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More on making informed clients

Teaching today’s customers is an important part of the process. Starting with a price breakdown is one way to go
Friday, January 24, 2014 - 09:00
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In part one of this two-part series on educating today’s customers, I mentioned some basic criteria that we can start to share with the customer/client. It is important to build into your business budgets, money to develop material that educates the consumer on the real costs of running this business in order to allow you to serve them effectively and professionally.

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Consider developing a menu style board for posting in the client area, with effective lighting, that breaks down how $1 on the client’s invoice is spent, in order to serve them professionally. You can start with phrasing like, “Where does your average dollar go to maintain your vehicle?”

Out of $1:

• 35¢ to replace total parts installed (oil, tires, batteries, parts)

• 33¢ to replace all shop wages (technician, administrative, management)

• 3¢ to replace legislated state and federal payroll taxes

• 23¢ to replace shop operating expenses (insurance, shop and office supplies, utilities, business and property taxes, maintenance and repair, rent, etc.)

• 6¢ shop profit before corporate income taxes

Consider this concept. The numbers I have used are an example only. The goal is to achieve a net income of 10 percent of gross sales before corporate taxes are paid. That can be achieved only with the right labor rate and the shop operating with a productive process format. It is imperative that you sit down with your own accountant and work out your shop numbers. Take your year-end numbers and summarize them into this format. It is something the customer/client can understand.

Do not be afraid to admit that you make a profit. Profit is not a dirty word, and profit is required if you are interested in serving your clientele properly in the future. The client becomes a big winner when the shop is profitable, because then you will have the monies required to invest in new high-tech equipment that will be needed to serve their future vehicle needs, and be able to afford the best and competent staff to ensure the clients work is done right.

Also is imperative that we educate the client regarding your policy on the quality of business

you want to deliver to them. Consider making up another wallboard, or on your monitor in the client waiting area, with the quality and the management broken out. The information under quality can be used on the wallboard.

Quality
As much as we would like to, we cannot provide both quality parts and professional workmanship and low prices.

Our regular clients know that our prices might be perceived to be in the higher bracket of the industry, but they come back again and again because we do the work right the first time and guarantee both parts and workmanship. Further than this, we will run real values from time to time, but will not run loss leaders just to draw people in and use high pressure tactics to sell work or parts.

We will counsel you about real deficiencies in your vehicle, give you an honest quotation concerning repair, maintenance and service costs, and leave the decision concerning whether you want us to do it to your discretion.

Please note that our maintenance and technical service rates must include the wages of our highly skilled and trained technicians plus other overhead costs such as rent, equipment costs, insurance, utilities, business and payroll taxes, etc. Oh, yes, one further addition, our prices include a profit allowance for us so that we can continue to provide quality service to our many valued friends and clients.

Please do not hesitate to ask for a quotation on any work or service. We are not ashamed to quote our rates and take the time to share with you what extras you get for the sometimes perceived higher costs than those provided by some competitors.

The Management
Looking at these two educational tools coupled with January’s article on this issue, you are now beginning the process of upfront education of your clientele. This is only the beginning. There are so many topics to discuss such as the technology in a car today compared to five or seven years ago, the life expectancy of today’s vehicles, the life expectancy of today’s shop equipment, the types of different equipment required today to service a vehicle, the diagnostic skill level required and not just a mechanical level and so much more. The message you clearly want to achieve is that your shop today is in the knowledge business, not just the parts business, and your educational material must clearly define this.

Independent service shops that continually run their business on price are doomed, and if they don’t want to change, there is not much a lot of us can do about it, other than wait them out to go out of business. You are in business for the long run — the journey — a career, not an overnight trip that so many are seemingly determined to be.

Education of your clientele will determine the level of relationship you end up with. Set an objective of producing one new educational material per month for your shop. When your client walks in, let them see how fully informed you want them to be. Consider direct mail pieces, email or Facebook material provided to your clientele as an informational feature on our industry and on your shop.

It is only with education that one can see rightly, see what is essential is actually invisible to the eye. Your educational message, in essence, should be screaming to the marketplace “We are the independent sector, and I, as a competent shop owner, want you, my client, to clearly understand that there are only three ways to run our type of business, namely price, service or quality — pick two! We, as a competent shop have chosen our two; we are in the service/quality business. 

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