Do Your Customers Know the Difference Between Price and Value?
On a typical work day, about four years ago, my service advisor informed me that Ron Castro (not his real name) declined a brake job on his pickup truck. Ron was a customer for nearly 25 years; we had a long-standing relationship and he had never declined work before. I asked my service advisor to give me the details. He said, “Ron came in with his ’03 Chevy pickup for a New York state inspection and needed front and rear brakes. When I gave him the price, he said that was too much money and not to touch the truck.” This was not the Ron I knew, so I decided to give him a call.
It wasn’t until later in the day that I finally had the chance to call him. I got right to the point: “Ron, I hear you declined the brake work on your truck?” Ron replied, “Yes, Joe, I can’t pay your prices anymore. I will have to take my cars somewhere else from now on.” Not being prepared for what he said, I thanked him for his loyalty through the years and told him that if ever needed anything, to please call me.
I wasn’t really sure why Ron declined the work. Was it really price? Did we just assume he was going to buy without presenting the benefits of what we were selling? Did we become too complacent with our long-time customers? Were things going on in his life that made him react like that? Whatever the reason, Ron did not see the value in the work we were trying to sell him. He only saw price.
There will always be that balance between being profitable and competitive. But the bigger picture is how your customers perceive your prices. If customers don’t see value, the perception is that your prices may be out of line. When customers see value, they buy. It’s one of the reasons behind the success of the iPhone and Starbucks coffee, which are priced higher than other products in their market. If we lead with price when selling a job, we are telling the customer to please judge us on price. If we lead with value, we help remove price in the mind of the consumer.
We took a long hard look at what happened. If we lost Ron, were we losing other customers? We looked at the sales process to ensure we were communicating value, and not leading with price. We began to track all declines and other customer issues. We re-established what made us successful in the past: our customer service, our warranty, the extra mile we go for our customers and all the other benefits of doing business with us. When we looked at the reasons why we had so many long-time customers, it was more about relationships and our culture. It was not price.
A few years had passed when I got a surprise voicemail. It was Ron Castro. He had a problem with his pickup and wanted to speak to me. I wasted no time and called him. Ron told me that he thought he needed a water pump on his truck and asked for a price. He also mentioned a rattle from the front of the truck. I replied by saying, “Ron, you’ve known me a long time. I want to give you the best we have to offer. Let me check out the truck, then I will be happy to give you a price.”
After checking out Ron’s truck we found that it was not the water pump, but the A/C compressor. We also found out the truck needed lower ball joints; the reason for the rattle in the frontend. I called Ron to let him know what we found. I made sure I explained the work in detail, the benefits of what I was recommending, the value of our multi-point inspection process and the warranty. He was a bit surprised that it was not the water pump and happy to hear we found the reason for the rattle. He authorized everything.
When Ron came to pick up his truck, I made sure I was there to review all the work and benefits again. After paying his bill, he pulled me aside and said, “Joe, since leaving you, I went to the shops that were cheaper in price. But, you do things that these other shops don’t do. You always go the extra mile, your mechanics are thorough, and you give me peace of mind.” I knew at that point Ron realized the difference between value and price. I replied by simply saying, “Ron, welcome back.”
Joe Marconi has more than three decades of experience in the automotive repair industry. He is the owner of Osceola Garage in Baldwin Place, N.Y., a business development coach for Elite Worldwide and co-founder of autoshopowner.com. Reach him at email@example.com.