My Service Customers Want Discounts!

Larry Edwards

From Larry Edwards' Ramblings

Deal­er­ship ser­vice man­agers are giv­ing dis­counts to ser­vice cus­tomers and their ser­vice mar­ket share is shrink­ing.  Giv­ing dis­counts to deal­er­ship ser­vice cus­tomers is not work­ing!  In the last four years, deal­ers’ share of the after­mar­ket ser­vice busi­ness has declined from over 27% to 21%.  Ser­vice man­agers are attempt­ing to regain lost mar­ket share by low­er­ing prices.  The facts indi­cate low­er prices are not win­ning back lost cus­tomers!

Are you pay­ing your ser­vice writ­ers on dis­counts giv­en to cus­tomers? If I was an advi­sor and my ser­vice man­ag­er paid me to give dis­counts to cus­tomers, I would offer every cus­tomer I wrote up a “dis­count coupon!”

Are you using Com­pet­i­tive Mar­ket­ing Prop­er­ly?  Lost Lead­ers are just what the words say: goods and ser­vices that are priced at or in some cas­es below cost in or order to attract cus­tomers to your busi­ness.

Com­pet­i­tive prices should not be used to sup­ple­ment ser­vice con­sul­tants who have poor sell­ing skills and/or ser­vice man­age­ment oper­at­ing prac­tices that turn cus­tomers off.

Devel­op­ing a com­pet­i­tive ser­vice pric­ing strat­e­gy is a rel­a­tive­ly sim­ple and straight­for­ward process:

  • Step 1.  Deter­mine who your com­peti­tors are. Oth­er fran­chised deal­ers are not your deal­er­ship ser­vice com­peti­tors.  Your com­peti­tors for ser­vice busi­ness are after­mar­ket shops!
  • Step 2.  Shop your com­pe­ti­tion; you want to know more than their prices.  What are their hours of oper­a­tion?  What are their most high­ly adver­tised “Lost Lead­ers”?  What do they claim as Fea­tures, Advan­tages, and Ben­e­fits to cus­tomers who do busi­ness with them?
  • Step 3.  Com­pare your prices to your com­peti­tors.  Before you begin, make sure you are com­par­ing apples to apples.
  • Step 4.  Estab­lish your com­pet­i­tive prices.  We rec­om­mend that you have no more than five (5) com­pet­i­tive priced ser­vice items at any one time. Do not attempt to estab­lish prices low­er than your com­peti­tors.  Remem­ber, you have a lot more to offer and cus­tomers know this too.
  • Step 5.  Train your staff on the tac­tics they need to know in order to up-sell cus­tomers who are attract­ed to your deal­er­ship for the low priced spe­cials.
  • Step 6.  Mon­i­tor, mea­sure, and track per­for­mance.  If you low­er prices on a ser­vice, you must mea­sure how many were sold before the price change, how many more were sold as a result of the revised pric­ing, and how many addi­tion­al dol­lars of rev­enue did the com­pet­i­tive price bring in to your deal­er­ship.

Remem­ber com­pet­i­tive pric­ing must be part of an over­all strat­e­gy.  It can­not and should not be used to cov­er up for poor train­ing, poor sell­ing prac­tices, and you should nev­er pay employ­ees on dis­counts.

Lar­ry Edwards is pres­i­dent of Edwards & Asso­ciates Con­sult­ing and can be reached at [email protected]. Read the here.

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