John and Sue are busier than ever! Their parking lot is packed; their techs have one car after the other in their bays. The phone is ringing off the hook—being an auto repair shop owner is looking great!
But wait—Sue goes to pay the parts bills and there’s barely enough in the account to cover them. Payroll is coming out this Friday and it looks like John and Sue will have to hold off on depositing their own checks in order to make sure all of their employees’ checks don’t bounce. How is this possible when we are so busy?
The answer is often at your front counter. Discounts.
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How Discounts Can Kill Your Business
Discounts can be a coupon for a first-time visitor, a special price on a specific job, a way to make an unhappy customer satisfied, or your service advisor uses discounting as a method to close the sale. When discounts are attracting the wrong kind of customer or are used too frequently, they will drastically cut into your bottom line, leaving insufficient dollars to pay your obligations—or worse, nothing for the owner to put in their own pocket.
There are three categories of discounting in most auto repair shops:
1. Marketing Discounts
These are those coupons you run on Groupon, or postcards you send out to customers offering $25 off a brake job. Unfortunately, most marketing discounts attract customers who are only interested in the bottom-basement price and nothing else. Marketing discounts can be very effective when targeted to the right audience. In ATI’s Marketing class we discuss how to target your marketing to the customers you want more of, avoiding the ones you don’t.
2. Discounting to Close A Sale
This refers to dropping the price on an estimate when the customer balks or wants to negotiate. There are no benefits to this. Why? It puts your shop’s integrity into question; now the customer thinks the first quote was trying to rip them off. It also trains your customers to say no until you give in. The best way to fix this is with sales training for your service advisor and teaching them how to highlight the features and benefits of the recommended service, building value vs. focusing on price.
3. Make An Unhappy Customer Happy
This occurs when the customer gave approval for the repair but is now dissatisfied. Maybe we didn’t meet their expectations—or set incorrect ones. Maybe they got in their car and found greasy fingerprints. Most of the time a discount at this point will not make an unhappy customer happy. Before offering a discount to this person, ask yourself: Is the relationship with this customer of value? Will it satisfy them? If the answer to both is yes, then do it. The best way to fix this is to improve your internal processes: set and meet expectations, stay in communication with customers, and have a quality-control process to make sure the vehicle is properly repaired and no damage/grease left behind.
As an auto repair shop owner, you work hard for your business—don’t give away your expertise!
At ATI, we teach shop owners how to how to achieve their dreams by implementing best practices in their shop. Want to learn more? Start by registering for a shop owner event at www.atievent.com.