If ATI were to give out an award at SuperConference for the Lowest Labor Rate in the Country, “Patrick” would have been the winner!
Patrick was a member who I coached several years ago, who owns a shop in Central Pennsylvania, where he charged a $70.00 per hour labor rate. While his labor margins were low, his anxiety level on employee paydays was high.
When reviewing his net profit goals, I reminded him that making payroll would become less of an issue if he raised his labor rate. I could tell this made Patrick uncomfortable because he swallowed so loudly, I could hear “the gulp sound.”
Even though he was obviously uncomfortable, he responded: “OK Eric, when we talk again next week, I will have raised my labor rate!”
The following week, I was looking forward to our coaching call. This was going to be the week where Patrick took the first step to becoming a profitable shop.
I got Patrick on the phone and asked “Patrick, did you raise your labor rate as we agreed? “Yes, I did, Eric,” He replied with an enthusiastic tone. “My new labor rate is now $71.00 per hour!”
In his book, Unlocking Potential, Michael K Simpson coined the phrase “the gulp factor” to describe those goals that stretch your comfort zone to the point where you make the “gulp” swallowing sound before setting them.
For example, you won’t experience any sleepless nights prior to raising your labor rate by $1. However, raising your rate to exceed your local dealer, is a goal that comes with gulp factor fully assembled!
I know what you’re thinking: “Eric, the Les Brown quote was great, but I’m not like most people. Why do I need to aim high when setting my goals?” Keep reading to lean the two benefits of setting gulp factor goals.
You Will Attract the Right People
Imagine being in the front of the room doing a Powerpoint presentation for the members of your 20 group. Next, imagine stopping mid-sentence to reach for your bottled water to take a drink. Chances are, nobody would leave their seat to help you pick up the bottle. Now, what if you stopped in the middle of your presentation to reach for the six-foot folding table in the corner of the room?
Someone would get up to give you a hand. Why? Because lifting a bottle of water isn’t a stretch for you. Moving the six-foot folding table, on the other hand, is difficult for you to manage by yourself and will require help from others who are stronger than you.
Let’s go back to the labor rate example. You don’t need a coach or other successful shop owners to help you raise your labor rate by $1. If you were increasing by $10, you would be more inclined to consult with your coach or others who have made this move to find out how they did it and what they did to justify the value of their service to their customers.
As I mentioned in a previous blog, the higher you advance as a shop owner, the more you must depend on others to achieve your goals. If you commit to setting goals that make you uncomfortable, you will attract the right people.
You Will Take Aggressive Action
I am always amazed at the number of shop leaders who respond to attending their first ATI class with the following statement: “I already knew that.” What’s amazing is that those who make this statement leave ATI to return to a shop that is failing to achieve their desired outcomes.
It’s taken me eight years to figure out why this happens, but here it is: in most cases, the level of “know-how” between the good performer and the great performer is similar. What separates the great from the good is their ability to take the necessary level of action whether they feel like it or not.
It doesn’t take aggressive action to improve your Average Repair Order (ARO) by $20. Setting a goal to improve by $200 would make you gulp, but you would be more likely to role-play how you overcome objections, conduct daily courtesy check audits, and to verify that the writer was visiting the vehicle with every customer.
Again, I know what you’re thinking: “But Eric, I may get depressed if I fall short of achieving my stretch goal.” Well, which scenario would be more depressing: setting a goal to improve by $20 and achieving it, or setting a goal of improving by $200 and “only” improving your ARO by $100. (I was never a math whiz, but I believe $100 is more than $20.)
Failing to achieve a stretch goal, will take you further than succeeding with the simple goal. The aggressive action that is required makes all the difference.
After attending the shop owners class, Patrick increased his labor rate by $10.00. The idea was such a stretch for him that he was motivated to consult with the other shop owners in his class. The mere idea of making such a move attracted the right people in the class to provide him with guidance. Their input motivated him to take aggressive action when he returned to his shop. As a result, Patrick put more profit in his pocket.
If you commit to set stretch goals, you can achieve the same outcome! Does your goal have the gulp factor?