CRA Business & Profitability Explored
By Dave McMahon
Add-on services add to customer base through services such as mechanical repairs and glass to entirely new product lines, collision repair shop owners are turning to ancillary revenue streams to bring new customers into their business.
From mechanical repair and glass to entirely new product lines, collision repair shop owners are turning to ancillary revenue streams to bring new customers into their business.
The 2021 FenderBender Industry Survey showed that while 52 percent of respondents already offer multiple services at their collision repair shops, there’s plenty of opportunity for growth in 2022. When asked on the survey if they have considered adding additional service to their shop, 33 percent said “no.” After talking to a variety of shop owners, it’s clear that add-ons can be an important traffic driver.
Mechanical (5 percent) and glass (5 percent) repairs were the most frequently mentioned add-ons as prospects for growth. Other add-on prospects include offering oil changes, brake work, towing, plowing, detailing and more.
FenderBender caught up with a variety of shops who have turned their attention to at least one specific add-on.
Have you considered adding additional services to your shop?
According to the 2021 FenderBender Industry Survey
Yes – Mechanical Repair: 5 percent
Yes – Glass: 5 percent
Yes – Mechanical Repair and Glass: 5 percent
I already offer multiple services – 52 percent
No – 33 percent
Dan Sjolseth grew up in his father’s repair shop before launching Superior Service Center in 1982. But when he decided to purchase a mechanical repair shop in 2007 and put the two facilities under one one roof in Eagan, Minn., Sjolseth never imagined how complementary the two offerings would be.
“I remember having a conversation with my accountant. I didn’t know anything about mechanical. I grew up in it in the 1970s, but things had changed an awful lot,” he says. “My accountant says if you can just hold your own in the mechanical shop until the body shop gets done, you’ll do OK.”
Chalk one up for the accountant.
The decision to add a mechanical repair component to his business would affect nearly every aspect of the collision repair process.
He would have to consider the space and equipment requirements, as well as how his staff would react and update their practices to incorporate the new revenue stream. Sjolseth says that one big challenge was cross-training estimators to be service advisors.
“It’s tough. It’s hard because they want to discount stuff. They have a hard time selling it the way you need to sell it,” he says. “They have a hard time telling the customers because they are so used to dealing with someone where if we have to replace this part, you replace the part, no question about it since it’s a safety item. They are so much alike but they are tremendously different.”
Sjolseth and his team had to work out all the details in order to minimize disruption to the main part of the business.
Sjolseth felt that the time was right to invest in mechanical repair. When he was starting out in this space, he saw a trend that has come back today: Customers are holding onto cars longer and are more interested in repair work.
“That lends itself to being good for the repair shop, but not so good for the collision shop,” he says. “Because if you have a lot of old iron on the road, they’re going to total it. And there’s not a big pool of cars to purchase right now. It’ll be interesting to see how this shakes out over the next year.”
One of the first challenges for Sjolseth was to figure out how much to physically separate the two repair styles. This meant practical planning in areas like the parking lot and lobby. Sjolseth was at times playing the role of traffic director, dealing with customer vehicles and tow trucks. Eventually he worked out a flow that worked for the operation.
“We always thought we should have separate entrances for the mechanical shop and the body shop, but we decided not to make that happen and it’s worked out great,” Sjolseth says. “Our lobby is just a melting pot. In January, our busiest month, three or four tow trucks were coming in one after another. Shops were turning tow trucks away. I told them to drop the cars where they were. We have a forklift that can move dead cars. I was just running traffic. It was insane.”
The more challenging aspect was how the shop might turn a collision repair customer into a mechanical repair job. Much of that happens in customer communication. Sjolseth says that he trains his team to be clear with each customer that they are able to perform a mechanical inspection and talk about any issues in addition to the collision repair work that they’re originally there to handle. Shops need to be careful to make sure the customer knows about the line between the two shop processes.
“I think it’s our duty and our responsibility in the body shop where if we see something that’s a danger or threat to the safety of them driving, like you notice the brakes are grinding when you pull it in,” he says, “or their tires are shot, you need to make those people aware.”
This becomes easier with regular customers who become attuned to your shop’s way of repairing. Staff members are talking to customers, getting a feel for their vehicles’ needs, and offering suggestions in the mechanical repair space.
“I’ve heard of shops that are having customers come in and say, ‘I can’t get in across the street at the mechanical shop to get my brakes done. Can you do the brakes on my vehicle, could you inspect it?’ Sjolseth says. “It’s a slower approach, and it works.”
The mechanical repair side of the business picked up quickly. Sjolseth felt that all the preparation was worth it.
“Truth be told, the mechanical side started making money right out of the gate,” Sjolseth says. “There was one technician and one service advisor. The first year we doubled sales, the next year we nearly doubled it again because he really didn’t have anything going on. It was easy once you started doing some advertising. But the mechanical shop we found out complemented the body shop extraordinarily well.”
The collision and mechanical sides of his business have taken turns being the most profitable over 14 years, but the real success has been in how the two complement each other.
Sjolseth sees greater opportunities for crossover between mechanical and collision repair as shops dive more deeply into ADAS calibrations.
“With driver assistance, all that technology and calibrating, a lot of shops are starting to do calibrations, so they are bringing mechanics in to do that, and they start looking at doing brakes and other add-ons,” he says.
As long as you have the space and training to not disrupt the core collision repair business, mechanical can be a great added revenue stream. The most important part of the process is helping the customer understand how your shop is prepared to offer both kinds of service.
Article Credit to FenderBender.
Have you considered ancillary revenue streams to drive new customers to your business? What advice can you give other shop owners and managers regarding exploring alternative revenue streams for their business? Let us know in the comments below. Also, if you found our content informative, do like it and share it with your friends.
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