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News Release Frost & Sullivan Performance Measurement: The Key To Success For Automotive Training Institute

Published Thursday, 22 August 2002 | By Mary Beth Kellenberger

Research uncovered endless pages of articles and advertisements on training options for automotive technicians and service providers. Each article or advertisement claimed their program would provide a more educated employee that would broaden service capabilities and drive increased profitability. Yet, finding a company or customers that published results that quantitatively defined the impact of the training on the customer's bottom line proved to be extremely difficult.

One company so confident in their programs actually guaranteed each client a two to one return on investment. The company, Automotive Training Institute, (ATI) is based in Savage, Maryland. ATI's mission is to increase the profitability of each of its customers through the provision of shop management consulting and training services.

Chris Frederick, President of Automotive Training Institute (ATI), has been in the automotive training and equipment distribution market for over 25 years. In the late 1990s he found that the organization, as it was structured then, was not going to be the organization he had envisioned; a world class national or possibly global company.

The addition of a shop management software program to the product offering was the stimulus for ATI's change in strategic direction. In its client base of over 1,200, the company soon found that many shop owners lacked the skills to comprehend what the data was demonstrating and that the industry benchmarks imbedded in the program were so broad that shops could operate within the benchmarks, yet be below profitability. ATI responded to client needs by expanding their training programs to include management training courses incorporating their own benchmarks and tracking programs to ensure profitability.

The introduction of management training to ATI's product offering in the late 1990s proved to be a boom for the company. A large portion of the success of the management programs can be attributed to ATI's ability to quantify the impact of their training on the customer's profitability. The ability to show measurable results to a client became ATI's strategic advantage in a very crowded automotive training market.

ATI's management training focuses on shop profitability, productivity, car counts, and ratios between services to vehicles and guarantees clients a 2 to 1 return on investment. Since 1999, ATI has divested itself of the equipment and technician-training segments, elevating management consulting to the position of core competency.

Unlike most other training programs that operate on a course by course basis, ATI clients commit to a one or two year full serve-consulting program that covers all aspects of running an automotive repair shop including productivity, human resource operations, marketing, succession planning, book keeping, self diagnosis, and profitability.

ATI's advantage over competitors such as R.L. O'Connor and Management Success is the full year of continuous coaching and monitoring versus training at your leisure that the one course at a time method provides.

The Resources

Each client is assigned an ATI consultant who is the primary contact for the client and is responsible for assessing the client's needs and goals. In addition, consultants are responsible for engaging ATI's specialized consultants, those who provide detailed training on human resource management, retirement planning, succession planning, and bookkeeping. Each ATI consultant is highly motivated to assist clients in achieving their goals because of the company's commitment to the 2 to 1 returns on investment. Furthermore, consultants receive bonuses based on the client's performance above the standard 2 to 1 ratio.

Automotive Training Institute's clients fall into three groups, those who are successful and want to retain that position, those whose operations are waning, and those whose operations provide a reasonable return but do not meet the owner's long term goals. It is this last group that has become very important to ATI. Baby boomers in general are choosing retirement at a rate of thousands per day and their children have generally chosen careers outside the automotive repair field. An essential component to ATI's management program is succession planning, and not just choosing a successor but developing the business to a level that the profits support both the original owner's retirement goals and provide a comfortable living for the successor.

Show Me The Money

The heart of the ATI system is its customized benchmarking system, named the Customer Performance Tracking System (CPTS). The web-accessible and fully automated version of CPTS was launched in late 2001. Clients log onto ATI's site and input weekly sales and cost data for parts and labor, car counts, jobs counts by service, technician productivity statistics, human resource costs, and operational costs. These factors are then benchmarked against 16 financial indicators and 16 performance indicators. The top five financial indicators include weekly sales, weekly car count, average car repair dollars, shop productivity by technician and weekly gross margin. Performance indicators track the ratio of vehicle manufacturer suggested maintenance to the number of oil changes performed. Within seconds of input, the CPTS tabulates and charts the weekly results and provides gap analysis.

The training portion of the program educates the client on what the charts and tabulations are indicating and provide suggestions to rectify poor performance. If the client exceeds their predetermined gross profit (GP) target for the week, the excess goes into a "bank." If the client fails to meet their weekly GP target, the shortfall is removed from the "bank." The minimal acceptable level of improvement is two times the cost of the training.

The Clients

The goal of the program is to teach clients to identify the shortfalls of their own organization which implies that at the duration of the one year program, as put succinctly by Chris Frederick, "the client is prepared to leave the nest and fly solo."

Chris Frederick is a firm believer in providing his clients value for their money. The weekend seminar boasts that the information provided can boost gross profits between 3 and 5 percentage points; in most cases enough to pay for participation in the 1 year program.

ATI currently boasts a client list greater than 800. Most of ATI's clients are independent shop owners but a number of franchise automotive service organizations have sought out ATI's expertise and endorsed the program for their franchisees. Sunoco, Midas International, Inc., and Meineke, Inc. are such organizations.

For all the success that ATI has experienced over the last 10 years, Mr. Frederick admits that the organization does face some challenges. Despite a strong motivational team, proven training materials, and measurable results, an estimated 2.5 percent of clients' fail to attain the two to one guaranteed returns. Usually the shortfall can be pinned on extenuating circumstances or failure to apply the principles consistently. The intense client screening process keeps the failure rate low and allows ATI consultants to address the issue long before the completion of the one year contracted period.

With a roster of over 800 clients most being multiple locations owners, a 30 percent client referral rate and a planned 150-city presentation schedule for 2002, ATI is well on its way to attaining its goal of national recognition. ATI is working with companies in the United Kingdom and continental Europe to bring the ATI philosophy to automotive professionals in those countries.

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