Selling up at Service Reception
Submitted by Steve Phillips
Question: I get embarrassed when I have to up sell because the prices are very expensive, can you help?
Answer from Steve:
Hi John,
it’s very important that you add value when up selling to customers, if customers feel you are ripping them off you’ll lose them and that’s no good for you or them.
I often hear “we can put our Diagnostic tester on your car which will cost £106”
The customer then has to match up the money they are paying with the product they are receiving and calculate their own value statement “Is this job worth this money?”
If the customer has to think like this, you will lose, you must attempt to include the customer’s value calculation in your conversation.
Here’s an example:
“Our Master Technician who been specially trained by [franchise] will carry out a comprehensive diagnostic check on your vehicle. This will include testing all the electronic components as well as the wiring loom for the engine management system so that you can rest assured that we’ll eradicate the problem for you. As you can appreciate, it’s a highly skilled job with specialist equipment, but we can complete this for you for just £106.00″
What you are doing here is justifying the cost of task you are describing and matching the price with the task. Remember that the customer does not know what is involved in the task and a bill for £106 without any explanation would terrify them, and rightfully so!
1) Explain the task
2) Explain the price
3) Match the price with the task
4) Create the customer’s value calculation for them
5) NEVER attempt to rip off a customer
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Steve,
this is a very interesting point and of course it’s not just about selling up, it’s about “adding value” for the customer.
The same practise and due consideration should also be be given to the way you structure an invoice, one of the methods I recommend is called “Story-boarding”. A real-life example of this is given on pages 155 to 159 of How to make more profit with your Service Department.
At the end of the day, your focus must always be on the customer, not you. Your job is to make your customers happy to do business with you and to do that one criterion is to provide them with outstanding value for money and to do this you need to take the time to explain things properly.
Jeff Smith
What is expensive? Generaly your perception of what is expensive relates to your own personal circumstances. Staff may have the preconception that your prices are expensive and respond accordingly if challenged by customers. One way to resolve this is to carry out regular mystery shopping with other garages to know that whatever price you are charging is competitive. To do this effectively your staff must carry out the excercise. Ask them to list a number of repairs that they consider could be done cheaper elsewhere and then to ring three garages who they consider to be competitors. It is essential that they are clear about the exact nature of the repairs so you carry out a like for like price comparison. For example if you are comparing prices for a replacement cam belt then clarify whether or not a new tensioner is included in the price. Some garages do not include this item and therefore appear cheaper until they start the repair and then need to ring the customer for additional authority.
Once the excercise has been completed arrange a meeting with your team, review the findings and consider if you are substantialy more expensive (or cheaper!) than your competition whether you need to change your service offer. Remember it’s about being competitive not the cheapest and outstanding service is all about professional people delivering high levels of competitive service to their customers.
Carrying out this excercise regularly will ensure that your prices are competitive and your staff have the confidence to communicate that fact when challenged by customers.
Hi David
As much as I agree with your comments, unfortunately, the driver behind labour rates is often driven by costs not competition.
My point is this:
Due to escalating energy prices and the credit crunch the operational costs continue to rise. The outcome on your business is that the consumer calls the shots and this is further compounded by the difficulties in raising finance, the result? Sales margins eroded.
Aftersales are now under more pressure to achieve a reasonable absorption %.
So, in real life the bosses look to bridge the gap, how?
Easy, put the labour rates up!! I have seen labour rate increases of 20% and upwards in the last year.
In this case unless all your competitors, including independents, have the same financial structure you are unable to compete.
I certainly don’t condone this practice but it’s common in large organisations where the share holders expect a sensible return. It’s a shame, certainly not right, but that’s the way it is!!!
You will see large conglomerates’ lead-times diminish and small independents flourish.