Make Money: How We Can
I am sure we have all had a bit of trouble booking appointments and staying as busy as possible this year. With all the depressing stories about the economy, the housing and mortgage crisis, and the astronomical gas prices, many people and businesses are struggling. Let’s face it, car washing and detailing is more a luxury than a necessity for most consumers. Some customers may have tried doing these services themselves, some have cut back on their car care spending, and others have just stayed away entirely. Can we still make money — good money — in this economy?
in this Economy, Part 1
By Kevin Farrell
PERFECTION EVERY TIME?
We all have egos, and we all want to make every car look its very best. Some of us are compulsive about perfection and strive to give every car a “show car” look on every job. But we must realize that every customer is not asking for that kind of perfection. We get bogged down in “the relentless pursuit of perfection” (to steal a line from the Lexus Corporation), but we forget that the customer may not want, need, or be willing to pay for that level of service.
I constantly tell students that they will need their “A” game every once in a while for very demanding and discerning customers. They will ask for, and demand perfection. These jobs are where all your skill, knowledge, and equipment will be needed to accomplish the feat.
However, the vast majority of people are unwilling to pay for that type of perfection or, sadly, won’t be able to notice perfection. So we kill ourselves on some cars and take way too much time to produce a vehicle that a customer will never truly appreciate. Sometimes the perfection that you want, and the price that you charge is not what the customer really wanted. They may have paid top dollar in the past, but they may not be willing to pay that kind of money now.
On the flip side, how many times have we overworked on a car and not gotten paid for what we put into it? Admit it, this happens to all of us sometimes. It didn’t hurt so much when the phone was ringing off the hook and everybody was willing to pay a higher price for a near perfect detail. Maybe you took a little more time on some vehicles, but in the long run, you still made money. But now, the phone isn’t ringing as often and people may not be willing to pay a huge price for detailing services.
Perfection is what a customer should get when they are willing to pay for it. We should never just give it to them. This is especially true now because costs keep going up.
The cost of running a business never goes down. But it seems what we provide is the same regardless of the price being charged, and sometimes detailers never increase the price. Not
raising prices in this economy is fine, but we must take a closer look at what we are providing for the price being charged.
In a tough economy, people are looking for bargains. They may ask you to “discount” the price if they feel the detail is too expensive. This is where the entire industry gets itself in trouble. We can’t just discount prices because people ask for a discount. We all know this is a labor-based business. If you were selling a product, maybe discounts could be an option, but you never want to discount labor. If you discount labor, you are still required to do the job to perfection and take the same amount of time doing it, but accept less money. Nobody likes to do that. This cheapens the service and, believe it or not, makes you look less professional. Remember, costs have not gone down and if people are asking you to take less money to do the same amount of work, you don’t have to be Donald Trump or Jim Cramer to figure out who will lose on these deals. It’s a bad business decision in most cases.
So what can we do? How can we still satisfy and keep customers, cultivate more customers, and still make money in a bad economy?
ADAPT AND CHANGE
We need to change our philosophy a little bit. People who were willing to pay $250 or more for a detail, may no longer be willing to pay that much. Sure, there are some well-to-do people who will still pay a premium for a perfect car and we may still have some of those customers. However, many people may not have the money or may not want to spend that kind of money. You can still satisfy these customers — easily.
You can give them just a little less perfection for a little less money. Maybe the vehicle really doesn’t need a four-step buff, or the engine does not need to be detailed, or the interior need not be dressed. If you skip a few minor and unnecessary steps, you can save a bunch of time and charge a little less money. The car will still look great, and the customer will save some money, making this a win-win situation. Of course, you should explain these options to customers and educate them about the steps that are not required, which in turn will save them money.
This should not be about “discounting” the same service. There needs to be a compromise. When you can properly explain that most engines do not need to be cleaned and the interior does not need to be shined or dressed, and the paint will still look great with one less buffing step, you will save time and you can pass your time savings on to the customer in the form of a lesser price. But notice, you are not discounting the same service.
Giving customers some options about how they can save money will put them at ease and show them that you are willing to work with them. However, you are not arbitrarily giving them a discount for the same labor. This can, and will work!
Do you have a labor rate? Do you truly know how much money you are making on every car? A labor rate is essential in every business. There are certain costs involved in running a business. You need to make money on top of the costs. This is truly the only way to determine a price and ensure you will still make money. What do you pay employees? What is the rent on your building? What are your utility charges? What are the gas prices currently? How far are you traveling to get to the jobsite? What type of equipment and products are you using to complete the job? What are your insurance costs? What are your vehicle payments? Are you leasing the equipment you are using? You must figure out your costs of doing business and then figure out how much money you need to charge per hour to cover expenses and still be profitable.
WHAT THEY WANT
Detailers can be a pretty stubborn bunch. We know what perfection looks like and we try to push that on customers regardless of what their expectations are. We try to sell a detail job for $300, which will turn the car into a near showpiece because “we” want the car to look like that. But maybe the customer does not. Maybe he just wants a clean shiny car.
Ask your customers what they want. Ask what their concerns are. You can tell a lot from your customers’ answers about how he wants the car to look when it’s completed. I have seen customers walk around their cars and tell me they thought the outside looked okay, but they were concerned about a spot on the seat. Meanwhile, there were scratches all over the car, which they did not point out to me. Did they not care or did they not even notice them? I knew I could get them all out, but when they said they did not want to pay a ton of money for the detail, I let this go. I gave them a price for what they wanted, making sure I was still going to make money. When these cars were completed, I knew they were not perfect but the customers were still more than satisfied. That’s the bottom line. Why should we give them perfection when they are not paying for it, or they just don’t care that much!
We can still make money pricing vehicles this way. I do it all the time. If I know it will take me three hours or less to get a car to look really good, but maybe not perfect, I charge accordingly and still make great money. Yes, I could get the car to look better, but these customers are not paying for that and it doesn’t bother me — anymore! I used
to try to make every car look spectacular, but I quickly figured out you will lose money that way and people won’t appreciate perfection if they are not
paying for it. If you are still making the same money per hour, and the customer is happy with a slightly lesser service, just give it to him and let everyone walk away happy.
In next month’s issue of Auto Laundry News, we’ll continue this discussion with a look at how “express detailing” can be adapted to address the realities of the current economic situation.
Kevin Farrell owns and operates Kleen Car (www.kleencarauto.com), a full-service auto-detailing business located in New Milford, NJ. Kevin is also an instructor for a detailing program he developed for, and in conjunction with, BMW of North America. His background includes auto dealership experience and training through DuPont, General Motors, and I-Car.