I was standing across the counter from a client explaining why we don’t give discounts after the fact and why we could not give him an additional 10% off on his repair bill. Each time that this happens a few things run through my mind.
I see the large stack of bills that never disappear from my desk no matter how many times I pay them. I see the Insurance Companies, various Government Agencies and my employees, with their hands out for MORE. Most of all I picture myself telling my wife that we don’t have enough money to buy groceries, pay the mortgage or send our children to college, let alone take a decent vacation for the first time in 10 years. And, I picture myself delivering parts at the age of 70 because I couldn’t set aside enough money to retire.
No matter how long I have been in this business or how many times somebody asks me for a discount, it is always personal for me. I believe it is because I know how hard it is and how hard it is to make a living servicing and repairing other people’s cars.
I don’t believe that one discount will kill my business or starve my children, however, if I discount this bill what about the other 65 customers that will have their vehicles serviced this week? If I supplement this repair then my other customers will have to pay more to make up for it or I will have to take it out of my own pocket. How can that not be a little personal?
As my heart started to pound faster and my mind began to race, I found myself thinking of the various places that the money might come from and I realized that this customer had put me in a tight spot. I really want to keep every customer happy and coming back but more importantly, I want to pay my bills and have my business be a success. I want my family to have all the things they deserve and I would like to retire while I still have the health to enjoy it.
I believe it is a simple case of math. If we have calculated our overhead correctly and put in place pricing that reflects our true costs of business then the 10% that this customer is requesting has to come from somewhere. (Watch a free sample of a class on determining the numbers that you need to succeed in your business)
As much as I like this customer and appreciate his trust, I am not going to take money from my own pocket and give it to him. My personal expenses are budgeted almost as tightly as our business expenses. I sure as heck could not go home and explain to my wife that her monthly budget would be decreased because I needed to discount a customer’s bill. I also could not tell my children that we can’t afford new clothes for the upcoming school year or that they will not get their allowance because I helped pay for a customer’s repairs.
The last time I asked my wife to see if the grocery store would give us a 10% discount on all of our purchases, (after all we do spend over $1,000 a month), she looked at me like I was completely crazy.
I have tried asking the Landlord and the local Utility Companies to discount our bills but they are always so uncooperative.
I have tried getting the various Insurance Companies to lower our rates because of our stellar record of no claims or injuries in the past 8 years, but instead they continue raising our rates to pay for other businesses with less stellar records than ours.
I wish that I could get a discount from the numerous, local, state and federal taxes I have to pay but no matter how well I run the business or how much we pay, it just seems like they get higher each year. The 10% wasn’t going to come from there.
My parts suppliers get rather upset if I don’t pay my parts bills in full and on time. When they don’t get paid it seriously affect my ability to service or repair any car and my ability to give my customers what they expect. It even affects my relationship with other parts suppliers. (When you don’t pay your bills the word gets around faster than a bad case of poison ivy and the side effects can last much longer.)
I guess I could try asking the technicians to take a 10% pay decrease but they can be so negative when it comes to money. In May I told them that insurance rates had risen almost 30% and they couldn’t get a raise, it cut productivity in half for a month and they are still complaining. I can’t imagine what they would do if I asked them to take a pay decrease so that I could discount a customer’s bill.
I asked the other customers that were picking up their cars, if they would like to pay a little extra so that this customer could have his discount. None of them felt inclined to supplement these repairs, in fact they were rather amazed that I might suggest it.
I explained that the cost of his repair had been carefully calculated to take into account all of our expenses (including my pay), rent, lights, water, the well-trained and knowledgeable Master Technician that worked on his car, the cost of quality parts that we could warranty for 2 years & 24,000 miles, as well as a small profit that would enable us to stay ahead of rapidly changing technology, modernize equipment to be as efficient as possible, and insure that we would be here in future to continue to give him the quality repairs and customer service that he had become accustomed to. Try as I might I just didn’t know where the 10% would come from.
I asked him if he would prefer that we use cheaper parts, less qualified technicians, kept his car for days on end waiting for parts from suppliers that would give us cheaper prices but horrible service, hire somebody for the front counter that couldn’t answer his questions, give him little or no warranty, or short cut the repairs and maintenance on his vehicle insuring its unreliability and early demise. He told me that he didn’t want any of these things to happen.
After wracking our brains neither of us could come up with a fair alternative to him paying his bill in full.
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This may sound like a far-fetched conversation but I assure you it is one that happens in Automotive Service Shops all across the country every day. The only difference is that we usually find someplace to shift the costs, which often seriously affects our companies continued health, our families’ financial security, and/or our employee’s happiness. Or, we take it from our other customers in ways that they do not see or understand. In many cases this means cutting corners in performing repairs, using inferior parts or untrained personnel, or just not performing the services that are necessary to keep customers vehicles in their best running order, which seriously decreases the life of their vehicles and greatly increases their out of pocket expenses. (a topic for future musings)
As a 30-year veteran of the Automotive Service and Repair Industry I have often been involved in discussions that are centered on the myriad of problems within our industry:
- Untrained, unmanageable and temperamental technicians that demand way too much pay for what they are willing to give us, if we can find them.
- Seriously under-trained sales people who are order takers at best.
- The difficulty of quickly obtaining quality parts that carry a good warranty from someone who will also give us exceptional customer service.
- The perception that Automotive Service Shops are “ripping off consumers” if they suggest the services that they know will help the consumer get the best use of their 2nd largest investment or charge enough to survive that is perpetuated in the media.
- The seeming need to spend so much of our time with price shoppers that ultimately find somebody who is cheaper than us (at least on the surface) leaving little time for the customers that really support us.
- Business owners that have little or no idea what their true costs are which causes them to discount repairs and price themselves way too cheap, insuring their ultimate failure and making it harder for those that truly understand what it costs to succeed in this business.
- Customers that expect us to do exceptional work, predict the future failure of their vehicles, all while they try to keep us from maintaining their vehicles in a way that will ensure their continued reliability, and that ask for and expect rock bottom prices because we have trained them incorrectly.
- Insurance companies as well as state, local and federal taxes that are choking our businesses and making it almost impossible to give our employees and customers what they want or need.
- And, a serious lack of quality training which we expect to be provided for us at little or no cost, that we either do not attend and support or fail to implement because, “I can’t afford to train people, once I do they will just go somewhere else! or I am too busy trying to make a living to get the training I need to help me survive, I just have to get this car finished”
I am old enough and experienced enough that I realize working on a customer’s car and discounting their repairs at the expense of my business and my family is crazy, and yet I have found myself at the counter more than once considering it. I have seen many owners and service advisors sacrifice 10% without realizing how it affects everyone depending on the business. And, I have had more than one owner that was going broke tell me that he/she could not raise their rates because their customers would not pay.
As I reflect on this experience I remember something that I was taught by my parents and various Sunday School Teachers when I was very young. “Decide who you are going to be and how you are going to be before you get in stressful situations.” I am sure that they didn’t have any idea that it might apply to my current business situation, but I have found this advice to be useful in every aspect of my life.
In our business we have decided that we need to be honest, give the customer a quality repair, unbelievable customer service, a great warranty, and make enough money to insure a good quality of life for the owner and our employees while guaranteeing our continued success. We ask for and get what we need because our customers see value in the things that we offer them and we always give more than we cost.
We are successful because we have decided to act like professionals. We base our prices on our true costs and not what the guy down the street is charging. This keeps us from making the costly mistake of assuming that the guy down the street has any idea what he is doing, what his true costs are, or that he isn’t going broke if he isn’t broke already.
We include in our calculations a fair wage for ourselves and for our employee’s, (an hourly rate that accounts for all our expenses and a fair profit that will allow us to continue to service our customers for many years to come).We have decided that the person who should pay for this is the person who bought the car, drove the car and broke the car.
We give the customer what they deserve; a quality repair performed by a qualified licensed technician using a quality part with a great warranty, thus insuring the longest life of their second largest investment, at a fair price (fair to us and fair to them). Our customers find great value in this and are willing to pay for that value.
Whenever you find yourself wanting to discount a customer’s bill, take a long look at the large stack of forever proliferating bills that seem to grow from your desk. Think about telling your wife that she can’t go to the grocery store or buy your children the things that they need. Picture yourself at 70 delivering parts or standing in a store saying “Welcome to Walmart” because you don’t have enough money to eat, let alone retire. If this doesn’t work for you, consider the fact that you may be giving away your new truck payment or the money that you need to buy that new trick tool. It makes it really easy to tell your customer that he needs to pay his fair share. It makes it easy to do our job in a professional manner while handling the customer that asks for a discount.
Have you decided what kind of business you are going to be and who is going to pay? Will it be: you, your Technicians and their families, your other customers, orr the person who bought the car, drives the car and sometimes even breaks the car? After all you are in control of your life and your business, or you should be. You Decide!