Ottawa, Ontario — The Ontario Automotive Recyclers Association’s (OARA) latest virtual training session once again featured Mike Kunkel, Lee Worman and Rob Rainwater from Profit Team Consulting—this time answering some of the industry’s questions around block labour and part warranties.
Worman said block labour warranties have the potential to solve a common percentage-based problem among recyclers.
“A lot of people will do a warranty with a percentage, and then add another percentage on top of that with the labour,” explained Worman. “The truth be told, the R and R and the labour doesn’t have anything to do with the prices on what we have. Sometimes you could be dealing with a part that has outrageous labour in comparison to the amount. If you were actually selling on that, it would be disproportionate.
“Block separates the two. If I’m selling an extended part warranty, it makes perfect sense to charge a higher percentage and charge more for a $1,000 part I need to replace than a $500 part. It makes sense to pay more for a warranty for a more expensive part because the exposure is greater.”
Offering labour warranties is a separate deal, said Worman.
“If I do my due diligence to find out what the [average] labour [for a purchase] is, I can sell what some people call labour protection or labour warranty—whatever you want to call it to pique interest. It suggests that the recycler can tailor to cover your labour—you’ve got $1,000 labour? Well, that’ll be two $500 buys.”
“The whole idea of the block warranty program is to customize the program to what the customer’s needs are, be it labour or time,” said Rainwater. “The idea is to make it a concept of selling a policy of protection to the customer for what fits their financial needs.”