The two-toned hardwood flooring stands out instantly.
Then there’s the high-top tables, the workstations, the leather couches, the refreshment “bar,” and the sharp red-white-and-blue color theme of the walls—walls that are decorated, alternatingly, with fresh, trendy designs and nicely framed sepia-toned images of the auto repair industry’s yesteryears.
“And that’s just part of our entire approach,” says Ramon Munoz, the sales/service manager of this Tampa, Fla., repair shop. “The bigger thing is the approach we take with customers, our processes. We shake their hand when they come in the door. We talk to them, and I mean really talk to them. It’s about making it personal, making a connection.
“It’s a different industry now, and we need to be a different shop for customers.”
And, if you were wondering, this shop happens to be named Pep Boys.
The 21,000-square-foot Tampa facility is a prototype of a new repair concept launched by the quick-service and parts giant earlier this year. It could be the first of many, the company says, not only marking a sharp shift in business model for a corporation that’s just seven years short of its centennial anniversary, but also serving as another reminder as to the overall direction of the auto repair industry.
Dealerships, chains, independents—it doesn’t matter what type of repair business you run, says Kansas City shop owner Ed Schaeffer, the industry is more competitive than ever.
Vehicles are better, maintenance periods are longer, and attrition will eventually set in.
Shops need to adjust, and, as Schaeffer and other shop owners agree, survival in today’s industry will come down to one word: value.
Preventing the ‘Closed Loop’
Schaeffer has owned Northtown Auto Clinic on the north end of Kansas City for more than 30 years. But he got his start in the industry as a service manager at a Mercedes dealership in the 1970s.
“We had clean, white floors, and I walked around each day in a coat and tie,” he says. “It was what our customers expected to see.”
The concept was simple, Schaeffer says. The dealership wanted its customers to understand the value of their vehicle purchases, and that included a high-end experience in the service department. The relationship between the customer and dealer—and the value brought with it—couldn’t end when the customer first drove off the lot.
“That’s the entire concept behind the ‘lifetime oil change’ programs or ‘lifetime warranty’ deals,” he says. “They want that customer to think they are always going to be getting the best value if they stay inside that dealership. And when the bill for a repair gets big, it’s just as simple as, ‘Well, let’s take you over to the showroom.’”
Schaeffer refers to it as the “closed loop,” something vehicle manufacturers and their dealership partners are working harder and harder to create in today’s market.
And it’s not limited to high-end manufacturers—or even large commercial manufacturers. Tesla Motors, an independent electric vehicle manufacturer run by billionaire Pay Pal founder Elon Musk, began opening its own service centers earlier this year. The company also has what it calls “service rangers,” which are mobile repair units that make house calls.
Tesla’s business strategy has not only allowed the company to debunk the perceived necessity of the current dealership format (all of its vehicles are sold through Tesla-operated stores), but also bypass the aftermarket all together.
Where the problem comes in for independent repairers, Schaeffer says, is the perception this “closed loop” creates for customers.
“We have to be able to get across the value we provide,” he says. “Almost out of necessity, [independent shops] have always had a more customer-centric mindset. We need to find ways for customers to better see that.”
The Big Fix
When Charlie Rindom took over his father’s repair shop in Moberly, Mo., the business had already gone up in smoke. That’s not a cute metaphor—the shop burned to the ground in 2005.
Not an ideal way to start running a business, but Rindom, 32, says it gave him a chance to really set the foundation for how he hoped to turn C&R Transmission into a successful business that could meet the modern demands of the industry.
The rebuilt facility included a larger waiting area with a focus on creating an atmosphere customers “could actually relax in.”
“We have comfy seats, TVs, magazines, snacks and beverages free for the customers; coffee,” Rindom says.
“When my dad started out [nearly 40 years ago], the waiting room was basically an uncomfortable chair that made customers feel like they weren’t supposed to wait around. It didn’t matter as much then.”
Rindom’s five-person staff focuses more on customer interaction now than it ever has, he says, the main emphasis being on understanding and meeting the customer’s needs.
“I used to be focused on price, thinking that’s what the customer cared about,” he says. “But I found it didn’t really matter as much as them knowing they’re getting great value for that price.
“Now, it’s all about communication and creating that environment.”
And Rindom’s business has succeeded because of it. The shop is on pace for a record year in 2013 with overall sales expected to top $720,000. Rindom, with his brother Randy as a partner, has also opened a separate location in nearby Kirksville.
Schaeffer has gone through similar transitions with his own shop over the years. The area surrounding his shop has been under heavy construction for several years, blocking the main thoroughfare near his facility. Combined with the economic hit his area took during the recession, he saw business drop below $1 million for the first time in years. He had to downsize to maintain his margins, and is slowly working to increase volume.
Most of his shop’s recovery effort has been centered on promoting its customer-centric business model. He’s made a push to advertise the shop’s free loaner vehicles and shuttle service. He displays and discusses the shop’s certifications (NAPA and AAA) for customers, and has a portion of his website dedicated to his two-year, 24,000-mile warranty on parts and labor.
Combining those efforts with his already well-kept facility and waiting room, Schaeffer’s entire focus is on the value he can provide to customers.
“The expectations and the bar has been raised in the last few years,” he says. “We didn’t think of this stuff 35 years ago. Cars don’t break as much, and maintenance intervals have been spread out further and further. This isn’t the same industry, and we can’t operate the same way.”
Full Circle
Knowledge and options—those are two of the biggest challenges shops face today in keeping customers coming back. And it’s why Rindom says he works to never turn customers away.
“It’s really hard, especially when you’re busy, to make space or get someone’s car into the shop,” he says. “But, in the end, you have to do that. If you just make an appointment, or wait for them to come back, most likely, they aren’t coming. There are too many other options out there.
“Customers are different today, and they do their homework. They expect it do be done right the first time in a timely manner—and that’s a minimum [expectation]. Everything you do above that is what keeps them coming back.”
And Munoz has seen it firsthand at his Pep Boys facility.
Customers are shocked, he says, when they see the new shop and waiting area.
“The reaction we get when they come in the door is pretty great,” he says. “I’ve had customers say that they feel completely different about us.”
Munoz joined the team at Pep Boys during the makeover of the facility, and before then, while working at another local shop, he says he was actually a customer of his new employer.
The quality of work hasn’t changed, he says, and he’s very proud of the work his technicians do. Yet, since the shift in the shop’s approach to customer service, he said there are far fewer complaints—and many, many more compliments.
It’s all about customer perception, Schaeffer says. Customers aren’t going to fully know what goes on back in the shop; all they see is the final product, the bill and the interaction with staff.
“There’s always going to be someone cheaper, and there’s a lot of shops that can fix cars,” Schaeffer says. “So, what are you going to do to stand out?”
