to repairing their clients’ vehicles to a high standard. They’re intelligent, hard working and persistent people many of which have been in business a good few years.
With all of this in their favour you would imagine that they would be spending their free time pondering the length of their next yacht, or whether they should winter in the Alps or Rockies? Unfortunately this is often not the case, and it’s not uncommon to be asked “How can I increase the financial success of my business?”
We all know that an unfeasibly large income doesn’t buy you happiness, far from it. But I do know this. A healthy business is a profitable business, and a profitable business not only buys you less stress, it buys you choices and options on how you spend your days. Would you like more options? If so read on.
Back to that question. “How can my business be more financially successful?”
‘More’ is a dangerous word and it’s often not attained. A better question would be “What is the maximum revenue, profit and personal income that my business can generate in its current form?”
It is something that a lot of business owners haven’t contemplated. But you really should. Only when you know this, can you decide if your current business is performing at it’s best, and is the vehicle to get you to where you need be financially.
The good news is you don’t need to be an accountant to calculate your maximum net labour revenue. Just using the available hours to sell your labour rate and the number of technicians your employ will get you a long way in the right direction. Take an average hourly rate of £55. It could probably be higher but we’ll come to that in due course. This will yield a maximum net income of £422,000 a year from labour sales with four technicians. If your garage is reaching that level of income (£105,000 per tech) at that labour rate, then you should give yourself a rather large pat on the back. Nice one! Not reaching that? That’s incredibly common. In fact if your garage has a net labour revenue of around 54% of your maximum, then you’ll not be alone as that’s the average for a business when we start to work with them on our business development programme.
Why so low? Why are business owners leaving £50,000 per technician on the table? There are a plethora of reasons but I find the most common answer is one of focus. They’re just focusing on the wrong things.
It’s natural. In fact it’s perfectly understandable why a garage owner focuses on the technical aspect of their business. You know that if you don’t fix the cars in a timely manner to a high standard that your income will suffer and your customers won’t return. So of course you’re interested in technical tools and the latest workshop wizardry that’ll enable you to complete a job that you couldn’t without it, or the same job in less time. But let’s be honest (we’re friends after all) is this laser-like focus healthy? Are you too focused on the next tool, the next gadget, the next BIG THING to the cost of your business? All too often I find that a garage owner is and it’s costing you.
If you’re not measuring it…
All that is required is a change of focus. The success of your business is in the data, and if you would like to claw back that £50k per technician (or at least a large chunk of it) then learning how to measure the right data and use it to your advantage is essential. After all: If you’re not measuring it, you can’t improve it.
So, you want to increase your income and profit, what should you be measuring? Here are a couple of metrics to get you started.
