Will You Price Match your repairs or service?

[Joe Marconi]

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[JustTheBest]

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[Joe Marconi]

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[JustTheBest]

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[dfrisby]

The issue I've had recently is people ordering their tires online, and then wanting us to drop everything to install them today. My tire prices are competitive with all other shops around and even the big box store. I can't and won't attempt to compete with online prices for the tires. My mount and balance price is $80 for a set of 4 plus disposal and valve stems if required. My markup on automotive tires is a minimum of $20. When they buy online, they are in turn taking $80 away from me.  Yes, I'll still install the tires. No, I won't drop everything to do it. Schedule at least a day or two in advance to drop off car and it'll get done same day. I'm not going to move a profitable job to the side for a customer that wants to bring his own steak to the steakhouse to save a couple bucks.

[newport5]

Briefly,

I’m opposed to price matching. Even just the IDEA of pricing matching. That’s not to say that I’ve never done it.  But …

First, you just taught your customer how to get your price down next time.

Second, since you did it this time, you’re somewhat ok with it and you’ll do it next time.

Third, think of the time it took to get to the point of comparing “line by line.” The research, phone calls and the actual time going over the “line by line” comparison with explanation. All that to make less money ??

Think of it: your customer takes 15 minutes to a half hour to find and call three shops for quotes and saves $100 with you. That’s $200 to $400 an hour for them.

Instead, build up such a relationship with your customers/clients/friends that they trust you are taking care of them (and yourself) at a fair price.

If your customer is calling other shops for price comparisons, you are probably “selling” parts and labor. I’m close with Joe, but instead of “selling” Relationships and Trust, I’m Building Relationships and Trust.

More later …

[CAR_AutoReports]

I think price matching a commodity like tires... is way less risky than price matching services like the water pump mentioned above.  If done correctly, price matching tires is a cheap way to get that person in the door and dazzle them with the rest of what you do and why your value proposition far exceeds whoever they are trying to compare you to.  Large marketing firms have completely commoditized the very services we all rely on to survive and profit from, forcing all of us to change our landscape in ways we couldn't ever imagine 10 years ago.

This is our opinion of the present landscape:

• Large firms in our industry are putting more money into marketing and sales tactics
• These tactics are driving customers to their doors on lower margin items
• While they are there, they are deploying a wealth of sales tactics to raise the ticket sale
• Often times selling customers things they don't necessarily need

If you doubt this, go visit a local national chain with one of your vehicles.  Experience what they are providing and how they manage while you are there and their follow up after you have left.

Why is this important?

The longer they can keep this game up with all of us divided, the more of our customer base they can pull from us.  Eventually putting us in a bind if we aren't paying attention.

I think a lot of us are underestimating the steamroller making its way through the industry and if we all stand still... we're gonna be in a lot of trouble in 5 short years.

We've seen consumers get a lot smarter about this. 

We've actually had consumers give us complete estimate from other dealers or service facilities, with the price hidden, and ask us to quote them out.  Which leaves us in an interesting predicament, one that is mentioned above by Joe.  We can easily present our value vs a dealer quote, but a quote versus a competitor shop... becomes exponentially harder.

I think once you start competing with price, you enter an arena that small competitors can't manage against the large marketing arms competing directly with us in our space.  Each scenario is also clearly very different, but I can say this... we have found tires to start becoming more profitable than I've ever seen them.  We've increased our average profit per tire sale significantly over the last 18 months, and we're going to attempt to stretch that as far as possible with some aggressive marketing and advertising starting next year.

For those of you who doubt it, we monitor tire prices insanely closely and we can compete with the large online retailers in brand tire pricing today.  Something we couldn't dream of doing just 5 years ago.

 

In short, we don't price match actual repairs over the phone.  We ask the customer for the opportunity to actually look at the vehicle and assess it ourselves.  We then explain why this is important with the old water pump trick mentioned above.  We explain that while the water pump may be leaking, what do the other hoses look like? Has the thermostat ever been changed?  Changing these items together, will actually lower the cost of repairs long term and if the other shop hasn't properly inspected the vehicle... they aren't doing anyone a favor but themselves.  If they actually do make their way in, which we have a good statistic on... they are usually impressed with us and how we operate with CAR and open them up to the process.  We usually earn a customer for life with this tactic.  Quick Quote, a recent feature, was purpose built for the price match or quote callers.  Initial tests are showing some promise even though it's still in it's first stage.

 

This is a work in progress, like everything in our business these days and we are tweaking constantly as we fight for survival like everyone here.

[JustTheBest]

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[JustTheBest]

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[CAR_AutoReports]

I don't think all of auto repair is a commodity, even though I agree with your assessment that customers treat it as a commodity. 

To be really clear, here are the commodities that I see within what we do, that translates into price shopping:

• Tires - There are a plethora of competitors in the space, what advantage can the small shop have?  You have to actually install them regardless of where they are purchased.  Smaller players have an insanely difficult if not impossible time trying to compete here.
• Brakes - Long been a safety item that was commoditized by cheap materials providers and the marketing companies that operate in our space. Nearly impossible to compete here as there is no telling how low anyone is willing to go.  We have a car wash that advertises pads and rotors for $225 down the street from us.
• Oil Changes - Another item that was commoditized by quick service facilities.  Although, if you do some homework these days, you will find the quick lubes are the most expensive game in town and their entire game is upselling.  Customers are starting to notice this.
• Exhaust - Used to be a serious commodity where a lot of small shops would lose out on the sale to a Meineke or Midas with pipe bending equipment... but better materials like stainless steel, hit these businesses with abrupt changes in market dynamics and many of them found it difficult to initially find their new position in a post exhaust service world. This is happening to the Quick Service routine and that is why you are seeing the Quick Service facilities become the one stop shop for all commodities within our industry; Tires, Brakes, Oil Changes and now even filters (cabin & engine).

Everything else, although treated like a commodity, it really isn't much of a commodity.  It's more a service calculation, or lack there of.  What makes them a commodity in the customer view is that a large portion of the industry is in the business of undercutting everyone for the quick sale instead of trying to build long term value.  This is a pain point that will likely never stop happening in our lifetime.  Especially as the cream work starts to dry up and shops begin to suffer from not staying current with tools and procedures.

For example, the A/C work you did... A/C is far from a commodity, especially when vehicles have a smaller version of a house system, wrapped up between the front and rear bumpers.  You wisely made a choice, likely based on local competition and your local market to address it in a manner that would bolster your credibility.  Your choice may also have been a result of having the right equipment and experience.  But each market is different, even though customer behavior is not.

We get plenty of calls for "water pump" or "radiator" or "hose" quotes.  We're just not interested in competing in an arena where we are blind bidding based on what one person may have indicated is wrong with the car.  We also don't subscribe to the logic of, "Give them a cheap number to get them in the door and then we can adjust."  We think that is the most deceitful of practices and participating in it, makes you complicit in what ruins this trade.

 

We are also seeing interesting shifts in consumer behavior where customers want to fix older vehicles that we advise them not to.  Not only do they want to, they are insistent that you help them get this sorted, because we're the local expert they rely on.  We've had to get really crafty in how we procure parts and negotiate the price for said parts and then the selling angle to the customer.  We had to get crafty, because we knew if we weren't... we would lose a customer for life.

Personally I think that customers have too much of a choice in parts these days as there are too many combinations of good, better, best... and they aren't all interchangeable and even worse... we're seeing even the better and best parts have poor quality which is leading to higher failure rates.  But customers don't see your side of the headaches, they just want their car fixed for the least possible price and if you don't help them fulfill their needs... someone else will.  It's also hard to explain to all customers that they maybe making a poor choice trying to save $200 on materials, only the ones that really trust you understand.  Sometimes, even the ones who really trust you... are going to learn the hard way.  When that happens, you may have lost that customer for good... even if you end up being right.  The worse is, when they get lucky and their gamble pays off... you will always be the one who tried to rip them off.

It's not easy and the only advice I have is... talk to your customers, educate your customers, and treat them how you would expect to be treated if you were in their position.  Second, be very thorough in everything you do.  We've gone to great lengths to make sure customers are satisfied.  Up to and including, making appointments at the dealer for recalls and getting them done for the customer while the vehicle was in our possession.

 

"I know a shop owner who basically locks himself in his office and let's the service advisor handle customers - even when they ASK ABOUT HIM!"

With regards to this... A shop owners time is the most critical element in his entire business.  The entire point of the service advisor is to act as a buffer, while it may be overdone at times... I can only tell you that it is immensely difficult to focus on a task at hand when you are stopping to treat every customer personally.  A good team helps you carry this burden and as they successfully do so... they become the face of service alleviating the pressure on the owner to still be at the forefront of operation.  No business in this industry can grow to a million in sales annually with the owner trying to grow the business and personally attending more than 30% of workflow and depending on the goals... even 30% might be a lofty number.

 

With regards to standing out, there are a myriad of ways to do so.  From thank you cards to follow up phone calls to holiday appreciation.  Standing out helps you stay on your customers mind... but it does not do much to mitigate the price wars we are all facing.

 

This industry is shifting from a high parts margin business to a full rate for service business, where parts are going to be a nice supplement but labor prices must pay for everything and have a net profit built in.  Customers are wiser and even when they aren't... they have access to parts cheaper than you do all too often.  All of which is designed to sell product and ruin your reputation if you are working on becoming the lowest bidder vs the place that fixes it right the first time and prevents come backs. 

 

I have dozens of examples of jobs that we were able to sell, because I would rather make money on labor than parts.

[sparkerauto]

We don't do any price matching as most of the customers that are shopping for price only, are not what we want. We strive for regular customers that will return for more services, not just a one time deal. We want the relationship, not just the sale. 

[Network Auto Body]

@Joe Marconi You said that right. 

Quote

There is always something left out or the parts are not the same.

Deserve attention towards O.E.M parts, repaint work done is not satisfactory, repair guarantee might be differ or sensing a difference in the way your vehicle handles. Improvement are key to ensuring and maintaining the highest possible level of satisfaction among the customers. Competition heads neck-to-neck in repair shops. The customer rely on quality and cost of service.  A happy customer is one who will come back whenever they need help. Because the customer estimates the labor rates to various shops in nearby locations. Our biggest challenge is to adapt latest technology, while repair cost will minimum to our valuable customers.

[Joe Marconi]

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[ATSAutomotive]

We do not price match, I didn't pull a number out of a hat to put on an estimate.  My estimate is specifically designed based on my needs.  Parts are marked up according to what I need to be profitable, same with my labor rate.  If your looking for the best price in town, I am not it.  I am a professional and I want you to come to my business because of the service we provide, not because of my prices.  Also why are you guys not making any money on tires??? Marked up 43% for 30% profit.  I am not a tire store, I am only going to install tires if I am making money.  Let the tire stores whip tires in and out.  We have a diagnostic and repair work to do. 

I would like to say I think some owners need to slow down in their day.  Being busy is just an illusion of being profitable.  Bust in to your books and build your prices based on what you need.