30-20-10 in Action
Shop Name: Big Sky Collision Network Owner: Matthew McDonnell Locations: Billings, Bozeman, Livingston, and Manhattan, Mont. Annual Revenue: $18 million
The rules of the 30-20-10 sales technique are fairly simple to understand.
The legend says that in order to reach maximum gross profits, 30 percent of a shop’s sales should come from body labor, 20 percent should come from paint labor, and 10 percent of sales should come from paint materials. Legends are often just that, but Montana’s Big Sky Collision Network has managed to turn this one into a reality.
Since taking over the family shop in 2015, Matthew McDonnell has managed to grow his father’s business from a single location to a network of collision repair facilities through the 30-20-10 sales technique.
McDonnell’s father, Matt McDonnell, founded Big Sky Collision Center in Billings, Mont., in 1978.
“My dad ran the store from his gut,” says McDonnell. “He knew how to fix cars and motivate people, and he made money.”
But his father, like many in the industry, was spending all his time in the shop.
“He was always in the store, there was no way he could run multiple shops,” McDonnell says.
That’s why, when McDonnell took over, he says he began to run the shop like a business—not just a body shop.
In the beginning, McDonnell says he felt more like a fire chief than a shop owner. Proverbially running around with a water bucket was still making the shop money, but McDonnell knew it wasn’t sustainable.
When there was only one shop to take care of, it worked—not perfectly—but it worked. Putting out fires managed to pay the bills, but McDonnell says opening more locations was out of the question until he and his staff got their bearings with the first shop.
“Ninety-five percent of the shops we go into, operate from their gut,” he says, “That’s why we see people burn out so soon in this industry.”
Even before he was in charge, McDonnell knew something had to change and that’s why, about a decade ago, he sat down to figure out what.
In 2015, Big Sky Collision consisted of one shop, running on all cylinders, all the time. Making an annual profit of nearly $4 million didn’t seem too shabby to McDonnell until he realized that by effectively using the 30-20-10 sales technique, he could be making a lot more.
“Basically,” he says, “we sell five things: body labor, paint labor, paint materials, parts, and sublet.”
Much of the parts and materials pricing is out of a shop’s control. When it comes to paint materials, McDonnell says there is very little wiggle room. He says the same is true for parts, due to the fact that most shops are given similar price points.
For that reason, his shop chose to focus on increasing body labor hours—McDonnell says it’s where you can get creative, pushing toward that 30 percent of sales mark.
Take the repair manual for example, he says, which should be turned to for each and every repair to ensure the latest instructions are being followed for safety reasons. McDonnell says something as simple as looking up the repair manual counts as labor hours.
Rob Moore, chief executive officer for Big Sky Collision Network, says they were able to find additional body labor hours on the mechanical side, including for blueprinting, scanning, and estimating.
Moore says an unforeseen boost to body labor hours also came as a result of the pandemic. Disinfecting surfaces and cleaning steering wheel coverings, seat covers, etc. counts as labor hours.
If the demand is there and your shop still isn’t reaching the correct percentages by finding hours in the margins, McDonnell says it could be a reason to hire another technician, in order to maximize those labor hours.
“Labor is where the bread is made,” McDonnell assures. “If you’re efficient in how you operate on your labor side, then you can make some money there.”
Less than five years after keying in on 30-20-10, Big Sky Collision Network operates shops in Bozeman, Livingston, and Manhattan, Mont., in addition to the original Billings store. This year, the MSO’s projected profit is $18 million.
McDonnell says understanding the 30-20-10 sales technique is essentially understanding your labor cost, a figure that pays out in more ways than one.
Now, instead of running around the shop floor with his bucket of water, says Moore, “We can sit back now and drive the ship—or fleet of ships—from the conference room.”
Though it took some time and planning, by employing the 30-20-10 sales technique, Big Sky Collision Network was able to rise to its potential and set even more goals for the future.
McDonnell admits it took him and his company years to fully understand its profits and how the 30-20-10 technique could help. He describes the implementation of the sales technique as “eating an elephant, one bite at a time.”
Noah Kiprono, chief financial officer for Big Sky Collision Network, says he’s able to budget, as well as project sales for the coming years, by basing his numbers off the 30-20-10 sales technique.
“When you know those numbers, you can predict for the future,” he says.
The company, Kiprono says, which once employed 20 people, is now knocking on the door of 100 employees, and has no plans to slow down.