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• The Parts Alliance continue 'Big Drive' to win customers 

  The Parts Alliance is rolling out ‘The Big Drive’ as the latest in a series of national promotions. Billed as the ‘Luxury Edition’ and running until the end of November, the promotion gives garage customers the chance to win a Jaguar XE in either the Portfolio or R-Sport models.

• 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.

• THE WINNER TAKES IT ALL... 

  Workshop owners need to think hard about investment decisions. With that in mind, I’ve used my last two articles to look at a business management tool called value proposition design, which can help us to work out where to spend our cash.
      
  We saw that it involves understanding our customers’ needs, which we do by identifying the jobs they want to achieve, and the positive and negative factors associated with them, respectively known as gains and pains. We then looked at how a business can identify products and services that might help customers complete their jobs, which, in turn, will either create the customers’ desired gains or relieve their undesired pains. These gain creators and pain relievers provide benefit to customers. Thus, investments in the right products and services increase our value proposition.
      
  Our investment decisions are usually complicated by the fact that they can represent a chicken-and-egg situation: Money is needed to support the creation and delivery of products and services, yet profitable products and services are needed to create money (at the very least you will need to show that you will have good profitability if you are borrowing to fund your investment). As such, there are two measures of success of our value proposition: Whether it provides real value to our customers and whether it can be deliverable within a sustainable business model.
      
  This article introduces a concept known as fit, which is the extent to which a company’s offerings match the needs of its target customers and are delivered within a sustainable business. Fit, therefore, represents the yardstick by which the success of a value proposition is assessed.
      
  There are three levels of fit of a value proposition to a customer (segment) profile:
  
  Problem-solution (‘on paper’)
  If we take the value proposition discussed in my last article and check it against the customer segment profile created in the preceding article, we can check their fit. We do this by going through the pain relievers and gain creators one by one and checking to see whether they match a customer job, pain or gain. We can physically visualise this degree of fit by putting a check mark on each one that does (see Figure 1).
      
  In this example, we have used our experience to the identify some jobs, pains and gains that customers might care about, and then created a value proposition to try to address them. However, at this point, we do not have any material evidence of the potential success of these products and services, gain creators or pain relievers. I.e. the fit is only evident on paper. The next step is to find evidence that customers care about the value proposition, or to start over designing a new one, if it is found that the customers don’t care.
  
  Product-market (‘in the market’)
  Once your products and services have been made available to customers, you will soon see whether they provide value to your customers and gain traction in the market place: customers are the ultimate, most ruthless, judge and jury of your products and services.
      
  When assessing product-market fit, it is important to check and double-check the assumptions underlying your value proposition, i.e. have you correctly identified and prioritised the relative importance of the customer’s jobs, pains and gains? Have you provided things that customers don’t care about, and will you have to amend your value propositions, or start again?
      
  Business model (‘in the bank’)
  Your business model is the way your business is geared up to generate revenue and burn cash whilst you are creating and delivering a value proposition to your customers.
      
  The search for business model fit involves reaching a state where you have a value proposition that creates value for customers (products and services they want) and a business model that creates value (profit) for your organisation. You don’t have business model fit until you can sustainably generate more revenues with your value proposition than you incur costs to create and deliver it.
  
  Context
  The potential value of our products and services, and the associated gain creators and pain relievers, doesn’t just depend on their match to the customer’s jobs, pains and gains. It also depends on the circumstances in which they are offered; i.e. their value is dependent on context.
      
  For vehicle owners, an example might be the value of breakdown services. Have you ever signed-up for these from the hard-shoulder of a motorway? You’ll notice that you don’t get much of a discount. Those offers that you might have seen on the internet beforehand will suddenly seem pretty good value. These differences are because the breakdown service companies know full well that the perceived value of their services depends on context!
      
  As such, businesses must identify the contexts in which their products and services will be offered. For example, a customer’s priorities will differ depending on whether they are broken down, have an expired MOT, need a replacement bulb in night time driving conditions, or are just booked-in for scheduled servicing etc. It is possible that each context might require its own value proposition.
  
  Focus
  For a customer having a given set of jobs and associated pains and gains, there are many ways a business might design a value proposition to achieve a fit. This is certainly true in our industry, in which there are many competing types of service and repair provider. Each has tweaked its value proposition to suit a given type of vehicle owner or context:
  
  Independent workshops, often offering a large range of products and services as a kind of one-stop-shop to the ‘general’ motorist, usually aim to generate sufficiently high revenues by inspiring maximum loyalty from customers and trying to meet all their needs under one roof. These businesses require constant investment to provide the services necessary to keep-up-to-date with changes in motor vehicle technology and face a continuous challenge to monetise the value of every additional service.  Many diagnostic (or recalibration) services are still not well understood by customers, and workshops have to work hard to educate them, so that they can ‘appreciate’ their value. Convenience must also play a relatively significant part in their value proposition.
    
  Fast-fit operations are all about convenience: Their customers can get in and out fast, without any notice, and, hopefully, with the minimum of disruption to their lives. The businesses require large stock inventories to ensure that there are no supply-related delays. By concentrating on only the fast-moving (the most commonly needed) products, these businesses can remain highly scalable and profitable: although they limit the scope of their products and services, to reduce costs, their sales volumes allow them to retain considerable buying power. Their customers love the convenience and prices they can offer given the buying power (and increasing integration with the parts supply chain) that the larger fast-fit chains have. Main dealers, I think, rely more on social or emotional pains and gains to draw in their customers (e.g. think about the image they work hard on purveying or the potential manipulation of customer perceptions of safety, both driven by presenting themselves as the most qualified to work on a given make of vehicle). They need to work hard to offer convenience (e.g. courtesy cars, rapid turn-around, customer/vehicle pick-up or drop-off etc.) as their dealerships, geographically-speaking, are relatively sparsely distributed amongst the population. Some vehicle owners (ironically, those most likely to buy their next vehicle from a dealership) will also be concerned with the resale value of their car and may seek to maintain a full dealer service history to try to maximise its value.
      
  Following the above, broadly-defined, categories of businesses, there comes specialists, offering a smaller range of products and services to increasingly niche customer segments or contexts: e.g. independent specialists (single-make specialists combining aspects of both the independent workshop and main-dealer value propositions), diagnostic specialists (as with breakdown and recovery specialists, when you need them, you need them – and they should charge accordingly), component-repair specialists (e.g. transmission specialists).
      
  Then there is the remaining plethora of value propositions available to vehicle owners: breakdown and recovery services (apart from their normal role helping those in distress, I’m sure they would agree that they also play a role in repairing vehicles for those that place no value whatsoever on preventative maintenance…); mobile technicians (perhaps offering the ultimate in convenience in certain contexts?); and, my favourite, the chancers (that bloke in the pub who once changed a side-light and now thinks he can charge an equally stupid idiot to fit a new timing chain for them…).
  
  Future
  We’ve seen from the above that a stack of value propositions is competing for our vehicle-owning customers. As such, our value proposition design work and derived knowledge, can inform a strengths, weaknesses, opportunities and threats (SWOT) analysis of our business. So far, all these competing businesses have managed to co-exist and thrive within an industry that is set-up to offer value to private vehicle owners. However, take a look at Figure 1 again – what might be arriving in the future that could represent a threat to not only an independent workshop but the entire sector? How about Vehicle-as-a-Service (VaaS), a.k.a. car-on-demand? This single value proposition removes an awful lot of the hassle of vehicle ownership (equivalent to automotive morphine…) and provides many gains. In fact, it is so disruptive that it removes/changes the very nature of the customer segment; vehicle ownership becomes almost redundant. Should it be a surprise that one of the few barriers to widespread adoption of VaaS (the convenience of making short, necessary, journeys, e.g. to pick up milk when nearby shops are closed) is being addressed by a company that is seeking to provide VaaS: i.e. Amazon whom are also developing drone delivery systems?
      
  When it comes to the ultimate value proposition, may be there can be only one.
      
  I’ll leave that thought with you.
  
  
  

• TV’s Helen Fospero to host Top Technician and Top Garage Awards Dinner 2019 

  TV presenter and journalist Helen Fospero is to be the host at the Top Technician and Top Garage Awards Dinner 2019, being held on Saturday 22 June 2019.

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