The Institute’s Leading Edge Podcast

The Leading Edge is a show dedicated to providing Automotive Service and Repair Shop Owners a one-on-one with The Institute’s experienced consultants. Ask us questions regarding any aspect of your business and we’ll answer it during the show!

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107 - Boost Your Auto Repair Shop’s Performance and Profits with Cecil Bullard!
September 19th, 2024 - 01:05:33

Show Summary:
In this podcast hosted by The Institute for Automotive Business Excellence and AutoLeap, Cecil Bullard and Jimmy Lea dive into how auto repair shops can boost profits through better productivity, smarter diagnostics, and process improvements. Cecil breaks down the importance of viewing your shop as a machine with labor and parts as your inventory and how most shops are leaving money on the table due to poor procedures and pricing. He shares his diagnostic labor rate strategy, explains how to handle productivity blockers (or “bricks”), and offers practical ways to streamline dispatching and authorization. With real-world shop examples and industry-proven solutions, this episode is a must-listen for shop owners looking to operate at peak performance.

Host(s):
Nicole Penrod, AutoLeap
Jimmy Lea, VP of Business Development

Guest(s):
Cecil Bullard, Founder & CEO, The Institute

Episode Highlights:
[00:04:18] - Shops should be run like machines—your "inventory" is labor hours and parts, and both need to be managed strategically for profit.
[00:06:52] - Charging variable labor rates for older or more difficult cars is essential to account for added time and complexity.
[00:10:16] - Labor is perishable—if it's not sold today, it's gone forever, making technician productivity critical.
[00:14:39] - Productivity issues often stem from poor systems; shops need to examine how cars are dispatched and how techs are kept busy.
[00:18:05] - Pre-authorizing repair limits and confirming contact methods helps reduce downtime and increase efficiency.
[00:27:35] - Diagnostic labor rates should reflect the skill, tools, and time required—Cecil outlines a tiered pricing strategy.
[00:34:11] - Diagnostic work must be priced like medical diagnosis—start with basic tests, then expand based on findings.
[00:43:24] - Productivity suffers when "bricks" exist—these can be company or employee-related and need to be removed.
[00:51:34] - Motivating a "brick technician" means removing company obstacles and helping them see a path to success.
[00:59:01] - Raising your labor rate shouldn't be feared—most customers won’t notice, and those who do likely aren't your ideal clients.

In every business journey, there are defining moments or challenges that build resilience and milestones that fuel growth. We’d love to hear about yours! What lessons, breakthroughs, or pivotal experiences have shaped your path in the automotive industry?
Share your story with us at info@wearetheinstitute.com, and you might be featured in an upcoming episode.

👉 Unlock the full experience - watch the full webinar on YouTube: https://www.youtube.com/watch?v=hLzmQDVBwug
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Nicole Penrod: Hello, everyone. Thank you for joining us today. Super excited to announce that not only do we have Cecil here with us, but we also have Jimmy Lee. So they are going to be leading us through today's webinar. But I want to let everybody know that We are recording this, so if anything happens, you need to drop off for something, your internet fails for whatever reason, there will be a recording available.
Nicole Penrod: Also wanted to let you know that the institute will be recording, adding in a couple of things, and then sending this out to everyone. I'll let Cecil give you more details on that. So I will leave everybody with Cecil Bullard, the CEO of the Institute for Automotive Excellence and Jimmy Lee, the VP of business
Jimmy Lea: Business development.
Nicole Penrod: There we go.
Jimmy Lea: Yeah. We'll take it. We'll take it. Well, thank you, Nicole. Thank you for inviting us on to talk to. The industry today, because we're going to talk about some really awesome and wonderful things and to make sure that this is as interactive as we can possibly make it. Please everybody go to the Q and a section.
Jimmy Lea: Now, do we have chat or Q and a here? Nicole.
Nicole Penrod: Both the chat should now be active. Everybody should be able to message to everyone.
Jimmy Lea: So if you've got a question you'd like me to ask Cecil, put it into the question. If you, if there's just a little bit of chit chat that wants to happen, put it in the chit chat.
Jimmy Lea: But I want to make sure you know how to do the question portion here, because that's where we can dig deeper in with Cecil talking about questions. So go in the window to the question bar, And type in to the Q and a where you are joining us from today and what your shop is. So go to the Q and a and drop in there.
Jimmy Lea: And I'm laughing because I'm laughing because Andrew's following me around today from Long Island, Andrew Knutson, Long Island, going from webinar to webinar, gathering as much detail and as much information and knowledge as he can possibly gather. Andrew, thank you for joining us. I really appreciate that.
Jimmy Lea: Stu's joining us from Salt Lake city, Utah. Michael joining from North gateway tire in Medina, Ohio. Nice. How's the weather in Ohio? Alyssa from top knot mobile mechanic, LLC from Florida. Nice Alyssa. That's wonderful. What part of Florida are you in? Florida is a big state. My parents just moved to Pensacola.
Jimmy Lea: We just had an employee move into Naples in Florida. So tell us where you're from in Florida there, Alyssa. Robert joining from Boca Auto Service. Robert, glad to have you with us. Is that Boca, Florida? Robert, let me know. Eric Newton from Phoenix Kurtz Auto Repair. I think that would be joining from Phoenix, and it's Kurtz Auto Repair.
Jimmy Lea: Becky, owner of Butterworth Service Center in Ingersoll, Ontario. Woo! We're international, baby. How about that? Love to have our brothers and sisters from the frozen white north. Hey, is it frozen white yet? I saw snow on the mountains. Cecil, did you see snow on the mountains up there in Ogden?
Cecil Bullard: Not here, not yet.
Jimmy Lea: Really? Down in Utah County, they were posting pictures. Everybody's posting pictures of snow on the mountains. Might've been earlier in the week.
Cecil Bullard: We had sleet.
Jimmy Lea: Oh, yuck. All right. Nevermind. On from that. Garner from Ideal Car Care in Arizona, Noah from Nathan's Garage in Edmonton, Alberta, Canada. Michael says it is beautiful.
Jimmy Lea: Leland Arizona Suspension in Arizona, Alyssa Lakeland, Florida. Nice. That's beautiful territory. Robert says Boca Raton, Florida. Thank you. That's what I was thinking you were going to say. And Becky from Crazy Hot. Oh, that's Ohio. It's crazy hot in Ohio. All right. Well, very good. Now that you know how to work the Q and A, which is awesome.
Jimmy Lea: Thank you very much for doing that. We're going to jump right into having a conversation with Cecil Bullard and Cecil is going to talk to us about processes, procedures, and profits. Hey, those are three Ps. That's really good. We should, that's a good one. But it's more than that Cecil. I'm going to turn the time over to you brother and have at it.
Jimmy Lea: So as you have questions audience, Type them in the Q& A and then I'll interrupt and we can ask those questions. Don't wait to the very end. Don't wait to the very end.
Cecil Bullard: Alright, so a funny thing happened to me on the way to the webinar. I walked in and I said, today we're not going to have a PowerPoint.
Cecil Bullard: And Nicole was like, ah, we're going to wing it. And Jimmy Lee said, no, you don't understand. We could actually record Cecil in his sleep and he would be talking about these things. We are a at the institute. We are a coaching and training company to help automotive businesses. We have programs for owners, service advisors, et cetera.
Cecil Bullard: And the reason I say that at this point is, I think some people don't understand that we actually, that's what we do. But also because it's gonna come in to play a little bit in what we're gonna talk about. There are. When we're talking about improving performance, and I think when we look at shops from my perspective, from what I do I'm on the, I'm online with someone, or I might even be in a shop, and I'm looking at bays, I'm looking at effective labor rate you have a posted rate, and you have what you call your effective labor rate, which is what do I actually charge, Per hour on average.
Cecil Bullard: I think some people believe that your effective labor rate is what are we actually bringing in per hour? And that's not, it can certainly be called that, but that's not what, when I'm talking about effective labor rate, that's not really what I'm talking about. So, you know, if my technician is productive and does you know, 1.1 hours in a one hour period, or say nine hours in an eight hour day.
Cecil Bullard: Then I'm going to bring more money in during that eight hour day. But I also have what I charge. And we have today in the industry, most of the shops that, that we would work with and I'll say most only because I cannot necessarily tell you that I've looked at every single shop we work with every day and I know exactly what they're doing.
Cecil Bullard: When I say most, I really mean all, but most of the shops that we work with have varying labor rates. I was talking to one of our clients yesterday. And they were talking about cars that are more than 20 years old coming in their shop and how difficult they are. The owner does not want to turn those cars away.
Cecil Bullard: The technicians don't necessarily want to work on those cars. And I'm kind of with the owner in that I don't want to turn them away because instead of charging, say, 140 an hour, I can charge 165, 170 because I know that this car, being older, I'm gonna have to deal with rust, other than if I'm in Florida or Palm Springs, California.
Cecil Bullard: I'm gonna have to deal with trying to chase down parts that are difficult to come by if it's even possible. We might have to chase parts in, in a junkyard for an older car. We might have to modify something else to make it work or fit where we can. So varying labor rates is one of the things that we might talk about if we're gonna talk about increasing property.
Cecil Bullard: Profits. So the basis of this is really my business is a, it's an engine. And that engine is designed to put out a certain amount of torque and horsepower for me, that means money, profit, and productivity. And there are really two ways in an automotive shop, and I guess I could have put that slide out.
Cecil Bullard: I've shown you guys this slide in a hundred webinars. One way is parts. We buy and sell parts. And we have lots of webinars out there right now talking about parts marching and parts matrices and how to price yourself and you know, how to answer questions of customers that want to bring their own parts, things like that.
Cecil Bullard: So I don't want to get into that. Today, I'm going to tell you the second way that we make our machine run properly is through productivity, having a technician come in and spend eight hours on the clock and in effect, if I'm paying a salary or an hourly, get paid a certain amount and then give me eight hours worth of billable work done.
Cecil Bullard: That I can then sell to my client. So if you thought about yourself like a store, you'd have two things on your shelf. You'd have parts. And I buy those parts from, I don't know, Napa, WorldPAC, CarQuest, wherever I buy my parts. And then I mark them up and I resell them to my customer. And then the different thing, what I paid for them.
Cecil Bullard: And what I sold them for is my profit or my profit margin, dollars and margin equals dollars equals margin. And then I also have labor on the shelf and the thing about parts is a non perishable. So parts is like having, I don't know, toilet paper on the shelf or paper plates or I don't know, plastic forks.
Cecil Bullard: If I have that on my shelf and I don't sell it today, it still is good a week from now, you know, a month from now, maybe even years from now, I can still sell that and I can make I might even make more money on it later because the price of it has gone up and the cost of it's gone up, but I paid for it five years ago when the cost was lower.
Cecil Bullard: Labor, on the other hand, is what we're going to talk about primarily today. And labor is the thing that gets me because I have labor on the shelf. If I have three technicians who are gonna work eight hours today, I have 24 hours on my shelf that I need to basically sell and then I need to make sure that work gets done.
Cecil Bullard: And I think when we look at shops and I look at shops every day yesterday, I think I had six meetings with shops that I coach with. And we're going to talk about a couple of those meetings because a couple of things that happened during those meetings is one of the reasons why shops are not financially as prosperous as they ought to be.
Cecil Bullard: And so I have this labor on my shelf and I have 24 hours. Am I finding the work on my customers cars? And am I selling the work? When we look at the machine, the automotive machine, the automotive business as a machine, and we diagnose that, we look at it and say, I've got 24 hours of labor on my shelf.
Cecil Bullard: I'm 130 an hour. And my parts to labor ratio is of what I'm selling 55 percent or let's do 50%. It should be 55 percent labor. And 45 percent parts, but let's do 50 50. So if I'm 130 an hour effectively and half of what I sell is parts and half of what I sell is labor, then I have 260 times 24, which is what I should not only sell today, but what I should finish if I don't finish the work, even if I sold it, then my guys are not productive.
Cecil Bullard: And my cost for labor it doesn't necessarily go up because I'm paying you for that eight hours, but my profit on labor goes down because I'm paying you for eight hours, but you're only giving me six to sell instead of eight and frankly, if I have three texts that are doing six hours a day, instead of eight, then I'm losing at 130 an hour, 260 times three 700, eight 780.
Cecil Bullard: Every day. And if I do that every day, then I've lost 780 times 200 and 50 days. And so whatever that, that particular number is, my, my brain isn't going to let me, it's probably somewhere around 300, 000 or something. I've lost this huge amount of labor that I didn't bill for and the parts that would have went along with it.
Cecil Bullard: So what I'm trying to do when I walk into a shop is I'm trying to say, I've got three techs at this amount, which means that we should be selling 8, 000 today. And if we sell 8, 000, then we should also be doing 8, 000. And when I'm doing my business planning. I'm so I'm having a marketing discussion yesterday with one of my clients and they have a business in around in Tennessee and we need a certain amount of dollars to make that business run and be profitable.
Cecil Bullard: And we have I think five techs in the shop right now. And I'm saying to them, not only do we know how many dollars we need in, but we also know how many hours we need to sell. And we also know how many cars that needs to be. So when we have a marketing discussion, we can talk to our marketing people about the fact that I need 12 cars a day or 15 cars a day, because I have an 800 average repair order.
Cecil Bullard: And I need to do 12, 000 worth of work. Well, that's at 800, that's 12 cars, right? Excuse me, 15. Somebody's gonna correct me. But I know, if I know what that number is that I need to produce, because I know what my hour's worth, and I know how many techs I have, then I know how many cars I need, because I also know what my average repair order is.
Cecil Bullard: So there's a real simplicity to this. When you really understand your numbers and what you should be producing in your business. And so now I'm going to, I'm going to shift and I'm going to talk about productivity because that's the thing when we're talking about performance, we're really talking about productivity.
Cecil Bullard: And performance can be service advisor performance. Certainly. I need my service advisor to sell a certain amount of whatever we offer our clients. But I also need my technicians to perform at a certain level so that I can bring in the money I need to pay the bills and have the money I want left over.
Cecil Bullard: And I'm trying to not get too deep, but get deep enough to kind of paint the whole picture here. So I'm looking at my three technicians and I'm saying I want 24 hours sold today and I'm done today. And there are easy things to fix, and there are hard things that are more difficult to fix. So if you were to look at productivity as one of your primary things that's holding the business back from running the way that it should, and making the profit that it should then you start looking at what creates productivity in a shop.
Cecil Bullard: And I'm going to talk about easy things. And I'm going to talk about harder things. So, one of the things that happens when we walk into a shop we'll look at things like how much time are you charging for what you're doing. So, I'm on a meeting this morning with a client happens to be one of the service advisors in one of the shops that we coach and consult with.
Cecil Bullard: And the service advisor is saying, well, we have this tech who's upset because he's getting all the work that doesn't pay well. So he's doing all the heart diagnostic, all the weird stuff and we, he's, part of his pay plan is a performance bonus, and he's missing his bonuses, because that work is, Giveaway work or that work is work where you cannot charge what it takes.
Cecil Bullard: And what I'm saying to him is there is no giveaway work, right? I don't have technicians work on cars that customers are not paying for. Because if I do, then my business doesn't produce what it needs to, and I'm not as profitable as I need to. So one of the things that will make you successful is basically the pen, or today we would translate that to the computer system.
Cecil Bullard: How am I estimating the job? So for instance the shop that I'm talking to has a lower labor rate on their diagnostic than their normal labor rate. And why they do that, I don't know. The reason that shops have lower labor rates on their diagnostic is because they're trying to be competitive with places that don't charge for diagnostic.
Cecil Bullard: And what I'm going to tell you is, frankly, there is nobody that doesn't charge for diagnostic. Even Pep Boys or AutoZone charges for diagnostic, okay? I get it that the customer doesn't quote unquote pay for that, I see Jimmy raising his finger, but the customer does pay for that time because that employee is charging and getting paid and the company is raising the price on their parts to pay for that time, okay?
Cecil Bullard: So I don't know, Jimmy, if you guys, if you had a question or whatever, you were raising your finger, go ahead.
Jimmy Lea: Yeah, so the question falls right in line with what you're talking to hear about the diagnostic time versus the labor time. And this is a question coming from Eric. Eric, I might need a little bit more detail.
Jimmy Lea: The end part of this, I'm not 100 percent certain, so I'm going to kind of riff on this. Eric's asking, how do you handle the eight hours a day per tech when jobs cannot be sold on time because of the customer's slowdown? And I think what he's saying there is that the customer is slow to respond. How do you still handle?
Cecil Bullard: So you you know, obviously there are complications and things in your business that are more difficult for say a shop that's got three bays. than a shop that has 15 bays. So if my techs each have two bays then I if we have a slowdown, my tech has other work to do. The way that we dispatch is one of the things that will create productivity or keep us from being productive.
Cecil Bullard: If I bring the cars in kind of throughout the day, and I kind of plan like that one's going to be three hours, And then, so I'm going to bring another one in at 11, and then I'm going to bring another one in at 2 and I give, I dispatch one car to my tech, when that car, when he's stopped, or she is stopped on that vehicle, then there's nothing else for them to do.
Cecil Bullard: So, what we want to do, really, is We want to bring all the cars in kind of in the morning early and we want to dispatch multiple cars to our techs. I always want my tech to have a backup job to do if they get held up, and they can get held up for a lot of reasons. They can get held up because the service advisor is too busy to do the estimate because somebody else's estimates came in first or whatever.
Cecil Bullard: They can get held up because the service advisor is too busy because the service advisor is answering phones and doing other stuff. They can get held up because the parts aren't here or the parts they got were the wrong parts. They can get held up because it's taking too long to get the sale and the authorization because you can't get a hold of the customer.
Cecil Bullard: And so if I look at, say, that one and I carve that one out what I do. Is when I'm, when the car comes in, first of all, I'm bringing the car in as early as possible in the morning and I'm letting that customer know that I will call them at some point, like one o'clock in the afternoon. And then I'm telling the technician, I need to have that estimate on my desk at noon so that I can estimate it and call the customer by one.
Cecil Bullard: and get that thing sold. And hopefully, you know, the way that we schedule and the way that things work out that actually happens the way that I think it ought to happen. But it often does not. Another thing I do in the morning is I verify my contact method with the customer. How do you want me to get a hold of you?
Cecil Bullard: Is this a good phone number? Would you like me to text you? If I text you and I can't get a hold of you, you don't respond, would you like me to call you? If I can't get a hold of you, do you want me to move ahead up to, say, 1, 000 and get the work done? Or do you want me to stop so that you and I can talk?
Cecil Bullard: So pre authorize, pre authorizing a certain amount. Also will help me with that and help me get my technician moving at a faster pace. So there are, you know, maybe four or five things I can do to make sure that it happens as fast as possible. But if my tech does get held up, I want to have that technician have another job that they can do.
Cecil Bullard: So in my shop, we scheduled all the customers to come in before nine o'clock. 90 percent of the time that worked out fine. We had. Our 13, 14 cars come in before nine, we dispatched all the cars to our techs, and then throughout the day, we made adjustments to the dispatch based on what was selling, what wasn't selling, what was getting us held up, you know, parts, et cetera.
Cecil Bullard: And we move some things around to make the most efficient use of the machine. So, if Bob we sold 15 hours for Bob on a car and we had the parts here and we knew we could get the work done. Bob still had two other cars that he was supposed to diagnose and work on. Probably while I was estimating, Rob, Bob was working on one of those cars.
Cecil Bullard: One of those cars he hasn't touched yet. I'm actually going to pull that car from Bob, and give it to somebody else in the shop who didn't, whose work didn't sell, or who got held up. So if we are paying attention to the flow, the ebb and the flow of the business throughout the day, or somebody is doing that, Then we're going to be more efficient.
Cecil Bullard: Our people will be able to be more productive and we will get more hours done. Is it a perfect world every day? No, it can't be, but we're going to do everything possible to make it as perfect a world as we can make it. So if I identify not getting a hold of customers and getting the authorizations from them as one of my problems, then I'm also going to identify three or four solutions.
Cecil Bullard: During my weekly management meeting or when I'm sitting in my office by myself working on my business instead of in my business, and then I'm going to work with staff to implement those solutions to create better flow. better productivity, more consistency of product, more consistency of profit.
Cecil Bullard: And I hope that quote unquote answers that particular question.
Jimmy Lea: It did. And Eric says, thank you, by the way. So that, that went right into it. What I'm hearing is that a lot of proper preparation will help in the process procedure and proficiency of the shop. There's a lot of P's there. I know The proper preparation, getting that set up right at the very beginning definitely helps the productivity of the shop and the efficiency of the technicians.
Jimmy Lea: So Eric, man, that, that was awesome. Oh, Eric says what expected productivity would you expect out of a shop because of those possibilities?
Cecil Bullard: My shop ran at 119%. Our goal was 120. So my guys produced about 9. 5 hours a day. Over us in an eight hour day over in an eight hour day now, by the way you you have to, you, everything has to be working smoothly for you to have a hundred percent or more productivity in your shop.
Jimmy Lea: You don't step into that tomorrow. That's a lot of work.
Cecil Bullard: Well, you're yeah, there's, it's, everything's a lot. Yeah. So I walk into a shop or let's say I get a vehicle in my bay and that vehicle is not running as well as it's supposed to run, customer complaint, whatever. I know how that vehicle should run and it's not.
Cecil Bullard: And then I'm going to go through a diagnostic process or a series of tests to determine why it's not running the way that it should. And then I'm going to put a solution in place. And that solution might be part of the solution, or it might be all of the solution on the car. Business is not different in my thought process in what I, you know, what I do is a little different, but my, I diagnose, I have an idea of how it should run, and when it's not running how it should, I go look at the things that create, say, productivity.
Cecil Bullard: So one of the things that creates productivity is this. So if I'm. Getting a car in for a diagnostic and customer calls and says, Hey, I've got to check engine light on my car's running kind of crappy. I'm not getting good gas mileage. It doesn't feel right. I estimate back in the day, we were 250 for a diagnostic on a typical car that had a check engine light or run ability problem or a noise.
Cecil Bullard: We had other diagnostics, like if we had a cooling system. problem. We had a cooling system diagnostic, which happened to be 158. We had a starting and charging system diagnostic, which happened to be the time. I think about 128. We had a brake steering suspension diagnostic, which at the time was 68. And so different diagnostics because of the time involved or the time we estimate involved have different pricing.
Jimmy Lea: Yeah, and we've seen shops all across the country that have that 50 percent efficiency, 75 percent efficiency, 100%. It's awesome that you were up in the 119s. That's super cool.
Cecil Bullard: Well, efficiency and productivity, two different things. Totally. A lot of people, a lot of consultants, a lot of trainers will talk about efficiency.
Cecil Bullard: When they're really quote unquote talking about productivity, how many hours does the technician produce in a day?
Jimmy Lea: Yeah. Yeah. Well, and I want to go into your diagnostic. So this is a question from Andrew. This is coming from our audience here. Andrew is asking I don't know if I missed it but is there a formula that I can use to determine what my diagnostic labor rate should be so that my labor margins don't fall if we are diagnostic heavy?
Cecil Bullard: There's two pieces that you need to do. One is my diagnostic should probably be an hour and a half of my time. Okay. So if I'm going to spend an hour and that's what I think the tests I'm going to initially run are going to take. And I think that, I don't know, 60 percent of the time that should get the job done.
Cecil Bullard: Then I want to charge an hour and a half of whatever my labor, my diagnostic labor rate is. And my diagnostic labor rate is a higher labor rate. Because I'm using the most expensive equipment I have the most expensive technicians I have and the most expensive training I have
Cecil Bullard: to do those diagnostic and a lot of times we have shops either not charging for diagnostic or adding it in or some of it in later or they're charging based on a regular tech when they're putting their most expensive guy on that diag And so, and then I need three different diagnostics, at least four, say check engine lights and run ability stuff, because, you know, I know nothing about the car.
Cecil Bullard: Sometimes the customer tells me they've got a Camry. And it shows up in actually a Corolla, sometimes the customer tells me they have a Toyota and it shows up and it's actually a Honda. And sometimes the customer says, you know, it's running a little bad or it's running fine, but the light's on and the car comes in and there's steam coming out of the hood and it's running terribly and we know that there are major issues with the vehicle that we have to figure out.
Cecil Bullard: So I have a multi level initial testing phase. Some people don't like the word Diag. I used it all my life. So. I'm going to say DIAG, and that is an hour and a half of my time at my highest rate because I'm using my equipment, I'm using my highest paid tech, etc. And by the way, that is a starting point.
Cecil Bullard: That's not a finishing point. If I get the car in, if it has one or two codes that have to do with the same system. If we run a couple of tests on it and we are able to determine the problem very efficiently, very quickly, then I might even charge a little less than that DIAG that I initially quoted or at least I charged that DIAG that I initially quoted.
Cecil Bullard: If the car comes in and it has 23 codes that are across five systems. Then my original assumption about the time that we would spend on the car is inaccurate. And at that point, I have to let the customer know that I need additional time and additional testing because the problem that we were, the basis we were going on to set time and pricing is is no longer valid.
Cecil Bullard: So, I go to the doctor I've got, I had my shoulder rebuilt. I have trouble with my shoulder. I go in and I go to my normal doctor and my normal doctor, you know, do this, do that. How's that feel? Blah, blah, blah. Hey, see, so I think we need to run some x rays. So I'm paying my normal doctor's rate. And then I'm going to pay for the x rays.
Cecil Bullard: Then I'm going to go back to my doctor and he's going to hold those x rays up and he's going to say, wow, this looks more complicated than we thought. I think we need to do an MRI. So, and Cecil, you've, now you're beyond my capabilities, I'm going to talk to you about your MRI, but I'm going to send you to a specialist that does shoulder reconstruction or whatever.
Cecil Bullard: So now I go for an MRI and I pay for the MRI and then I go to the new doctor who interprets the MRI and then tells me what the solution is. And the solution is to go in and rebuild my shoulder. All right. So now I go and have that done and I pay for all of that. And then I go through therapy and you know, six months into therapy I'm still in a lot of pain.
Cecil Bullard: It still doesn't work the way I want. Wakes me up in the middle of the night if I move wrong. And so now I have to go back to my shoulder guy, or I have to go to another shoulder guy, and I have to run additional tests. So I had a second MRI, and the second MRI showed problems that they thought, okay, they have to be in your neck.
Cecil Bullard: So now I'm going for an MRI on my neck, which creates or shows a couple of additional problems. One being That I have some vertebrae that are screwed up. So now I'm going to go to a neck guy and pay for that. And then it also showed some things on my thyroid that now I have to have tests to see if potentially I might have something else going on that I had no idea that might be going on.
Cecil Bullard: But, you know, and when you look at that and how they do that in medical, you know, in a huge way, how we repair automobiles and how we diagnose automobiles is very much alike and should be, except most of us in the automotive industry think, well, we charge them. You know, 120 for the original diagnostic.
Cecil Bullard: And if I can't figure it out in the original hour, I thought I would, I need to spend whatever time I can to get it figured out and it's my responsibility. And the fact is it's not my responsibility. I mean, my responsibility is to do is to know enough to be good enough. to do an honest and intelligent diagnostic on the car in a reasonable amount of time.
Cecil Bullard: But if it's got one code and one problem, that is what I'm thinking. What if it's got 15 codes and six problems? That's not my responsibility to take care of all of that because it's not my car. And I don't know, Jimmy I don't know what they're saying out there. I don't And I don't even know if I answered the first question, the way that we think about charging and the way we charge in this industry is wholly inadequate for the way today's cars are complicated, because you know the way that we're still charging is what we used to do back in the 1970s when we were working on 1960s cars and 1950s cars that had carburetors.
Cecil Bullard: And points and condensers and did not have, you know, six computers with 27 different systems on them. And so we, as an industry need to change and we're not changing fast enough and we're holding each other back because some of us are afraid to charge the customer. To fix their car, right?
Cecil Bullard: Which makes no sense in my brain. So, What was the original question? Did I get the answer or did I like go off in my ADHD mindset?
Jimmy Lea: Well, you were definitely chasing squirrels, but I think all the squirrels were really good. Because we were talking about the diagnostic fee and how do I determine what that diagnostic fee is?
Jimmy Lea: And I think you nailed it. It's the most expensive time in the shop. It's the most expensive technician. It's the most expensive equipment. It costs you the most amount of money for the training for the technician. So it I mean, I think the question is how do I determine what I should be charging for diagnostics?
Cecil Bullard: I have, I start with three different rates.
Jimmy Lea: Yeah.
Cecil Bullard: I have my level one diag, which is usually an hour and a half of my highest amount of time. So if I'm doing if I have a normal rate of say one 30, I might have a DIAG rate of 160 and I might have a 240 initial DIAG and the extra half that I'm putting in there is for the parts that I'm not making and the income and the profit on the parts I'm not selling.
Jimmy Lea: Yeah. I was going to ask about that because you're missing out on that margin of parts. Yeah.
Cecil Bullard: I also under that circumstance want to dedicate 45 minutes of time to the actual diagnostic. Okay. And no more. Yeah. So, in my shop, we had a level one diagnostic, which at the time was 250.
Cecil Bullard: And it was one and a half times our our high rate at the time. And my tech spent 45 minutes on the car and then they filled out a form, which at the time was on paper today would be digital that said we did, we went in, we pulled these codes. We ran these tests. We know this about the car, either it's not this, it's not that, because the test proved that it wasn't that, and we've either diagnosed it, and we know this is what we need to do, or here are the additional tests I need to run, and the additional time that I'm going to spend, and by the way, time, when I talk to my tech, it's about time, when I talk to my customer, it's always about money, time is never mentioned.
Cecil Bullard: Yeah. I have a second level diagnostic, which is when I get in there and it's obvious that the initial one hour, one and a half times my high rate 45 minutes of time spent and 15 minutes of paperwork and discussion and research. Then when my tech goes in and pulls 15 codes from, say, four different systems.
Cecil Bullard: Then my tech, I want my tech coming to me very quickly and saying that initial guess was not right. And here's why. So now I can go back to the customer and say you know, I know we talked about 258 or whatever. And unfortunately when we got in the system and we downloaded the information we found.
Cecil Bullard: You know, 15 different codes in four different systems. And so the original time that we thought the original amount that we thought is no longer valid, we have to go here, right? And so that's a level two, which is usually for most shops, a double, whatever my level one is. So if I have a 250 level one diag, then I have a 500 level two diag.
Cecil Bullard: And that's a couple of hours. Of my time that my technician spends an hour and 45 minutes on, because don't forget about the 15 minutes of paperwork and some research that also has to be done.
Jimmy Lea: That's right.
Cecil Bullard: And then I have a level three diag, which in my book is usually four times my normal, because if you come to my shop and you say it's been to two shops and nobody can fix it, and I've already spent 2, 000 on it, then I don't want to start at a level one.
Cecil Bullard: I want to start here. Yeah. Because for some reason. The customer always seems to think that because they've already spent money on it, I should do stuff for free, and I'm not going to do that.
Jimmy Lea: And that you'll find it quicker.
Cecil Bullard: Yeah it's, and by the way, if you've already had somebody in there, or you've been in there, then you've just complicated my job, and now it's going to take more time.
Cecil Bullard: And time is money.
Jimmy Lea: figure out what they do. Yeah. Oh, it's so true. So the thank you for talking about the diags of one, two, and three. That helps a lot. I think that'll help Andrew and it'll help Eric. Robert is now asking a question. I don't know if this is specific to AutoLeap or if it's applicable to all point of sale systems.
Jimmy Lea: The question is how do I be sure that I have this set up properly in my software to charge the appropriate price for the diagnostic?
Cecil Bullard: I think it's a combination of things. Number one most software systems today point of sale systems, shop management systems allow you to use multiple labor rates.
Cecil Bullard: So I can put in different labor rates for different, under different circumstances. They certainly allow you to do canned jobs. So I can create can jobs for a level one, level two, level three. I want can jobs for my brake steering suspension, my air conditioning diagnostic or tests my come on, see, so electrical starting charging system tests and et cetera.
Cecil Bullard: I want to create. A canned diag or a series of canned diags in my system that are charged out properly so that I can easily get those on the ticket and get the customer in and out as fast as possible because that will increase my productivity. The faster I can get the customer out of the, my face and get the car back to the shop, the sooner I can get a diag, the sooner I can get the parts coming, the faster I can get the car fixed.
Cecil Bullard: So, and you know, also now a lot of the systems and I'm not as familiar as I probably should be. So I, you know, I can't say auto leap or whoever else does exactly this, but they also should allow you to use a labor matrix on certain jobs, which a labor matrix will also help me be productive.
Cecil Bullard: And just briefly the three minute explanation. Is that when the labor time was originally figured out on a car was in a bay, it was racked the tools were laid out, the parts were laid out, and they had a technician do that job multiple times on a new car. I don't get many new cars in my shop that I'm going to put water pumps on, or radiators in, or rebuild the rear differential, or whatever, most of the cars I get, the vehicles, cars and trucks I'm going to work on, Are going to be 6, 7, 10, 12 years old and they have these gaskets and these plastic components that are worn and maybe someone else has been there and overtorque the bolts et cetera.
Cecil Bullard: And also in the beginning, they, the tech that was doing the time was start to finish replacing the water pump, not start to finish replacing the water pump and doing the test drive, rechecking the system. And filling the paperwork out. That's right. And so, I talk a lot about brown bananas. If you've seen me before talk about this subject, there are things called brown bananas.
Cecil Bullard: The way I relate it is in a grocery store, my grocery is going to buy 5, 000 bananas and but they're not going to sell 5, 000 because some of the bananas are going to go brown and customers don't like brown bananas. So the question is who pays for the brown bananas and in many shop owners and service advisors will say, well, the grocery store pays for the brown bananas.
Cecil Bullard: That's not right. The customer pays for the brown bananas and the reason they pay for the brown bananas is that the green and yellow bananas are priced higher to make up for the brown bananas. That's how a grocery store stays in business is they understand their loss rate. And they modify their pricing and raise their prices to cover their loss rate.
Cecil Bullard: So if I have brown bananas, if I have time that my tech needs to spend on paperwork, cleaning and cleaning would include taking old gaskets off, because that's not how the time was originally decided the test drive, re verifying the repair etc. That is brown bananas, and we have to raise our rate to cover those brown bananas because I still have to pay my technician.
Cecil Bullard: And so, you know, I want to cover briefly, and I know we don't have a lot of time, so unless there are exactly more questions here, Jimmy, on this, I want to talk about bricks, okay? So, as a shop owner trying to get performance, productivity, consistency, and profit out of my business, I'm going to have people come up against a brick wall.
Cecil Bullard: All right. And so, one of the bricks in the wall is something someone mentioned earlier. I can't get a hold of my customer in a timely fashion. I can't get the approval in a timely fashion. And this slows my productivity down. That is a brick. Okay. And when we think about bricks in the wall, We think about all the different things.
Cecil Bullard: So estimating and time charged initially is a brick. If I'm estimating an hour and my technician is spending three hours, that's a heck of a brick that's in a wall that I can't get through, and so I can't get the productivity that I need. Your employees are coming up against brick walls. When we think about bricks in a wall, we have to think about two different things.
Cecil Bullard: We think about company bricks. And we think about employee bricks. Okay. So a company brick is the way we dispatch. So if we are bringing in cars and I've got, I don't know everybody, all my techs have a car, but I have seven work orders, you know, sitting in the computer and seven cars sitting here that have not been dispatched.
Cecil Bullard: That is a brick that will create an initial issue, right? If I dispatch all the cars so that when my technician is held up, they can go to another car and get started working on another car while we're getting the authorization, while we're getting the approval, while we're getting the parts. That's a brick that I take out of the wall, and that's a company brick, the way we dispatch, the way we schedule, the way we price, those are all company bricks.
Cecil Bullard: So, if I'm trying to get productivity out of my technician, but I only have one DIAG, and it's A half an hour, and then my technician is spending three or four hours on a typical diag, then that's a brick that's keeping me from getting the productivity and the profit that I need. So I need to identify the company bricks, and as a company, I need to remove the bricks.
Cecil Bullard: And I also need to identify the employee bricks, and I need to, as a manager, help my employee understand what bricks they're dealing with. that are keeping me from, you know, earning them from being productive and us from earning the profits and the consistency of profit that we need. So an employee brick might be a tools problem or knowing how to use the tools issue.
Cecil Bullard: I'm talking to a guy either yesterday the day before one of our clients. They got a new alignment machine. Surprisingly enough, we got a new alignment machine. Now we're doing three times more alignments. So we had a brick that was, we have an old machine that nobody can use, or knows how to, where it's too difficult, so the employees are not recommending alignments.
Cecil Bullard: And we get a new machine. We didn't know we had the brick. We get a new machine and all of a sudden we're doing more alignments on vehicles because now the machine is fun to work with and it's easy to work with. That was a brick that we didn't know about. If I'm a good manager and frankly, a good business owner.
Cecil Bullard: I have an understanding of what the expectation of performance is, the volume, the hours, et cetera, out of my staff in my shop. And in my head I believe that a good technician that has everything they need to. And if with a shop that's pricing correctly can do 1. 2 hours for every hour that they're on staff.
Cecil Bullard: Because we're going to make sure that the customer is paying the right amount of time, is paying for the brown bananas, and we're going to hedge our bets a little. Plus, if my technician is good at what they do, you know, break flush. Most of the shops are charging between eight tenths and an hour to do a break flush.
Cecil Bullard: And certainly, A break for us today is, or some people don't like flush, so, I don't know, fluid transfer, whatever it is you want to call it. Excuse me, I got my foot stuck in the stool, and I'm cramping up, so I've got to move it. Oh so, most of the shops are charging somewhere between eight tenths and an hour for a break service a fluid service.
Cecil Bullard: Whatever you call it, and it really takes. maybe 20 or 30 minutes for a technician that knows how to do it and that has the right equipment. So if we're going to do, I don't know you know, a break flush today or two break flushes today. And my technician is going to do that. Then my technician can be very efficient on those jobs and can be very productive because, you know, in 40 minutes, maybe an hour at the most, My technician will be able to do two of those and I'm billing that out at an hour each.
Cecil Bullard: And so I've got two hours billed for an hour's worth of real work for my tech, which will help make up for some of the times where the technician has to spend a little more time on the car or the job because of other difficulties. And I need to understand my business in that kind of financial way so that I'm making sure that my jobs are priced correctly.
Cecil Bullard: Pricing is a brick time and how we price it is a brick in our wall. Whether or not we can get to the productivity on the other side of the wall is whether or not we fix our pricing. And I know that some of you out there are going to tell me, see, so you can't charge that here. You don't understand.
Cecil Bullard: I'm in Utah. I'm in, I don't know a poor part of town. I'm in whatever. I don't know, man, I just went to. Carl's Jr. for breakfast yesterday, and I got a burrito some potatoey things, and a soda and I paid I don't know, almost 13 for that, and it used to be 5 6 at the most, and that was two and a half years ago, and now it's 13, and I didn't go in and yell at the manager I didn't write a really nasty response on their, I on their website about how they're cheating me and how they're ripping me off, et cetera.
Cecil Bullard: But we have a lot of people in shops that are doing the pricing, that are figuring out pricing, that are not pricing themselves for success. And so I need to be pricing myself for success. It is probably The easiest thing that I can do to remove a brick out of the wall and create more productivity and more profit out of my business.
Cecil Bullard: And I know that somebody is going to go, there you go. There's just one of those coaches, raise your price. And that's not really what I'm saying here. I'm saying get paid fairly for what you do. No longer can we take on the responsibility of fixing someone's car and doing that work if it's not our car.
Cecil Bullard: Because the business used to run easier, simpler. The cars were easier to fix and it is more complicated today and we have to be able to get paid for that. Jimmy, do we have some other questions? I'm being told that we're coming up on the five minute mark. And I want to make sure we get questions answered.
Jimmy Lea: Yeah, we are on the five minute mark. We do have one last final question. And I hear this across the entire industry. Not just in Long Island. Not just in Sacramento. Not just in Phoenix. Not just in Maine or Montauk. The question is, About the bricks. What if you've got a brick technician? How can I, as a younger manager, motivate a brick?
Cecil Bullard: Well, first of all come to a leadership intensive, which is a three day class that we put on that's about how to build amazing teams and how to I'm not gonna say motivate people, but how to understand people better. To be better in a position to help them motivate themselves. Okay. So frankly, I can't motivate anybody.
Cecil Bullard: I have to help them figure out what their motivation is. And and then, and then help them understand that they're motivating themselves, which in a way. Create the environment that they can win. So think about this. I'm a tech in your shop. I come to work every day, go online go to changing the industry podcast.
Cecil Bullard: Listen to some of that go online to Facebook and look at their Facebook and the comments. And you have, I don't know two thirds of the techs or a third of the techs in the industry who are literally dying complaining about how bad it is where they work. All right, so go to work every day and come up against a brick wall that is primarily the company brick wall, not mine.
Cecil Bullard: So, you're putting me in a position because of the way you price yourself, because of the way you estimate. Because of your fear with customers, because you don't have the money to buy the equipment I need, or send me to the training I need. You're putting that person in a position where they not only cannot win now, but they lose the hope that they'll ever be able to win.
Cecil Bullard: Right? And so, and now you say okay, Cecil, I want to motivate that guy. Well, you can't. You put things in their way. If I want to earn someone's trust, another subject. And I have to earn the trust of the people that work for me, meaning they have to believe that I'm trying to do what's best for them maybe even over what's best for me, okay?
Cecil Bullard: And the way I do that is I'm constantly trying to figure out how to help you be successful, and then I'm putting things in play that help you be successful. So if you come to work day after day and, you know, you get your coffee and you stand there for 15 minutes and you don't have a car dispatched.
Cecil Bullard: And then I'm going to get on your ass about productivity. Well, wait a minute. You're mad at me because I'm not productive, but you're not giving me the opportunity to be productive. You've got technicians that are coming in and spending 3, 4, 5 hours, 3 days on a car that you only charged an hour for. And you haven't done anything about it.
Cecil Bullard: And don't think that technicians don't know what's going on. Because they're going, holy crap, I'm, you know, and you're going to them now and saying, why aren't you productive? Well, it's the system is not set up to make me productive. And so you want to motivate me, help me win the game. Help me win in my position.
Cecil Bullard: Help me be productive. Do your pricing right. Do your products correctly. Get me the right education. Have better dispatch. Have Work on your parts and getting your parts in a more timely fashion or you know Some people are ordering parts from the weirdest of places because they're cheap Well when they come in it's not the right part or it doesn't work the first three times We put it on the car and then we're upset with our tech because we tried to save ten bucks on parts for our customer And instead, go to the best place that will get you the best part that will get you the part the fastest because that's going to put your technician in a place to be successful and you in a place to be successful.
Cecil Bullard: And by the way, the customer wants that car now, and most customers, not all, probably 85 percent of them, understand that they might have to pay for that. And so, you know, how do I motivate people? Give them opportunity, show them the opportunity, help them have hope. And then get the company bricks out at least so that, you know, if I have a brick wall in front of me and it's six feet high, it's and it goes from wall to wall, it's hard to get over that and get to the next place.
Cecil Bullard: But if I have a brick wall, it's only a foot and a half high. I can step over that pretty easy and get to the next place. So, I want my people to understand that no, my company is not perfect and there are things that aren't right, but we're constantly working on those things to help our people be successful and get what they want and what they need to feel good about themselves.
Cecil Bullard: Because that's what's going to motivate them, not me, you know, yelling at him or not me, you know, being unhappy and miserable because the shop's not profitable change. And if you don't know what to do, there's some great coaches and consultants out there. And if you don't think it's worth it, I'm going to tell you something.
Cecil Bullard: Our clients I think the net. Average net from our clients was over 19 percent last month, our clients, and you're talking about some people coming in to the program that would have very low numbers. So our typical clients been here for a while probably is more than 19 percent net profit. Our clients have higher sales, higher average repair orders.
Cecil Bullard: And I would say that's probably true of most of the coaching and consulting companies out there. There's some bums out there, just like there are in our business. You know, if you don't know how to do this, get the help you need and then listen to the person that's giving you the information because I've helped over 3, 000 shops at this point in my career.
Cecil Bullard: I think we know how to get the job done. Any other questions?
Jimmy Lea: That's it, brother. That's it. Thank you.
Cecil Bullard: I have to mention we have a five day service advisor intensive coming up. It's life changing for the service advisors that have been through this program. The, we dumbed the numbers down in our advertising because we didn't think people would believe that we can get that kind of results, but we can.
Cecil Bullard: It's life changing for the people that have attended it. And we have a summit coming up, which is our big thing for our clients and additional people. Three it's I think three days. It's going to be amazing. In February, we'd love to have you there. Last time we did this. Everybody was, they just thought it was the greatest thing in the world.
Jimmy Lea: It is the greatest thing in the world. It is, it really is. And Nicole, you'll be there with us, so it'll be, it will be awesome.
Nicole Penrod: I know, I'm looking forward to it, so.
Jimmy Lea: Yeah. I'm gonna throw you a little softball here. One last final question coming in from Noah. When it comes to increasing your labor rate, is it best to do it all at once, or to take it increments over time?
Cecil Bullard: I'm an all at once guy, get the paint over with, tear the band aid off. I've had guys do it over six months. I don't think it matters.
Jimmy Lea: I've been What about that guy in Utah that doubled it?
Cecil Bullard: Yeah, well, you know, I pro I don't know if I would have doubled my labor rate at all, ever. I don't know that I ever had the guts for that.
Jimmy Lea: When he was at 45 and everybody's else is at a hundred. Okay. That's not that's not that big of a jump, but that's years ago.
Cecil Bullard: But I think unless you've built your business on discount customers and doing cheap oil changes and you raise your labor rate, most of your customers, 99 percent are not gonna even notice.
Cecil Bullard: And I would tell you that. I've been 25 years or 24 years as a coach doing these events and teaching classes. And I started out saying, raise your labor rate, change the way you price yourself 24 years ago. And today if I'm in a class and I'm teaching and I'm talking about rates and stuff like that, I will say, hey how many of you have attended a class like this and you went home and raised your labor rate?
Cecil Bullard: And most of the class will raise their hand. And I will say how many of you. Lost a bunch of customers or more than just the two or three customers that you should have lost anyway. And then you want it to lose anyways. Yeah. And nobody will raise their hand. Customers care about do I get it? Do I feel good about being here?
Cecil Bullard: Is it convenient for me? Do I believe I can trust the people working on my car? Did my car get fixed? They care about those things five times more than they care about what the cost is. Yeah. All right. And most people don't understand what the cost should be. And most people, even if they are pricing you online or calling around, they don't know what they're pricing.
Cecil Bullard: So whatever their pricing doesn't match, and it's more about where they feel comfortable than about where's the cheapest price. And if it is about the cheapest price, probably not the person you want in your shop in your face.
Nicole Penrod: All right.
Nicole Penrod: I know that Cecil could talk about this for another five days. So I want to thank you guys both for being here and presenting this information. And I want to thank everybody for joining us today. As a reminder, this was recorded. It'll be sent out and it'll also be available on the auto leap website.
Nicole Penrod: And then there's a couple of links in the chat. So I dropped one for just a feedback survey about our webinars, and then Stu posted the five day intensive service advisor course from the Institute, as well as more information about the summit. So, those are available, and I'll make sure that those links are included in any follow up emails.
Nicole Penrod: So with that, thank you everybody. Have a great day.
Cecil Bullard: Thank you.