Value Is Important… So Are You Charging Too Much?

By Charlie Polston, Automotive Customer Retention & Profitability Consultant, BG Products, Inc.

Customers in your service department say that value is their top priority. Does that mean you’re charging too much; that you need to lower your prices; or that customers want cheap service? No! No! No! 

The Cox Automotive Service Industry Study, after interviewing 3,500 dealership service customers, found vehicle owners want a good return on the vehicle maintenance and repair dollars they invest, and that is the definition of value. You get what you pay for; cheap isn’t good and good isn’t cheap. 

There is this crazy wrong impression that dealerships charge too much for service work – way more than anyone else does. It just isn’t so! For example, Cox found the average dealership oil change to be $61, while the quick lube average was $60, and tire stores and repair chains averaged a whopping $75 – for an oil change. 

Fact: Quick lubes, tire stores, and auto repair chains do millions more oil changes than dealerships. 

Fact: Their average oil change price is the same or much higher. 

Conclusion: Cheap price is not a huge motivator – but value is. 

Quality, convenience, and trust rounded out the top four customer priorities – in that order. I find that very interesting because a great definition for value is quality (skilled technicians and precisely engineered parts), convenience (reasonable wait times, loaner or rental cars, shuttle, and streamlined drop-off and pick up), and trust (keeping your word, following through, and showing transparency). 

Speaking of convenience, the study revealed the threshold for wait times was 2.4 hours. Customers that spent less than 2.4 hours at the dealership gave a CSI grade of “very satisfied.” There is this crazy notion in the collective fixed ops mindset that says we have to get them out in 30-45 minutes. 

This rush to push customers out the door is a great excuse to squash any service up sales. In their quest for speed, many advisers never discuss needed maintenance with the customer – or if they do, it is discussed in terms of “do it later.” My friends, never put off until tomorrow the labor that you need to sell today! Strike while the iron is hot – ask vehicle owners to buy tech-recommended, needed maintenance – right now. Your shop can get any fluid maintenance service, filter exchange, or fuel service done in an hour, and the Cox study says the consumers will give you the time. 

I realize this is an article about value but indulge me for a few more paragraphs about time and convenience. If you review the multi-point inspection with customers no longer than 25 minutes into their wait time, then odds are you can buy more time. Most people would rather spend an extra hour at your dealership today, than try to figure out a time to come back, fight traffic, and go through the inconvenience later. For heaven’s sake, ask for the additional tech-recommended maintenance and repair business – ask for it today! 

The reality is if you don’t sell it today, you never will. 

Oh, and by the way, the dealership will make more money doing repairs and maintenance services than oil changes – and so will managers, techs, and advisers. 

Remember, you do oil changes to retain customers so you can sell maintenance services to make money. 

By the way, that’s value. Your dealership becomes their one-stop service shop for all their automotive transportation needs. 

Your labor rate is probably somewhere around $125 per hour – wow, that’s a lot of money; or is it? Bob Greenwood says shops are, in reality, knowledge-based businesses. Your shop manages productivity through billed hours, which come as a result of selling your knowledge. Greenwood, president and CEO of Automotive Aftermarket E-Learning Centre, LTD., goes on to say that the automotive industry is all about competency – and competency is reflected in the labor rate. That’s value! 

Doctors, lawyers, nutritionists, CPAs, college professors, and automotive technicians are all paid in the same manner – according to their knowledge and competency! 

Earlier this summer, I bought a 14-year-old four-wheel-drive SUV so my wife and I could access two of our favorite fishing holes. It was in great shape, but it had a flutter, a stumble at about 40 mph. It annoyed me beyond measure. The shop diagnosed it as a transmission issue; yet $400 later the problem persisted. Then I went to one of the most expensive places in town. Ninety seconds into the test drive the technician diagnosed a misfire. Problem solved. 

Additionally, they found my alternator was on its deathbed. I can’t tell you how much safer I feel taking my sweet wife of 34 years into these remote locations to catch bass. (She usually catches more than me.) I paid more for the right diagnosis and cure – and it was worth it. That’s value. 

Let me make one final point. Value is not automatically perceived by vehicle owners; it has to be sold. It may well be your most important sale.

Make sure your advisers keep “telling your story” and that they explain the credentials and certifications your techs have earned. That’s how you build value. Examples of this might include: 

•  “Our techs have a combined 10,500 hours of training.”
•  “Collectively our guys have over 295 years of experience working on Fords.” 
•  “We’ve invested over $150,000 in diagnostic tools, equipment, technology and software to assist our techs in quickly getting to the cause and cure.” 
•  “Our maintenance technicians are fully certified to perform all necessary fluid exchange services.” 

Customers demand value, and your service department provides it! Happy value sales to you! 

(My special thanks to Jim Phillips of Cox Automotive for permitting me permission to quote from the Service Industry Study.)*

y Charlie Polston, Automotive Customer Retention & Profitability Consultant, BG Products, Inc.

Customers in your service department say that value is their top priority. Does that mean you’re charging too much; that you need to lower your prices; or that customers want cheap service? No! No! No! 

The Cox Automotive Service Industry Study, after interviewing 3,500 dealership service customers, found vehicle owners want a good return on the vehicle maintenance and repair dollars they invest, and that is the definition of value. You get what you pay for; cheap isn’t good and good isn’t cheap. 

There is this crazy wrong impression that dealerships charge too much for service work – way more than anyone else does. It just isn’t so! For example, Cox found the average dealership oil change to be $61, while the quick lube average was $60, and tire stores and repair chains averaged a whopping $75 – for an oil change. 

Fact: Quick lubes, tire stores, and auto repair chains do millions more oil changes than dealerships. 

Fact: Their average oil change price is the same or much higher. 

Conclusion: Cheap price is not a huge motivator – but value is. 

Quality, convenience, and trust rounded out the top four customer priorities – in that order. I find that very interesting because a great definition for value is quality (skilled technicians and precisely engineered parts), convenience (reasonable wait times, loaner or rental cars, shuttle, and streamlined drop-off and pick up), and trust (keeping your word, following through, and showing transparency). 

Speaking of convenience, the study revealed the threshold for wait times was 2.4 hours. Customers that spent less than 2.4 hours at the dealership gave a CSI grade of “very satisfied.” There is this crazy notion in the collective fixed ops mindset that says we have to get them out in 30-45 minutes. 

This rush to push customers out the door is a great excuse to squash any service up sales. In their quest for speed, many advisers never discuss needed maintenance with the customer – or if they do, it is discussed in terms of “do it later.” My friends, never put off until tomorrow the labor that you need to sell today! Strike while the iron is hot – ask vehicle owners to buy tech-recommended, needed maintenance – right now. Your shop can get any fluid maintenance service, filter exchange, or fuel service done in an hour, and the Cox study says the consumers will give you the time. 

I realize this is an article about value but indulge me for a few more paragraphs about time and convenience. If you review the multi-point inspection with customers no longer than 25 minutes into their wait time, then odds are you can buy more time. Most people would rather spend an extra hour at your dealership today, than try to figure out a time to come back, fight traffic, and go through the inconvenience later. For heaven’s sake, ask for the additional tech-recommended maintenance and repair business – ask for it today! 

The reality is if you don’t sell it today, you never will. 

Oh, and by the way, the dealership will make more money doing repairs and maintenance services than oil changes – and so will managers, techs, and advisers. 

Remember, you do oil changes to retain customers so you can sell maintenance services to make money. 

By the way, that’s value. Your dealership becomes their one-stop service shop for all their automotive transportation needs. 

Your labor rate is probably somewhere around $125 per hour – wow, that’s a lot of money; or is it? Bob Greenwood says shops are, in reality, knowledge-based businesses. Your shop manages productivity through billed hours, which come as a result of selling your knowledge. Greenwood, president and CEO of Automotive Aftermarket E-Learning Centre, LTD., goes on to say that the automotive industry is all about competency – and competency is reflected in the labor rate. That’s value! 

Doctors, lawyers, nutritionists, CPAs, college professors, and automotive technicians are all paid in the same manner – according to their knowledge and competency! 

Earlier this summer, I bought a 14-year-old four-wheel-drive SUV so my wife and I could access two of our favorite fishing holes. It was in great shape, but it had a flutter, a stumble at about 40 mph. It annoyed me beyond measure. The shop diagnosed it as a transmission issue; yet $400 later the problem persisted. Then I went to one of the most expensive places in town. Ninety seconds into the test drive the technician diagnosed a misfire. Problem solved. 

Additionally, they found my alternator was on its deathbed. I can’t tell you how much safer I feel taking my sweet wife of 34 years into these remote locations to catch bass. (She usually catches more than me.) I paid more for the right diagnosis and cure – and it was worth it. That’s value. 

Let me make one final point. Value is not automatically perceived by vehicle owners; it has to be sold. It may well be your most important sale.

Make sure your advisers keep “telling your story” and that they explain the credentials and certifications your techs have earned. That’s how you build value. Examples of this might include: 

•  “Our techs have a combined 10,500 hours of training.”
•  “Collectively our guys have over 295 years of experience working on Fords.” 
•  “We’ve invested over $150,000 in diagnostic tools, equipment, technology and software to assist our techs in quickly getting to the cause and cure.” 
•  “Our maintenance technicians are fully certified to perform all necessary fluid exchange services.” 

Customers demand value, and your service department provides it! Happy value sales to you! 

(My special thanks to Jim Phillips of Cox Automotive for permitting me permission to quote from the Service Industry Study.)