Service center program
These days, independent repair shops must be able to locate and utilize resources that will help them retain their share of the market and remain profitable. For many, that may mean joining a program distribution group's affiliate service center program.
Todays shop owner must be adept (if not very adept) at many things: customer relations; parts, service, sales and personnel management; accounting; advertising and marketing, to name only a few. That's why a growing number of independent shop owners have opted to become involved with one of the many program distribution groups' affiliate service center programs.
A program distribution group is a collection of warehouses that have banded together to collectively purchase larger quantities of products, enabling them to negotiate better prices from their suppliers. Some of these groups have also developed privately branded parts, tools and equipment, chemicals and other products, along with a wide range of other programs in a quest to attract and keep member jobbers in their group.
In addition, some have also developed affiliate service center programs to develop a purchase loyalty to their company-operated and independent jobber parts stures from independent shops. This article will attempt to answer the question: Should your shop participate in one of these affiliate service center programs?
Affiliation with a Program Distribution Group
In our opinion, the auto service and parts distribution industries rely heavily on each other to provide quality auto repair and service to the motoring public. To do that correctly and profitably, they must understand each other's needs and be able to work together.
Our observations of these two industries for the past several years reveal some needed changes absolutely necessary for the survival of both. There are a number of areas in which each industry could improve its ability to work more fluently with the other.
Service providers need to obtain quality parts and supplies at a competitive price, while receiving them in a timely enough manner to efficiently maximize sales of their labor inventory. Shops can no longer accept indifference on a call placed to the supplier, consistently receive the incorrect parts and supplies, have legitimate warranty claims go months without settlement or receive poor quality and/or poor service.
Likewise, parts suppliers need to have enough purchases from shops to be able to make a competitive profit. Orders must be placed correctly, with all the right information, and suppliers must be paid in full when the statement arrives.
Suppliers also need to have shops balance inventory purchases and utilization with their just-in-time delivery requirements. They can no longer afford to dispatch delivery after delivery to shops that are disorganized, that write small invoices requiring minimal parts purchases per order or that buy from every supplier in town, all while constantly requesting lower prices and better service and increasing their warranty claims.
For purposes of this article, we'll assume that both parts suppliers and shops are pursuing a satisfactory working relationship.
Affiliate Service Center Programs
A shop can become an authorized participant in an affiliate service center program by meeting qualifications established by the program distribution group, and by adhering to the terms and conditions called for in the program agreement. The concept is that as the shops business grows, so, too, will its parts, supplies and chemical purchases.
Affiliate service center programs also consist of a host of valuable resources and benefits for participants. Our research indicates there are more than 60 categories of resources and benefits available to affiliate service center program participants.
Selecting an Affiliate Service Center Program
Not all affiliate service center programs offer the same resources and benefits, and even those that seem alike may differ in content. For instance, a 90-day same-as-cash program may be offered by several program distribution groups; however, the details of how each works may vary widely. That's why a shop must thoroughly research these resources and benefits when it comes to selecting an affiliate service center program.
We surveyed several well-known program distribution groups that offer affiliate service center programs and asked them the following questions of interest to shops thinking of joining:
What are the requirements and commitments necessary to become an affiliate service center program participant?
The following items were pretty consistently required by those program distribution groups that responded to our survey. They included: a clean shop and waiting area; employment of ASE-certified technicians or the equivalent; be a full-service provider; install and maintain affiliate signage; make the affiliate the first call for all parts, supplies and equipment; have in place shop liability insurance; utilize regional and/or national marketing programs; participate in and honor a national parts and labor warranty program; utilize a vehicle inspection system; have adequate parking; and meet the affiliates standards for interior and exterior appearance, including signage. Some groups' requirements were more stringent than others. As a shop owner, you must examine those requirements thoroughly to determine whether your shop can make the commitment.
What are the most utilized resources or benefits in your affiliate service center program?
These included (in no particular order) brand recognition, incentive trips, direct mail programs, national warranty programs, business management and technical training programs, direct-link computerized ordering and inventory management and equipment leasing programs.
What are the most underutilized resources or benefits?
The majority of participating shops utilize very few of the resources and benefits made available to them. That's because the amount of time and energy required to fully understand and implement them is overwhelming to many shops-especially the smaller ones, which comprise the majority of the industry. It would be like a technician having a toolbox full of the most state-of-the-art tools, a vehicle that needs repair, and having no directions or training as to how to use the tools to repair the vehicle.
We believe that for most shops electing to take advantage of a majority of these resources and benefits, it may be necessary to outsource the evaluation of those in which they're interested. Then, based on the feedback, shops can make a decision as to which ones they want to implement. Additional outside help may be required for implementation.
An alternative to outsourcing would be for the program distribution group to provide the service and training necessary for shops to select and to fully utilize most of the prograin's resources and benefits they desire.
Do service centers in your group receive preferential treatment when it comes to service?
This was a difficult question because a program distribution group could have a service center affiliate that barely spends the minimum with the group's local store, and at the same time have a nonaffiliated service center that spends three times the minimal amount. To which one do you provide the highest level of service? Certainly, purchase volume is not the only qualifying criterion.
Program distribution groups have their own internal method of determining their idea of an ideal customer, they responded, and the same level of professional service was available to all their customers-no matter their affiliation. However, it was made clear that nonparticipants in the service center program did not receive the other benefits available exclusively to program participants.
Is there a way shops can rate their satisfaction with your program distribution group?
The responses to this question ranged from "No" to "Absolutely." Many respondents indicated they conducted annual surveys of their affiliate service center program participants, as well as received input via regional and national advisory councils/boards. The survey ranged from brief to very in-depth, as did the input received from their advisory councils/boards. Those indicating they had an in-depth program evaluation process in place stated that they found the information to be "priceless."
What's the retention rate of shops in your affiliate service center program?
The responses included "fairly high; they will drop out if their primary parts supplier changes"; "the retention rate is well over 90%...we have many that have been in the program since its inception"; and "annually over the past five years, we have had a steady increase in service providers in our program."
Our research indicates that participation in affiliate service center programs is on the increase, and has been over the last few years.
What process is involved if a shop decides to withdraw from the group and no longer be an authorized service center?