I recently had a discussion with a good friend and engine builder customer over the price of some pistons and rings for a 383 Chevy project. For some reason he believed the pistons should have cost about half the true price. He had made the mistake of quoting a job for HIS customer that had a very tight budget to start with, without getting any info on costs. To make things worse, he got on the computer and shopped the price down even worse in his mind and possibly his customer’s. He worried that his customer is going to think of him as a “jerk” (edited for print) if he tries to sell parts for more than they can be found on the internet, plus he has to charge tax. Does this scenario sound familiar?
First off, I think we’re worrying about nothing. His customer can probably find anything he wanted cheaper, given enough shopping. Even his labor rate would come into play here. Funny, I had asked him just a few years ago if “walk-in parts” were a problem for him since he’s primarily a performance shop. At the time he didn’t have internet access, didn’t think it was a problem. Now he complains more and more, and sometimes it seems directly related to him having access to the web.
Yes, it IS tougher to sell your services and parts than ever before but my point is that we often sell the wrong thing.
Selling price will never help him. I know he does not mark up his parts that much, so he’s not going to gouge his customer in any way. And this customer didn’t come to him because he’s the cheapest performance shop around – he’s actually an excellent shop, with an outstanding reputation and a tremendous amount of knowledge and experience. These are the things he should be selling. Based on this, his prices, especially his labor prices, are probably way too low. Instead of selling price he – and maybe you – should be selling value.
Value? Where do I order that? Does it come in bulk? Can I get a discount if I buy enough? I think this is why selling value can be difficult – it’s not tangible. You can’t hold it, share it on Facebook, you certainly can’t fake it, yet it’s an important part of everything we do. It can also be difficult to relate to if you just focus on say, the pistons in our first example. After all, they were the same parts from the same manufacturer, wherever they were purchased. That could apply to the same labor being hired.
He’s not a speed shop just trying to sell a set of pistons in a retail environment. He’s selling “a means to an end” that will be just what the customer needs; the pistons are just a portion of the sale. If I remember correctly, he hadn’t received any flak about his price, he was just certain it would happen.
The parts price is obvious, but everyone also has a competitor with a cheaper labor rate. Are you ready to start negotiating your labor? I certainly hope not. But if and when it did happen, I’d like to think the conversation would go something like this:
“Joe, you didn’t come to me to help you fix your problem because I’m the cheapest, or even because I’m competitive. You came here because I’m going to fix your problem. You know or have heard that I’m fair and knowledgeable and when it’s all said and done, and you’re enjoying driving your car again the price will not be that important. Sure, you can try to beat me down, buy your own parts, do whatever work you want yourself.
“But running my business is like keeping up with a clock whose hands never stop. Everything I do here is related to that. I have to make money to keep my doors open. You need that right now and I need that always. That clock needs X-amount of dollars per hour to just break even. If you don’t want to pay the clock one way, it will get paid another. If I don’t make a few bucks on parts, I’ll just have to charge more on labor, or more likely, I’ll have to put more attention into other jobs that are working harder to pay the clock, my bills.
Much like your own job, Joe, if you work for a commercial enterprise your business is making money off the work you do. If you stop working, at a bare minimum, you’re gone.
No Joe, you came here because when we’re done you’re going to be part of a family. Happy, satisfied return customers who I see at the car shows, who bring their daughter’s, cousin’s or neighbor’s work to me because, like I’ve said, when its all said and done, the final price is not as important as the security in knowing the job was done right. If I couldn’t promise you that, then I’d have to lower my prices, just like some of my competitors have. If that’s all they have to offer, do you really want to go there?”
What you should remember is that you have something unique. Your business, your experience and all you bring to the job is distinctively yours. So of course you want to highlight or leverage your strengths.
Your confidence is extremely important here. If it’s missing, or if you vacillate when price comes up, you’ll lose. Your sales pitch for yourself and your business is something you should know and have no problem preaching.
Now is not the time to be shy about your successes. Some people say, “Been there, done that, got the T-shirt.” I say it can’t hurt to frame that T-shirt and hang it on the wall.
You also want to make sure that the logo on your t-shirt is relevant. Just as you don’t want to bring up your problems or failures, try to make sure the majority of your testimonial relates somehow to your potential customer’s job. The more it relates, the easier it is for them to see themselves as part of your next success story.
I think I sometimes find more value in my customers than they do. I recognize their expertise in various fields and sometimes exploit that to help others. The value you represent is tremendous. Never forget it, always promote it. Never let someone else tell you what you’re worth.
Selling value is all about selling you. Yes, this is the time to roll it all out. Your years in business represent security. Your vast resources and a belief in using quality products is important as well. Everyone knows quality costs a little more, and the implication is that it is worth it. And if you have services available that others don’t, you should highlight these. In-house usually means lower cost as well. Follow up services are extremely important. Let them know you’ll be around to help them after they pick up the job. Though your time is valuable, you are available to your customers to help with questions that might arise latter.
Selling value, like selling anything else, is easier if you’ve done a little listening as well. First, to relate your story to your customers’ needs, you need to understand what those needs are. If you listen they’ll tell you which is most important, price or security in a good job. Some experts say that about one third of your customers will be solely hung up on price. So the good news is that two thirds will not! They are sophisticated enough to understand value over price.
Sometimes it pays to qualify your customers as well. I’ve seen a number of shops that have jobs stacked up because their customers can’t afford to pick them up. Your out-of-pocket can soar when jobs are not picked up. Funny how these customers are usually the ones who are in the biggest hurry and extremely cost conscious.
It’s not hard for your customer to understand that value is long term, while price is not. The bitter taste of a bad value far exceeds the momentary reward of a good price. The customer who can’t understand that might not be the one you want. But you can’t walk away from them all so don’t let your customers tell you what you’re worth. Always put forward your best sales tools: you, your history and your success stories. If you have customer testimonials you can use, all the better. If they are letters, hang them on the wall near your cash register or service counter. Anywhere they’ll be seen. Include all licenses and certificates you’ve earned as well.
Choose your customers wisely. Then, be assertive and confident. You have much to bring to their job and they need to know how and why. Bring on the value and watch the price concerns fade away. And, in Profitable Performance tradition, always include the price of your parts and their profitability in that sales pitch. After all, the correct parts are a portion of the value you’re selling.