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.