The diagnostic charge is the biggest hurdle a service department puts between itself and the customer's money, and Steve Shaw of Shaw Dealer Training Group and Dave Rogers argue on this episode of Fixed Ops Focus that removing it, and every other "we don't do that here," is how you get more cars into the shop and more repairs approved. Steve tells how his neighbor, refused a simple tire price by her Cadillac advisor, went and bought a Lexus, and how his Porsche managers warned that dropping a two-hour brake diag would bring "a line of Porsches down the street," while Dave explains that diagnosis is already built into customer-pay labor times and that up-front diag time mostly protects inexperienced techs. Steve's alternative is to pay the technician five-tenths on every diagnosis whether or not the customer buys, at a cost of about $25, and to sell more time only when it's needed, and Dave's tip for general managers is to review repair orders and multi-points for declined rotations and unchecked brakes and to listen to how the phones are answered.
Always in a great mood 0:00
Steve Shaw: Here we go again. Dave Rogers, how you doing, sir?
Dave Rogers: We're doing fantastic, Steve Shaw. Fantastic. How about you?
Steve Shaw: I love it. You're always in a great mood, just like me.
Dave Rogers: Nobody cares if you're in a shitty mood, so you might as well be.
Steve Shaw: That's right. When I first started running a big auto group, my first time running multiple stores, a guy walked up to me and said, "How you doing?" I said, "Having the best day of my life," or "Living the dream," something like that. And he goes, "You know, I heard that about you. People say you're always in a great mood." I'm like, "Shit, cool." What else would you want? People thinking you're a grumpy old guy?
Dave Rogers: Years ago I read and listened to Zig Ziglar, and he was big on that. "Fantastic, everything's wonderful," because it's contagious, and nobody wants to hear that you're miserable. What are you going to do, bring everybody around you down? I've been saying "fan-damn-tastic" for years, whether I mean it or not.
Steve Shaw: It's amazing. I'm not going to say the guy's name, because I don't want to get into politics, but when I was young I was watching two newscasters, and one was very right-wing conservative, yada yada. Somebody commented that he always had a smile on his face, and he said his mentor told him, "No matter what, don't get mad. Always keep a smile on your face while you're interviewing somebody, even if you're having a spirited debate." For one, you don't want the other guy to get to you. And two, it's, "Hey, we're having a conversation. This is fun." So whether it's podcasting, a training setting or our dealerships, we set the tone. If I walk into the store in a shitty mood, everybody's going to be in a crappy mood. It's up to us to put our best face forward. Check your feelings at the door.
Dave Rogers: It's true. Every day you come in, whether you're the GM, the service manager or the parts manager, everyone's going to look at you, and if you come in in a pissy mood, you're going to change the attitude of the whole store. So you might as well pretend you're happy even if you're not.
I had a mall I was working at with a centralized accounting office. At eight o'clock in the morning, the women from the accounting office would get on the phone with my cashiers and my advisors and blow them new butt holes about all the mistakes they'd made the day before. I finally had to put a stop to it, because they were setting off my cashiers and advisors first thing in the morning. I finally said, "You can't talk to anybody in the store anymore. You've got to talk to me." I caused a lot of waves with that. If you're going to complain about somebody closing an RO, or somebody not cashiering a penny off, you can't light up all my people first thing in the morning. You have to watch your attitude, or at least your persona, what people think of you. It's very true.
Two rules for service managers 3:18
Steve Shaw: When I was a young man working at a Pontiac store, I must have screwed something up. My boss's name was Ted Hemi. I'll never forget him. I don't even know if he's still around. Ted says, "Son, I'm going to give you some advice. I'm going to tell you the two top rules for service managers in the car business. The number one rule is: don't piss off the business office." And I'm like, "OK, that's a good rule. If I pissed off the business office, I apologize. I will never do that again." Now, one time I fired the controller's husband, but that's a whole different deal. "The number two rule is: never show up to a tech meeting without enough pizza."
Dave Rogers: Well, those are good rules.
Steve Shaw: So I've tried to follow those rules, along with a smile, for most of my career. I'm not saying I'm perfect at it. That's for sure.
Dave Rogers: I'll tell you my golden rule one day. Next show.
Frictionless: the Cadillac customer who bought a Lexus 4:29
Steve Shaw: OK. Too many rules for this episode. But I've got to talk about Damon. Remember when Damon was on from Canada? He said you have to make business frictionless. Thank you, Damon. I've incorporated that term into my training. I'm going to send Damon a certificate. He's probably going to call me and ask, "Where's my certificate?"
So I just got back from my trip to Sheboygan, and one of my neighbors down in the Florida Keys calls me up and says, "Steve, I've got to tell you a story." And I'm like, here we go. These neighbors are pretty well-to-do people. They have a house here in Tampa like me, and a house in the Florida Keys, and a small business that does pretty well. She drives a Cadillac, so she must do OK.
She takes her Cadillac in for service back in December, and the service advisor, good job, says, "Hey, you're going to need tires soon." Didn't use the Steve Shaw approach, but he said you're going to need tires soon. "And by the way, we're going to have a tire special coming up in March, buy one, get one. I'm going to put you on my list, and I'll call you in March." So my friend Kelly says, "Great, awesome, keep me in the loop. I'll get some tires."
March rolls around, and of course the advisor from this particular Cadillac store did not call. OK, I can live with that. So my friend Kelly calls the service department, gets the service advisor and says, "I want to get those tires we talked about back in December." And the service advisor goes, "Oh yeah, come on down, and I'll take a look at your tires and get you a price." She says, "No, no, no. I just want a price on tires, and then I can make a decision." "No, you've got to come down so I can look at your tires." "No, just give me a price so I can make a decision." And the lady was adamant: "No, you've got to come in so we can look at your tires."
So my friend said, "You know what? I just wanted a price on tires so I could decide whether to put new tires on my Cadillac or buy a new one. And since you're not being a nice person," and she used a word that starts with a B and rhymes with "snitch," and I don't say those words, "I'm going to go buy a Lexus." By the time she called me, she already had a new Lexus. That was frictionless.
Dave Rogers: Wow. Frictionless. I bet you she bought the Lexus with no friction.
Steve Shaw: What was that movie? Julia Roberts and Richard Gere. Everybody's going to put it in the comments: "Pretty Woman." She couldn't buy clothes on Rodeo Drive in Beverly Hills because they said she didn't qualify, so she goes out, spends thousands and thousands of dollars somewhere else, comes back and shows the lady: "You work on commission, right?" That's exactly what Kelly was like. She said, "I'm going to drive over there and show her my new car."
Dave Rogers: It's funny. The "no" first, the obstacles in the way, are one of the pain points most car dealerships have, especially in service. They're always looking for "we don't do that" or "we can't do that." You'll get me on a rant, but the maintenance lights. I've seen it. Steve wants an oil change: "Can I get an oil change?" "Is the light on?" "What light?" "The one that says you need an oil change." "I don't know. My car is six months old, and I want to get an oil change." Light or no light, how about just saying, "Bring your damn car down. I'm going to do your oil change"? Why do there have to be rules on this stuff?
If you're calling me up and asking for my business, why am I going to throw a wrench in it? The car was just there, and you don't know the tire size? You can't take two seconds to figure it out and give her a price? I never understand it. Damon's term "frictionless" is perfect for that, because we don't just put friction in the way. We put up hurdles. We put up cinder block walls. We put down the spike strips, so if you back up you're going to blow your tires out. That's what we do in this business for some reason, and it just doesn't make any sense.
The diagnostic charge is the biggest hurdle 9:41
Steve Shaw: This will get us way off track, but I call that the diagnostic charge.
Dave Rogers: OK. It's a hurdle.
Steve Shaw: I want to get my car serviced, and I drive into your store: "Hey, my check engine light is on." What's the first thing out of every service advisor's mouth? "$150 to diag your car." What? You're going to charge me $150 so you can tell me what's wrong with my car? Listen, I get all the arguments. I get all of it. But I'm going to give you $300, $400, $500, and you want $150 before I can give you $550? Nothing drives me crazier than that. That's the biggest hurdle on the planet.
Dave Rogers: There are two things I'm not a big fan of, with an exception I'll give you in a minute. I'm not a big fan of the diagnostic charge, and I'm not a big fan of prepaid parts. I tell people all the time, when you order parts at the counter and have the customer prepay, I'm not a big fan, because when they start calling and want their money back and they get to the GM or to me, I'm giving them their money back. So why bother? Now, if you want to take a deposit, a little bit of money, whatever. But a prepaid part, when 90% of the time we can return the part?
Steve Shaw: I know what you mean now. I agree with you on that.
Dave Rogers: Now, if it's a VIN-coded part, or a key I have to get for you, or a computer I have to get for you, that's the exception on prepaid parts. You're paying for it, and I'm not giving your money back. But I'll tell you, if the customer calls enough people, they're going to get their money back anyway.
And the only time I've ever been a fan of the diag fee is to weed out the problems. We started running Carfaxes. You've got a car that's never been there before, 80,000 miles. Before we talk about anything with the customer, run a Carfax. Now that car has a branded title. It was in a flood. "You know what, Steve? I'm going to hit you up for $600 in diagnostic fees that you don't get back, by the way. You're going to give me $600 to rip through this car." But if you're a regular customer, and I look at the value screen and you've bought three cars from me and you've been servicing your car here, I agree with you 100%. We shouldn't be charging a diag fee. Take it on the chin. If the guy decides not to get the work done, pay the tech an hour, it costs you 50 bucks, and move on with life.
The line of Porsches down the street 12:13
Steve Shaw: Exactly. I'm the service manager at a Porsche store, and again, it was obstacle city: you should be lucky to have your Porsche serviced here at our Porsche dealer, blah, blah, blah. They would charge diag for brakes. If you came in with a brake noise, they'd charge you two freaking hours to look at your brakes. So I said to these two guys, "We're not going to charge diag for brakes anymore." And they looked at me like, "What are you doing?" And these were their words: "If we stop charging diag, there will be a line of Porsches down the street to get brakes."
Dave Rogers: Oh boy, what a terrible thing.
Steve Shaw: That's what I said. I go, "Holy shit. Did you just hear yourselves?" And when they heard themselves say it, they were like, "Yeah, we just lost that one, didn't we, Steve?"
Dave Rogers: That's the line I used to use with my kids all the time: "Say it again one more time out loud, and let's see if it sounds just as goddamn stupid as it did the first time." And listen, there's a percentage of people out there who are just moochers. They're going to come in to get it diagnosed. Why are you dealing with them? They're going to bury you in a Google review anyway.
A lot of times managers and advisors do this diagnostic time because they're letting the tail wag the dog with the shop. And if you really dive in, it's not your experienced techs forcing it. It's the not-so-experienced guys, the younger kids. They can't flat-rate a job, so they want the one hour up front. In one BMW store I had, I used to make fun of the guys and call it survey time, not diagnostic time. We'd get an hour, and they'd walk around asking the veterans, "Hey, what do you think it is? What do you think?" They couldn't diagnose the thing. So I told the guys up there, "Stop charging it. This is survey time. We're not going to charge customers for the tech to walk around the shop. Let's give the car to somebody who can really diag it, and then we'll figure it out." But I agree with you 100%.
Pay the tech, don't charge the customer 14:29
Steve Shaw: Well, I look at a diagnostic charge to the customer and paying my technician as two totally different things. I have a philosophy very similar to yours. I'm never charging diag. I may ask for a pre-approval limit: "Would you consider up to $500 without us calling you?" Something like that. And this is what we've always done: I tell my tech, you get paid five-tenths no matter what. You go to the car, and no matter what happens, you get five-tenths.
Now, if you need more than a half hour to diagnose that car, come back to me, and I'll call the customer and sell more diag time. We call it express diag. I know you spent five-tenths. But there's a catch, Mr. Technician: if you want more than five-tenths, you have to be clocked in on it from the minute you get the car. You get your five-tenths, and if you need more, I'm happy to have a conversation with the customer. If not, take your five-tenths and run. And it's just free. What does it cost me, 25 bucks? Who cares? And the goodwill you get for that, please.
Dave Rogers: I agree. Look at the aftermarket. They advertise a free diagnostic for the check engine light, and we know all they do is plug in the meter and get a code. Then they tell you there'll be additional diagnostic time or charges to get into it deeper. Or when it's over their head, they say, "That's probably a recall. You should take it back to the dealership," because they can't fix the car. But they scan the car for free. Why don't we do that? Just scan the car for free. What does it take? You could have a scanner in the drive-through. You don't need a technician to scan the car. For some reason, we like to say no. I don't know if it's because this is the only place where we have authority, so I can tell you no.
Steve Shaw: A bunch of Karens.
Dave Rogers: Well, listen, I tell technicians this sometimes, and I don't mean to ruffle feathers, but you know who you are out there. I was a married guy, and I've got a girlfriend, so I know what it's like. You come home, and your wife tells you when you're going on vacation and where you're going on vacation. You kind of let her choose those things. You don't like to fight about it. I don't care what color the bathroom is. I don't care what color the house is. Let her decide that stuff. But when I come to work, I'm the boss. I make all the rules. And I think that's what happens to people sometimes. They don't have the ability in their personal life to tell anybody what to do, so they come to work and boss customers around. I'm not saying it's right. I just think that's what they do. It's crazy.
Steve Shaw: Oh my God. I've never understood it. But I also think, and I know this is going to piss everybody off, all the techs and all the advisors: it's because "I can't sell shit, so I'm getting my 150 bucks up front." Or the technician says, "He's not going to sell it anyway, so I want my hour." Again, I always try to separate the two. But because you don't sell anything and you get tons of declines, you want to get a diag up front, acting like I'm the ass, the customer. No, no. I came in because I've got a problem, and I'm asking you to fix it.
I do a lot with op codes for that. I'd have a diagnosis op code, and a repair op code and a decline op code. Again, the diag could be free, but I'm going to put "diag check engine light" on there. How many diagnoses did I do? How many repairs did I do? How many declines? If we're not monitoring it, we don't know, and you've just got a bunch of people throwing diag time around. And all we're telling the customer is, "Hey, I'm really expensive. I'm $150 an hour," or $200 an hour, whatever that fee is. That's what I'm planting in your head, and the customer goes, "Oh shit, these guys are expensive. Maybe I'll look around."
Diagnosis is already built into the labor time 18:38
Dave Rogers: Now, listen, I do think technicians should be paid for their time to diagnose the car, but I think it's built into the operations, or it should be. If I'm going to replace an O2 sensor, maybe it only takes 15 minutes to put in, but that job pays an hour, or maybe an hour and a half. Look at the old days, the Chilton book, the MOTOR manual: it includes diagnose and replace O2 sensor, and retest when it's done. That's what it includes. So if it's a two-hour job, it's a two-hour job. Maybe the guy spent the first 15, 20, 25 minutes diagnosing it, but it all rolls up into his time, and I'm going to price that job at two hours.
That's the piece where everyone seems to get lost. I don't know what happened in the business, but that's the way it's always been: the job is two hours. So why do you have to break it up and tell Steve he has to authorize the first hour? I've been in stores where the boss made us do that, and in stores where that was the service manager's way of doing it. But it's never been my philosophy. The only time I'll bring it out is if I think somebody is trying to pull a fast one. Now that I have Carfax, I can see the car was just in an accident last week. "Steve, you've got a problem with your left front headlight. Was that before or after it came out of the body shop?"
"Oh, well, I didn't notice it." "All right, listen, we're going to have to take the car apart. This car was just in an accident. There's going to be some time and some money involved. I don't know if you want to get your insurance company involved, or take it back to the shop that did the work, whatever the case may be. I'm going to be transparent and let you know right off the bat: this is probably related to your accident, so it's not going to be covered under warranty. Are we clear?" I think you should get those things out of the way before you waste your time or the technician's time. But if the car wasn't in an accident, it's got 50,000 miles on it and it's been coming here for a couple of years, roll the dice, baby. Roll the dice.
Steve Shaw: That's it, man. Take a chance. Listen, you've hired me as a manager to practice my trade, which is to sell shit, or to get people to buy. So let me do my job. Give me every single car you can put in front of me. Let me shove it into the shop and get the diagnosis. That's when I get to practice my trade, show my expertise, show you what a great salesperson I am and close that deal. I'm with you 100%. That diagnostic charge has got to go. I can see the thumbnail right now: "The diagnostic charge has got to go."
Dave Rogers: And some of the best techs I've ever had, the ones who produced the most hours, didn't care if there was an hour of diag on a ticket. "Just give me the ticket. What are you doing with that job? Oh, Fred's waiting until he calls the customer to get the diag approved? Just give me the goddamn thing. I'll figure it out. I'll have it diagnosed before Fred can write the RO." Those were the guys who made a hundred hours a week, who produced all the time. They didn't care about that stuff. And again, their diagnostic time is packed into the repair. Let's be honest. It's not like warranty claims, where we have to fight for three-tenths or six-tenths. It's built into the customer-pay labor time guide.
Steve Shaw: And on the customer side, here's every advisor's favorite line: "Well, if you buy the repair, we roll it in."
Dave Rogers: Or they say they waive it, which is false.
Steve Shaw: Yeah, "I'm going to waive it," which means I've included it in the cost. I just jacked up the price 150 bucks and didn't show it on the RO. Well, you're a fucking liar, and I can catch you. I refer back to my silly book that I wrote: ask the service advisor, "Where'd you get your time? Did you get it out of Chilton, or did you pull it out of your ass?" And most of the time they pulled it out of their ass. The tech says, "I need five hours for this," and no one even looked.
So I think it's a total cop-out, and I think it's totally wrong, and the advisor is going to get caught. There's RepairPal.com. I don't know if it's still out there, but it will tell you that in Pottstown, Pennsylvania, the average cost to replace a mass airflow sensor is $395. If you rolled in the cost of the diag for another 150, you're outside the range, and now you've lied to the customer. You're a liar right out of the gate when you tell me you're going to waive the charge and roll it into the cost of the repair.
Dave Rogers: True. Did I ever show you the diag wheel I made? I had some guys who couldn't diagnose a car to save their life. It's actually an app that looks like a wheel on the boardwalk, and you spin it. The choices are: "I have no idea." "No problem found." "Ask the shop foreman." "It's probably a sensor." "It's probably wiring." Because that's about what you get for diag time when you give it to some of these guys. Yeah, I pissed them off.
Steve Shaw: Spin the wheel, baby.
Dave Rogers: Spin the wheel. "Hold on a second, let's get the wheel out and find out what you're diagnosing."
Just say yes 23:49
Dave Rogers: But to go back to your original point, the friction: whether it's the lady who wants tires, or the customer who wants to change his oil four times a year. "Four times? Oh my God." He's 70 years old, he's been doing it for the last 60 years, he wants to change his oil four times a year, and he knows it costs $80. Just take his money. It makes him happy. If the guy wants to rotate his tires every three months, let him rotate his tires. I don't understand why people just say no.
Steve Shaw: Or the technician comes back and goes, "It doesn't need a rotation." I'm like, bullshit.
Dave Rogers: Oh, that's the one. And you know what it is? They just don't feel like taking the wheels off, because they don't want to check the brakes. I've had express techs who've been in the business for a minute and a half telling the advisors the tires don't need to be rotated, and the car is done and outside. How do they know? "Well, the tires are worn evenly." That's because the guy rotates his tires every six months! If they weren't worn evenly, it would mean he never rotated them. Get it back in and rotate the tires. And nobody in the shop can tell you anymore whether the best tires are supposed to go on the front or the back, whether it's front-wheel drive, rear-wheel drive or all-wheel drive. Just rotate the tires. It's crazy.
Steve Shaw: Why is it so hard? About five years ago, before COVID, before I had Stacey as my web designer, I'd built my own website and bolted a few different options onto it, and it was real clunky. I had a guy trying to log in and do something, and I couldn't get him through it. And I thought, OK, I am not living up to my principle of making it easy for people to spend money, because it was very difficult. I was making it hard for people to pay me, at my own company. If I'm preaching this, I've got to do it myself. So that's when I found Stacey, my new IT person, and now my life is amazing. We made it easy for people to give us money, and a thousand stores later, we do well. But if you don't make it easy, I'm going to go buy another car from somebody else.
Dave Rogers: That's exactly what happens. Any part of the process, whether it's buying parts, a new car, a used car or an extended warranty, why does it have to be difficult? We talked about selling service contracts in the service drive. "I want to buy a service contract from you." "We don't do that here." Why are we doing this stuff? We should be saying yes. I had a boss who used to say it all the time: "Yes, and right now." That was it. The answer is always yes, and let's do it now.
Steve Shaw: Why are we fooling around? I shopped all over for my Wagoneer. I had two criteria: I wanted the black Carbide edition, and it had to be flat-towable because of my bus. I'd call people up: "I'm looking for a black Carbide edition Wagoneer. Do you have one?" "I don't know, let me look." Well, you've got 20 on your lot. Then they didn't know what a Carbide edition was, and they didn't know what flat tow meant or which number to look for. They don't know the product.
And I took my Wrangler to the store right down the street from me, which unfortunately is where my car is being worked on right now. They did such a bad job on my Wrangler that I said, "You're out. I don't care if you've got the car on your lot. I'm not buying a car from you, because your service department sucks." Quite frankly, it sucks. So I drove all the way to Tampa and ended up buying it from a good friend of mine who owns a dealership. It wasn't about money. It was about the service.
Now I just don't feel like driving 40, 50 miles back to Tampa to get my car serviced, so I take a chance on this local store again, and who do I run into? The same effing service advisor who worked on my Wrangler. He may or may not remember me, because it was a year ago, and he does a shitty job. I actually sent in the survey yesterday, and I didn't want to give the guy a crappy score. I gave him all 10s and made a big comment: the car has an electrical problem, the car stinks, and I've been waiting on galactic backorder for a radio. But when I get done, I'm going to let him have it, because it's the worst service I've ever had. I won't give him a bad survey, because I don't do that. But it's just crap. I'm not even going to say the company's name. And that's how we all get a bad rap, because of those people. That's what sucks.
Dave Rogers: I agree 100%. There are always those people. They don't want to take your money. They don't want to do business with you. I just don't understand it. I feel for your lady friend with the tires. How hard is it to give somebody a price on tires? You don't think she could have called Firestone and gotten a price?
Steve Shaw: Right. It's probably a couple hundred bucks a tire, so 800, and she gets two for free, so that's 400 bucks.
Dave Rogers: Right. Even if she needs an alignment, with tax and everything it's going to be less than a thousand dollars, and you're good to go. Imagine that.
Steve Shaw: I was at a store, I'm not going to say where, and one particular advisor was at three-tenths per repair order. I'm like, are you just telling people to go away? You can't be taking people's money. It's got to be the worst thing I've ever seen.
Dave Rogers: "Somebody's stealing all my good jobs."
Steve Shaw: Yeah. No, it's because you kind of stink. But I'll let you wrap this up. I had a dealer group out of Denver whose motto was "Yes, with options." It's always yes. The advisors literally were not allowed to say the word "no." It could not come out of your mouth. "Yes, I can do that. Here's how." That's what they were taught to say, and they were freaking off the charts. It was a great group, a great place to train, and a bunch of really good people who wanted to serve you. So as we cross that 30-minute line, I think we probably have to wrap up.
GM tip: look for what's declined before the customer sees it 31:13
Dave Rogers: Well, listen, whether you're a GM or a service manager, I really think you should take a look at your repair orders and your multi-points and see what's being declined in the shop before the customer even gets it. Again, the tire rotation. And listen to the phones being answered, and see if there are rules to get a price on the phone. You don't know how it's going to impact the person on the other end of the line. Your friend went somewhere else and got a new car.
If you're making it difficult for people to spend money with you, they're going to go somewhere else. Everybody should want your money. That's what the business is all about. So take a look at the repair orders. I was shocked when I looked at some multi-point inspections and saw all these cars going through the express lane without their tires rotated, and the brakes weren't checked off. And the scariest part was these cars had high mileage. They were coming through the express lane at 60, 70 and 80,000 miles, and nobody was pulling a wheel off, because the $17-an-hour lube tech said the tires don't need to be rotated. He'd rather be on his phone watching reels and TikTok than taking tires off a car. Anyway, that's my tip.
Steve Shaw: Your tip is awesome, and we need to tailor it into our next episode. You watched the Father Bob episode and heard Father Bob talk about reaping what you sow, and you said you wanted to talk about that. That's really what we're doing here. So let's spend some time on your motto on our next episode, reaping the fruits of your labor, whatever that particular mantra is. I'm just going to say my mantra is: make it easy for people to spend their money. Let's move on to the next episode next week when I see you.
Dave Rogers: You got it, man. Great idea.
Steve Shaw: All right, I'll catch you later.
Dave Rogers: All right, talk to you.
Make it easy for customers to say yes
Steve Shaw has spent over 40 years in dealership fixed operations, and the Shaw approach to service advisor training has been proven in over 1,000 rooftops across North America. Get the car in the shop, make the need visible, and customers buy failed items 76% of the time.