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Confessions of a Shop Owner is hosted by Mike Allen, a third-generation shop owner, perpetual pot-stirrer, and brutally honest opinion sharer.  In this weekly podcast, Mike shares his missteps so you don’t have to repeat them. Along the way, he chats with other industry personalities who’ve messed up, too, pulling back the curtain on the realities of running an independent auto repair shop. But this podcast isn’t just about Mike’s journey. It’s about confronting the divisive and questionable tactics many shop owners and managers use. Mike is here to stir the pot and address the painful truths while offering a way forward. Together, we’ll tackle the frustrations, shake things up, and help create a better future for the auto repair industry.
Mike Allen [00:00:00]:
When call volume gets to point X, we need to add an advisor. When car count gets to point X, we need to add a tech. Is that what you mean?
Matt Lofton [00:00:05]:
Or those are numbers that are going to trigger revenue dollars, right? You know that you need X amount of calls to get X amount of cars to get X amount of dollars, right? But you need a certain amount of people to be able to generate the dollars. Otherwise you generate a lot of volume with no dollars.
Mike Allen [00:00:22]:
The following program features a bunch of doofuses talking about the automotive aftermarket. The stuff we or our guests may say do not necessarily refle of our.
Matt Lofton [00:00:32]:
Peers, our sponsors or any other associations we may have.
Mike Allen [00:00:36]:
There may be some spicy language in this show. So if you get your feelings hurt easily, you should probably just move along. So without further ado, it's time for Confessions of a Shop Owner with your host, Mike Allen. Good morning Vietnam. How's it going?
Matt Lofton [00:00:58]:
Just dodging the bullets in the napal. Yeah. Another day in the life of a shop owner.
Mike Allen [00:01:03]:
That's a movie reference that a lot of our listeners might not get at this point. I think we're starting to age out of some. I don't know. I'm good, man. Life is good. I've been spend a lot of family time here lately.
Matt Lofton [00:01:20]:
As you should at the end of summer.
Mike Allen [00:01:21]:
Yeah. As we will discuss, it has had an effect or there's. There is a direct correlation. I don't know if it was causation, but we'll see. But today was the first day of school so got the kids off to car line this morning and ready to get back to the grind. So awesome. How was your summer going?
Matt Lofton [00:01:43]:
We had a great summer. Really. A little bit busier than I would probably like it to be work wise, but that's a, that's first world problems.
Mike Allen [00:01:53]:
So we won't complain.
Matt Lofton [00:01:54]:
We won't complain about those too much. But. But no, we had a good. We had a good time. Kids, kids had a lot of fun. We had. The kids had some friends over this past weekend to spend the night before the last weekend of summer for before they go back to school. So we got to take them fishing and spend a little bit of time outside with them and have a good time playing and getting some dinners.
Matt Lofton [00:02:15]:
A lot of fun.
Mike Allen [00:02:18]:
You said that your shop has had another record month, right? Yeah.
Matt Lofton [00:02:22]:
So that's five in a row for us, man.
Mike Allen [00:02:25]:
That's freaking awesome.
Matt Lofton [00:02:27]:
It is, it is.
Mike Allen [00:02:30]:
Especially if I've seen your numbers and I don't know if you share your numbers or not, but they're impressive, and you're in a market that is not one that is prone to impressive numbers, so.
Matt Lofton [00:02:41]:
Well, I appreciate that. And we're, you know, I've got a great team, been very fortunate. We've been. We've been working on our system and processes for the last year and a half and. And feel like we've got about 30% of it dialed into where it needs to be. And, you know, kind of as, you know, and as we're going to talk about that, it's a. It is a daily struggle for the consistency of greatness. If you shoot.
Matt Lofton [00:03:04]:
If you shoot for greatness, you usually. You usually fall short of it more than you attain it. And dealing with the disappointment of falling short of it is. Is a learned skill, so. Well, I can be.
Mike Allen [00:03:17]:
I can be okay with falling just a little bit short of great, because that's pretty good. Right. It's. When I fail to get very close to the same neighborhood is great sometimes, but that's, you know, invariably, ultimately it comes down to a lack of support or a lack of accountability on my part when that happens more often than not. So. But we can talk about that a little bit. Where do you want to go?
Matt Lofton [00:03:44]:
Yeah, so let's jump into that. And, Mike, I appreciate you sharing the numbers with me for this month. So we're going to be talking about July, and you had a little bit of a. Just to kind of recap our. Our. Our June, May. We. We kind of had a down month in May.
Matt Lofton [00:04:03]:
We started to rebound again in June. We had both advisors back at the front. Looked like the first half of June was going to be doing pretty good. And then we've gotten into July here, and we've had a regression.
Mike Allen [00:04:18]:
Yeah. And I think, you know, this is. This episode's gonna be released, I think, on the 26th. So, you know, I've continued to struggle with that, so. Got the timeline a little bit off there. We had that really good month, that record month, and then we came down a little bit, and we came down a lot. Back up a little bit. Still not where we want to be for July, but it was better than the previous and.
Matt Lofton [00:04:49]:
Gotcha.
Mike Allen [00:04:50]:
We're struggling again this month. Right. So last month, we effectively had two technicians because we were shuffling pieces around the table, trying to find the right mix of individuals at the right locations. Right. And we did. I think it was 104,000 in revenue. It was 166 cars at $637, I think, is what the numbers were. So it wasn't I'm sorry, 166 cars at $629.
Mike Allen [00:05:24]:
So Aro is definitely not where we wanted to be. That was a reflection of closing rate. You know, the technicians were doing a good job on their DVIs and you know, Hub shop was doing a good job building estimates. It was just a limiting factor of finding ways to make the customers comfortable saying yes. Right. So, you know, we've talked about car count and call volume. Those were both at a good level. So I think the biggest problem that I'm having right now is giving the front of house team the support they need to manage the call volume, the car, the car volume, the estimate volume.
Mike Allen [00:06:12]:
Right. And also getting buy in on the process that we're trying to implement that has proven to be so effective at the other shops. And that is kind of a very, you know, say yes kind of mentality right now kind of mentality. And I understand that that's more challenging with a smaller facility when you don't have a ton of bays. Right. But there's ways to work around that and we have plans to work around that. And then finally there's been limitations of me holding accountability for not following through with those processes. I've kind of allowed it to be, here's how we want to do it.
Mike Allen [00:06:52]:
Well, yeah, but I'm going to do it this way. Right. And I've not been there having those accountability conversations because I've been goofing off. So.
Matt Lofton [00:07:02]:
So outside of the accountability conversations, what do you have? Because I also know you have some management layers which, what accountability steps do they have with the individual stores to be able to hold. Hold them accountable for the processes?
Mike Allen [00:07:21]:
So historically, Steven was managing the two Raleigh locations and Xander was managing the Garner location. And starting a little over a month ago, the two of them together are both over all three locations and slightly separate roles. You know, Xander's still primary base location is in Garner, but he's responsible for interviewing, hiring, training. Obviously I'm involved as well, but front of house personnel and process and the rack attack team.
Matt Lofton [00:08:00]:
So that's Xander that's responsible for that. Okay.
Mike Allen [00:08:03]:
And Steven is still primarily based in the Raleigh shop areas and he's primarily responsible for operational systems, back of house, car flow, you know, parts and inventory management, that kind of stuff.
Matt Lofton [00:08:25]:
So then most of what we would be talking about for this store and kind of what we identified as what's fallen short would be front of house procedure. So that would probably fall under Zander. Correct?
Mike Allen [00:08:36]:
Yeah. And we've got to figure out how that's going to work though, because.
Matt Lofton [00:08:40]:
You.
Mike Allen [00:08:40]:
Know, Stephen has been in Raleigh primarily and he's got those relationships and Xander comes in and they don't really know him that well. Right. But that is under his task description. Right. So maybe they trade a little bit and, and spend some, some more time back and forth where they need to be. But yeah, something's got to change because what we're doing right now is not working.
Matt Lofton [00:09:05]:
So. And I'm, I'm not, I'm not trying to put all this on Xander and remove you from the situation completely. I just want to make sure. Yeah. You know, the, the first portion that I think you need to work on is, is making sure that, that Xander has all the support that he needs to monitor this on a day to day and, and figure out what that. Because you're the overall vision and accountability of the overall vision. And then there's, you know, then there's the day to day workflow management of things. So we hate to be at the end of the month before, you know, we look back and start making changes or training or idea that we have this type of a problem.
Matt Lofton [00:09:47]:
Like you've id'd now we're less than halfway through the month already and you already know that this is a persisting problem, you know, trailing into August as we speak. So what does Xander have? Does. What does he have for expectations to know when we have something that's, that's underperforming. And then what is the game plan? What is the corrective action plan that he has in place? Do we have any type of trigger that says, hey, depending on the store, he's looking at front of house numbers at the stores and looking at the performance of the front of house and saying, okay, here's, these two are good. Is, you know, you know how this works, right. You very rarely ever get all three of them going in the right direction at the same time. Right. You got two going good, one going bad.
Matt Lofton [00:10:35]:
You get to one fixed. Once one over here starts to slip a little bit and then so it's kind of going to be shifting around all the time to, you know, given the one that needs the love and the pat on the back and the kick in the butt, what triggers that for him? Do we have anything in place to do that?
Mike Allen [00:10:51]:
No. Historically that trigger has been me. Right. And early this month there were, you know, we had one of those triggering meetings, right, where I was like, you know, this, this doesn't, this isn't working. We've got to do something different. We can't expect different results just because we say, go team, you know, so, you know, he know. So we have very clearly defined goals and we get together every week to discuss our process along those goals, what our paces are for those goals for the month. You know, if we're meeting and exceeding grade, if we're falling short, what do we need to change or what do we, what do we think is the reason that we're falling short? So, you know, there's a, like, for example, we have a shared Google Doc that has the goals for each month laid out.
Mike Allen [00:11:51]:
And some of them are KPI driven, some of them are staff driven, some of them are, you know, cash flow management items. But every Sunday I just go in and I update where we are month to date and what our paces are month to day. And you know, have we hired these positions that we need or have, you know, has that changed? We need a different position or whatever it might be. Do we need to transfer someone between stores and then we discuss that on Monday? Right. So that's typically what the mechanism that we have in place right now is, that weekly review session with the goals that we've all agreed to, you know, for the month.
Matt Lofton [00:12:35]:
Okay, so what I hear out of that is you've created a hub and spoke system for your management team that if you're not at the center of the, if the hub is removed, the wheel can't move. The individual stores don't rely on you at that level, but it seems like the management team does. Okay, Right.
Mike Allen [00:13:01]:
Okay.
Matt Lofton [00:13:03]:
And I could be wrong about that, but that's what I'm hearing. Tell me your thoughts on that.
Mike Allen [00:13:08]:
It's certainly possible. Now, I would say that I believe Stephen and Xander both have the wherewithal and the presence of mind to be monitoring those goals of their own volition and to know if they're falling short or exceeding and they communicate constant, what.
Matt Lofton [00:13:27]:
Triggers the action plan to do something about it.
Mike Allen [00:13:32]:
Teach me, guru. What do you suggest?
Matt Lofton [00:13:35]:
Okay, so you have a tracking system in place, right. You have MLAPs in place to some degree, I'm assuming. All right, so if you're below an mlap. So if I was in Xander or Stevens position, what I would want to know is if I have a store that's tracking below, you know, below standard for X amount, we're not going to look at it on a day to day basis like that. But just say we have two weeks in a row, that's a trend. Right. Then that should trigger an action on my part to go do something so if, if we do an audit of that location and we determine that this is a front of house issue, just the way you have them split up, that would be Xander going to that location and having some sort of, you know, some form of over the shoulder training and, and review of that location's front of house procedure and staff to try to try to recorrect them back into the right, you know, into the right direction. Yeah, if it's, if the audit says that it seems to be more of a back of house problem, then we send Stephen and let him kind of do the same thing.
Matt Lofton [00:14:53]:
That's kind of the way that I envision that. If it's staffing, then it's a, you know. Yeah, it's a different, that's a different issue. Yeah, so that's kind of the way I look at that. And that way there's, I would just like to see speed delete a little bit faster there. You know what I mean? When we identify a trend, we get there a lot quicker. We have, you know, some sort of a three day, you know, some sort of a three day mini boot camp with, you know, front of house or back of house, you know, training and action, you know, training and over the shoulder action, plan to try to get them back in line with what it's supposed to be and then, and then move through. And I think, you know, one of the things that I think you've witnessed and identified just through your experience of different things is having that person that can come in and be the Michael Jordan and say, y' all get out of the way and give me the damn ball and watch me do it sometimes inspires everybody else.
Matt Lofton [00:15:59]:
I'm not saying, you know, not saying that's good for the, for the team, for long haul kind of things, but for like a three day deal, you know, having, having that somebody like a Xander or Stephen that can come in, that knows the system, knows the process and procedures and can perform it in front of the others. Sometimes once they see, once they see it in action and they see it, that is possible. It creates the belief. Right?
Mike Allen [00:16:29]:
Yeah, I gotcha. Yeah, I think, I think I can revise the way that we build out our goals to like a BHAG the goal and then the MLAP. Like I have MLAPs for specific employees. Right. But I don't have an MLAP shop goal set. Right. And if we fall short, if our pacing has fallen down to that MLAP area, then it triggers a reaction, right?
Matt Lofton [00:17:05]:
Yep. So, I mean, I would break those into front of house and back of house and you know, set your, you know, set your targets for the store of what you know, you need it to be, you know, what you need the front of house performance to be, what you need the back of house performance to be, and then come up with some deviation of, you know, of what the goal is and say anything that's a greater deviation than this requires XYZ to happen, you know, whatever that looks like. And I think, you know, getting, getting, getting Steven and Xander's input on that would be instrumental as well.
Mike Allen [00:17:45]:
Yeah, I think I can definitely sit down with them and.
Matt Lofton [00:17:49]:
Because the question is, if you put, if you park Xander in that store tomorrow and you said your job is to be the service manager until things are turned around, how quickly do you think it would turn around?
Mike Allen [00:18:02]:
Within a week. Right. But I think he'd, he'd probably run off some folks because they wouldn't be comfortable with the changes that he's forcing on him.
Matt Lofton [00:18:10]:
Right.
Mike Allen [00:18:10]:
And that might be necessary, I guess. I don't know. I don't know. He might not, you know, but it would definitely ruffle some feathers. But didn't a store that small, it doesn't take a lot to move the needle, you know.
Matt Lofton [00:18:26]:
That's right. And so that's, you know, that's where I would look at that and just say, you know, in three, three to five days he can have a big impact, you know, in an underperforming area. It's just a matter of getting him there as quickly as you can. And so. All right, let's just go back through. So we, we, we've identified that we've got, I mean our GP percentages have dropped, our closing percentages have dropped. It almost appears that everything is kind of trending to that direction of what you were talking about. As far as the, you know, as far as this being a front of house issue.
Matt Lofton [00:19:10]:
The one thing that I am a little bit confused about just because I know how your estimating is done, how did the GP percentage drop so much?
Mike Allen [00:19:20]:
We had a rash of warranty jobs because we had a technician. Okay, break some.
Matt Lofton [00:19:26]:
Okay, so that explains that. And then, so I know we're, I know we're back down to one advisor and two technicians at this location. I'm assuming that's not the end goal for, for staffing for that location. We're planning on getting back to the 2 and 3 model. Is that the goal?
Mike Allen [00:19:53]:
Yeah. So I think probably two technicians and a high performing GS who's going to be primarily in rack Attack.
Matt Lofton [00:20:00]:
Yep.
Mike Allen [00:20:01]:
And then an advisor and an assistant up front. So it'd be a five person staff for the most part. And I think we can get there in a pretty timely fashion. It's just like if I'm going to do that right now, it means I'm stealing personnel from the other stores. And I'm. I'm just playing whack a mole. Right. And so I don't.
Mike Allen [00:20:24]:
I'm short about two people across the whole company to be able to do that. And so if I'm robbing from Peter to pay Paul, it's just going to cause a problem somewhere else. So I need to.
Matt Lofton [00:20:38]:
So you have an aggressive hiring campaign to try to get two more people.
Mike Allen [00:20:41]:
Yeah.
Matt Lofton [00:20:42]:
Okay.
Mike Allen [00:20:43]:
But I mean, I can get two more people today. I just. They got to be two more of the right people.
Matt Lofton [00:20:46]:
Sure.
Mike Allen [00:20:47]:
You know, is it better to have a warm body who's not the right person or to wait for the right person? I guess it depends on how long you got to wait and how much havoc is wrought by the warm body. I don't know.
Matt Lofton [00:20:59]:
No, I mean, I'm. I'm with you. The right people outweigh, you know, outweigh people. A good system is about 60% of it. I don't want to say 60 of it. What? The percentages don't matter. There's a portion of it that's going to be, you know, the system. You have to have a system in place that gives an opportunity for people to be successful.
Matt Lofton [00:21:24]:
And then the rest of it is you have to have the right people that can elevate the system. Right. That would have been talented and successful regardless of a system. And the system just makes them even better. Right. So the, the easy comparison there is. We brought up Michael Jordan earlier. Michael Jordan, pre.
Matt Lofton [00:21:39]:
Phil Jackson, pre. The triangle was good, won a lot of scoring titles, never want to play out. You didn't win playoff games, didn't win championships. You bring in Phil Jackson, we put a structure together. We put the triangle offense. There's a system. He has to work within that system. All of a sudden the whole team is better and they win everything for seven years in a row.
Matt Lofton [00:22:01]:
Right. So there's. But you can take bad people and put them in that same system and the system doesn't work. So I think there's, there's a lot there to. So we were talking about, you know, one of the things I'd like to talk to you about. We're talking about trying to build accountability for the, for the managers and trying to Build goals and trigger points. And I know that you said Xander is, is responsible for recruiting and onboarding and training. Is that correct? Or he's involved in it.
Matt Lofton [00:22:32]:
Not necessarily responsible.
Mike Allen [00:22:34]:
Involved in it. And primarily front. I mean, we like a key hire. We all talk to him, right? Sure. But, you know, Xander's focus is primarily front of house.
Matt Lofton [00:22:48]:
Do they have a trigger that says we need a new person? Do they know that? Or is that you looking at everything and going, we need two more people?
Mike Allen [00:22:57]:
I mean, we talk about it constantly, right. You know, staff level, staff coverage is a constant topic of conversation. And so that's part of the goal sheet that we review every week is, you know, hey, we need, this store needs, you know, it needs a GS. The store needs an advisor assistant. This store needs a technician or whatever it might be. And so we're actively reviewing that need list every week. I mean, when you say trigger, you're talking about when car, when call volume gets to point X, we need to add an advisor. When car count gets to point X, we need to add a tech.
Mike Allen [00:23:33]:
Is that what you mean?
Matt Lofton [00:23:34]:
Or so those are numbers that are going to trigger revenue dollars, right? You know that you need X amount of calls to get X amount of cars to get X amount of dollars. Right. But then once you, but you need a certain amount of people to be able to generate the dollars, otherwise you generate a lot of volume with no dollars. So the question, one of the things that I'd like to talk, you know, talk to you about is do you have a, a goal for revenue per employee for the business? So you guys kind of know, hey, we're trending up our next goal. So if you set a goal for the location that goes from X to Y, you know, higher, are we expecting to absorb that same amount into the entire team or when do we know we need another person to be able to add that revenue in?
Mike Allen [00:24:20]:
So I, I have that number in my mind for technicians. I don't have that number in my mind for advisors because it's such a huge variance in advisor productive capacity and customer management capacity. You know, there are some due to start to get flustered after five or six customers a day. Right. And there are some who can handle 20 a day. I guess that's probably true for technicians too. Right.
Matt Lofton [00:24:49]:
But so I would, I would urge you to, to do the math on your, on all your locations and look at your revenue per employee. And I think you're going to find a pretty consistent trend there, you know, between your locations. And it's one of the things that I've started to, you know, pay a lot more attention to with both clients and in my own store. So I know because again, it's, it's easier to project out what a technician should bring you because it's, it's a lot more. I can back into the math a lot easier. I'm expecting 40 plus hours a week with my effective laborator being this and, you know, double that, you know, for the easy math to get your part sales off of that. And that's how much I should expect off of a technician. Right.
Matt Lofton [00:25:39]:
But what if you hired it, what if you hired a porter? Right. Should that add any revenue to your business?
Mike Allen [00:25:49]:
Should make things easier. Yeah. I mean, every employee should address revenue.
Matt Lofton [00:25:53]:
So what should that amount be? Right. And so I think it's important to have an idea there of what, what the amount of revenue that you expect per employee is. And that way, you know, when you add somebody on, you're adding that back in. Because regardless of what the position is, again, if I hire a porter, the porter should take, you know, take a little bit of work off the front of house and should take a little bit of work off the back of house, which should increase the efficiency and overall productivity of both of those. And I should get a net gain of revenue off of that employee being there. If I don't, then what's happening is the rest of the team just taking it easier now that they don't have to empty the trash out and take customers home. Is that individual not doing those things? And we're still, you know, so it, it helps set a really good expectation. And it also says, well, if I want to go from here to here, it gives a tighter window of how much staff I really need to be able to generate that amount of revenue.
Matt Lofton [00:26:57]:
So. And it would be one more trigger that I would look at, you know, for Xander and Steven to take a look at and say, okay, what is my, you know, what is my revenue per employee? And is that team running efficiently, comparatively speaking? I will give you the rules of thumb. These are by no means like set in stone concrete as much as it would be if we were looking at the technician numbers. Like, I'm sure if I asked you, technician wise, what are you looking for per. Per technician, you'd be able to give.
Mike Allen [00:27:27]:
Me a. Yeah, I can talk to you about revenue or hours or.
Matt Lofton [00:27:30]:
Yeah, yeah, and we would probably agree on both of those numbers. It would be pretty daggone close. This may change, but from what I see is, you know, somewhere between 20 and $30,000 of revenue per employee is. This is monthly, is a. Is a pretty good target.
Mike Allen [00:27:55]:
So with that target staff at Hillsborough street, that would be a target of a 150 per month, which is very doable. That's just where we were when we had that many people that were. It was clicking.
Matt Lofton [00:28:08]:
Yeah. Yep. And that's not to say that some people out there can't get to 40 and we don't want to get to 40. That's just saying, you know, somewhere between that 20 and 30 is. Is been my observations of. And when you back into the rest of the math, like you just kind of did really quickly, if you had a five, you know, if you had a five employee location, that's 150amonth, that's going to track out to a lot of the other math that you would do. And if you go back to your good month, that. That's what it was.
Matt Lofton [00:28:36]:
We had two advisors, three technicians, $150,000. And. And so that's. I would set one of the. I would do the math at your other stores where everything's been a lot more consistent here recently and see what that looks like. And I would set a standard in place for what, you know, you're. Cause, you know, if you take a look at that, you know what revenue you're generating, you know what bottom line you're generating at those places.
Mike Allen [00:29:00]:
Let me ask you this. So I take some money out of the business. Xander and Steven obviously do. I've got a bookkeeper that manages all three stores. How would that, how should that affect my. Because there's. Should it just be a third of a per. A third of a person per each of us? So.
Matt Lofton [00:29:18]:
So I'm, you know, in those scenarios. Yeah. I'm not, I'm not counting myself in that. If they're not a. An individual store manager, it counts in the equation. Right. Because they're in that location driving production. Whether they're producing or not doesn't matter.
Matt Lofton [00:29:42]:
I would probably. I wouldn't count Xander and Steven as whole employees just because they're not, but I think that they go to that to some degree. Obviously.
Mike Allen [00:29:54]:
I got Xander, Steven and my office manager count that as one additional person at that store.
Matt Lofton [00:30:01]:
I think that's fair. I think that that's fair because they're taking some workload off of those people. Obviously they're filling in from time to time, doing this and doing that. They're holding people accountable. Your. Your office manager and bookkeeper is. That's less stuff than a service advisor would have to do in a single store location. But by and large, they're not adding to the production of any one location.
Matt Lofton [00:30:24]:
Yeah, but that's a great question.
Mike Allen [00:30:26]:
Well, they are an expense item, though, right?
Matt Lofton [00:30:28]:
Sure, sure.
Mike Allen [00:30:31]:
Okay. So really, I want to be shooting for, you know, 175, 180 there.
Matt Lofton [00:30:39]:
Okay.
Mike Allen [00:30:41]:
And that'll be a super profitable place to be if we can get there on a consistent basis.
Matt Lofton [00:30:47]:
So that's 35,000 per employee, which I think is doable. I mean, I know it's doable. It's just a. I think it's very doable for you. That 20 to 30 range, like I said, is a good little litmus test. Anything below 20 is. Every time I've ever. I've ever pulled the math and it's been below 20,000 per, you know, per employee.
Matt Lofton [00:31:07]:
It's been. The rest of the numbers have been bad. When we get into the P and L, when we get into the performance of the business, it's. The business is not performing well.
Mike Allen [00:31:17]:
So do you think it's safe to say that a good BHAG number could be 35, a goal could be 30, and an MLAP could be 25?
Matt Lofton [00:31:26]:
I think that would. I mean, obviously, like I said, run the math on your other locations, but I think.
Mike Allen [00:31:30]:
Yeah, yeah, okay.
Matt Lofton [00:31:31]:
I think, I think that would be a good thing.
Mike Allen [00:31:33]:
Who are listening, who maybe have their own situation, they're thinking about that. Every situation is different, but that's a decent baseline to aim at.
Matt Lofton [00:31:41]:
Yeah. Like I said, these, These are rules of thumb. They're. They're not laws, but you have to have some sort of a starting point, you know, to look at and see. But I. I would encourage everybody, if you're not looking at that number, go through and start paying attention to what that number is. Because again, when you sit down and you bring on a new employee, well, the goal should be the business should grow. Right.
Matt Lofton [00:32:03]:
It just shouldn't get easier for everybody. It should be. It should be a revenue generator in some way, shape or form. So I think there's, you know, there's obviously been a lot of effort and thought and time put into how much should a service advisor bring me? How much should a technician bring me? But we don't think about some of the support staff people that are coming in to make those people better. And then overall, like you said, it's really difficult from a service advisor standpoint. How do you know? Because some of. If you go, from a guy that's doing 120,000amonth in sales by himself and then you add a second service advisor, you're probably not going to do 240,000 in sales. Right.
Matt Lofton [00:32:45]:
It's going to split some of that amongst the two of them. So how would we know how much is acceptable? If we know I'm supposed to get $30,000 of revenue per employee and that's my target, then I know that I can increase my, my sales goal, you know, from a hundred, from 120,000 to 150,000 or. Right. And hopefully the experience is better and customer retention is better and the details are paid a little bit more. And while we're not doubling our revenue by adding another advisor, we're doubling the experience and we're still hitting our revenue goal. Right.
Mike Allen [00:33:18]:
So, and just to repeat ourselves from earlier in case somebody's listening who isn't tracking when I say bhag, it sends for big hairy audacious goal. Big hairy ass goal. That's kind of like the pie in the sky goal. And everybody knows what your goal is. And MLAP is minimum level of acceptable performance. So you know, key employees should know what their minimum level of acceptable performance is. But I guess what you are telling me is that there, that Steven and Xander need to have store wide M labs that trigger responses when we start falling short of those. Yeah.
Matt Lofton [00:33:55]:
Not just store wide, but actually split the store in half. And let's have some MLAPs for you know, the two different sides of the business in each location. So if the overall store is, is down, you know, we have a front of house KPI scorecard, We got a backhouse KPI scorecard. You know, you pick the trending time. If three days in a row of bad performance is a trend, if it's two weeks, it's a trend. Pick whatever you decide that timeline is that says it's a trend. And you know, try to pick your leading indicators and not your lagging indicators so you're in front of it. You know what I mean?
Mike Allen [00:34:32]:
So let's talk about that. So for me, front of house KPI are going to be like inbound calls, car count, closing rate, average pair order, gp. Right. It's easy for me to come up with because it's the world that I live in, back of house that's going to be, you know, tech average quote. Is it average hours per technician or what do you, what do you think? Because I mean you can have low hours and it'd be a front of house problem.
Matt Lofton [00:35:03]:
Yeah, 100%. Yes. I mean I think, I think the, the two things that they have that they're most responsible for on the technician side is because technicians can limit their car count as well, right? Yeah. With their efficiency of how they spend their time throughout the day. Not necessarily their efficiency on the job, but what do they do between jobs? Are they taking 45 minutes to mop the floor? Are we taking 72 smoke breaks a day? We getting in a 30 minute long fight with the girlfriend on the cell phone, all that kind of stuff. Right? Yeah. So I would look at, at are they hitting their cars per day goal per technician? Because you can be hitting the goal as a group, but have an individual that's lagging behind and that could be a distribution issue. And I get that.
Matt Lofton [00:35:57]:
But by and large, if they're available to work, a service advisor is going to give them the work. Right. So I would look at average tech quote in cars because it, because what that's doing is, is that that means they're producing sales potential through both of those things. If they're hitting their three to five car a day goal and they're averaging $2,000 plus per car coming in, then each technician is, is getting 8 to $10,000 of, of sales potential added to the front of house. And then it's what does the front of house do with that? Right. Are they selling it? And if they're not, then it's a front of house problem is what it is.
Mike Allen [00:36:34]:
Gotcha. Okay. You've definitely given me some homework, man. But I think that's really good. That's good stuff. And I've never thought about it that way. I think three days as a trigger is maybe a little too quick, but I think one week. What do you think?
Matt Lofton [00:36:52]:
I mean, I'm fine with it. I don't, I think that's a, I think that's a great conversation for you and Xander and Steven. I would, I would try to dwindle it. Obviously the goal would be to dwindle it down to a short, you know, the shortest time frame that you can. And the, the ability to do that is going to be how strong are your leading indicators? Right. So like my leading indicators are how much sales do I have in the funnel? Like how much am I adding to it on a daily basis? So if I have a, a 15, $20,000 day, that's great and I'm super happy about it. But if we only added $1,000 to the sales funnel, and I know tomorrow we come in and we only add $2,000 to the sales funnel, the team doesn't feel it yet. Like in their mind they're still celebrating the $20,000 day.
Matt Lofton [00:37:46]:
And you know, it hasn't hit a pay week yet, but I know that we're getting ready to be slow. Yeah, right. Because a week or two from now you're not going to have that work because we didn't sell that work ahead of time. So that would be a leading indicator for me at the front counter. The better your leading indicators are, the better that is. I'm looking at two weeks ahead appointments, like how many do, how much do I have on the appointments? And I'm not booking work out two weeks, if that makes sense. I'm not having people call me in today and I'm scheduling them out for two weeks. Let me make sure that I'm really clear on that for everybody that listens.
Matt Lofton [00:38:24]:
I'm pre scheduling appointments from three to six months ago and scheduling them back in. But if I'm looking on my calendar for next week or the week after that and I don't have a lot of appointments or they haven't contacted and confirmed, then I know we're going to have a scary day or two in there because I don't have any guaranteed work next week.
Mike Allen [00:38:45]:
What percentage of your car count is pre booked appointments from previous services?
Matt Lofton [00:38:51]:
Are you asking me what my goal is or what it actually is?
Mike Allen [00:38:54]:
Yes.
Matt Lofton [00:38:57]:
So our goal is, is to be 90% pre booked. That's. I don't know that we'll ever get there, but I'm striving for it. I would say right Now a good 50 to 60% of our car counts pre booked appointments.
Mike Allen [00:39:13]:
I think that's great. So there's definitely something to. And look, people have been doing pre book appointments forever, Earl. I've been hearing people talking about it. I've just never been able to pull it off. And that's team buy in to a degree and how it's delivered to the customer. You know, I believe that you can say, you know, hey, Ms. Jones, my job is to, to be your car guy and take care of anything that you've got going on in the world of your car.
Mike Allen [00:39:37]:
And so part of that service that I provide for you is I'm going to remind you when you're due for your next service. So I'm going to call you in a few months and remind you that you're coming up due for your next oil change and we'll book an appointment then. And that's really the pre booked appointment. But I'm presenting it to the customers. I'M going to call you and remind you when you're due.
Matt Lofton [00:39:53]:
Right?
Mike Allen [00:39:54]:
It's a little bit of a soft, softer conversation.
Matt Lofton [00:39:57]:
And so I mean the pre book and that's, I mean that's how you would do the pre book. You just have to have a scheduling strategy in your, in your shop management system on the calendar that says this is, this color is a pre booked appointment. And then we call a week or two ahead of time and we confirm it and after it's confirmed we change the color, you know, to a different color, you know, but the, the way I try to present that to the, you know, to the staff is this people matter. And I'm not trying to dehumanize the people, but let's just take a look at it from a mathematical standpoint. All right? If I could strategically line up my schedule with the most advantageous opportunities, I would have an opportunity I would, that would, I would make more money, right? So if I, the more pre scheduled appointments that I book, if I'm looking ahead a week or two ahead of time and I'm looking at the schedule, then I get an opportunity to take a look at my rollovers, see what I currently have, see what I need to fill in for gaps, you know, to meet my goals. And then I get to pick and choose off the buffet which opportunities are the best opportunities to fill into that. Because if I prescheduled appointment from six months ago, you don't remember whether I scheduled it for the 20th or whether I scheduled it for the 3rd of August, you don't even remember that I scheduled it. So if I'm on the third and I see, hey Mike is an A list customer, but I need another car today, you know, or I'm going to need another car next week, I'm going to prioritize my call out schedule based off opportunity and I'm going to call and schedule Mike and say, hey Mike, I've got you pre scheduled for your oil change this month.
Matt Lofton [00:41:31]:
Do you have an opportunity to bring it in on the third at 10am Right?
Mike Allen [00:41:36]:
Yeah.
Matt Lofton [00:41:37]:
You know, if I can keep scheduling by opportunity that way. And every single day I'm maxing out the schedule with the best opportunity possible and not just doing a bunch of first come, first serve, you know, block filling, which is kind of what we're historically done in the industry.
Mike Allen [00:41:55]:
Now. I don't know that I've ever heard anybody talk about pre booking on kind of nebulous dates and then cherry picking the best clients first or to fill, fill gaps that Makes a ton of sense. So.
Matt Lofton [00:42:11]:
Yep. So my, my analogy to the service advisor I spoke with yesterday was I said if we had a line of 10 people and your job was to collect all of the money that, that those 10 people had in their pocket, like if you talk to them for an hour, you were guaranteed that you were going to get all of that.
Mike Allen [00:42:26]:
Careful, that's evil shop owner conversation.
Matt Lofton [00:42:28]:
Well, I mean, so just bear with me. Again, so just take. Again. I'm not trying to dehumanize it, I'm just trying to make it, make the math of the concept make sense to everybody. Right? So you had, you had 10 people, you only have eight hours in the day, you've got one hour conversation. So you have to pick eight out of the 10 people to talk to. Right. And your job is to collect the most money possible from those 10 people.
Matt Lofton [00:42:52]:
Well, picking the, picking the right eight would be a big portion of making the, the most money. Right. So have you, you ever been in church on Easter Sunday and they do the giveaways for the, you know, the, the oldest mother, youngest mother, you know those types of deals. And they say, raise your hand, you know, if you're 20, 20, raise your hand. If you're 30, raise your hand. And then by the end of it, you know, there's some 90 year old lady over there that still has her hand raised and she gets the, she gets the flowers and the, the cake or whatever. So I said, if I said the, the best way to do that would be you would ask everybody, you know, you would find out how much money they had in their pocket, right? You would say, who's got $100, who's got $200, who's got $400, who's got $500? And we would stack them in line like that, right? So my point with bringing that up was in your shop management system, you have access to that information, you have their pre existing buying habits. And even if you don't, you have an, you know what type of car they have because you scheduled it for the car.
Matt Lofton [00:43:50]:
Right. And you know what type of opportunity that car has. And if I'm looking at a 2025 Hyundai Kia and I'm looking at a 2015 Ford F150, you know, there is a tremendous amount of difference in the opportunity between those two vehicles. So I can go on my schedule a week from now and I can just quickly. I mean, it's subjective, obviously it won't be 100%, but if I'm looking at next week and it's all pre booked with a bunch of vehicles that are three to five years old. I know my opportunity is lower, right?
Mike Allen [00:44:22]:
Yeah.
Matt Lofton [00:44:23]:
If I see a bunch of a list customers with good cars, I know next week's going to be a banger. It just, just because I know my opportunity is going to be there. So.
Mike Allen [00:44:32]:
Great. And it seems like that would remove the peaks and valleys and some of the stress out of scheduling too.
Matt Lofton [00:44:38]:
I would think it, it definitely does. I mean, obviously, you know, it takes a commitment to being able to do that. But again, the, you know, I look at it as a.
Mike Allen [00:44:48]:
You get that and you understand how to work that system. Getting a team of people on the counter that also get it and you know, engage brain to work that system actively rather than just checking boxes is.
Matt Lofton [00:45:00]:
A much, is a much different deal. And like I said, I'd say we're probably about 30 to 40% there. They see it and they understand it. You know, there was a, we were having a conversation a couple months ago and my store manager, she was like, man, you know, I told her, I was like, you're getting ready to have a bad week next week. And she's like, no, we're not. Don't say that. And I'm like, no, I'm telling you, you're gonna have a bad week. And so she went into it and you know, they, they, they were under the goal for the week and she was like, well, she's like, I, you know, I hate to say this, but you were right.
Matt Lofton [00:45:29]:
But I have to know how, like, how did you know? And so I sat down and I showed her. I'm like, it's, I can see a week or two ahead of time, you know, through those two things, what are we adding to the funnel? And then, and then what is my opportunity look like, you know, next week. So. And what my opportunity looks like next week is because it's about 50. 50, right. You have almost half your sales this week are rollover from the previous week, right? So it's opportunity that you created a week ago that rolled into this pay period and you know, you get it done and it closes out this pay period. And the other half of it is work that came in and you were able to get done this week and then another portion of that rolls into the next week, right? So if you, if you had a bad discovery week the week before and you didn't sell off of that discovery, then it rolls your 50% lower this week. Or if you had bad opportunity scheduled for this week, then it limits that 50%, right?
Mike Allen [00:46:26]:
Yeah, for sure. So, I mean, it's all logical and it makes sense. It's just being able to articulate it in a way like that to help your team understand it too, I think makes a big difference because you have people who are hungry to perform. Right. But they might not understand why they're falling short or why they're struggling this week versus last week. And I think that makes sense. So thank you for that.
Matt Lofton [00:46:50]:
Yeah, absolutely.
Mike Allen [00:46:51]:
So you've given me a lot of homework, brother. Definitely going to have some good conversations with. With the team this week and next. So anything else you want to review or are you sufficiently overwhelmed? Me at this point?
Matt Lofton [00:47:06]:
I'll send you some resources that might make those conversations a little bit better. I don't know that they'll be an exact fit for what you guys are doing, but it'll at least give you a starting point for the conversation. And if you need anything else, let me know and I'd be happy to.
Mike Allen [00:47:22]:
We're coming up on the Expo. I don't think this will publish, actually. This will publish on the 26th, and then our. Our next one will publish on the 23rd, which will be the week of the Expo. Right. So I'm excited about that. Y' all bringing kind of the A team out, right?
Matt Lofton [00:47:40]:
Or for Elite. Yeah, yeah, we'll have the A team there. Yeah.
Mike Allen [00:47:44]:
So I know that Nick won't be able to be there because he'll be in Connecticut. And I. I am.
Matt Lofton [00:47:51]:
I am very. You killed my. My fall vacation plans. I. When the. When the per. Service schedule came out and I. I saw that that was location, I told my wife, I said, listen, don't make plans.
Matt Lofton [00:48:05]:
We're gonna go. You're gonna come with me to that event and then we're gonna leave and go to New York for a couple days. And then we might go to Boston for a day or two and we'll do the. We'll do the northeast wing. And then I got on a good meeting.
Mike Allen [00:48:17]:
Man. They're not staying at the Holiday Inn Express. No, I know they're not eating an Applebee's. It's gonna be a hell of a meeting. And I'm. And they're giving me unending about not being there.
Matt Lofton [00:48:29]:
Yeah.
Mike Allen [00:48:30]:
But I'm looking forward to seeing you in, in Raleigh. The pre party is going to be a banger. It's going to be a good time. So I'm looking forward to that. If you can't, if you're going to make it Thursday, come to the pre party Thursday night.
Matt Lofton [00:48:45]:
So I hear that there's going to be. I heard on the last episode there's going to be some. Maybe some wrestling involved. Yeah.
Mike Allen [00:48:51]:
You know, the big padded sumo suits. We're going to have a sumo ring. It was going to be a bunch of stuff. I don't want to give it all away, but there's going to be plenty of ways to embarrass yourself or laugh while other people embarrass themselves. And I did get pro tip from John Monks at Huska. He said, hey, man, have you ever done the padded sumo suit thing? And I was like, no, I haven't. All advice appreciated.
Matt Lofton [00:49:24]:
He.
Mike Allen [00:49:24]:
He said, make sure you do it early in the night because they're very hot and late in the night they're pretty gross.
Matt Lofton [00:49:33]:
So I can see that.
Mike Allen [00:49:34]:
So. And we'll be at the hospitality suite. Also is going to be the podcast and Elite's going to be there at the hospitality suite with us. We're going to have some. Some fun stuff going on there. So I'm looking forward to the whole thing, man. It's going to be a good time.
Matt Lofton [00:49:45]:
I mean, the whole industry wants to know, are we going to see the fight that we really want to see? Which is. Is so, I mean, you and Lucas are going at it. Is Brian and David, are they going to go at it?
Mike Allen [00:49:56]:
I think I might not. Maybe. I'm not supposed to give away the whole fight card, but I think that Pollock and Zeb are going at it, which, I mean, Zeb's like five, nine, you know, he's svelte, he's wiry. Yeah, yeah. And he's. I mean, he's angry too, man. I mean, look out. So I think he's just going to go straight for Brian's knees.
Mike Allen [00:50:19]:
Yeah, it's going to be David and Goliath. So anyway, I think it'll be a good time. It'll be.
Matt Lofton [00:50:27]:
I'm excited about it. I know the team is excited about it. And I actually. It's pretty cool. So I. My GS moved to Arizona earlier this year and I actually was able to hook him up with one of the guys in pro service and get him employed there. But he's actually coming back. He got some time off, so he's.
Matt Lofton [00:50:46]:
He's coming back to go to Asta and he's. He messaged me about. I said, look, buddy, I said, if you can get off and you can get a plane ticket, I'll. I'll get you a ticket to the show. So that's pretty cool. So he's coming all the way in from Arizona and so be pretty neat to see him.
Mike Allen [00:51:03]:
Well, I'm looking forward to it, brother. I'll see you soon. Take care.
Matt Lofton [00:51:06]:
Have a great one, Mike.
Mike Allen [00:51:07]:
You too. Thanks for listening to Confessions of a Shop Owner, where we lay it all out, the good, the bad, and sometimes the super messed up. I'm your host, Mike Allen, here to remind you that even the pros screw it up sometimes. So why not laugh a little bit, learn a little bit, and maybe have another drink? You got a confession of your own or a topic you'd like me to cover? Or do you just want to let me know what an idiot I am? Email Mike, Confessions of a shop owner.com or call and leave a message. The number 704-confess. That's 704-266-confession 3377. If you enjoyed this episode, be sure to, like, subscribe or follow. Join us on this crazy journey that is shop ownership.
Mike Allen [00:51:44]:
I'll see you on the next episode.
Matt Lofton [00:52:02]:
Right.
Mike Allen [00:52:04]:
You know I said Jess.
Matt Lofton [00:52:14]:
You know I said Jeff.