Is Your Shop Too Expensive?
Eric M. Twiggs
“Always care about value—not about price.”
― Debasish Mridha
― Debasish Mridha
Imagine dining out at Ruth Chris Steakhouse. Your waiter comes out and takes the order for your family of four without writing anything down. It takes forty-five minutes for the food to arrive, and when it does, the order is completely messed up. You asked for the steak, but get the chicken wings.
You asked for mashed potatoes, but they bring you French fries. It’s been so long since you’ve seen your waiter, you feel the need to take his picture with your I Phone, so you can remember what he looks like!
At the end, you get your bill and you see that the total came to $150.00 with the tip already included! Now you’re mad and ask to speak with the manager. You tell the manager “I could have gone to Outback and spent much less!” But, why are you really upset?
Are you upset about the price, or are you upset about the experience? The experience would be the right answer! You would be upset because you didn’t feel the value for the price you paid.
Ruth Chris is a high-end restaurant with a great reputation, but based on this imaginary scenario, Ruth Chris was too expensive. Based on the level of service you provide, are you too expensive? Here are some additional scenarios to help you decide:
If your phone rings so many times that your customer volunteers to answer it, you may be too expensive. If your writer tells your customer that he can’t give her a price over the phone because “the guy from ATI told me not to,” you may be too expensive. (This actually happened!)
If your customer comes in faithfully every 5,000 miles to have his tires rotated, and is greeted by a different “brand new service manager” on each visit, you may be too expensive.
According to a 2011 American Express survey, 70% of the respondents reported that they would be willing to spend more money with companies that provide excellent customer service.
Here’s the big takeaway: If you’re losing customers, the first place to look is at the quality of your service, NOT the quantity of your pricing. Keep reading and you will learn two strategies to help you evaluate the quality of your service:
Close The Back Door
In his book The Sticky Church, Pastor Larry Osborne introduces the metaphor of the door. He points out that some churches are so focused on acquiring new members through the front door, that they ignore the fact that their existing members are leaving through the back door. He refers to this failure to focus on the existing flock as leaving the back door open.
Are you losing a flock of customers through the back door? Measuring and monitoring your customer retention on a regular basis is the key to closing the door. For example, the average shop has a one-time visit frequency of 47%.
This means that 47% of their customers made only one visit during the past twelve months. If your one time visit frequency is much higher, then you must ask yourself the following questions: Why aren’t my customers coming back more often? Did they die? Did they relocate? Or are they upset with some aspect of my service?
Reviewing your visit frequency report and contacting your one-time visitors to find out what’s keeping them away is a critical step to closing your back door. I have had several of my members contact their one-time visitors to find out what was keeping them way.
Without fail, Issues like not fixing the problem right the first time, the time it took to complete the work, and not liking the previous service manager, are mentioned more than price. Even when price comes up, it’s usually followed by some aspect of the service the customer was unhappy with. In other words, the service wasn’t worth the price.
Feel free to email me, if you would like additional information on how to access your visit frequency report, so you can close the back door.
Ask For Complaints
‘But Eric, it’s not my service because my reviews are great and I don’t get any complaints.” This is what a shop owner said recently, after experiencing a sudden drop in business that he was blaming his pricing for. If this sounds like you, please keep the following in mind:
According to a recent retail industry study, 96% of unhappy customer don’t complain. 91% of those unhappy customers will never come back. When it comes to customer feedback, don’t mistake silence for satisfaction. Asking for complaints will help you to avoid making this mistake.
When I say ask for complaints, I’m suggesting that you give the customer the opportunity to tell you what they are unhappy about before they leave your shop.
There are two ways to accomplish this. The first and most basic method is for the service advisor to ask every customer and the end of the transaction, “Have we exceeded your expectations today?”
The second method is to say the following when asking for the internet review: “We are committed to delivering a 5-star experience. If today’s service wasn’t a 5 out of 5 for you, please let me know what we can do better.”
If your customer does mention pricing as the problem, you can review exactly what you did during the service, how it will benefit her, and the details of your warranty.
The retail study I mentioned earlier also mentions that an unhappy customer may tell 15 people about their experience. Asking for complaints will keep you from developing a reputation for delivering a level of service that’s not worth the money.
So, there you have it. Closing the back door and asking for complaints, will keep you from being perceived as too expensive. Improving the quality of your service, will make dinner at Ruth Chris more affordable for you!
Eric M. Twiggs
The Accountability Coach