I’m losing business because of the pricing matrix!” This statement was made by a shop owner named Rich, during our weekly coaching call. Both his car count and average repair order (ARO) were down from the previous year.
He had two service writers named Steve and Chris. Even though they had the same invoice count, Steve held a 61% parts margin and a $400 ARO, while Chris hovered around 45% and $230.
I had Rich make the “where have you been” calls to determine why people weren’t coming back. He spoke to ten customers; five from each writer.
As suspected, he got feedback stating that he was too expensive. Four previously loyal customers mentioned finding another shop with lower prices. Which service writer do you think had the most complaints?
If you guessed Steve, guess again! None of his patrons mentioned the price. They had good things to say about him and the service. All of the complaints came from Chris’ customers.
Why would Chris’ clientele complain even though Steve was charging more? Keep reading and you will learn two ways to lose your good customers over price.
Only Mention What’s Wrong
Chris would only to talk to his customers about what needed to be repaired on the vehicle. Steve began his presentations by mentioning the positive findings from the courtesy check. Steve’s people felt their vehicle was worth investing in while Chris often heard the following: “I’m getting rid of the car, so why spend the money.”
The customer has to value your service and their vehicle. If the customer feels the value, they will pay the price!
Don’t Do a Show and Tell
Steve did a vehicle walk around with everyone, which enabled him to show the worn tires and wiper blades. He experienced less resistance because he and the customer had the evidence in front of them. Chris didn’t have time to go out to the car, besides, “his customers” didn’t like going back outside.
If you only mention what’s wrong, and refuse to do a show and tell, you will end up with the same results as Chris!
Several weeks later, Rich terminated Chris, replacing him with a restaurant industry veteran who focused on talking about the positive items from the courtesy check and performing vehicle walks with the customer. The price complaints decreased and the margins increased!
Have you been hearing more price objections lately? Pay close attention to how your writer is communicating the value of both your service and the vehicles.