Automotive Management Institute Instructor Blog

Listening to Customers Makes You More Money

2008-04-04T08:42:00.000-05:00

If you want to make your shop more profitable, turn your ear toward your customers.

How do you define quality service for your customer? If you have already begun to answer this question, then you have fallen into a common trap. I believe that we don't define quality customer service, the customer does.

It is my belief that quality is whatever the customer says it is. The customer may want it fast, they may want the best price, and/or they may want the best product regardless of price. Only the customer can truly define what quality means for them.

To define quality, you must first listen to your customers. Your customers will tell you what they want if you ask and listen.

An old Turkish proverb says, "If speaking is silver, then listening is gold."

Listening is gold when it comes to business. To better serve customers, deliver quality service and make more money, we need to be better listeners.

Get mentally prepared
Your mental state has a big influence on your listening ability. According to Dr. Eric Berne, there are three modes of behavior, which are referred to as transactional analysis (TA). They are child mode, parent mode and adult mode. The mode you are in influences how you see the world and thus affects what you hear.

When you're in child mode, anger and despair dominate reason. When you're in parent mode, you can be controlling and judgmental (much like a parent). If others are not doing it the right way, you will respond by telling them so. The best mode to be in is the adult mode. In the adult mode, you focus on the facts, the situation or the behavior and not the person. You are neutral and open, listening to the customer without the biases of the other two modes.

Remember that people form an impression of you in seven seconds. So getting mentally ready also means checking your body posture and remembering to smile (if on the phone, smile with your voice). If possible, grab a pen and paper and be ready to take brief, but specific notes. Your mental state of mind will affect your listening, so be sure to get in the "adult state of mind."

"Seek first to understand, then to be understood"
"Seek first to understand, then to be understood" is one of the seven principles from Dr. Stephen Covey's book, "The Seven Habits of Highly Effective People." First, ask questions and then shut up and listen. Don't prejudge the issue or blurt out answers or solutions. Remember quality is whatever the customer says it is. Listen for needs, wants, desires and challenges. All of these answers will provide clues to better servicing the customer and helping them to buy from you.

Check for understanding
Even if you think you know what your customers said, you still want to "check for understanding." Some studies show that as much as 70 percent to 90 percent of a message is screened by the receiver. Don't assume you know what they said. Check it out. Ask questions for clarification, check for accuracy or ask them to repeat the information again. If they inform you that you don't have it correctly, then let them tell you what they meant. Never assume anything. Again, the key is to identifying customers' needs and wants. This happens by actively listening.

Listening is gold
The following techniques will help you actively get involved in the listening process and make you more gold. These tips are not in any specific order. As you read the list, focus on any ideas you tend not to use on a regular basis and put them into practice.

Get ready mentally - Clear your mind of any preconceived idea that could taint your understanding of the speaker's message. Temporarily let go of your need to be right and any prejudices you may have.
Come prepared - Develop a list of questions you want to ask. This gets you in the asking/listening mode.
Encourage the listener - Your body language can be an encouraging or discouraging factor when getting others to talk. Demonstrate your interest by leaning forward slightly, making eye contact, giving encouraging vocal cues ("Hmm," "Interesting," "Really") and being physically attentive, not doodling.
Listen with your eyes - Some studies show that more than 80 percent of the message can be nonverbal. Don't just focus on the words - engage your whole self into the process. Make eye contact with the person and pay attention to nonverbal cues.
Watch nonverbals - Look for eye contact, change in voice, facial expressions, posture, tone of voice, gestures and so forth.
Internal summary - Concentrate on what is being said and try to summarize the main points in your mind.
Take notes - When appropriate, take notes. This is an active way to stay engaged in a conversation. However, take brief, key-word notes.
Restate - For clarification, repeat what the person just said using their words. For example, "Let me repeat this to make sure I understand."
Paraphrase - This technique is where you restate what the speaker said in your own words to see if you understand the message. "So let me see if I understand, you would like me to ..." or "So it sounds like you want ..." Then wait for the other person to confirm or clarify your paraphrase.
Minimize interruptions - Don't try to take phone calls, read or complete another task while someone is talking to you.
Don't interrupt - Let others finish what they're saying.
Allow for silence - Pauses may seem uncomfortable, but don't automatically interject your comments. People may need a little time to gather their thoughts. Silence shows strength.
Think before responding - Suspend judgment; think about what they said before responding.
Ask questions - First, ask questions to clarify what the speaker is saying. Next, ask questions to encourage people to tell you more or force them to think through an idea. You can do this by asking open-ended questions. Examples: "Tell me more about that." "What do you mean by that?"
Avoid prejudging - Get all the facts before you draw your conclusion. Don't assume you know what the other person is talking about until you've heard the whole message.
Avoid tuning out - Be careful not to tune out because you may disagree with what the person is saying. Remember that your job is to listen and understand, not necessarily agree.
Next time you are talking with a customer or a prospect, try using these techniques. Who knows? You might be able to save time, make more money or even increase the quality of your service with these easy concepts.

I like to close this article about listening with a quote from one of my favorite motivational speakers, Zig Ziglar. He said: "People don't care how much you know until you show how much you care."

By being a good listener, you will not only make more money now, it will help you build better relationships to increase your revenues in the long run.

Thinking of Rehiring a Technician Who Worked for You in the Past?

2008-03-11T12:34:00.001-05:00

Most shop owners and managers at many dealerships are willing to rehire past employees who were good producers. When you listen, this is what they'll typically say ...

"Now that Mike's worked at another shop for a while, he knows just how good he had it here with us! So I know that if I hire him back, he'll be a great, lifelong employee!"

Well, before you jump to an agreement, maybe you should consider this: When you bring someone aboard, you need to look for a number of things, and none are more important than a mutual commitment to a long-lasting relationship. And one easy way of doing that is by making sure each and every employee knows you have a no rehire policy. You'll need to tell them, in very clear terms, that if the day ever comes when they think about moving on, then they'll need to really think through their decision. Here's why:

If you're willing to rehire an employee, then what you're really doing is sending a strong message to your people that they can leave whenever they'd like, and if they were good employees, you'll always be open to hiring them back. Now here's the downside: That kind of business philosophy leads to giving people the initiative - or as I like to call it, "the silent approval" - that at any time, they can go out and see if the grass really is greener on the other side of the fence. So when the shop down the street says they'll pay them a dollar an hour more, this is what they'll typically think ...

"You know, it's a great opportunity and I'd really hate to pass it up. Since I have a great relationship with my boss and since I'm one of his best producers, if it doesn't work out, for whatever reason, I'm sure I can get my old job back!"

Now I need to be clear. There's nothing wrong with anyone wanting to do better in life, and we should always encourage career advancement in all the people who work with us. But as business owners, we need to think through our policies. By having a policy that says we'll consider rehires, what we're really doing is this: In a very indirect way, we're encouraging our employees to go to work for our competitors and we're putting ourselves in a position whereas we have to find and hire replacements. Then, if we do rehire, we're going though even another expense. All at your cost, and not at the cost of the employee.

So by now you might be asking yourself what a no-rehire policy will do for you. Well, here are your answers!

First of all, a no-rehire policy will bring about a greater commitment and sense of loyalty from all your employees.

Second, it will make all your people do what they should do, which is really think through any decision they make to leave your company. And that in itself will help prevent your people from making those quick, emotional decisions that more often than not turn out to be the wrong decisions.

And finally, the best benefit of a no-rehire policy is that it will cause your people to be more open, and discuss their concerns with you, rather than trying to run from the issues that may be confronting them at your facility.

Are there exceptions to the rule? Of course there are. If someone has to move out of town due to a family issue, if they are forced into a career change due to medical issues, or if they leave you for any other reason that is legitimately outside of their control, then they should be candidates for a rehire. On the other hand, if they walk away from you by choice, they'll not only be leaving you, but they'll more than likely go to work for your competitors. And by the way, if you go through an exit process with an employee, you will more than likely find that many of your people will change their minds and decide to stay on board when they're reminded that you have a no-rehire policy.

So, I guess, good business relationships are no different than good marriages. They require genuine commitments up front, continual communication, an understanding that there will be both good and bad times, and a willingness to make it work.

Paid Sick Days Are Bad for You, Bad for Your Employees

2008-02-14T10:34:00.000-06:00

Now, here's where a lot of shop owners get into trouble. They'll put together a compensation program based on what their predecessors have done rather than what they should be doing, which is thinking through the entire process. To put it another way, they fall into that age-old trap of following the examples of all the wrong people.

Let me give you an example of what I'm talking about. If you're like most shop owners, you probably think paid sick days are a good idea, because that's what our industry has done for decades. But I disagree. Paid sick days are not only bad for your employees, but they're bad for you, too.

Before you jump to any conclusions, consider this: The first step in putting together any kind of compensation program is to never forget the cardinal rule when it comes to training puppies, raising children and managing - "The behavior we get is the behavior we reward."

If we apply that rule to sick days, it stands to reason that what we'll be doing is rewarding people for calling in sick. Now that does not make much sense. But what does make sense is accepting the fact that people do get sick, no matter how good their health may be. We also have to accept the fact that sometimes an employee needs time off for personal reasons, and without question, if they do get sick, it would be nice if we could offer them some form of a financial safety net. If I have your agreement so far, you're probably asking yourself, "How can we reach all three of those goals?" If that thought is going through your mind, here's your answer:

The first thing you need to do is look for ways to reward people for staying healthy, and the way you do that is by offering all of your people what I like to call "well days," instead of "sick days." (The behavior we get is the behavior we reward, remember.) Have a meeting and tell all of your people that they're going to be entitled to three "well days" per year. If they're ill, they can take the day off, and they'll be paid the predetermined amount of money for that day (for the purpose of this article, let's say that amount is $200).

If they need a day off to pick up family members coming in from out of town, meet with teachers at school or take care of any other personal matter, they can use one of their well days. All that you require is that they let you know as far in advance as possible if they're going to use a well day for any personal needs.

By now, you're probably asking yourself how you win! Here's your answer: What you'll have is less absenteeism, and happier people, at the same time! Not only do they now know you understand that they, too, have personal needs, but they also know that at the end of the year what you'll do is buy back any unused well days for their face value! And if they haven't used any of their well days, you'll pay them double the face value for all three!

For example, if Larry only used one day (worth $200) and at the end of the year he had two days left, he could redeem them for a total of $400. And Mike, who didn't miss a single day throughout the entire year, gets a check for $1,200, which is all three of his well days at double their face value.

What this means for you is that when the day comes when one of your guys or gals rolls over in bed and thinks about calling in sick, they'll also realize that decision is going to cost them $200. And as the year reaches a close, they'll start to realize there's a good chance they won't be using any of their sick days! If they decide to take one at that point, they'll forfeit the bonus they would have received for not using any of the days.

Consider giving this idea a try. Never forget that when it comes to managing people, the behavior we get is the behavior we reward. What we need to do is let them know we respect the fact that they have personal needs. We need to put them in a position where they're not going to be telling us the white lie that they're sick to have the day off, and we need to do what your competitors never will do! Reward your people for being productive, and staying healthy - both at the same time! Well days can help you reach that goal.

Women Want Positive, Receptive Customer Service

2008-01-17T10:08:00.000-06:00

It's common to hear or read about the growing influence of women in today's society. The U.S. Census Bureau reports that three in 10 households were maintained by women in 1996. According to the National Foundation for Women Business Owners, women-owned enterprises are growing faster than the economy in general. The National Automobile Dealers Association's latest quarterly survey shows evidence that women are a growing part of the dealership sales force. The National Institute for Automotive Service Excellence reports that women are not only becoming more influential in deciding what car to buy, they are also taking over the traditionally male-dominated responsibility of maintenance and repair. With this increased buying power of women comes an increasing need for automotive service employees to understand women's likes and dislikes, as well as their buying habits.

Big and influential
ASE reports that more than 65 percent of customers who take their vehicle to a repair shop for service and repair are women. AutoInc.'s annual How's Your Business survey of Automotive Service Association (ASA) members recorded slightly lower figures, with the gender distribution of customers balanced at 50 percent female and 50 percent male. This increasing presence and buying power of women in the automotive industry is the result of a rise in the overall percentage of female drivers, while the overall percentage of male drivers is decreasing; and research that shows nearly half of new car purchases are made by women, and 53 percent of used-car sales can be attributed to women. In addition, Ford Motor Marketing reports that women influence 80 percent of all purchases and have 95 percent veto power regarding automotive purchases.

Customer service/politeness count
Nine out of 10 women responding to a recent Car Care Council survey said they believe repair shop operators and technicians treat them differently because they are women, and the difference is seldom positive. According to the survey, women want to be informed customers, understand the repair in layman's terms and receive quality repairs and customer service ... not really any different than the expectations that men have for automotive repairs. "Repair businesses that respond to women's needs and expectations by providing clean waiting rooms, timely delivery, and repair orders that are easy to understand are making smart business decisions," said Lyn St. James, famed Indy car driver.

A Bozell Worldwide and U.S. News & World Report 1996 study showed that politeness is extremely important in a woman's buying process. Nearly 60 percent of women say they have left a store, stopped buying products or hung up a telephone at least once in the past year due to poor customer service. Of that total, 49 percent have done so one to five times; 7 percent, six to 10 times; and 3 percent, 11 or more times.

The same study identified an overall lack of civility in U.S. residents' day-to-day lives, with 78 percent of both men and women agreeing that rudeness has become more rampant in the past decade. Ninety-one percent see this downward shift as a very serious problem. This data suggests that common courtesies and the basic rules of etiquette extended by shop personnel will go a long way toward satisfying customers, especially women.

According to About Women and Marketing magazine, service with a smile and a "can do" attitude make women customers feel welcome. Women like to know that someone is available to answer their questions with "yes," "no" or "I'll find out" responses instead of "I don't know" or "I don't think so" responses. When women complain, they tend to be forgiving if they see progress toward resolution. If the complaint turns out to be a lengthly process, offer them frequent updates and invite them to use your complimentary services (i.e. coffee, shuttle, etc.).

Women with small children in tow will appreciate a play area for their children while they wait; older women customers will enjoy comfortable benches or chairs on which to rest. When their vehicles are ready, women customers like an efficient, expedient process at the front counter (unless they have questions about the repair; if this is the case, be ready to provide a lot of details).

"There is a growing appreciation of female customers. Technicians report that females ask more questions, inquire about details, and are more willing to look under the hood, or check out parts," said Diane Hohman, an automotive consultant in Herndon, Va.

After the repair, make sure women are part of any customer follow-up program. The Council for Marketing and Opinion Research reports that most women (64 percent) find answering surveys an interesting experience. Nearly the same amount like to see how their responses compare with those of others. Overall, women answer surveys because they see it as a way to provide feedback to companies.

Ultimately, all customers want value, whether they're using the services of an automotive repair facility or shopping for clothes. Value is difficult to assess, however, fair prices, respectful service, convenience, quality repairs and a pleasant atmosphere are good starters for creating value in any customer's mind.

How Shops Compensate Technicians: What Works? What Doesn't?

2007-12-19T10:23:00.001-06:00

As virtually every Automotive Service Association (ASA) member will agree, there's a shortage of good technicians. Attracting them and keeping them are vital if your business is to survive. That's where compensation plays a big role; however, also key are nonfinancial rewards (benefits) and intangible incentives.

What's the best way to compensate a technician? What works, what doesn't?

Shop owners don't always agree on the best way to compensate a technician. Some favor the salary form of compensation, others like paying by the hour, some by flat rate, and others by commission.

Earl Copeland, AAM, who has been operating Earl Copeland Garage Inc. in Valdosta, Ga., for 31 years, likes paying his technicians by straight salary. "There are a lot of pros and cons to that method of paying, but in our shop, it just works better," Copeland said. "We used to pay a commission on labor, but sometimes they'd have a good week, sometimes a bad week. This way, they know what they're going to make, and it's better for our customers and bookkeeping too."

David B. (Dave) Zwalina, AAM, the owner of Automotive One Inc. in Longwood, Fla., and an affiliate director on the national board of ASA, favors paying his technicians a flat rate. "We pretty much follow a structured labor guide to determine how much a repair job will cost a customer and our technicians get paid a percentage of that. But say the labor guide allots three hours for a job and the technician completes it in two and a half hours; he still gets paid for three hours. We work 45 hours a week but the average technician can turn 50 to 55 hours of work, for which he is paid."

Zwalina said some tasks - like changing oil, cleaning fuel injectors, servicing transmission systems, and brake work - are what they call "menu-type items" for which there is a set fee and technicians get paid at a set rate for those chores.

He also said that if a technician has a "comeback," a repair job that must be done over or fixed, the technician does not get anything for that. "We try to be very fair with our people and we probably pay them more than the industry average, but we expect them to do good work so the customer won't bring the car back."

Don Whitehead, the owner of Quality Body Works in Midland, Texas, also prefers the flat rate for compensating his technicians. Whitehead said he uses a computer-based estimate to figure a job and a technician gets paid at his hourly rate based on the computerized flat rate for that particular job. If there is hidden damage and the job requires additional time, the technician gets additional pay based on the revised flat rate.

Whitehead said his shop tries to do everything it can to help the technicians be more efficient. "We try to keep them working," he said. "The first six months I was here, I didn't write an estimate; I just watched the work flow. That scared some of my people, but it paid off when we started making the operation more efficient. At least one worker told me he had noticed his check getting bigger and bigger, and it was simply because we did everything we could to help our people be more productive." For ex- ample, Whitehead pointed out that in many small shops, workers have to jockey cars around. "We don't have much of that," he said. "Our people have plenty of room in which to work and they don't have to wait on parts. If there is a delay, they can use that time to work on another job because each technician has multiple work stalls."

Kevin Caldwell, AAM, director of ASA's Collision Division and owner of Autobody by Caldwell Inc. in Laguna Hills, Calif., compensates his technicians on a flat rate commission basis. "If it is by the hour, as the work gets slow, the technicians get slower; if the work is heavy, they still won't do more," said Caldwell. "There's no incentive."

Caldwell said that his flat rate commission basis rewards the technicians who are productive. "If a job is estimated at four hours and if they do it in less time, they can make more."

Rick Sharbrough, AAM, director of ASA's Mechanical Division and owner of Rick's Hi-Tech Auto Care in Katy, Texas, pays his technicians a flat rate but has a built-in incentive for them to do better. "We use labor guides to estimate jobs and if it only takes a technician two and a half hours to do a three-hour job, he will get paid for three hours," said Sharbrough.

Sharbrough also provides a bonus incentive for his technicians. "Every day a guy works eight hours billed out to customers, he will get a $10 bonus," he said. "If he works enough in a week's time to bill out more than 40 hours to customers, he will get a $50 bonus. For every additional 10 hours he works that are billed out to customers, he gets a $100 bonus. For 50 hours billed out, a technician will get a $150 bonus; for 60 hours, a $250 bonus; and for 70 hours, a $350 bonus. I pay these cash bonuses every Monday morning and they are posted on a board for all to see, so it keeps my people competitive."

Sharbrough said the bonuses are available to all of his technicians; they all have an opportunity to make the money - it just depends on their productivity. That way, no one accuses him of favoritism, he said.

Don Seyfer, AAM, a past chairman of ASA and owner of Seyfer Automotive in Wheat Ridge, Colo., compensates his technicians by what he calls "performance-based pay." Seyfer said that if a job calls for three hours and a technician can do it in two hours, the technician will make more because he gets an hourly rate. But if a job is estimated at four hours and it takes the technician five and a half hours to do the job, the technician will still get paid for four hours.

Michael Draskovic, owner of Mike's Auto Tech in Glendale, Ariz., prefers compensating his technicians by the hour. "I've explored other options, but hourly works best for us," said Draskovic. "We think paying by the hour cuts down on rivalry in the shop, and paying by the hour is better than a flat rate because, in a flat rate system, the mechanic is racing against the clock."

Draskovic said he instills in his technicians that they are providing a professional service and that he wants them to give him accurate time and an accurate list of parts. "I think the hourly rate keeps everyone honest and the customer wins," said Draskovic.

Edward Day, of Collision Restoration in Fairfield, N.J., is another shop owner who favors paying by the hour. Day said he might pay a flat rate if the layout of his shop provided "better flow." He said, "We're a high-volume shop, but the layout of the shop isn't perfect - there are a few bottlenecks, and so I think our current pay formula is more fair to my technicians. My guys are paid very well."

Dale Wingate, AAM, owner of Wingate Body Shop Inc. in Findlay, Ohio, also pays his technicians by the hour.

Dale Feste, AAM, owner of Dale Feste Automotive in Hopkins, Minn., pays his technicians by the hour; however, he builds in an incentive for them to be productive. "We also keep track of their flat rate," said Feste. "We have an incentive grid based on the number of flat rate hours turned each week by each technician that results in added pay. In effect, we are saying, 'if you want to make more money, you've got to make more money for the shop.'"

William "Bill" Haas, AAM, owner of Milex Tune Up in Chicago, said he pays his technicians by commission. "I have a graduated pay scale for hours booked (hours billed to customers). We use labor guides to give our customer estimates, and if one of my guys books 30 hours or less, we pay him at a certain rate per hour. But we have pay increments so that the more the technician 'books,' the more he makes per hour."

Haas said the graduated pay scale provides an incentive for his technicians to perform well. "If a technician does a job in less time than the estimate, he can make more," he pointed out. "Conversely, if he takes more time, he can lose."

James "Jim" Overholser, owner of Eureka Body & Fender in Wyandotte, Mich., also pays by commission. He said his technicians get a percentage of what they "turn out."

Overholser said, "When they're on a percentage basis, they know you're being fair to them. We even give them a copy of the invoices so they see for themselves."

In all of the shops surveyed for this article, what an individual technician makes depends on his or her education, skills and capabilities. The more skilled, productive technician is paid at a higher rate than someone just starting out or with little experience.

So prized is education that most shops will pay for their employees' training, and then reward them for that training. For example, Haas pays his people an extra 25 cents an hour for each ASE certification they hold.

In addition to financial compensation, all of the shops provide benefits, which in effect is compensation too. All of the shops provide some type of health insurance. Other popular benefits include vacations, paid holidays, sick days and access to the ASA credit union. Nearly all of the shops provide uniforms. Some provide 401(k) plans or other types of savings programs, and at least one shop (Zwalina's Automotive One in Florida) will pay for short-term disability.

Virtually every shop awards extra "perks" to its technicians. For example, Caldwell lets his technicians work on their personal vehicles after shop hours, and pays all their expenses for attending the International Autobody Congress and Exposition (NACE). Feste also makes available unlimited use of his shop after work hours to his technicians for working on their own vehicles. Zwalina pays his technicians for time off on birthdays. Draskovic gives his technicians bonuses at Christmas, and Feste has a year-end profit-sharing plan in which an employee is fully vested after 5 years' service. Feste also provides his technicians insurance for loss or theft of tools (up to $50,000) and gives them 15-minute paid coffee breaks.

Draskovic provides safety training for his technicians and makes available to them safety glasses, ear protection devices, gloves, etc.

All of the shops prize their technicians and go to great lengths to keep them happy, well and productive. "We treat them with respect and dignity, try to provide a good working environment, and pay them what they are worth," Caldwell said. Sharbrough pointed up the importance of buying the latest equipment and keeping it updated. "We do everything we can to help our technicians be more efficient. We try to remove all the roadblocks or hurdles that will keep technicians from doing a good job."

Many shops, like Haas' business, try to create a "family atmosphere." Wingate admits he's a "people-person" and says he takes time to talk to his people. He wants to know if anyone in their families is sick and he does "little things" like buying doughnuts for his workers. Wingate also takes his employees and their wives out for dinner at Christmastime. If one of Feste's technicians has a child who is in a school performance during business hours, the technician can leave the shop long enough (with pay) to attend. "We're family-first here," Feste said.

Maybe Overholser best expresses the feelings of shop owners. "It's a changing world ... it's harder than ever to get and keep good technicians," he said. "When you do get a good technician, be fair to him."

Shops have various financial and nonmonetary methods of compensating technicians. As long as a shop's employees are productive and content, the shop owner can rest assured the shop has the "right" system in place.

The Rising Cost of Health Insurance

2007-11-13T09:32:00.000-06:00

In today's employee benefit marketplace it is becoming increasingly difficult to get more for your employee benefit dollars this year than in years past. Many factors have contributed to the rising cost of employee benefits, especially group health coverage. As our population ages, the demand for medical services is increasing. New treatments and technology come with a hefty price tag, and we all want access to the very best health care available. Advertising is pushing the demand for prescription drugs to record levels. More Americans are on some type of prescription drug than ever before. Due to Medicare cutbacks, providers are shifting part of the costs of treating some patients to other consumers, primarily individuals covered by private insurance. Federal and state regulations, especially in the small group marketplace, have put tremendous pressure on rates and the ability of insurance carriers to maintain expectable profit margins.

Far too many employers have fallen into the trap of just trying to shop their employee benefit program each year in order to save a few dollars, only to realize 20 percent or higher rate increases the following renewal. This is a vicious cycle that usually leaves both the employer and the employees frustrated each year, especially when benefits begin to erode and costs continue to climb.

Fortunately, there are answers and alternatives that employers can implement to help control, manage and - more importantly - budget employee benefit costs; not just for this year, but for the next several years to come. There are strategies available to both healthy and unhealthy groups. These strategies can usually be implemented effectively for most groups from five to 5,000 employees. The primary goal is to allow the employer greater control of his or her employee benefit expenditures and to protect as much of each year's employee benefit premiums from future rate increases as possible. Two very popular strategies are defined contribution plans, tax-favored Section 125 plans making effective use of voluntary and work-site products.

Defined contribution plans simply allow an employer to budget a specific dollar amount, which will be provided to each employee for benefits. The employer then provides multiple plan design options from which the employee can choose. Employees have the freedom to choose a plan that most fits their lifestyle and maximizes the employer's contribution, while the employer can more effectively budget and control employee benefit costs from year to year.

Employees have the ability to control the level of benefits they desire along with the amount of premium they are willing to spend. The young and healthy employees may choose a high-deductible option that allows for nearly 100 percent of the premiums to be paid by the employer, while the employee with health issues may be willing to pay more for a lower-deductible option. The employees who are using the benefits and driving up the premium costs tend to pay more while allowing the healthier employees the ability to continue to afford coverage. At renewal, when premiums are raised, the employer has the option to raise the amount of the defined contribution or leave it the same. This allows the employer to really budget and control his or her employee benefit cost. The employee has the choice to pay the additional cost for the health insurance or choose an optional plan design, which will defray the increased cost. Employees appreciate the ability to make that decision for themselves, versus the employer mandating that "we are raising deductibles and all employees will be paying more for their employee benefits coverage."

A few key points to designing a successful defined contribution plan is that each plan option maintain an affordable office visit co-pay, an emergency room co-pay and a prescription card. Eighty-five percent of all claims will be in these three areas. Very few employees are hospitalized or have expenses that require them to pay their deductible during a given year. The employer can offer an HMO, POS or PPO combination and still use the defined contribution approach.

Another great tool in reducing your overall employee benefit costs is to reduce your overall tax liability. By instituting a tax-favored Section 125 plan you will be able to provide your employees a raise in take-home pay and reduce your overall employment tax liability. These plans can usually be set up with little or no cost to the employer and allows for the portion of the benefits premium paid by the employee to be payroll deducted on a pre-tax basis.

Many employers have been pressed to provide ancillary benefits such as dental, vision care and short-term disability. Most groups with five or more employees can now offer these benefits along with a host of other group benefits on a strictly voluntary basis. By coordinating your voluntary benefits program and work-site benefits with a Section 125 plan, your employees will be able to customize a benefits program that meets their individual needs on a payroll-deducted, pre-tax basis. In reality, "Uncle Sam" is paying a portion of their employee benefits premium. The employer reduces the overall payroll tax liability for every dollar spent by the employee for these voluntary or work-site benefit products.

Many times, the employees can purchase these products on a payroll-deducted, pre-tax basis and see very little change in their take-home pay. A Section 125 plan allows the employer to actually give each participating employee a raise in their take-home pay at no cost to the employer. In actuality, the employer is being rewarded for this benefit in a reduction of FICA tax they are required to pay on behalf of the employee.

By providing this cafeteria-style approach of providing ancillary benefits, the employees can personalize their choices and only purchase products that benefit their specific situation or need.

Combining the Section 125 plan and voluntary ancillary products along with the defined contribution approach to employee benefits will allow the small employer the ability to offer a benefits package that equals many Fortune 500 companies. This will help with employee retention and satisfaction. Employees like the freedom of choice and having their tax dollars diverted to pay for benefits, while the employer appreciates the ability to finally budget and manage his or her employee benefit costs while reducing overall tax liability.

The good news for you is that the next time you are faced with a double-digit renewal increase, you can use one or more of these solutions to regain control of your employee benefit program.

Involvement Opens Doors to Future Techs

2007-10-11T12:18:00.000-05:00

The week looks busy, but manageable. First and foremost, let's make sure our customers and their vehicles are taken care of. Find out how the employees are doing and don't forget to praise them. Do something with the marketing plan, or maybe leave that until next week. The office computer went on the blink; maybe we should think about a new system. Last, but not least, we need to hire another technician, but in this tough labor market, where and how do we find the good ones?

Automotive vo-tech instructors say, “Get involved with our programs.” Their request suggests a proactive approach to finding and cultivating talent during a time when just about all industries are experiencing a labor shortage. It also models what many businesses in other industries have been doing for a long time. They set their sights on upcoming graduates by offering apprenticeship and internship programs. They visit campuses to recruit students and establish relationships with career placement centers, instructors and counselors. Their goal: reach the graduates before they hit the open job market. This same approach should be used to recruit technicians to your business. It may mean, however, putting aside some stereotypes about the caliber of vo-tech programs and their students, and instead realizing that a positive transformation is taking place at many vo-tech schools.

“We are trying to effect a 'culture change' in our district that automotive programs are no longer the dumping ground for the non-achievers. Instead, send us the students who will actually achieve in our class and have the brains to do it,” said Brian Manley, vocational automotive instructor at Smoky Hill High School, Aurora, Colo. Instructors leading this charge appear to have one thing in common. “They love their programs and they love their kids. If you don't, you're not going to last doing this very long,” said Manley.

This commitment is keeping and improving the good programs, while programs lacking instructor, administrative and community support are being discontinued. “Many programs are being discontinued when the current instructor retires. In our district, in the last five years, there have been three high school automotive programs shut down when the instructor retired,” said Lloyd Schott, auto technology instructor at Warren Tech Center, Lakewood, Colo. Schott attributes the closings to the high cost of operating an automotive program, especially in states where school funding is poor.

A Student’s Voice I chose to go into the auto repair industry because it is something that I love to do. Since the age of 10, when I received a subscription to Hot Rod magazine, I have been into cars. I started working on the family cars by watching my dad. Soon he was watching me. I have always enjoyed fixing things with my hands.
After high school, I will attend Arapaho Community College. I will go through their excellent auto program. I also plan to enter the Chrysler Apprenticeship Program. For guidance, I turn to my auto instructor, Brian Manley. He has never steered me wrong in which direction to go and is a great help.

I was involved in SkillsUSA-VICA this year. At the district competition, I took first place in Automotive Service Technology, Job Interview, Auto-Related Math and the written test.

Luke Roina, Senior
Smoky Hill High School, Aurora, Colo.

“The programs that are surviving are doing so because of the dedication of the instructor. By this I mean the instructor is willing to spend the extra time required to obtain certification by the National Institute for Automotive Service Excellence (ASE), be involved in training, both manufacturer and aftermarket, be involved in the SkillsUSA-Vocational Industrial Clubs of America (VICA) and the Automotive Youth Educational System (AYES) program, and stay abreast of current technology. These involved instructors have the support of the aftermarket suppliers and manufacturers and receive donations to defray the cost of operating a quality program,” explains Schott.

Schott's program is ASE-master certified. All instructors are ASE-master techs, with one being a world class tech, and the center has had a SkillsUSA-VICA club program for the past 20 years. They also participate in the AYES program, a partnership between General Motors, DaimlerChrysler and Toyota corporations that gives students work experience while they pursue their high school diplomas.

Manley describes his program at Smoky Hill as “wounded” when he was hired as a full-time instructor five years ago. He took the position after a 15-year career as an automotive technician. The program was under probation by the state for not having a SkillsUSA-VICA Club and for its low female enrollment. Tools were outdated or missing and the latest textbooks were 15 years old. It was essentially a “hobby shop,” where students did what they wanted to do. Manley gained support from the administrative department to revamp the program and started the process by taking steps to achieve ASE-certification through the National Automotive Technicians Education Foundation (NATEF). Manley also set up a SkillsUSA-VICA Club, and once the school achieved ASE-certification, it became an AYES participant.

The state of Colorado now requires ASE-certification for its vocational automotive programs or funding for the programs will be discontinued. According to Patricia Lundquist, Ph.D. and executive director for NATEF, states are starting to pay more attention to the expensive programs like automotive and as such, are requiring certification for schools to continue to receive funding. This certification process evaluates technician training programs against standards developed by the automotive industry, and therefore, raises the quality of secondary and postsecondary programs.

“The number of programs ever certified is increasing,” said Lundquist. As of May 2000, there were a total of 1,137 ASE-certified automobile programs of which 687 were recertifications and 450 were initial certifications. (Programs must be recertified every five years.) Lunquist points out that the number of recertifications in automobile programs has exceeded the initial certifications, which indicates that programs are realizing the value of certification enough to do it again. On the collision side, there are 130 programs in initial certification and 83 in recertification. NATEF started the collision certification process approximately seven years after the automobile program.

Lundquist also stresses the importance of a proactive approach to the shortage of technicians and the benefits of being involved with secondary and postsecondary schools. “If you want to get something from the schools, you have to be willing to give something,” said Lundquist.

Manley and Schott both say they have minimal involvement in their programs from the independent segment of the industry. They suggest a number of ways for shop owners to be involved. They can be NATEF team evaluation members, volunteer on advisory committees, participate as a judge for the SkillsUSA-VICA competitions, and support informational days sponsored by the school. In addition, they encourage shop owners to visit the schools and give talks, as well as open their businesses for field trips and tours. “Shops can get involved simply by picking up the phone. Or walk in, see if you can help,” said Manley.

To Get Involved, Contact: National Automotive Technicians Education Foundation
(703) 713-0100
www.natef.org
SkillsUSA-VICA
(703) 777-8810
www.skillusa.org

Independent Technicians Education Coalition (I-TEC)
(425) 413-0232
www.iteconline.org

National Institute for Automotive Service Excellence
(703) 713-3800
www.asecert.org

Automotive Service Association (800) 272-7467
www.asashop.org

Automotive Youth Educational System (AYES)
(360) 456-2849

Upon graduation, Manley will mentor his students to pursue a number of options including postsecondary training at community colleges, dealer programs such as ASSET, SETP and T-TEN, and independent training programs at the college level. Some will join shops and dealerships as employees and rely on those businesses to mentor them and provide additional education and training. Manley also works closely with the Automotive Service Association (ASA) of Colorado and its apprenticeship program. This two-year-old program identifies students at the high school level and develops their skills with a combination of classroom education at Front Range Community College and hands-on experience at participating shops.
A program with similar goals was launched in southeast Texas in May 1999. According to Bertie Standley, school-to-work coordinator with the Southeast Texas School-to-Work Partnership, this internship program is unique because it has brought together local dealerships and independent shops to address the labor shortage issue and improve the quality of vo-tech programs. Students take classroom education at Lamar State College of Port Arthur and receive hands-on work experience at participating dealerships and shops that form the Automotive Technology Council of Southeast Texas. Students are assigned a master technician to mentor them in the work environment. Council members also help instructors and post-secondary and secondary schools achieve their certifications through ASE and NATEF. In addition, they assist with equipment and curriculum needs. According to Standley, there are approximately 20 dealerships and shops in the program. For the upcoming fall semester, however, there are more students than participating facilities.

In the state of Washington, the independent segment of the industry developed a program called the Independent Technicians Education Coalition (I-TEC), now in its third year of operation. “Nobody could find technicians, nobody was doing anything about it and we all knew we needed something,” said Dan Flanagan, vice president of I-TEC and publisher of the Manifold, an industry publication. Approximately 30 to 35 people dedicated themselves to developing the I-TEC program, which was modeled after the dealer programs (ASSET, ASEP and T-TEN); but instead, students are placed in independent shops for their hands-on work experience. Students alternate between classroom education and hands-on learning in this two-year program that concludes in an associate's degree and I-TEC certification. All participants—schools, students and shops—must meet high standards before being accepted into the program. According to Flanagan, the first class of graduates had 16 students. Although the program does not require a commitment from the students to stay with the sponsoring shop after graduation, all 16 of these students are still working at the 16 sponsoring shops.

“Ninety-nine percent of the time students do end up working for the sponsoring shop. They are well-trained; there is an established relationship and the shop owner has been involved in the training process,” said Flanagan. The fourth class to start in September will have approximately 30 students. Based on its early success and acceptance, the I-TEC program was extended approximately a year ago to include auto body repair.

“The I-TEC program is a great example of how independents can get things done. It shows how they really care about themselves, their future and the industry,” said Lundquist.

Surviving the Big One

2007-09-04T12:58:00.000-05:00

The past few years have brought devastating destruction to this country from hurricanes, floods, tornadoes and earthquakes. Now, the reality of terrorism looms over us. In 1993, after being spared Hurricane Andrew's wrath by only a scant breath, my eyes were opened to a fact that most business owners don't even want to think about. I watched helplessly as some of my colleagues tried to rebuild from the rubble. Huge revenues were lost. Some never recovered from their losses.

In retrospect, the precautions I took then would have done nothing to protect my business. Hurricane Andrew gave me the wisdom and knowledge to know what I need to do to ensure my family and business can survive and function after most disasters.

Have a Disaster Plan

Unfortunately, when the wolf is at the door, many owners realize then that it's too late to do much to protect their businesses. Pulling computer, fax and modem plugs aren't going to do much. Having a well-thought-out plan will make all the difference in the world to your business' survival. Obviously, you can't have a plan for every disaster that Mother Nature can dish out, but if you live in a geographic area that is prone to flooding, earthquakes, tornadoes or hurricanes, you can plan for those. Much of the planning you do will ensure protection for other unforeseen situations. Any plan is better than none at all.

A good start is to have written records of clients, vendors and suppliers as well as each employee's address, social security number, payroll information, and phone number. We rely heavily on computers these days. But you can't access records if you don't have electrical power to turn on a computer. Make a written list of all community emergency services. It's a good idea to keep a copy of these lists in a bank's safety deposit box as well as off-site of your business premises. Storing important records or documents on-site will be of no use if your business location is destroyed. Imagine trying to dig through rubble and debris for your insurance papers!

Back up all valuable computer data and store them at another location as well. Make hard copies of the information and store these in a separate location from the backed-up tapes and zip drive floppies. The faster your business can get into your databases, accounting systems, etc., the faster you can recover.

The first thing to go, after a disaster, will be your communication equipment. You'll need to contact other employees to determine their safety and assess your company's situation. Make sure that you have cell phones for the most valuable people in your organization. Invest in top-of-the-line computer and fax surge protectors as well. Find a supplier in another city or county that can lease equipment to your company. Be sure to do the preliminary paperwork for leasing in advance. Your local suppliers may be destroyed or their equipment may be depleted by other businesses that were able to get to them first.

As part of your disaster plan, you'll need to set up an emergency operating site. This can be a rented warehouse, or simply the chief executive's home. You'll need some location to work from, and it should have adequate phone lines. You'll need to contact your customers who have pending repairs or part orders, and let them know the situation. You will also need to reassure them that you will be able to fulfill their orders and repairs as soon as you possibly can. Remember, if they are trying to reach you by phone they probably won't be getting an answer.

Plan to set up a system for obtaining emergency funds. A line of credit, set up in advance, will do miracles for accomplishing everything that needs to be done, and it will relieve the added pressure of lack of cash flow at a crucial time. It's a good idea to have cash on hand for necessities you will need immediately. Remember, your bank may be out of commission too.

What about loss of revenue and profits? Business interruption insurance will protect you for a halt in business activity over a long period of time. It goes into effect when the halt was caused by direct physical damage to property or equipment as a result of fire, flood, earthquake, etc. It will cover loss of net income, and continuing expenses such as payroll, rent and utilities while you rebuild, repair or replace damaged property. The insurance company will demand proof of expenses such as employee salaries and rent of a temporary location and equipment; which is another reason to keep records in a safe, off-site location.

Emergency Management Team

An emergency management team needs to be created in order to implement a disaster plan. This team should consist of top management and/or the chief executive officer. There should also be an alternate person appointed in the event the top person is hurt, incapacitated or dies. A team leader should be designated, and the plan should be written out and given to everyone on the team. The plan should spell out each staff member's responsibilities. A location where every employee can meet within 24 hours of the occurrence should be established and made known to everyone. The designated temporary operation site would be a natural meeting location.

Employees need to know that they must check in with the company as soon as it is safely possible. There may be something your company can do to help them if they are affected by a disaster as well. After hurricane Andrew, many companies in Miami did not hear from their employees for several weeks, especially with the phone outages.

Staff members, or if they can't be reached, the emergency management team, must contact your employees and customers as soon as possible. Employees need to know that they still have a job, and how they can pitch in and help to get the business going again. Any way that you can assist your people will help in bringing your company to life again. This is when team effort and team spirit really come into play. If you already have implemented a team approach in your business, you'll be way ahead when disaster comes calling.

After your company has created a disaster plan, do a mock simulation and see how it goes. It's better to discover the weak areas or overlooked problems beforehand; after all, you don't want any surprises at a crucial time. It's also a good idea to do a mock simulation annually. Be sure to update any changes such as employees, their addresses and phone numbers, insurance and bank information, suppliers, clients, parts and repairs pending, etc.

I was blessed in escaping hurricane Andrew. By having that close call, I now have my business protected the right way. Many business owners get so caught up in the day-to-day operations that they feel they don't have time to even think about disaster planning. Having a plan before disaster strikes is a luxury many businesses never take, but wish they had - only too late.

Distance Education

2007-08-07T12:16:00.001-05:00

Few debate the importance of ongoing training for shop employees, however, it sometimes takes a backseat to the more pressing and immediate challenges of operating an automotive service facility. Time constraints, demanding workloads and the constant question, “Can I really afford to have my lead technician out of the office for two days of training?” often sidetrack good intentions for training or at least put them on the back burner for a while longer.

New technology and the proliferation of computers at work and home are, however, encouraging the development of new ways to deliver training that fall under the broad category of distance education. There are a number of ways to learn under distance education, including instructional audio and video, computers and print. The computer has become a dynamic force in distance education, eliminating some of the common barriers to training by making it more convenient and cost-effective.

Computer Usage Trends According to USA Today, the percentage of adults in the United States who use — at least occasionally — a computer at work, school or home grew from 59 percent at the start of 1996 to 68 percent at the beginning of 2000. In addition, the Consumer Electronics Association estimates that 54 percent of U.S. households this year own a personal computer.

An early-2000 survey conducted by Dun & Bradstreet showed approximately 70 percent of small business owners had access to the Internet, up from 57 percent the previous year. The Automotive Service Association's "How's Your Business?" study in 1999 showed similar growth in Internet access among its 12,000 members, with 83 percent of mechanical members and 79 percent of collision members reporting Internet access within the shop or at home. The International Automotive Technicians Network (iATN), with nearly 30,000 members, reports 63 percent have Internet access from both home and work; the percentage of members with access from home is 95.3; the percentage of members with access at work is 67.7 percent.

DIRECT 2000 projects that at least 40 million more Americans not already online will log on within the next few years. On the evolution of Internet use, Web-based trainers are seeing more habitual use; meaning users are using it for longer periods of time.

Terminology There are several terms being used to describe new ways to deliver training and it's not uncommon to hear these terms used interchangeably or incorrectly. For example, how does online learning compare with distance learning? Distance learning is any type of educational situation in which the instructor and students are separated by physical distance and technology is used to bridge the instructional gap. Online learning is, therefore, a form of distance learning, as are self-study and correspondence courses.

Online learning encompasses a broad range of approaches. There is computer-based training (also called computer-based instruction) that refers to courses presented on a computer. The course does not provide links to learning resources outside of the course. Often, learners take a computer-based training course on a computer that is not connected to a network.

Web-based training (WBT) refers to courses available on an intranet, extranet or the Internet and is commonly linked to learning resources outside of the course, such as references, electronic mail and discussions. Sophisticated Web-based training allows multimedia content (text, images, sound and video) to be synchronized for a coherent learning experience. This “streaming” audio and video format requires high bandwidth capacity.

Technology-based instruction refers to training through a media other than the classroom, such as computers and audio and videotapes.

Industry Programs In the automotive service industry, many companies and organizations have plans to develop these advanced ways to deliver training. Here's a glimpse at some of the newer online technical training solutions in the industry and how they work.

Delmar, a division of Thomson Learning, recently announced its newest Internet-based Automotive Technician Certification test preparation product, the ATCChallenge.com. The product allows “anywhere, anytime” access and contains updated task lists and fully updated content on National Institute for Automotive Service Excellence (ASE) exams A1 through A8, and L1 and P2. There are two test preparation modes. The Practice Question mode provides hints and insights into the right and wrong answers and includes access to a Spanish and English glossary of more than 5,000 automotive terms. Sample Test mode prepares students for exam day by using ASE-style questions reflecting the type of questions and task areas students are likely to encounter.

To use ATCChallenge.com, which complements Delmar's ASE test preparation print and CD-ROM products, users gain access to a personalized Web site that tracks their progress each time they sign on.

The company has also announced a partnership with PIX video, film & multimedia inc. to create additional customized, needs-driven training solutions in a variety of formats and platforms, including Web-based, multimedia, video and print. PIX has produced customized training programs for many original equipment manufacturers (OEMs), including Honda, Isuzu, Mazda, Mitsubishi and Nissan. According to Ridgie Barton, president of PIX, the company has a Web-based service advisor training program in production for Daewoo. “Right now, we have to deliver the product in two formats — CD- and Web-based — because in many parts of the country, connection speeds aren't what they need to be to support Web-based products,” said Barton. The company's training solutions for OEMs have largely been CD- or video-based, but Barton expects Web-based training for OEMs to explode within a year or so. According to Barton, Nissan has a dealer training Web site with basic information and Mitsubishi has an extensive dealer site with archived training programs.

iATN, founded in 1995 as an e-mail discussion list, recently introduced TechNight and a new Auditorium feature as part of its live conferencing system. In TechNight, live online conferences take place on Tuesday nights. These conferences are semi-moderated to keep discussions focused on the preselected technical subject. Members of iATN, who are largely technicians with at least four years of full-time experience or ASE-certification, have real-time conversations and can upload images to conference attendees. “For these conferences, we don't coordinate having experts, but they show up. It happens naturally,” said Brent Black, iATN founder.

Subjects have ranged from brake system complaints, on-board diagnostics (OBD) II and emission failures to anti-lock brake systems (ABS) and waveform analysis. Transcripts and images from the conferences are archived on the Web site (www.iatn.net) for future references and for direct links from forum discussions.

The iATN Auditorium has live conferencing with industry speakers. These moderated events let members post questions for the speaker immediately before and during the conference. Speakers then answer the questions. So far, iATN's Auditorium has had speakers from the U.S. Environmental Protection Agency (EPA), the California Air Resources Board and ASE.

According to Black, the network will soon rebroadcast the audio portion and accompanying Power Point presentations from live industry events on its Web site. It will adapt streaming video and high bandwidth content as the bandwidth capacity of its members increases. As of April 1999, only 7.1 percent of iATN members had bandwidth capacity at or above 128K. A current poll of its members shows nearly 20 percent with this capacity.

The network also provides an extensive technical library that includes more than 2,900 waveforms, scan data, infrared data, schematics and component photos (searchable by specific vehicle), 173,000 forum posts and 89,300 technical e-mails (also searchable by keyword or vehicle). There are user groups for particular products and the network handles 14 million e-mails per month among its members.

In June, the Inter-Industry Conference on Auto Collision Repair (I-CAR) announced its new Enhanced Delivery training programs. These programs combine interactive technology with hands-on classroom exercises. They have a student CD-ROM that includes the textbook, instructor audio track, video demonstrations of the classroom exercises and all instructional videos shown in the class.

According to I-CAR, this type of training will eventually replace I-CAR's traditional courses and is currently available on the following subjects: anti-lock brake and traction control systems, brakes, fundamentals of collision repair, damage analysis, electrical and electronics, restraints, welding and cutting steel and worker protection.

According to training experts, effective distance education programs take careful planning and a focused understanding of course requirements and student needs. The appropriate technology should only be selected once these elements are understood. In the very near future, the automotive service industry will likely be introduced to numerous distance education opportunities. The successful programs will be those that have good instructional design and strong content, while also matching the user's capabilities.

Customers for Life: The Older Population

2007-07-13T16:40:00.000-05:00

An “older” woman stops by the service department of a large, busy dealership in Florida to have her air conditioning checked. “It's the Schrader valve and it will cost $229 to have it fixed,” shouts the counter person. The older adult, in a soft voice, expresses concern about the price and says she doesn't know much about a Schrader valve. Guessing that the old lady is simply hard of hearing, the counter person raises her voice and repeats the price. A line forms, the woman becomes unnerved, and out of frustration and a lack of understanding, declines the service. The counter person responds (in the same loud voice), “It will cost $29 to put it back together and you can go to the waiting room. When it's ready, we'll call you.”

The dealership missed an opportunity to win this customer for life, which many older adults are likely to become once trust is established. Instead, this bad experience likely became the subject of that day's conversation among older friends who rely heavily on word-of-mouth recommendations when it comes to buying services, especially automotive repair.

An “Older” Profile

Donald Smith, 72, Nokomis, Fla.
The “older” market - age 65 or older citizens - represents business opportunities for repair shops that understand mature consumers' attitudes, concerns, needs and behaviors, and then take steps to reach out to this growing segment of the population.

According to the U.S. Census Bureau, this age group grew 74 percent between 1970 and 1999 - from 20 million to almost 35 million people. In 1999, the older population represented approximately 12.7 percent of the total U.S. population.

The Administration on Aging (AOA) reports that in 1999, there were 20.2 million older women and 14.3 million older men, or a sex ratio of 141 women for every 100 men. As the population ages, it becomes increasingly female.

The AOA predicts that the older population will continue to grow significantly in the future and will burgeon between the years 2010 and 2030 when the “baby boom” generation reaches age 65.

Medical advances, a better-educated society, healthy eating habits and exercise are all contributing to a society that is living longer, according to analysts. However, although people are living longer, the AOA reports that most older persons have at least one chronic condition such as arthritis, hypertension, hearing impairments, heart disease or cataracts.

Major sources of income for this age group, as reported by the Social Security Administration in 1998, were Social Security (reported by 90 percent of older persons), income from assets (reported by 62 percent), public and private pensions (reported by 44 percent) and earnings (reported by 21 percent).

Geographically, the AOA reports that in 1999, about half (52 percent) of persons 65-plus lived in nine states: California, Florida, New York, Texas, Pennsylvania, Ohio, Illinois, Michigan and New Jersey. Persons 65-plus constituted 14 percent or more of the total population in 10 states: Florida, Pennsylvania, Rhode Island, West Virginia, Iowa, North Dakota, South Dakota, Connecticut, Arkansas and Maine. In 12 states, the 65-plus population grew by 17 percent between 1990 and 1999: Nevada, Alaska, Arizona, Hawaii, Colorado, Utah, New Mexico, Delaware, South Carolina, North Carolina, Wyoming and Texas.

The Importance of Driving

According to AARP, persons over age 65 make more than 90 percent of their trips by private vehicle, either as a driver or passenger. The trips they make connect them to the goods, services and activities that make it possible for them to continue to live independently. An increasing proportion of the older population has relied on being able to drive themselves through most of their lives. This is reflected in the growing rates of persons age 65 and older who are licensed drivers. AARP reports that in 1996, 74 percent of all persons aged 65 and older were licensed drivers compared to 61 percent in 1983.

What does this mean to automotive service shop owners? It means you should be proactive in recognizing the size, strength and needs of this large market and take steps to make your business “user friendly” to older adults. Many of these accommodations pertain to how employees communicate with older adults and therefore, can be made with little, if any, outlay of capital.

Give Us the Information!

The female segment of the older population is immense and growing. They require a lot of information when it comes to spending money, and they appreciate businesses that are active in the community and accommodate their needs.

According to the AOA, almost half of all older women in 1999 were widows. When a husband who was the primary caretaker of the family vehicle passes on, it leaves the widow wondering, “who is going to take care of my car?”

“You can be that person for life once trust is established,” said Thom Gyder, president and general manager of Wilhelm Automotive Service Center, Peoria, Ariz. Gyder's business is on the edge of the area's Sun City retirement community and retirees make up 50 percent of the business.

Older women are also more likely to talk with their friends and family about big decisions and purchases they plan to make. They seek out other people's ideas more so than men and often travel in groups when shopping, exercising or visiting, making word of mouth extremely powerful. (In a survey done by Wilhelm Automotive of Sun City residents, 87 percent said they select a repair business based on word-of-mouth recommendations.)

When it comes to automotive repair, women are often concerned about being over-sold services or repairs they don't need. Theresa Kohler, age 72, East North Port, N.Y., sometimes has the feeling that she is “being taken advantage of,” and feels this way due to her general lack of knowledge of automotive repairs. “My first concern is that I can trust the person I'm doing business with and that I will be treated fairly,” said Kohler.
Older people are very concerned about how long the repair will take of the length of time they might be without their vehicle. People assume that because retirees don't work, they have a lot of free time and can live without their cars...they do have free time, but its booked with golf, doctor's appointments, social outings and volunteer commitments.

Make it Quick

As people live longer, the issue of mobility becomes more critical.

Older people are very concerned about how long the repair will take or the length of time they might be without their vehicle. “People assume that because retirees don't work, they have a lot of free time and can live without their cars,” said Gyder. “They do have free time, but it's booked with golf, doctors' appointments, social outings and volunteer commitments,” he said.

In addition, they are less prone to driving an unfamiliar vehicle, such as rental cars or loaner vehicles, especially if their personal vehicle is equipped to help them function with a disability. This makes a shop's pick up and delivery service very attractive to older adults.

Here are some other items that will make your business easy to use and attractive to older adults. Check your parking lot and access to your shop. Gyder's shop dates back to 1928 and he noticed cracks and settling in the concrete pad leading to the front door. He poured fresh concrete to eliminate safety hazards for customers. Is the lot free of potholes or obstructions, and does it have parking stalls large enough for full-door swings? If you have a lot of steps, can older adults easily access your front door via a ramp? Does your front door open easily?

The personality and skills of the front office employees who will greet older customers are key to building trust. Are these employees articulate and well mannered? Do they have the personal touch that will reassure these customers that everything is going to be OK? Are they patient and understanding as they interact with older customers and can they avoid the use of highly technical terms and complicated explanations?

“If you're in a hurry, you'll turn them off. You have to allow time for face-to-face discussions that sometimes have nothing to do with automotive repair,” said Gyder. His employees will often step out from behind the counter and sit down with customers to explain the repair. “We also have learning aids and books with pictures and illustrations. This shows customers what we recommend and why, and works well,” said Gyder. The shop also has a book with maintenance schedules that it uses to encourage preventive maintenance to customers.

In addition, is your waiting area clean and comfortable with handicap-accessible restrooms? Do you provide drinking water since many older adults take medication? Do they have access to a telephone to contact a friend for advice or to line up alternative transportation (if you don't have a shuttle service)? “Comfortable chairs with high backs are very important. And they have to have armrests since many older adults use these to help themselves up,” said Gyder. In particular, his shop has some “nodding off” chairs that are perfect for taking a little snooze while waiting for the repair.

Make it Obvious

If your business provides a warranty on parts and labor, post this information somewhere in your waiting area. This will signal to your customers that you stand behind your work. If you have a parts policy (used and new), make sure this information is stated clearly and prominently. “I would be disappointed if original parts were not used to correct any repair problems that occur,” said Donald Smith, age 72, Nokomis, Fla. “Quality workmanship is very important to me,” said Smith.

In addition, make it clear to your customers if your business is a full-service shop. Older adults appreciate having a one-stop shop to meet all their repair needs. They also are less likely to change residences so once you earn their trust, they can be customers for life.

Be Involved

To promote Wilhelm Automotive to older adults, Gyder volunteers his time to speak to retiree-related groups. He usually talks about cars and repairs, but occasionally is asked to speak about his love of the Grand Canyon. “It's very personal and spending this time with people lets them really get to know you ... and to trust you,” said Gyder. The business also supports many local groups, such as the theatre, symphony and bowling leagues.

Gyder reiterates the importance of earning trust with older customers. “You can make or break it in just one visit. After you establish trust ... a rapport, then they (older customers) can be more forgiving,” he said.

Defusing Difficult Customers

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You can spot them before they even open their mouths. With hunched shoulders, clenched fists and red faces, they rapidly approach your door. When they enter your waiting area, they fidget and avoid eye contact. Sure enough, these are the telltale, nonverbal signs of irritated customers, who according to one automotive shop owner, "make us (shop owners) responsible for everything that has ever gone wrong in their lives."

Even though these customers treat you like their personal dumping ground, how you treat them while they're complaining will ultimately determine the outcome of the situation. Management experts and shop owners agree that the best course of action toward resolving customer conflict is to listen, stay in control, keep emotions at bay and use positive language.

The Dissatisfied
According to management expert Dave Doremus, Doremus & Associates, Langhorne, Pa., there are a number of reasons why people become difficult. They are tired, stressed and inconvenienced, and have absolutely no time for anything, let alone car repairs. Their expectations were not met, no one will listen, the repair took too long, someone was rude, discourteous or argumentative to them, or chances are they were already upset about something totally unrelated to car repairs. "You can't control a person's behavior, but you can change your behavior to avoid causing annoyance," said Doremus.

Cherie Tucker, a management trainer and owner of Grammar Works, Seattle, Wash., refers to a recent customer satisfaction study that showed 68 percent of customers decide to no longer do business with a particular company because someone has been rude to them or they received poor service. Tucker advises shop owners to imagine every irritated customer as a "huge bag of money" and to do everything possible to try to save that person as a customer.

In addition, there are other equally important reasons to minimize difficult customer situations. These customers eat up huge amounts of staff time and resources. If angry customers are mishandled, they vent their frustration by telling others not to use your services or visit your business. Angry and difficult customers also elevate stress levels, reducing productivity and increasing sick leave.

Defusing the Situation
Doremus says customers expect to be taken seriously, treated with respect and handled immediately. They also like to clear up the problem and be listened to. Dan Meyer, Kay Parks/Dan Meyer Auto Rebuild, Tacoma, Wash., remembers only four very difficult customers in the past 15 years. His first and perhaps most important step with a difficult customer is to listen. "If it's [the problem] something within my realm, then I just take care of it. If we made a mistake, then we fix it," said Meyer. "Usually we are not talking thousands of dollars so it's not worth arguing about. It's cheaper for everyone if we just move on. Plus, difficult situations usually destroy the whole office," he said.

Doremus recommends that along with listening, shop owners really try to understand what the customer is saying. "It will help with your response," said Doremus. He also believes that a lot of conflict resolution starts with attitude. "Don't let emotions get involved. As soon as emotion gets into anything, it screws up the works," said Doremus. Once the customer has vented, he encourages shop owners to empathize with customers and get them involved in the process by using phrases such as "what would you like me to do now?" "what would make you happy?" and "what do you think is a fair way to settle this?"

"They [customers] want the problem, whatever it may be, to painlessly and politely go away. If I convince them we're going to take care of the problem, I'm a hero and they walk away very happy," said Dale Bright, Dale Bright's Auto Service, Chino, Calif. "However, at this point, I've got to be able to do whatever it is I promise," said Bright. In his many years of experience, Bright has also found that nothing takes the fire out of someone quicker than agreeing with them, if the shop is responsible for the problem.

When posing a solution, Doremus advises shops to make sure the customer is listening without any distractions. This may mean taking customers to a different area so both parties can focus.

Management experts and shop owners agree that certain words and phrases are argumentative or confrontational. According to Tucker, customers don't respond well to an explanation attributed to "company policy." Words such as "can't," "won't" and "unable to" hinder progress, as do phrases that suggest the person is not being honest. These phrases would include "you claim that," "you say that" and "you state that." Expressions that suggest carelessness ("you neglected to specify") and those that imply the recipient is not too smart ("we cannot see how you ...") should be avoided, as well as demanding phrases such as "you should" or "we must ask you to ..."

Language that promotes cooperation includes positive phrases such as "what can we do?" "I'm concerned for you" and "let's see if we can find some solution." Positive phrasing tells the recipient what can be done, suggests alternatives and choices available to the customer, sounds helpful and encouraging, and stresses positive actions and consequences that can be anticipated.

Promoting Positive Relationships
There are additional steps shop owners can take to calm the customer before they even walk in the door. If Meyer or his employees are outside, they make it a point to greet the customer before they enter the building. Once inside, all employees know to acknowledge the customer immediately, both verbally and with eye contact, and with a smile if the customer can't be helped instantly due to other customer commitments. In addition, both Meyer and Bright tout the importance of a good, solid handshake. "Shaking hands with my customers has made me more money than anything else," said Meyer.

Meyer also relies on the power of personal notes to build relationships with all of his customers. He is also involved in the local community and surrounds himself with positive-thinking people. With a base of mostly second- and third-generation customers, he sees the difficult ones as short-term problems in a long-term venture. He stresses that his success with customers is based on the business's whole program and its many components, rather than any one item.