Years ago an associate and friend gave me some good advice when he told me, “Anything you give away in a sales situation carries that amount of value to the receiver: nothing!” Months ago I read an extremely interesting article by a John Hirth entitled, “Stop saying no problem!”
Hirth states, “In our zeal to provide the service that we believe will be our differentiator we often create a situation where our customers believe what we have delivered has no extra value.” In actuality when we say “no problem” we are unaware of what our expense for that “no problem” will be. As an example, a technician might be working on a customer’s equipment in the field at quitting time. The customer asks whether or not he can finish up the job, to which the technician replies, “no problem.” Now the customer is happy, the job is booked for so many hours, the technician is paid overtime but the customer is not billed for overtime. The dealership loses…No problem!
No one thought to tell the customer when he asked if the job could be finished before the end of the day, “Yes, we can finish it up now, but it will require an overtime charge.” If the customer objects, the technician can return tomorrow to finish the job, unfortunately with a second trip charge. If the decision is to finish the job with no overtime charged, the customer should be made aware that this “no problem” situation was graciously “eaten” by the dealership, but that the dealership cannot allow this situation to happen again.
Over the years, sales personnel have gotten into the habit of giving something away to make a sale. We call these internal prices “sales department discounts” and maintain that is exactly what they are! They could also be termed as “giveaways” to bolster the margins on the equipment the sales department sells.
At the close of a seminar several years ago, a dealer asked how he could improve the margins on his complete goods. We suggested to the dealer that he stop sharing equipment cost prices with his sales personnel and simply give his sales people a figure below which they could not go. You would be surprised to see the extra dollars this adds to a dealer’s margins on both new and used equipment. Our suggestion is that unless sales people are working on “straight commission,” based upon the gross profit of the product, they should have absolutely no idea about the cost price of the equipment they are selling. Most manufacturers are against this, as they have their concern for market share.
For years we have been writing about a customer survey that was taken indicating 87.9 percent of all customers are willing to pay more for the product if they are assured the dealership will be there for them after the sale. Yet most dealerships and sales personnel still neglect selling the full services of the dealership. Today, everybody should be making this a regular practice with every customer they talk to. We continue to point out that an excellent time to do this is at the time of delivery of the equipment.
We have witnessed every type of giveaway imaginable. Once it starts with a particular customer it is extremely difficult, if not impossible, to stop. How about that customer who services his own equipment but calls your service manager for help in servicing that equipment? How many hours of billable time do you lose a day, a week or a year? No problem! No one is to blame. It is merely an expensive habit we’ve gotten into over the years, which now we must bring under control to survive.
We have seen this practice will range from a few dollars in value to thousands of dollars. When dealers ask how these practices can be eliminated, we recommend that it must start with the dealer principal. They must set the example of eliminating “giveaways.” Become aware!