By Joe Marconi
I can't tell you how frustrating it is to give a price on a radiator to a customer at the service counter, while he's on his phone searching for the part!
Here's what I do when I get a customer that tell me he can get the part cheaper....I agree with him!
I let him know that he can get the part cheaper, just like he can buy a steak and potatoes cheaper at the super market too. But he'll pay more for the steak and potatoes at a restaurant.
And then in a calm manner, I review all the benefits of me suppling the part, the warranty and the fact that if the part is wrong or defective or fails in the future, he will have no recourse and will have to pay to have done all again.
For most, it works. For many it's all about price.
Now Most IMPORTANT IS THIS: The reason why you don't mind spending more for a steak at a restaurant is because of the experience. So, make sure the customer experience clearly demonstrates the value of why people need to do business with you. When Value goes up, price becomes less of an issue.
Hope this helps. Let's hear from you on this frustrating topic!
By Joe Marconi
“Your labor rate is too high. If you can’t negotiate your labor rate, I will have the car towed from your shop to another shop in your area that will do the work at the labor rate we want to pay.”
Those were the words spoken to my service advisor a few weeks ago from a claims agent at an extended warranty company. The name of the company doesn’t matter. What does matter is what would you do when faced with this situation.
Here’s another scenario you’re probably familiar with: After diagnosing a failed steering rack, the customer informed us that she had an aftermarket warranty policy. She asked me if I could find out if the steering rack is covered. I said, “Sure, I will be happy to help. But, just to let you know, most of the extended warranty companies I deal with have their own labor and parts pricing policies, which may not be aligned with our pricing. So, whatever they don’t pay, you will be responsible for. Are you OK with this?” My customer said, “Absolutely. I understand. I appreciate anything you can do for me.”
I thought the hard part was over. What came next was bizarre. The insurance adjuster I spoke to authorized the repair, told me the labor dollars they will pay and then said, “OK, it looks like I have a used rack in a salvage yard in South Carolina. I can have that rack to you in two days.” I had to pinch myself to make sure I wasn’t in a weird dream. Used steering rack? Salvage yard? Is this guy for real?
I quickly shot back and said, “Let me ask you a few questions. First, where does is state in the contract that your company will supply a junk yard part for your insured? And why in the world would I remove an old worn-out steering rack from my customer’s car and put back an old used rack from a junked vehicle? Is that really in the best interest of the customer?”
The claims adjuster replied back, “Well, shops do it all the time.” I said, “I don’t think so, and I won’t do it either. Let me tell you how this is going to go. I am replacing the rack with a quality part, and I will make sure that my customer gets the best job possible. So, please give me the authorized amount and I will let the customer know what the balance is that your company will not pay.” He said, “You can’t do that.” I said, “Yes, I can. My customer is already briefed on the situation.”
He reluctantly gave me the authorization number along with the dollar amount. I relayed the story to the customer. My customer then called the insurance company and gave them hell. They did end up authorizing additional money for the part I installed.
Before we continue, I want to be fair and balanced. There are some extended warranty companies that try to offer their customers a peace-of-mind policy, and do pay a good portion of the repair. However, far too often, it’s a struggle to get an extended insurance company to agree to our labor and part prices.
Here’s the deal. If you’re like me, you have spent countless hours understanding the numbers of your business. You’ve also spent a great deal of time and effort to put the right people in place, develop the right pay plans and have created the systems to run an efficient business. You know the balance between being competitive and profitable. When you consider all this, we need to carefully consider how negotiating our prices will affect our bottom line.
I understand the reality too. Sometimes, you really need the work. You don’t want to lose the job. And settling for something is better than losing the job. I have been there. But the truth is that negotiating your prices, in the long run, will not only hurt you, but will also hurt our industry across the board.
By the way, my service advisor never did negotiate our labor rate. He simply told the agent, “Our labor rate is non-negotiable. Do you have any other questions?” The agent eventually backed down and paid us the job at our labor rate.
Be upfront with your customers. Clearly explain to them that their warranty policy may not cover the entire repair and come to an agreement with your customer before you call the warranty company. Lastly, make sure you know what it takes to earn a profit. Profit is needed to pay your expenses, put a little money aside for the future, pay your employees a decent wage and also pay yourself the salary you deserve. When you really analyze the bottom line and what’s really left over, do you really want to negotiate your prices?
This story was originally published by Joe Marconi in Ratchet+Wrench on May 1st, 2019
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By James Boswell
I am trying to get some real-world perspective on using the Mitchell 1 system. Specifically, I am trying to account for bad debt, but setting it up as a payment type doesn't seem to be a good idea because it shows in my Revenue reporting as a taxable sale. Is there any way to adjust this or is their a best practice for tracking bad debt?
On another note, I would love to be able to chat with someone who has used this system for years and is willing to share some of their best practices in general. Let me know if you might be open to starting a dialogue.
By [email protected]
Is there a way to get GM to pay labor warranty? I have a customer's 2005 Chevrolet SSR 6.0L Automatic. Oil pan threads were stripped and we got a new oil pan from local Chevrolet dealer (very pricey) and labor intensive. When I got the oil pan new in the box, it had metal shavings from the casting marks to which we cleaned out and it was fine. We installed the oil pan and after putting some mileage on it, we noticed oil on the ground. After lifting it up we discovered that the oil pan has factory casting marks and oil was literally seeping through the bottom of the pan through the casting mark. The tech is not happy, I am not happy and I'm about to call the customer to tell them the news so they won't be happy paying for more rental car time.
I called the parts department from the dealer that I purchased from and told them what happened and they can exchange the pan but they don't pay labor. Very frustrating cause of the labor involved and the customer who had a rental car for about a week now and already turned it in today thinking she was getting her car? Is there a way to get labor reimbursement? I already tried the GM 800 number and filed a complaint and they said it would be about 2 business days or whatever before I get a call back from a rep. Does anybody know how to find a local GM rep to come see their crappy product?