I recently read an article that explained how vehicle owners repair and maintenance habits change between 60,000 and 70,000 miles. The article explained that this vehicle may have been the owner’s “baby” receiving only the best care, the best tires, etc. Now that the vehicle has more mileage, the owner may have crossed the path of whether to trade the vehicle or keep it. With R.L. Polk saying that the average vehicle on the road is 11+ years, I would guess that a lot of people decide to keep it. With that decision, comes a decision to maintain the vehicle in the most economical manner. This plan may not include “Z” rated tires, since the owner only occasionally barely breaks the speed limit.
The issue that I see is that dealerships are approaching their customers with an OEM sales approach. Even worse, I see dealerships giving the “Best” price only.
Here’s how the story will generally go:
Service Advisor: “Mr. Criss, we had the opportunity to bring your vehicle in to find out why it is not starting. We’ve found that it is your starter. I have one in stock for $679. With your authorization, we can get the starter on and have it back to you this evening by 5 pm.”
Customer: “Hmm. So, it was the starter. And you say it’s $679? I need to call my spouse before I give you the go ahead. I’ll call you right back.”
Customer: “I just spoke with my wife and she says we just don’t have the money right now, so if you can just button it up, I’ll come and pay what I owe you and we will come and get it.”
Advisor: “Ok, but you know that the vehicle will not start.”
Customer: “Yes, my wife’s brother has a tow truck. He’ll come and get it and bring it to our house until we can afford the repairs.”
I always ask my classes, “Did we lose the job, or did we lose the customer”? The answer is probably both. We clearly no longer meet the needs of the customer for the servicing path they have chosen.
Fact: A tier one part sold by most aftermarket companies is exactly the same part as the manufacturer. That’s right. One day the supplier makes the part for the Manufacturer, and the next run they are putting it in a branded box and selling it over the counter. Here’s the kicker: The same part can be hundreds of dollars cheaper. So, it’s the same quality, but does it have the same warranty? No, it does not. Most of these parts carry a 12-month parts warranty that the customer has to come back to you. The customer may be ok with that if the part is substantially less expensive.
Let’s talk about the customer that you lost. What is your plan to replace that customer? Wasn’t that customer beginning into the higher repair and maintenance cycle of the vehicle? Why did we chase this person off, and what is our plan to replace that customer? We can ally a new car customer to our department, but it will take that customer 4-6 years to develop into that excellent buying cycle.
Ok, now let’s talk about OE (original equipment) vs. Aftermarket. We have already established that the tier one part can be the same as the OE. When I speak of this in dealerships, the first one to begin denouncing what I am saying is usually the parts manager. He many times will tell me that we don’t earn return money on aftermarket parts. My question back to him is how much return money do we earn on a customer who doesn’t do business here? I usually then hear, “Yeah, but…” and then silence.
Two mistakes not to make:
1. Don’t quote customers Aftermarket prices when they turn down the OE pricing. It will seem like you were trying to get them to buy the OE when they didn’t know you were offering them the aftermarket. “Oh, yeah, right, that’s exactly what we did”. Your credibility will suffer. Don’t fall into this trap. Give the customer the option.
2. I have seen parts departments reluctantly agree to offer these parts. They don’t see the big picture and do it to appease someone. I have seen them mark the parts up to just under the OE pricing, in hopes that will motivate the customer to buy the OE. But, that’s assuming that the customer is NOT going to shop us. If we give them one price, they ARE going to shop our competition. Our competition is going to quote around the MSRP of the price for the part from the aftermarket company. It could be substantially less if we are practicing this. The end result is the same. We lose the job and the customer.
There’s a better way of doing business, and our competition has done it for years. When we offer 3 options to the customer, it now gives the customer the opportunity to decide between the 3 options, and NOT whether they are going to buy from us or not. In the early years in aftermarket, they offered “Good, Better, Best” options. And the dealers that execute this properly win. They keep their customers longer, and sell more per repair order.
When I ask service managers if they sell “good, better, best” options, many will say “yes” and show me how the manufacturer has made it easy for them to quote these three tier pricing structures on tires. And what a great start it is. But to be successful, you have to be consistent. You have to identify parts that these 70,000 mile customers may start needing, and have options for your customers.
It doesn’t take a mathematician to figure out that by offering options, you’ll sell more. When you sell more, you keep your customers. When we hear “Nobody’s buying” from our advisors, we need to look at more than just the luck of the stars and the ability of the advisor. We need to look at the way we are doing business.
Here’s how it should go:
Advisor: “Mr. Criss, we had a chance to bring in your vehicle and diagnose it. And, you were correct. It’s going to need a starter. I have some options on pricing for you. First, we have the original equipment. That carries a 12 month, 12,000 mile warranty from the manufacturer and is serviceable at any of our manufacturer’s brand dealerships. It covers parts and labor. The price for this is $592. We have the same starter that is offered by our competition. It carries a 12 month parts only warranty, so that if there’s an issue, you’d be responsible for the labor to replace the part. Installed, this starter is $396. We also have a Value-Lined pricing from our manufacturer and carries a lifetime warranty on parts and labor. This price is $387. Which one of these would work best for you today?”
Really, at this point, the customer should be able to choose which is going to work better for them. We eliminate any issue with having to discount the job to make the sale. We’re holding full gross on all three option. The customer will leave feeling empowered and as if you were “watching” out for them.
So, you tell me. Which is the better way of doing business?