When calculating whether to increase your labour costs, it’s worth turning to the ‘value equation’ to help you find some answers. Andy Savva explains why.
Recognising the importance of the customer’s perception of value was something that was critical to the way I was running Brunswick Garage. The difference between the perception of high value and the perception of very little value can be the difference between success and failure!
Andy Savva is a former multiple independent garage owner who boasts over 30 years’ experience in the automotive repair sector. In every issue of PMM he’ll be sharing his advice with workshop owners who want to improve their business’ bottom line, but simply don’t know how to go about it.
I believe it was crucial for our customers to understand the value equation of our service in order to gain their loyalty, remembering that our labour rates and general pricing was (on average) 40% higher than any another local independent, but at the same time 40% lower than local dealers who we saw as our true competitors.
How does the value equation build customer loyalty?
It does so by reminding us to remain constantly aware of what the customer perceives as good or beneficial to them. Whenever we were thinking of increasing the cost of a service to reflect our rising costs we also had to be mindful that without an equal or greater increase in the quality of our service, the customer will feel as if they’ve actually lost something.
We worked hard at Brunswick Garage to always exceed our service – from the first
contact right through to handing the keys back at the end of the service trail. Increase the perception of your performance/service and you will give the perception of higher value.
In our service delivery process (the customer experience), we focused on answering calls promptly and in a soft, well- mannered tone, we always rang back as promised, our invoices were always less than originally quoted and vehicles were ready before any deadlines that we agreed.
Our consistent aim was to under-promise and over-deliver in order to increase our perception of value. In other words, if you give your customers above and beyond what they usually expect from a garage it will be easier to increase your labour charge and, more importantly, to justify it!
Every purchasing decision is balanced on the head of a pin and to purchase a service or repair from a garage is no different. On one side you have the severity of the problem, while on the other you have the cost of the repair/solution. If the perception of the problem is not so great as to demand a solution, the cost of the repair will determine whether or not a purchase is made.
Let’s face it, most customers hate paying for something that has little tangible reward for them, while others dislike the ‘hassle’ associated with having their car serviced or repaired. Learning to view the customer experience as if YOU were having your own vehicle worked on will help you create a better service delivery and rubber stamp that perception of value.