Wednesday, May 15, 2013

Inside an IRF

I know a guy who runs an independent repair facility – a good one at that. He and his team of technicians (mostly former dealer employees) work primarily on European imports, doing everything from oil changes to complicated engine rebuilds. They have invested significantly in diagnostic equipment and special tools, and buy mostly OEM parts from local dealers or OES (Original Equipment Supplier) parts from WorldPac. Not your average local garage, but interesting nonetheless.

These guys make a living by stealing business from dealers. Actually, they would probably resent the term “stealing” – as they do little marketing. Rather, they provide an outlet for dissatisfied dealer service customers, who flock to them in droves after their warranties expire.

How are they able to do this? They don’t have many Yelp reviews and aren’t smart about Search Engine Optimization. They don’t have a fancy waiting room. They don’t have nice loaner cars. They don’t offer online appointment scheduling. They aren’t open late or on weekends. They don’t charge less for parts. They don’t even have a significantly lower labor rate than area dealers. Nevertheless, they do have a loyal following and, through word of mouth, continue to conquer new customers every day.

So what is their edge? When asked, their customers say things like “better service” and “lower cost.” On the surface, these are head scratchers, since most dealers (particularly of European brands) provide more amenities and what would be considered higher service levels. Then there’s the price issue – again, this particular IRF charges his customers dealer list price for parts and has a similar labor rate. Hmmm…

When I presented this data to a customer, he accused me of being naïve (“Dealers have higher overhead, so they need to charge more”). To reinforce his point, he told me about his last experience at a dealer. He went in for an 80k mile service – he dubbed it “a glorified oil change” – which cost him far more than the $60 he pays for an oil change at the IRF. Not exactly an apples-to-apples price comparison, but it does illustrate a fundamental perception issue that plagues our business.

Of course, the folks at this IRF do many things well – they take a long view of their customer relationships and never do a hard sell for additional repairs. They remember names of their customers’ kids, “squeeze people in” without appointments, and sometimes perform basic maintenance “on the house.” They cater their approach to the individual customer, always delivering the right level of technical explanation and friendly conversation. They also have some structural advantages, such as extremely low staff turnover.

Bottom Line: We know there’s no silver bullet that will change customer perceptions overnight, but the stakes are high, and we need to keep a pulse on customer attitudes and react accordingly. For research and thoughts on how to tackle some of these challenges, check out our MyGuy website: http://www.my-guy.com

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