With Christmas just around the corner, money is tight. With the additional burden on their budgets, drivers will be looking for value for money and lower cost offers. So how do you keep your customers happy at this time of year, whilst still being a winning business? Neil Pattemore discusses.
When you take a closer look, is the lowest cost necessarily what everyone wants? A good comparison is the business model of the low- cost airlines. Upsetting customers with poor communication, extra charges that they didn’t expect, or perhaps even charging for something that should be free, is absolutely certain to drive customers away – yet these low-cost airlines are not just surviving, but are positively thriving. Is this a business model that can be used when reacting to your customers’ expectations of paying lower prices in times of economic uncertainty?
Firstly, I considered what the low-cost airline customer was expecting and needed. In short, it was the lowest cost travel where flying was the only real option. If this meant that the check-in could only be online, that there were penalties for not using the internet, or for trying to pay with a certain type of card, or for the type of baggage you could take, then these were the conditions that came with the lowest price and were accepted as such.
However, there is a big difference between price and cost. The advertised price is frequently not the price that the customer ends up paying, and should the customer not fully comply with all the detailed booking, travel and baggage conditions, the cost penalties can be severe. Therefore, for an independent workshop, it could be so simple – just reduce your hourly rate and sell all your workshop hours whilst minimising your costs! Certainly an ultra-low labour rate would attract attention, but low-cost airlines flex their prices to reflect demand, and you would need to vary your hourly rate to reflect booking levels. Once rates started to rise, competitors become more attractive.
Additionally, there is a much greater choice of garages than airlines. However, a couple of reality check questions: is low cost what your customers need? More importantly, is it what your customers want?
Certainly cost is an issue, but so are service quality, location and convenience, which are all important factors. Ultimately, it is also about choice. If you charge a lower hourly rate and also reduce your costs at the same time, there will be an advantage. However, customer expectations must also be reduced to directly reflect this new business model to ensure that they understand that they will only get the minimum.
So before any workshop embarks on this new business venture to revolutionise the automotive industry, it might be a good idea to ask your customers – do they still expect a good service, rather than just the lowest price? Low cost hourly rates may seem attractive, but may not be a model for long- term success. It is still about value for money and customer service.
Research shows that what customers value most is good, clear communication, followed by value exceeding the price they paid, being greeted and served promptly, and being made to feel important and valued.
‘Value added’ schemes can help by being spend related, which can be as simple as a menu pricing system where an increasing price also includes disproportionate increases in what is included. These are not loyalty schemes, they are just added value offers. Remember, it is the customer who you need to keep loyal, so focus on providing incentives and benefits directly to them as individuals, even if they are not necessarily directly related to the vehicle. This is where the importance of the communication shows.
It starts from the moment that the customer contacts you, when you should quickly and politely greet them, say how good it is to see them again and ask how you can help. Then listen clearly to their reply, summarising back to them what they have told you, in order to avoid ambiguity.
When providing what they have asked for, keep in contact to let them know what progress is being made and when to expect the job to be finished. On completion and payment of the job, ask how they felt the service, and consider how an unexpected gift would be a pleasant surprise and act as an incentive for their next visit. This could be as simple as ‘we have valeted your car’, or ‘as this was your third year of coming to us, the MOT due next month will be half price’. These are valued surprises that cost far less to provide. Everyone likes to feel valued and appreciated. In summary, you can create customer loyalty by generating a great customer relationship and then working hard to maintain it. So, keep in regular contact with your customers.