March 1, 2013
About a year and a half ago, John and Holly Cahill and Mark and Joan Brown purchased Toy Town Auto Salvage, now known as Brown’s Auto Salvage, in Winchendon, Massachusetts. The Cahills, who also co-own (with Tim and Carrie Cahill) Cahill’s Garage in New York, have over 20 years of experience working for both of the major consolidators in the industry.
John Cahill has observed first-hand the way business has evolved in the last 20 years. With their new ventures, he was presented the opportunity to re-invent a business that needed a new approach in order to move forward.
“I feel like there are still a lot of salvage yards today that are operating with an 80s-type mentality,” said Cahill. “We have an old joke in the salvage industry that if a part lasts for 30 days then it’ll last forever. Yet, many yards are still inflexible in their approach to customer service and are reluctant to give lifetime guarantees.
“If we are to revolutionize our industry, I think we have to adopt a customer service attitude similar to L.L. Bean, the clothing line known for its quality and high level of customer service, or the shoe company, Zappos, who does the same. Unfortunately, the salvage industry as a whole gets judged on the lowest common denominator – the few yards that operate below industry quality standards. Those yards give the rest of the industry a bad name.”
When they purchased Toy Town Auto, they knew they needed to have a fresh vision for the business. It had been operating since the 1950’s and offered a 30-day warranty. According to Cahill, it also had inaccurate descriptions of parts and the physical property and buildings needed maintenance.
Cahill says the first thing he and his team did was ask “how can we make this business better?” They decided to look at three major areas: the people they employed; the cars they purchased; and the processes they had in place.
They started with their employees and met with each one to see if they had the ability to do the job that would be required of them and the desire to move forward with the new vision they had for the newly-named Brown’s Auto Salvage. When they purchased the business there were 11 employees and Cahill says they intended to keep all of them who were interested in moving forward with them. What they found was that over time, all but one decided to leave because the change was so drastic.
“Our vision was to offer excellent customer service that was proactive, where you do everything to keep the customer happy,” said Cahill. “In order to do that we needed to have a mentality shift from ‘one sale and we’re done’ to a more continual customer service that focuses on building relationships with our customers. For example, we had one employee who left because he felt it was a waste of time to call back all of his quotes and sales from the day before. He thought the customer would call him back if he or she wanted the part and if he had already sold the part, what was the need to call the customer back?”
Cahill and team took the time to look at the characteristics and skills they needed for each job and wrote job descriptions for each position. For example, they wanted a young employee to work the yard and a very detail-oriented and thorough person to handle inventory. They kept these attributes in mind during the interview process.
“We really took our time with the interviewing process,” said Cahill. “We would spend a full day just interviewing for a position. I feel if you spend the time up front to make sure you are getting the right person, it will be worth the time you take to obtain them. If managers feel that they can’t spare the time because they are too busy, then I would encourage them to consider using a screening company to do the interviews so they can make sure to attract the caliber of employee they need.”
Cahill says he feels that their employees are special and although their business is too small to be able to have a dedicated trainer, they incorporate training on a continual basis to better equip their employees.
“A lot of people struggle with having time to train employees because they are wearing several hats. Although we don’t have a training manager, we recognize the importance of making sure that we keep up with training,” said Cahill. “Safety and other specialty training such as the storage and handling of hybrid batteries are only some of the subjects we ensure we stay current on. It’s important to have the safest work environment possible to avoid injuries and damage to property.”
Another area they analyzed was the option to outsource certain jobs. If an employee will take longer to accomplish the task perhaps it’s better to give the job to another company who can do it better.
“So many owners want to spend pennies to watch dimes go by,” said Cahill. “We evaluated the job performance of the employees who were doing certain tasks and decided that, in some cases, it made more sense to outsource jobs. For example, we decided to outsource our truck repair and in doing so we improved the quality of the repair and saved time as well.”
Cahill says that by making all of these changes, in less than one year, they have doubled their production.
A New Perspective on Cars and Parts
The next area that Cahill and team took on as they transformed Toy Town Auto Salvage into Brown’s Auto Salvage was considering the type cars they purchased. When the Browns and Cahills purchased the salvage yard, the cars they had for inventory were what Cahill calls “street buys” – lower priced merchandise, cars under $1,000 dollars that left them able to compete on price alone, because the parts were so old and high-mileage that they couldn’t compete on quality.
The quality of the inventory became a problem for Cahill. “My input controlled my output and my biggest mistake was to not crush everything and start fresh,” said Cahill. “I crushed about 85 percent of our inventory because it had high mileage, some parts had been on the shelf for five years, and overall the parts were junk. We had to move from the philosophy that says, ‘you might as well leave parts on the shelf since you bought them already and they will sell eventually’ to the 21st-century mindset where cash flow is king.”
Cahill says that turn of inventory makes a difference in today’s business and that instead of saving parts to eventually sell them, there are other avenues available today to turn those parts into revenue. For example, besides crushing material you can also sell cores and turn those parts into cash flow.
Cahill also suggests that 21st-century yards should consider breaking up assemblies and selling parts as specific parts. “With the Internet, today’s buyers are much more aware of the exact part they need and they may want to buy just a knee, not the whole package deal of knee, axel, spindle, etc.,” said Cahill. “By selling things like airbags, knees, and other assemblies as a group, you are limiting your audience and potential customers. Customers want the specific part and don’t want the other parts or the higher price that comes with the assembly.”
As a result Brown’s Auto Salvage finds themselves inventorying deeper into the car today than it did before. They also pay closer attention to their pricing, making sure that they attract the most money for the parts that they can’t keep in stock such as engines, transmissions, and other major components. Then they make sure that their prices are low and competitive for overstocked parts such as back seats.
Inventory purchasing is another way that the industry has changed. It is important to consider this when re-inventing your business. Cahill says that now he may pay more and buy cars that might have 50,000 miles on them rather than buying something cheaper that has a motor with 150,000 on it. He goes for quality over quantity and he says that ten years ago the average turnover for inventory was between six to 18 months. Today, turnover rates are much quicker, usually between 90 to 180 days.
Rethinking How It Works
The third area that Cahill and team considered when re-inventing and shaping their business was the processes they had in place. They changed three major processes: inventory, parts description and customer service, including the payment process. These changes according to Cahill, dramatically increased their credibility and customer satisfaction.
“None of what we’re doing is magic,” said Cahill. “The changes we made involved a major change in mindset and may seem counterintuitive to the way most salvage yards have done business. We have removed the obstacles that would prevent a customer from buying from us. Instead, we have developed a customer service minded business that makes it easy for the customer to buy from us. We have also made it easy for a customer to have a problem fixed, should one arise. As a result, we have greater customer satisfaction, eliminated wasted labor, have become more efficient and have raised our credibility enormously.”
One of the first processes that the team at Brown’s Auto examined was the inventory process. They started to inventory more parts giving them the opportunity to sell more parts. Now they sell a lot of non-interchange parts. For example, instead of just selling a door, they sell the door panel, sun visors, center consoles, master switches, and more.
The second process they changed was the way they described parts. Now, they take great effort to ensure they enter all the information from the manufacturer that they possibly can. Instead of entering minimal information such as left door, blue, they are careful to enter as much detail as they can. For that same door, their description would include the trim code, paint codes, and part numbers. They also use accurate damage codes.
“Giving an accurate description for parts is essential to increasing your potential sales,” says Cahill. “If time is taken upfront to make sure to understand and write an accurate detailed description of your part, you increase the likelihood of someone buying it. Rather than describing your mirror as an interior mirror, make sure to note that it’s a GPS style interior mirror. Instantly, you’ve expanded your potential sales audience.
“We have found that our credibility with insurance companies, body shops, dealerships, and retailers has grown considerably since we have taken the time to provide a more detailed inventory,” said Cahill. “We have greatly reduced the number of returns because the customer knows exactly what they are getting.”
This has played a part in changing the customer service process as well. Due to greater representation of the part upfront, they have reduced returns. They also offer a 100% money back guarantee. Cahill says they continue to take away any obstacle that would prevent someone from buying from them.
“The security blanket for customers is being able to get their money back if the part isn’t right,” said Cahill. “We do our best to ensure they get the part they are expecting. We also have put a pre-payment process in place. We don’t have customer walk-ins for parts that are not stocked on the shelf. In other words, if the part has to be pulled from a vehicle, we require customers to pay before they receive the part.
“This may sound counterintuitive to most yards, but we have seen that it not only enhances our customer satisfaction, it eliminates wasted labor for a part that remains unsold. Customers pay in advance over the phone by debit or credit card and we call them when their part is ready. Think of it as a valet service for parts. We show the customer that we value their time by saving them from waiting around at our yard while an employee pulls the part from the vehicle. The benefit for us is we eliminate the possibility of wasted labor for a part that may not get purchased.”
Michelle Keadle-Taylor is a freelance writer based in Northern Virginia.