I’m thinking about starting an auto repair facility. Well, not really, but yesterday I was struck with the thought that I could start one and have a pretty good opportunity to be successful.
Our German car broke down. Anyone who owns a German vehicle knows that repairs on these (generally) well built, fun to drive cars are ridiculously expensive compared to their Japanese and American brethren. I looked up the error code on the Internet while I waited for AAA to flatbed it away and found that the most likely culprit of its total failure to move was a bad alternator.
Fast forward three hours. The auto repair facility called me and told me that it was, indeed, the alternator. “The new one will cost $900 plus 2.5 hours of labor, so about $1,200 for the whole thing.”
“$900 for an alternator,” I asked? “Are there any aftermarket alternatives?”
“That IS a rebuilt alternator – not a new one. $900 is the best we can do,” replied the repair facility.
I told them to go ahead – what choice did I have. I needed my car. I thought about it for a few minutes and went online to do my own search for a cheaper alternator. Within five minutes I had found one for $200. I quickly called the repair facility and told them. “What’s the part number,” they asked?
I gave them the part number. “That’s not the right one,” I was told. I asked for the right part number and got back to work. Five minutes later I had found one for $320 from a reputable online company. I called back the repair facility and let them know – again. “Well, let me look into it,” was their response.
Ten minutes later I got a call back. “Well, it will be at cost, but we can reduce your price by $500,” I was told grumpily. $500. In the IT industry I sure wish I could make a $500 profit off a $900 product!
It got me thinking. In the IT industry we learned, years ago, that having a unique service proposition is where the money is, and hardware has little to no value. If you lead with hardware at high prices you won’t capture the higher margin service revenue that drives long term healthy, and profitable, relationships. So why not start a new repair facility that delivers differentiated services, a huge amount of customer service, and products at 5%-10% over cost?
Perhaps, for a $50/month fee and a one year contract, I could examine a customer’s car every month looking, proactively, for potential problem spots. Then, if one was found, I could give them a 20% discount on any labor to repair it. I know, as the owner of an eight year old complex car that’s out of warranty that I would pay that. It’s like a managed service for cars.
Anyway, when my fourteen year old son asked me why repair facilities are often so untrustworthy, I had to think long and hard about it. I realized that it’s not that they are untrustworthy – it’s just that many haven’t matured to become as sophisticated as the market they serve – a market where the customer can look up parts easily and find reviews of facilities. Word of mouth has gone global.
That makes me think about the current market I’m in – the IT integration industry. We went through a bit of a paradigm shift a few years ago with the move from project based services to managed services. We’re now going through another paradigm shift with the “move” to cloud computing. From a product and services perspective, we keep up with the market or die.
But how often do we revisit our customer service paradigm? I’m not saying that things radically change in this area, but sometimes I think it’s good to stay with the old.
For example, certain customer self-service approaches help – listings of open tickets, access to billing and shipping information, etc. But I’m still a firm believer in having a person answer the phone when someone calls as opposed to an auto-attendant, even if that auto-attendant allows you to speak to it. As a matter of fact, the number one comment we receive when we ask customers what aspects of my company encourage them to use us is that we have a person answer the phone – and that they actually track down the person who is being called.
So – I’m not planning on starting an auto repair facility soon, but I will be looking for a new one. While I do that, I would highly recommend that you review the sophistication of the market you serve and ensure that you have adjusted your approach to them accordingly.
Chris Labatt-Simon
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