How to tell customers you’re worth what you charge
By Robert Stuart
“What filter does my spa take?” a customer on the phone asked me.
“Would you like me to bring new filters when I come out or ship some to you?” I replied.
She hesitated, then said, “I just need a part number. We found a place online that sells them cheap and want to order them there.”
OUCH! That cuts to the core of every brick-and-mortar storeowner, and those calls seem to come often now. So how do you handle it? How do you justify your price verses the internet, and how do you justify your fee for service versus the Craigslist technician whose overhead is a service van held together with duct tape and some Wal-Mart tools?
The recession helped many of us learn to be more cost efficient, but it also trained consumers to look for the deal and helped online retailers cut into our margins while gaining more of a presence. They made it cheap and easy for the consumer, even though they aren’t always as effective.
Our suppliers haven’t helped: They’ve opened the door for internet companies to purchase and sell direct to consumers. Most tell you they charge a different price to online-only sellers; however, that doesn’t seem to be the case when our customer can often buy for what we do.
What do we say to the customer who wants us to look up the part or diagnose the problem over the phone — but doesn’t want to pay? Tell the customer there is a cost involved to stock those parts and supplies, plus the insurance, training, taxes and other overhead the internet or Craigslist guy don’t have. The only problem? The customer doesn’t care. They only care about their spa running and doing that with the least pain to them.
Brick-and-mortar retailers must realize it’s the saved time and frustration, not the dollar amount, that sets us apart. If you try to compete on price alone, you will lose every time.
I’m expensive. My initial call and hourly rate are more than most companies around me — and I’m quick to point that out — but I also explain why in the same breath. I stock most parts on my truck, and my experience makes me faster and more effective. I give an overview of my experience and share what I can do. I let them know they don’t need to be home because I will call or text from the site to let them know what’s going on before handing them a large bill. I always ask if they need filters or any other supplies brought out and reassure them I will take care of everything. They don’t need to do anything, and I give them a rough estimate.
I don’t usually have to sell myself to them more than once, unless I don’t follow through. In that case, I discount my service and make sure they know why, so I get full credit for the gesture.
If you discount something, don’t just say, “I gave you a better price.” Instead, tell them what you would normally charge and what they saved. If the discount was to earn more business, there is no better time to ask for it than now. For example: “I normally charge $250 for that service, but I know I took a couple weeks longer than expected to get parts, so I’m going to take $20 off. You can help me recoup some of that by referring me to your neighbor with a spa in their yard.” This is getting double credit. You make amends for being late and make them feel special for referring you.
Anything you can do service-wise, no matter how menial it may seem, will set you apart and make them care less about price and more about service.
Most stores have a point of sale or a customer-management system. Mine is a simple Quickbooks POS, but it tracks all purchases and service. When a customer calls, I look them up, go over what they’ve had done and what they might need per their purchase record. Often, if I see a customer hasn’t purchased a filter for a few years, I will let them know it’s time. If they tell me they bought elsewhere, I ask where and try to find out what they paid. This is the only way for me to compare my prices and services. Often, the internet is cheaper; however, the internet isn’t driving out to their house and installing it during a service call. That’s worth something. Most customers don’t even know the make or model of their spa, so when you walk through past service with them and know what their spa is, it instills confidence and makes them feel special. I don’t hesitate to say, “I’m glad you called us. We know your spa and have a history of what’s been done!”
As a business owner, you’re always going to dig deeper when a customer asks for a part number or tells you they purchased products or services elsewhere so you can try to win back that business. The key is to train your employees to be sensitive to it and avoid a confrontational tone.
Another thing I’ve done recently is to give an overall price rather than a separate price for labor and parts. For instance, I might explain to a customer that the cost to replace a heater is between $200 and $300 including new gaskets, element and so on. This sometimes takes away the fear of hidden costs. You are the one painting the picture of how that repair will look in the customer’s mind. If you give up that opportunity, you’ll lose the sale.
The internet isn’t going away. Distributors and wholesalers are not loyal to brick and mortar like they were in the past; they are loyal only to number of units sold, and the internet gives them that vehicle.
If you’re a large company with several stores, this may not be an issue. Usually your service department is set up to service only what you sell; you only buy direct from your spa manufacturers and you don’t deal much with secondary distributors.
As a smaller company, we work on everything and turn no one away. My service department doesn’t care what brand as long as we can get parts. The struggle here is that if you change spa brands, the manufacturer may not sell to you or charge you as much as 20 percent more for parts. That makes it harder to compete with the internet, and it’s a pet peeve of mine. I created the customer, built the relationship and suddenly the manufacturer wants me to turn them over to the new dealer? I refuse to do that, so I have to get creative in ordering parts.
But no matter how frustrating it is, the solution is to make it easier for the manufacturers to deal directly with us. We need to not only justify our existence to the consumer but also to the manufacturers. Most of them aren’t set up to handle customer direct sales in large numbers, and in time will realize their losses are greater than the benefit.
How we can help them: Order in quantity. Ordering one or two products makes us as much of a problem as consumer-direct, and they make more money from them. Also, stay loyal to the manufacturer when it comes to warranty issues. If the customer damages a product or gets the measurements wrong, deal with it on your end. Don’t open that door wider for direct communication between them and your customer.
The most valuable thing I have to sell is my customer service and myself. Without those, I’m nothing more than a parts house and have to depend on sheer number of units to stay open.
Don’t assume your customers know what makes you different or why your prices are the way they are. They don’t, and they don’t care — until you make it a value to them. We live in a world of “What’s in it for me?” Your job is to let them know.