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Will You Price Match your repairs or service?


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Hi Joe! I understand what you're saying - but I respectfully disagree in one way. First of all, I know tires are NOT a profit center. Additionally, you're correct about the discount tire suppliers online. Nobody in a repair shop with real world overhead could compete. 

But the issues I ran into with my shop was that I often offered a 100% price match guarantee - for the same job. Let me explain. I did a lot (and I mean a lot) of A/C repairs. I even had local retailers that would just send the car to us because "adding a little refrigerant" didn't work. 

When doing a quote for a repair - typically a large repair like compressor replacement - ($6-7-$800 or more!) I would always tell my customer that I wouldn't just MATCH a competitive price - but I would BEAT IT TOO! - But only on the identical job. 

Here's the rub. When doing compressor replacement, most shops don't (and won't) bother to do all the steps. No high side flush - no expansion valve or orifice tube replacement - no drier replacement - or any of the other supporting services. They would slam a compressor on the car and then hope for the best. 

In other words, if you want the job done right, there wasn't anyone who would beat me for the SAME JOB. After all, we did 8-10 big a/c repair jobs a day! We had a system that worked. 

So with respect to tires, I get it. You can't compete with the online retailers - and I wouldn't ever suggest that a shop does. But when it comes to other work, you have to be able to communicate to your customer that you WILL match the price - FOR THE SAME JOB! When you dig into it,  you can quickly see where other shops cut corners. In fact, a shop could even make this part of their USP (Unique Selling Proposition) where they "Won't be beat!". That's beyond the scope of what we're talking about here - but it can work. 

Hope this helps!
 

Matthew
"The Car Count FIxer"

P.S.: Join me on YouTube at Car Count Hackers! FREE Help to grow your Car Count, Income and Profit! 
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HI Joe! Thanks for the response and point. I think the most important matter you brought up was .... 

2 hours ago, Joe Marconi said:

let's match it line by line

You're 100% bang on. I never sold tires because there wasn't any money in them, so I can't speak to those matters but you're right. Tires aren't the complete job. Mount, balance, alignment, etc. is what the customer isn't thinking about. The most "mysterious" a system is... like A/C or Check Engine diagnosis - the more complicated it gets the more "ABC Auto Shops" mess with the price to get the job, regardless if they fix it or not! 

But with all that said, I think you said it best when you said "I sell relationships and trust". 

If all the other shops did that - I'd be out of work, so let's just keep this between us, okay! ;)

Thanks again!
Matthew

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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.

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  • 3 weeks later...

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 …

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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.

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Hi newport5! I understand your position. In all honesty, I typically didn’t have to do a “line-by-line” comparison because most of the time, I initiated it with the customer. I know, sounds crazy - but like I said, I was real heavy in A/C service. Most shops would ONLY quote on the compressor - so my offer was that I would NOT be undersold - for the same job. 

In addition to that, if there was a question, the customer would end up back at MY SHOP. Again, it was a little different than what you’re explaining.

But with all due respect, I’m going to tell you that YOU probably price shop - and you may not even realize it. Do you shop at Walmart? Target? Costco? Well, I am willing to bet that you could get most of your purchases from ANY ONE OF THOSE - instead of going shopping to each one. 

It’s pretty much the same thing! And besides, if the car owner didn’t consider auto repair as a COMMODITY, then they wouldn’t do it. So when they price shop - they’re really telling you that your shop offers the same service as any other one. 

Hope this helps!

Matthew
"The Car Count FIxer"

P.S.: Join me on YouTube at Car Count Hackers! FREE Help to grow your Car Count, Income and Profit! 

P.P.S.: Like and Follow Car Count Hackers on Facebook

P.P.P.S.: How one shop owner BANKED $9,780.39 in Bottom Line Profits!

Have you registered in my FREE Training? "How to Double Your Car Count in 89 Days"

 

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Hi CAR_AutoReports!

On 11/29/2019 at 10:40 AM, CAR_AutoReports said:

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.

Exactly! But it doesn't stop with just getting them in the door. I can't believe how many shops I see drop the ball on this. On average, a shop has LESS THAN a 27% chance of that new customer returning for another visit - and nobody does anything to inspire that to happen! 

But when it comes to price matching... or customers calling to "ask how much something is"... aka Price Shoppers... you said....

On 11/29/2019 at 10:40 AM, CAR_AutoReports said:

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.

Bingo! Auto repair is a COMMODITY and nothing more! At least, the way the consumer sees it - and that's because shops don't take the time to invest in their brand and "STAND OUT". 

Typically, shop owners hind behind their website! They use a bunch of stock images that are "stolen" from sites online - but people want to do business with PEOPLE - not names and businesses! 
What about a simple stupid thank you card! No, not one that looks like a billboard - I'm talking about a cheap thank you cand that's mailed to the customer! (Can't tell you how many shop owners have told me about the surprise their customers got - from a stupid, simple thank you card!

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! 

Auto service is considered a commodity because of how shop owners refuse to invest in their own brand - don't entice customers to come back - and then just call them cheap, price shoppers. Ha!

Hope this helps!

Matthew
"The Car Count FIxer"

P.S.: Join me on YouTube at Car Count Hackers! FREE Help to grow your Car Count, Income and Profit! 

P.P.S.: Like and Follow Car Count Hackers on Facebook

P.P.P.S.: Have you registered in my FREE Training? "How to Double Your Car Count in 89 Days"

Find out How one shop owner banked $9,780.39 in Bottom Line Profits!

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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.

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  • 2 weeks later...

@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.

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  • 1 month later...

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.

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  • Have you checked out Joe's Latest Blog?

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      It always amazes me when I hear about a technician who quits one repair shop to go work at another shop for less money. I know you have heard of this too, and you’ve probably asked yourself, “Can this be true? And Why?” The answer rests within the culture of the company. More specifically, the boss, manager, or a toxic work environment literally pushed the technician out the door.
      While money and benefits tend to attract people to a company, it won’t keep them there. When a technician begins to look over the fence for greener grass, that is usually a sign that something is wrong within the workplace. It also means that his or her heart is probably already gone. If the issue is not resolved, no amount of money will keep that technician for the long term. The heart is always the first to leave. The last thing that leaves is the technician’s toolbox.
      Shop owners: Focus more on employee retention than acquisition. This is not to say that you should not be constantly recruiting. You should. What it does means is that once you hire someone, your job isn’t over, that’s when it begins. Get to know your technicians. Build strong relationships. Have frequent one-on-ones. Engage in meaningful conversation. Find what truly motivates your technicians. You may be surprised that while money is a motivator, it’s usually not the prime motivator.
      One last thing; the cost of technician turnover can be financially devastating. It also affects shop morale. Do all you can to create a workplace where technicians feel they are respected, recognized, and know that their work contributes to the overall success of the company. This will lead to improved morale and team spirit. Remember, when you see a technician’s toolbox rolling out of the bay on its way to another shop, the heart was most likely gone long before that.
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