How to Excel as an Expensive Shop Without Having to Discount
“I can get it cheaper from the parts store. You guys are too expensive, cancel everything!”
Has anyone ever said this to you? This is what Laura, a first-time customer said to “Chris,” the service writer after he presented her with a $530 estimate for a distributor on her Mitsubishi Eclipse.
“Rich,” the shop owner, overheard the commotion at the counter and met with Laura to salvage the sale.
Put yourself in Rich’s shoes for a moment. What would you do to salvage the sale with a first-time customer who has a price objection? As Rich was telling me his story, I was sure that he would offer her a discount. What he said to her, took me by surprise.
“Laura, the price you were quoted by the parts store is a do-it-yourself price.” He went on to explain, “Ours is an installed service price, which comes with a two-year, 24,000-mile warranty, which is twice as long as the industry average.
“With that warranty, you get nationwide coverage in case something goes wrong while you’re out of town. Can you find it cheaper? Probably. Will you be as happy with your investment? Probably not.”
Laura’s response was shocking: “I didn’t realize everything I was getting. Go ahead and do it.” Later in the day, she called Chris and apologized! Why did Laura’s mind change even though her price remained the same?
Here’s the big takeaway: People don’t do what they don’t understand. After speaking with Rich, Laura was finally able to understand.
This allowed Rich to excel as an expensive shop without having to discount. Keep reading to learn two specific strategies to make this happen for you as well.
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Find Out Their Plans
110 retail business owners were surveyed as part of a 2014 Retail Systems Research study. 56% of the respondents reported experiencing increased price sensitivity from their customers.
The survey also concluded the following critical point: Customers only shop based on price when price is the only thing that separates competing offerings.
In other words, the less informed customer will be more price-sensitive than one who is educated on how your service will benefit them. The key is to find out what your customer plans for the vehicle.
So how do you discover their plan? I’ve done some in-depth, analytical research over the past eight years to present you with the following answer.
Brace yourself because I’m about to get technical. Here it is: You ask “What are your plans for the vehicle?” (It can’t be that simple, right?)
Once you know your customer’s plan for the vehicle, you can communicate the benefit of your service that lines up with what she wants.
For example, I’ve asked this question and received the following response: “My plan is to keep driving my Honda until the wheels come off.”
Later in the presentation, when we are talking about preventive maintenance, I would say, “Having your transmission fluid exchange service done will help you to drive your Honda until the wheels come off, just like you told me out at the car this morning.”
Finding out their plans for the vehicle gives you the opportunity to educate your buyer on how your service is a match for their specific needs.
Prep Them for the Courtesy Check
“Joanna,” a service manager working in the midwest, shared an encounter she had recently that hammers home the value of prepping your customer for the courtesy check.
She was attending her local chamber of commerce “Lunch and Learn” session where she ran into “Bob,” a longtime customer of her shop. Bob had good news and bad news to share with her.
“I’ve been coming to your shop for years and you guys have the best tire prices in town!” That was Bob’s good news. He then went on to say,” My last visit made me upset!
“I came in for four tires and left with a print-out of a bunch of other stuff that needs to be done on my truck! I didn’t plan on getting all that work done, I just came in for tires!”
To which Joanna replied, “The other items the technicians found were things that they noticed when they did the courtesy check. The courtesy check is done just to make sure everything on your vehicle is OK.
“We do that because we don’t want you to experience a break down on the road because we didn’t tell you about a problem with your vehicle.”
Here’s how Bob responded: “OK, that makes sense, now I understand. I will be making an appointment to get those things fixed on my truck.”
Like Rich from the opening story, Joanna explained the process in a manner that Bob could understand. What she shared with him, should have been communicated by the initial service advisor before the courtesy check was done.
If Bob had been prepped for the courtesy check, he wouldn’t have had any bad news to tell her.
So, there you have it. If you commit to finding out their plans and prepping them for the courtesy check, you can excel as an expensive shop without having to discount. As stated earlier, people don’t do what they don’t understand.
It’s my hope that now you understand the importance of educating your customers. The next step is for you to do it!
At ATI, we focus on teaching and coaching shop owners on best practices to get the most out of your automotive repair business. Want to learn more? Find an ATI shop owner event near you.