Monday, Monday, Monday, it's Round Two of the Shop Showdown!
Dealerships vs. Independent Shops: Who Has the Advantage? Who will win the fight for supremacy? Find out the answer, only on the final chapter of this special two-part Service Drive Revolution event!
On today's episode, Jeremy talks about independent shops and why (he thinks) they have an advantage. For those who weren't keeping score during the first round, there were 7 points for Dealerships.
It's no secret that, once a car is out of warranty, about 70% of consumers don't go back to the dealership for service. However, the dealerships control the first impression of the experience, so it does become the benchmark for what the customer expects from that point on. If a dealership does a great job by providing perks like car wash and vacuuming, but then you go to an independent shop that doesn't do that, then it's an incongruent experience.
Side note: Jeremy actually hand washes the cars at his shop if they come back.
Number 1: Independent shops service all makes and models.
Independent shops service all makes and models, anything you could possibly have on your driveway short of, I don't know, vehicles that aren't street-legal.
Sometimes the training at an independent shop is even more advanced than a dealership. Regardless of where a car is serviced, they're all machines; wires are wires and connectors are connectors. Most really good independent repair shops have their technicians and service advisors spend more time in the classroom than if they were at a dealership.
Jeremy claims that his technicians are better technicians than dealership techs because they don't fall into the rut of pattern failures. They see cars that are older, have more real world problems, and they overall have to fix tougher drivability issues because they're dealing with customers that might not have followed a proper maintenance plan. It's a harder job, but that makes them better at it.
Now, we had a little dispute over whether dealerships or independent shops have more comebacks where he felt that independents don't have more. He brought up a pretty good point that not many shops or dealerships even keep track of their comeback ratio.
Number 2: Independent shops provide a customized solution for the customer.
Independent shops provide a customized solution for the customer. Jeremy's parts department doesn't have a parts manager sitting there, not doing anything or messing up the inventory. They provide a customer with more options than if you were to take a car to a dealership for your make and model.
There's not just one estimate for the cost of repairs, there are many different ways that they can provide a solution. I totally conceded to this point because a lot of manufacturers would rather have you replace something than just fix it. If your BMW's transmission needs fixing, the BMW dealer would charge you $4,500-5,500 for a full replacement while an AMCO would just put a new seal on it or whatever for less than $1,000 and it's back on the road. There's not much leniency with dealerships if you're going against what the factory recommends.
In my experience, you do get what you pay for when you buy cheap brakes or whatever, but that also depends on the ethics of the person in charge of the shop. At Jeremy's shop, they don't do $89 brake jobs, they fix the $89 brake jobs.
Nowadays, customers are more market savvy and they want more choice. A big thing you get with independents is that their techs, advisors, and shop owners are resourceful and adaptable. Dealerships tend to be set in their way of doing things. They do what has statistically gotten the desired results, but good independent shops do what's best.
You know, one odd thing when we're coaching and looking at financials from independent shops is that their parts gross profit percentage is higher than the dealerships most of the time.
Number 3: Independent shops are grassroots and community-based.
Independents tend to provide a faster option where the customer feels like they have this personalized service experience where they don't have to wait for days for a phone call back from an advisor. There's more of a direct line, less layers. When you call, Jeremy is there to pick up. You don't have to listen to an automated voice telling you to press 4 for Parts.
Jeremy's had his shop for almost four years now and he's built so many relationships with his community that the shop is basically a part of their everyday lives. He knows everyone's names and faces. At a dealership, a lot of the time it's every one or two years when the car has a problem.
I do believe that this advantage isn't exclusive to independents, but there are definitely more of them that lean that way than with dealerships.
Number 4: Independent shops can provide a lower cost and better value repair.
Independent shops can provide a lower cost and better value repair, because they're nimble and can move quicker in certain areas. Areas like controlling overhead expenses rather than the large fixed ops at a dealership where, a lot of the time, advisors don't have any control over that. Everything at a dealership is preset – parts, pricing, labor rate, overhead – they have no control over it. Part of what gives independent shops this advantage is that they can understand each technician's specialty and what they're most efficient at. Because of this, their gross profit-per-actual-hour can be higher and they can manipulate the expenses better.
Number 5: Independent shops are better at marketing.
Strategic marketing! I gotta concede this one because dealerships don't really have to market, but that also makes them terrible at it. They think that marketing is posting pictures on Facebook of customers with their new car or ‘buy four tires, get one free,' but they focus everything on the commodity. Imagine if all of Apple's marketing was their hard drives and RAM. Buy the new Apple MacBook Pro and get a terabyte hard drive! They don't tell stories, there's no human connection, there's no vulnerability, no honesty, no authenticity; it doesn't pull you. Most of the time, dealers do marketing because they feel like they have to, not because it's actually effective.
With strategic marketing, the core of it is to be memorable and remarkable. Well, on the show, we both said ‘rememberable' which probably isn't a word but it sounds better when paired with remarkable. Be memorable and remarkable. If you succeed in that, the customer will share their experience with the world and that story will drive more business back to you.
Number 6: Independent shops are faster.
Number six is a bonus one, if you remember the terms you should know. What does SOS stand for? Speed of service. This is another one that's not necessarily exclusive to independent shops, but they execute on it more often. Dealerships don't really acknowledge it as a thing, but it's paramount to the customer.
Time is greater than money these days. Imagine being without your car for two weeks and there are two scenarios: one is that it takes the shop 95% of that time to figure out what's wrong with the car and they call you 13 days later to tell you that they'll have it fixed in five minutes. You wouldn't be very happy with that, but you'd be fine with the other scenario of them figuring out in five minutes that they need the rest of the two weeks to fix your car. Why is that? Because you know as early as possible how long it's going to take to fix it.
Jeremy firmly believes not only in giving the customer certainty, but that speed of service is a KPI that isn't generally tracked in the industry but really needs to be.
Ding, ding, ding! That's it, folks. The match is over, and it was certainly a close one. The winner and heavyweight champion of the world is Dealerships with a narrow margin of 7 to 6.
Really though, this was more just a fun little comparison than actually weighing which is better. I do think it's interesting because when you're sitting with an independent shop owner or a service manager in a dealership, they both think that the other has an advantage. What we know to be true is that the advantage is in your ability to execute the opportunity in front of you. Neither one has an advantage great enough to put the other one out of business. There's so much opportunity for dealers to do a better job at certain things and for independents to do a better job at certain things, and the advantage is really up to the beholder and who wants to execute. More than whether you're a dealer or an independent, more than what brand or market you're in, it's how you think and what expectations you set for yourself. The industry is plenty big enough for everybody that does it right, regardless of which corner you're in. I think the opportunity of a lifetime comes once a day, and everybody has that opportunity, so execute it and that's how you'll be successful.
This whole matchup was really fun. Be sure to post in the comments if you have some advantage for independent shops that you think Jeremy missed. We'd love to see your thoughts on it but I hope everybody agrees that it's your mindset and ability to execute more than anything else. Before we wrap things up, it's time for questions…
This question comes from… [email protected]…
“I am a service writer. I learned through a trucking company and I worked at a dealership and now I'm at an independent shop. How do I learn more hands-on mechanical experience and grow in the industry?”
So my thought is that the mechanical experience is not that important. I remember when I was a service advisor before I was even 20 and when I was starting to do pretty well, everybody started finding reasons to diminish my value. This Volkswagen tech, let's call him Shane, pulls me into the shop, calls the other techs over, and on this wooden crate is a round metal disc. I didn't know that I was being ambushed here, and he says, “Hey, what's this?”
“I don't know, a brake rotor?”
Everybody starts laughing like how can you be a service advisor if you don't know the difference between a brake rotor and a clutch disc?
Anyway, Shane was an asshole. What he didn't know and what you need to understand, fitmommy1107, is that your value in the marketplace is your connection with the customer, not the commodity. You don't need to worry about the commodity, you can learn it any time. I spent most of my energy on connecting with the customers and petting the dog, and when a technician would bring me an inspection sheet and there was something I didn't understand, I'd just go back and ask them to show me. I would just say, “Hey, I can't present this to the customer if I don't understand. Can we put it up in the air and can you show me?”
Don't worry too much about the technical. Just take every customer, connect on a deeper level, over communicate, over deliver, and ask a tech when you don't understand something. You don't build trust by technical knowledge, you build it through empathy and genuine curiosity about people.
This next one is long, so buckle up…
“I'm currently a tech with 15 years experience in dealerships and independent shops. Hold all of my ASE, master Chrysler, and a Ford senior master. I want to get out of wrenching and into management. The trouble I'm finding is that I'm the second most productive tech in our dealer group and management doesn't want to lose my productivity and move me into a different position. I have looked at other dealers in my area, but I'm only being recruited as a mechanic. What am I missing? No one can tell me in between the books, podcasts, and your on-demand training. I'm still clueless about what I can do to move up. Any advice would be greatly appreciated.”
The sad part about this is, because of your technical expertise, nobody's going to want to move you from the shop to the front because there's a high demand for good technicians. If you're really good at fixing the cars, that's the one thing that dealerships and independent shops struggle with today, and they wouldn't want to give up the production.
Jeremy's advice is to show up early and offer to write up the night drops so you can start getting familiar with the system. Start to be a service advisor and be there when they need help. Go up and introduce yourself to customers more. Get out from behind the toolbox and get your cards out there! Realistically, you were always going to have to fight to get there.
If you want the position really badly, you're probably going to have to leave there. Another thing you could do is go to your current general manager or dealer and say, “Hey, this is where I want to go. I want to become a manager. I'd love for you to mentor me on how to be a manager. Will you teach me financials? Will you teach me what you know?” I've given this advice before, but for different questions, but chances are anybody who's older in their career is going to want to mentor somebody because it's good for their ego.
Then, I would hand-write some letters to some general managers saying, “I'm a technician here. I'm the top tech, and I want to be a manager. Obviously, there's more demand for technicians and service managers but I'm gonna move on, and I would love for you to mentor me to become a manager.” I bet if you sent out 20 of those letters, half of them would bite.
That's it for the questions this week. So what did we establish here? If you had a choice, you'd rather work in a dealership, but you still have opportunity if you work at an independent? Nah, more or less, everyone has the same opportunity. You just need to go out there and make it happen!
This whole two-part showdown was awesome. Remember to post in the comments your thoughts about the advantages of independents and dealerships because we'd love to hear your thoughts on it. Thanks for tuning in, and we'll see you again real soon on Service Drive Revolution!