A few years ago, I worked with a very capable, very dedicated shop owner from Holdrege Neb., who, when talking about price versus value, rightfully said, “Price is what you pay, value is what you get.” Though very simple and basic, truer words have never been spoken.
Price doesn’t matter when there is sufficient perceived value; it is as simple as that. It doesn’t matter if we are talking about a gallon of gas, a pound of hamburger, a transmission flush, a cup of coffee or a four-wheel alignment, if the customer feels the value, price does not matter. The key, of course, is selling and highlighting value.
I remember talking to an exceptional former client of mine that owned a great European specialty shop in Spokane Wash. We were talking about the great job he had done in getting his parts margins in line and specifically about how he was able to raise his parts prices to where they needed to be while not creating a backlash of customer objections. He described what a local diner owner recently had done this in a similar circumstance.
This restaurant owner was determined that he needed to raise his prices, but knew that his many regulars would react poorly if it was just a matter of that same greasy cheeseburger they had been buying for years suddenly costing $6 instead of the normal $4.50. There would be no obvious reason that could explain the price increase and he knew his customers would be very likely to object. He also knew that to stay in business and to keep up with his expenses, he needed to raise his prices. What he did in the end was paint the place inside and out, redecorate the dining room, buy new silverware and glassware, updated the menu with several upscale and healthier offerings, touched up the bathrooms and even invested in upgraded uniforms for his wait staff.
Though in the end the cheeseburger didn’t change much, the plate upon which it sat was much nicer, as were the tables and the room and the whole customer experience. In plopping down the same greasy burger, customers suddenly were treated to something far superior to what they had been used to, and that $1.50 increase in price didn’t matter. What these customers got for their $6 obviously was worth it. A higher price is what they paid, but much greater value is what they got. This former client of mine, who has always made customer service a big priority in his shop, found ways to make the existing great customer experience even better and guided his customers past the significant price increases they were experiencing, to a clear understanding of the value they were getting for those dollars spent. Value, if it is there, trumps price every time.
There are no absolutes to selling. Customers are a fickle and unpredictable bunch, very apt to go their own ways and do their own thing but there is no doubt that the sales process is much easier and more simplified if we believe in and have confidence in the parts and services we provide. Though customers come into our shops prepared to spend money, it sure does not mean that they are not leery of us and worried about what our intentions are. Though our customers are very dependent upon their cars and want them to be safe and reliable, they are not necessarily happy to spend money and not necessarily trusting of us in this process. Our job as shop owners, as service managers and as service advisors is to inform and educate our customers on the repairs and services needed to keep their cars safe and reliable. In a larger sense, our job is to sell them on us and the value we represent. If we are successful here, the selling of the repairs and services will be much easier.
In the automotive repair industry, we tend to be hyper sensitive to price, though the funny thing in this is that our customers are far less concerned about price than we are. Customers want value for the dollars they spend. In survey after survey, our customers list quality, convenience, reliability and support after the sale as being much more important than price. But for some reason we of the automotive repair industry go to market stressing price over these other factors every time. Value always trumps price!
Being a shop that has highly capable technicians, that installs quality parts and stands behind the repairs and services performed, that is convenient or offers drop-off serve, is a shop that will enjoy high retention rates as well as consistently high customer satisfaction. There is value in all of this for our customers and would be customers.
In the marketing world, they would call this association between price and value a function of branding. Branding is our conscious decision to present our business in a specific light, such as quality of service or honesty and this has both internal and external benefits for our shop. Externally we create perceptions and an identity that clicks with our customers and would be customers. In essence, we create an identity that resonates with customers and in this process, we form emotional relationships with our customers. The emotional aspects of branding are important because though many customers try to be logical, informed and aware in making their repair and service decisions, all of us buy emotionally.
Branding is the emotional and psychological relationship we have with our customers and would-be customers. Hopefully in this branding effort, we elicit positive and confident emotional responses. Highlighting the quality of our parts, our strong warranty and our efforts after the sales to make sure our customers are taken care of is a great way to make a customer feel good about their association with us and their decision to have us work on their car. Remember that customers that see value are buying customers. They are also customers that keep coming back.
Internally branding serves to keep us and our staff members aligned with one another and also aligned with our customers. It is a way of not only assuring that all of us talk the talk, but assures we all also are walking the walk. If we are careful in our branding and believe in the value in the parts we sell and in the value in the services we provide, our presentations will be consistently confident and consistently successful. Price is what our customers pay but this value is what they get. Value is what keeps our customers happy and coming back.
There is a great internationally known company from Seattle that we all know and would recognize. They sell at a price that is higher than anyone else in their market but with an apparent value that has their customers coming back again and again. They sell value a cup at a time and sell millions of cups each and every day.
If you were offered a hot steaming cup of value, would it be Tall, Grande or Venti? I would definitely go for the Venti, no matter what the price!
