I often participate in Friday morning breakfast meetings with a group of local executives from a variety of industries. Discussion topics include the local business environment, performing versus non-performing entities, politics, and our hobbies. During our most recent meeting, a discussion of a common hobby and the performance of a local business reiterated that quality service is much more important than price, and customers will pay for better service.
One hobby several of the executives have in common is we own sports cars. Some of us participate in track days, wherein we drive our cars on race tracks at high speeds. When we do that, it is critical that our cars perform at their peak. So it is important to each of us to work with a service business we can rely on to maintain our vehicles at a high standard. I learned this past week that one service garage had disappointed three of us in the past few years, and had lost all our business.
One of the executives said he had recently hit a pothole, a frequent occurrence in the Pittsburgh area, and it felt like something was wrong with the wheels. He phoned a local garage that services high-performance and luxury cars to try to make an appointment. He left his name, number, and the reason he was calling; and he requested a return call. After a few days of not receiving a call back, the executive made an appointment with the BMW dealer. The wheels were bent, so the dealer replaced them, albeit at a slightly higher price than the local garage would have charged. Our colleague said “It’s not my job to chase him to give him my business. I will just keep taking my car to the dealer.”
I remarked that I had experienced something similar with the same garage. I had left a message requesting a date to get my car ready for a trip to Watkins Glen. After a week with no response, I called and spoke to one of the mechanics who said he would have the owner call me back to schedule service. After another week with no call back, I took my car to another shop; and I have been taking it there ever since. The other shop charges higher labor prices, but they are very attentive. They always return my calls and even drop the car at my home after servicing it. I gladly pay the higher prices at the new shop, because I know I can rely on them to do things well when I need them done.
After hearing my comments, a third executive said the same thing had happened to him. He previously took his Porsche to the local garage, but switched shops because of poor responsiveness. All of us are on a first-name basis with the garage owner, and we would like to see him do well. However, we want reliability and all of us have switched due to the lack of it.
I have written blogs in the past about service being more important than price. Obviously there are limits to how much of a price difference people will pay, but customers want to be taken care of. Customers will pay a premium for companies that provide great service. Even if it is only 1% or 2% higher prices (more like 15% higher in our car example), those premium prices add up. It can take 3 to 5 times as large an increase in sales to equal the amount of profit from a 1% price premium. So rather than thinking about lowering prices to get more sales volume, spend your time making sure your team provides great service. Your customers will be more loyal and they will pay better prices.
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