AKRON (Nov. 25, 2002)—Striving to be the low-cost provider in your market may not reap the rewards some bosses think it will.
If your tire dealership offers automotive services, I believe a healthier long-term goal is to be the best-value provider.
The best-value provider is doing quality work-fixing the vehicle properly and completely the first time-for a competitive price that may happen to be the lowest one. The price the best-value provider charges is seldom or never as low as that charged by the low-cost provider. However, the critical qualifiers are complete, proper repairs done the first time. Mind you, those are big-league qualifiers.
Suppose for a moment that a tire dealership or service shop meets these critical qualifiers. Field experience continues reinforcing my conviction that the cost of meeting these criteria (cost of doing business) prevent a boss from offering the cheapest prices on the block. Doing the job correctly the first time is not accomplished with luck. Rather, it requires a minimum of modern tools and equipment, capable, motivated technicians and ongoing technical training. These things cost money!
Regular readers of this column probably recall that I´ve discussed this topic several times over the years. But based on the discussions I´ve had with countless owners and managers around the country, it seems to be a theme I cannot over-emphasize. I meet too many bosses who are needlessly obsessed with beating the competition´s lowest price.
A prime example is a conversation I had with a service shop operator I met on an airplane the other day. His goals and growth opportunities mirror those of many Tire Business readers.
This man had grown up in the exhaust-replacement business. Like so many tire dealers, his family-owned exhaust shop saw the next logical growth opportunity was offering complete undercar services. Having completed that transition, his muffler shop followed another tire dealer trend by morphing into a general repair shop.
In fact, more and more ex-muffler shops are doing just what some tire dealers are doing so successfully: positioning themselves in the marketplace as one-stop, complete automotive service centers.
This gentleman´s assessment of the transition didn´t surprise me in the least. He described the transition to an undercar shop as being a baby step compared to a proverbial giant step into auto repair. Like so many other exhaust specialists, his only sales or marketing pitch was low price. Now he was struggling to maintain that approach in this new, full-service environment.
Regular readers know that I am out on the road much of the time doing technical training. Consequently, I meet many service personnel (lube boys to shop owners) from a variety of low-cost provider environments that are trying to transition into full service. Simply put, this transition has been anything but smooth and cheap. They´ve discovered it´s extremely difficult applying age-old cheap-tires, cheap-mufflers philosophies to fixing and maintaining modern vehicles.
My seatmate also complained that turnover at his shop was worsening at a time when he assumed that the expanded service offerings would reduce it. Basically, he believed that the cheap labor approach with which he had gotten by all these years would continue to serve him well. He seemed stunned that none of the people I consider serious, career technicians would ever consider a low-cost provider as a prospective employer.
Indeed, if you don´t charge enough to pay for the proper equipment and ongoing training, why would a good tech work for you? If the low-cost provider mindset precludes charging enough to pay competitive wages and benefits, why would capable techs take your business seriously?
Furthermore, why do I consistently find that the healthiest, most-reputable full-service shops of all kinds charge some of the highest prices in their towns? What´s more, why do so many of the shops perceived as being the most-expensive in town have a long list of techs waiting for a job opening to become available?
Meanwhile, I think I saw the proverbial light go on in this chap´s head when we finished our chat.
I wish him well, but he really needs to rethink his low-cost outlook on the market.