Part 2: How Do Highly Successful Shops Do It?
We’re all business owners here and we all have stories about struggles and successes. I don’t know about you but I prefer the success stories. Like the time I learned some new piece of information that really transformed my business. Or when I corrected an issue that was sucking money down the drain. Whether you’re money driven or not, any business owner at some point has come to understand the importance of cash in a business. Have it and many things are possible. Don’t have it and life-sucking stress can overcome you.
Last month, I discussed lean methodology and applying it to service businesses. Specifically, how can we best utilize our limited resources of time and money to get the best results? This month I want to dive into what our customers value because if we don’t know what that is or we’re not catering to it, we are wasting resources big time.
Imagine a chef who opens a restaurant where he makes the most amazing hamburgers, it’s his special skill. But the restaurant is only open 2-4 p.m. and does not offer french fries or soda. Ok, so that’s an unlikely example, but here is a real world example from the startup world. Several years ago, a budding business owner in an urban area came up with an idea. He sees the prevalence of electric cars and the challenge of parking. He decides to open up a business specializing in electric scooters. He thinks that people will appreciate the cost savings, easy parking, and that they want to be more environmentally conscious in this particular urban area. Makes sense to me. He opens up a store, stocks up on electric scooters and then… no one buys them. He realizes he’s made a mistake somewhere in his assumption. After researching some lean marketing concepts, he decides to take out an ad on craigslist. In the ad, he lists a Vespa scooter (one of the most popular scooters in the area, gas powered) for a price so low that tons of people call. When they call, he admits that he does not in fact have a Vespa for sale, but can he ask them a question? Understandably, half or more of the people hang out when they realize his ruse. But enough people agree and he asks them, “Would you buy an electric scooter over a Vespa?” Within 24 hours, he has the answer to his lack of sales without spending a single dollar on market research. Consumers in this area that ride scooters mostly do so for the “stylish image.” He hadn’t even considered this possibility. His method of market research is a great example of a lean process. One that cost him no money and very little time to get the information he needed. His electric scooter business, on the other hand, was not lean at all. He was not selling what scooter-riding people in this city wanted. I run across a similar lean market research tactic from time to time and I bet you have, too. Ever click on a “buy” button for some great online deal only to see that there is no stock until after you’ve clicked? Entrepreneurs are testing different value propositions to see what consumers will actually buy, hence the “out of stock” after the buy button. So… how many of us have actually given serious thought to what our customers want? Above and beyond just having the car fixed correctly.
My observation is that there’s assumptions, habits, and a lot of traditions in our industry when it comes to our views on customer needs and wants. How a person came to be a shop owner plays a significant role in these. For those who started as a technician, like myself, we tend to focus on repairing the car correctly. I mean, it was our trade, why wouldn’t we? We put most of our focus there, not thinking how important other factors might be to our customers. Technician founded shops often struggle with being price-focused. After all, we would never pay someone what we charge since we can do it ourselves or be better prepared to deal with a breakdown. Newsflash for all of us: We are not our customers. Another group of shop owners are those who got into an existing business founded by a parent or other older family member. These owners tend to focus heavily on the existing customer base since there are years of tradition and a firmly established place in the community. This is not necessarily a bad thing but customers can and do change their needs over time. Being complacent with a business that has existed for a long time and assuming that what got the business that far will continue to work can be a huge mistake. The portion of auto shop owners I find most curious are those that come from a business background. While they have to learn some of the ins and outs of our industry, they have an advantage when it comes to clearly understanding that business exists to solve a problem. Define that problem clearly, combine it with a financial model, systems and processes, and good people, and success is inevitable.
Many, many surveys have been done over the years on what automotive service consumers want. You already know price is not even in the top three. Trust always tops the list. Customers are afraid of being overcharged or sold service they don’t’ need. I’ve felt for years that reputation was unwarranted. I feel that shops who take advantage of people are very rare. But why then does this fear persist? There are many answers. Does our shop inspire confidence? Is it clean? Have we asked for enough reviews to look credible online? Have we trained our salespeople well? Digital inspections have made a big difference, sending people pictures as additional proof of a needed repair. It is so much more than the repair and it makes sense as the customer can’t really “see” most repairs. Besides a home, the car is the second most expensive asset a person has to maintain. Customers need our help to keep that asset running well so they don’t have to replace it prematurely. This involves education on why preventative maintenance is not “upselling.” We are their trusted advisor and everything we, and how we appear, either reinforces that trust or not.
When it comes to appearances, there are the basics. A clean shop, a well-appointed waiting area, and friendly professional staff are a start. Do your customer facing staff have uniforms? Are their shirts tucked in? People underestimate the importance of these appearances, specifically with design. Apple is my favorite poster child for design. Whether you like them or not, you can’t deny that they are twice as much as the alternative and they still dominate. Why? Customers WANT an experience and they will pay for it. In addition to fixing the car correctly, a true “brand” with a recognizable logo and modern design in the waiting area actually increases trust. Another value that ranks high in the list is washing a customer's car. As mentioned before, most of the time, they can’t see our work, so can you see how that would create a potential trust issue. When the car is cleaned, it’s proof that we did in fact touch their car and hey, having someone else clean your car for “free” or included in the price of the service is just something people value. Why do you think used car dealers put the spit shine on? Appearance sells. What else?
It’s not exactly a secret that transportation is a key value that customers need. It falls squarely under “the best businesses solve problems.” When a car needs service, the customer instantly has another problem: how to get around while the car is serviced. If you’re not taking care of this, you’re at a major disadvantage. Rides, rental cars, loaners, and Uber/Lyft service are a critical part of the modern shop experience. Yeah, modern.
The values of an automotive service customer in 2020 are a paradigm shift over those values 10-20 years ago. 10-20 years ago, some of these values gave a competitive advantage where now, they are just necessary for survival. This modern day consumer expects them. Have you ever surveyed your customers to see what’s important to them? I’d be interested to hear about it in the comments, especially any “regional” differences. In the meantime, I encourage you to take a fresh look at your shop or visit another shop. Is there more value you can offer to your customers? If you’ve done even the most basic calculation of customer loyalty vs. new customer acquisition costs you’ll understand why giving your existing customers everything they need and want pays off. More to come on Lean Methodology next month.