Revenue and Time - Right-Size These Elements in Your Operation
By Prentice St. Clair
A complaint that I consistently hear in the automotive detailing industry is that the operation is not making enough money or that the detail jobs are taking longer than they should relative to the amount of money being collected. Of course, there are many reasons why this state of affairs exists. However, in this month’s column, I would like to focus on two of the more common causes of a lack of money or time in a detailing operation. These are: inappropriate pricing and menu problems.
Let’s assume for the moment that the company’s marketing is okay and that there are plenty of interested customers. Secondly, let’s assume that the operation is using a staff that is well trained in an efficient and effective set of procedures that utilizes appropriate equipment, chemicals, and techniques. (Marketing, training, and supplies are certainly other areas that can be addressed to assist an operation to increase profit and efficiency, but that is another article for another day.)
THE ORIGIN OF THE PROBLEM
In my discussions with operators from around the country, I have found that there are three main mistakes that are made in pricing and packaging: • The menu is too complicated • The operator targets customers who expect inexpensive pricing • The operator sets prices based on the competition In the paragraphs that follow, I will offer some observations and recommendations that may help many of you. I fully realize that these ideas may not work for all situations. The goal is to help us all be more profitable so that the automotive detailing industry continues to be successful. So take what works for you and leave the rest for someone else.
WHAT’S ON THE MENU?
The first decision to be made in creating a menu is to decide between offering low-priced, high-volume services or higher-priced, lower-volume services. The challenge with offering both services is making sure there is appropriate placement of each incoming vehicle into the package that best fits the condition of the vehicle and the expectations of the customer. This requires a careful inspection of the vehicle as well as an interview with the customer.
The customer who is staring at the price of the “mini” detail will not be easily convinced that the more appropriate choice is the more expensive “full” detail, even if the car is a mess and the customer expresses the desire for a near-new result. Salesmanship skills are crucial in this case so that the customer is sold the correct package.
To avoid this type of problem, I recommend creating a menu that has as few choices as possible. Avoid the common “good/better/best/supreme” type of structure. Offering a number of detailing packages can have several negative consequences. These include confusing the customer (“I don’t even know which one my car needs”), increasing the difficulty of selling the services (as indicated by the scenario in the previous paragraph), and increasing the difficulty for technicians to deliver the correct result.
This last point is especially important. The technicians must know a separate set of procedures for each menu item to ensure that the standards of each are met. So, if you have six different detailing packages, the technicians must know six sets of procedures. I realize there is some overlap in particular steps in each procedure, but if they are not carefully outlined, you will end up with technicians taking too long to perform lesser packages, or not doing a good enough job on higher-end packages.
As alluded to earlier, another common problem with offering too many choices is this: given several price levels, customers will often choose the least expensive item, even though the vehicle condition may not match that item.
CUSTOMERS WON’T PAY MORE
Another common complaint from operators is that their customers try to bargain down prices that are too low to begin with. There are several possible reasons for this phenomenon, but typically it is because the operator is not providing good value and the customers are used to paying lower prices. I recommend that the operator analyze his current customer list to determine in which part of town most of his customers live and work.
The customer who receives a discount for great service may very well tell friends and family about both. So you have a delighted customer who is also spreading the word that you will discount the price. So these customers may refer new business to the operator and the new customers expect to pay the same price as the referrer.
Another flawed approach is to advertise heavily in an area in which the potential customers do not have a lot of disposable income for such (let’s face it) luxuries like automotive detailing. In these areas, you have to keep your prices low otherwise everyone will say “no.” If you continue to offer such low prices, something has to give, and it’s usually the quality of the service. If you are in the habit of providing only basic service, it will be difficult to attract higher-paying customers who expect greater value (e.g., higher quality).
The solution is to find ways to offer better value and higher quality service and find customers who have more money and expect more. With this approach, it is possible to earn twice as much money working on half as many vehicles and doing so with a relaxed, thorough pace that yields delighted customers and the personal satisfaction of a “job well done.”
With a new schedule of higher prices, you may lose some of your previous customers. The loss of these people, however, creates a void in your schedule that can be filled with higher-quality clients. It may take some time to transition from low quality, low price to high quality, high price. In the long run, however, the transition is well worth the time it takes.
Another approach for the customer who is looking for the “super buddy discount” is to offer something extra for free. By doing so, you can make the customer feel like he or she is getting a great deal while at the same time ensuring that you make at least your standard price. It is best to use add-ons that don’t take a lot of time, like fabric protection, windshield sheeting agent, or polymer paint sealant (instead of standard wax).
Another common approach to pricing is to determine what the competition is charging and either match or undercut their prices. My experience is that the competition is usually offering low-priced and inadequately valued service. Is this a good example to follow?
It is important to realize that matching the competitor’s price may not allow you to make a decent living, especially if the competitor is offering poor service performed by untrained, minimum-wage workers. If this is the case, you have to wonder about the type of customer that patronizes such a business. Do you really want such customers, who are looking for the lowest price? Or would you prefer to have customers that are willing to pay twice as much as the competition is charging, in exchange for excellent service and value?
Nonetheless, it is important to “know your competition.” I recommend visiting your competitor and even chatting with him or her about the industry.
Get the brochures and other information so that you can go home and analyze what the competition is doing. If nothing else, you can determine the things that your competitor is not doing, so that you can add value to your services.
There are ways to charge significantly more than what the competition typically does in a market area. First, you have to offer the absolute best detail for the dollar. Go the extra mile instead of rushing through the vehicle as fast as possible. Create a standard procedure list that yields vehicles that look as new as possible, every time. When you offer this type of service, you can attract the discerning customer who is willing to pay top dollar for such service. If you do things that the competition does not do, you have earned the right to charge more.
Second, create a “service experience” that far surpasses anything that the customer has previously encountered. Be ready for your customer — greet the customer with a smile, provide excellent results, get the job done on time, do something extra for free, thank the customer profusely, send the customer a thank-you card, and follow up with a phone call to make sure everything is okay with the vehicle. These simple steps will “wow” the customer who is used to an operator that shows up late or not at all, is not groomed and forgot something, barely utters a grunt as a greeting, does a sloppy job, takes twice as long as expected, and demands payment without even a “thank you.”
In order to be able to charge higher prices, one must operate professionally, offer more than the competition, market to the appropriate customers, and take into account operational expenses. In order to make a decent living, a professional detailer must price his or her services appropriately. You have two options: (1) providing low-quality, low-priced services to those customers who are not willing or able to pay for more; or (2) providing high-quality, value-laden service to those customers who have the disposable income and the desire to pay significantly higher prices. The latter choice typically yields higher profit.
Prentice St. Clair is an International Detailing Association Recognized Trainer and Certified Detailer. As the president of Detail in Progress Inc., he has been providing training and consulting to car washes and detail shops since 1999. He is available at (619) 701-1100 or firstname.lastname@example.org.