After a customer gets low-ball estimates from other shops, he wants his long-term shop to refund the ‘overcharge’ …

…What would you do?

The following story comes from a shop in Southern California. The shop says: “We have a longtime client who has brought four cars to us over the years. We recently quoted a job, and he found two other AAA-approved shops (not ASA shops, as far as I know) in our area that would do the job for what he said is a lot less money.

“He went through his service records and itemized each visit, claiming that we are ‘X’ percent higher in price. His ultimatum to us was to refund the difference he had spent with us compared to the other shops he’s getting quotes from. If not, he’ll go to AAA and complain. And if he doesn’t get what he wants there, he said he would take it farther.

“I listened to him, took it all in and told him I’d reach out to other professionals in the industry and get back to him.” What would you do?

Bryan Kelley, Valley Automotive Repair and Electric, Maple Valley, Wash.

“This is an interesting and ugly dilemma. Unfortunately, at this stage you are left with two choices. You can negotiate a ransom payoff, or you can lose this customer. I would choose to lose this customer.

“If this is a value-based customer, and you handle it correctly, you can lose the customer for the short term instead of the long term. If this is a price-driven customer, you will lose him and undoubtedly be better off. If given the time, I would explain the features/benefits we provide: extended warranty, shuttle service, loaner cars, high-quality parts, ASE-certified staff, car wash, vacuum, payment options and high ethical standards.

“This customer may not understand that all contributes to the cost of the repair. I would not expect that explanation to save the customer but give him something to think about later on. That way, when others don’t meet our service standards, the difference will be obvious.

“As an industry, we’re often guilty of not presenting those items before the sale. These additional benefits likely were not discussed during the initial visits. Had they been presented in a clear manner, the shop wouldn’t have been in this situation.

“Automotive repair is a for-profit business, and we’re in business to provide value, not cheap repairs. We need to make sure our customers understand the benefits of doing business with us so that they can understand the additional price that comes with it.
“As for his complaint with AAA, I wish him well since the repairs were done to a high standard and the customer agreed to the work.”

Craig Noel, Sun Automotive, Eugene, Ore.:

“I would compare invoices and see if the discussion is a true, apples-to-apples complaint: parts vs. labor. And I would look at the shop in question to establish what value comparison could be made, i.e. warranties, etc. If the value I offered was clear, then what price is fair for that value?

“If it were established that the customer might have some solid ground to stand on, then I would ask myself what value I’d place on the customer. For example, I’d consider how much he spent over the course of our business dealings, average rate option (ARO) and the monetary amount the customer was seeking. This is where it gets tricky.

If you were to compensate the customer, what do you then charge him going forward? What message does this send, and what will the customer say to others within his sphere of influence?

The customer’s concerns sound wide and deep. Clearly, there was not just one event. And it makes me wonder if there was anything this shop could have done to make the situation right and keep a happy, long-term customer. I believe the customer already had made up his mind who he would do business with in the future.

What the shop did

“I spoke to the client and touched on many of the points brought up in my conversations with other professionals. I pointed out all the free services that we had performed for him over the years, which I think should count for something. I even offered him a $250 store credit as a goodwill gesture, after explaining why we can’t run our business on other shops’ budgets. But he said the number didn’t even come close.

“I wished him well, kept my cool and disagreed. In the end, he said he couldn’t shake the idea that he’s been overpaying us for service and repair for years and would call AAA to complain. I later spoke to our AAA representative, and he was on our side of this pricing issue.”

What T.J. Reilly would have done

“It’s easy for another shop to say what they would charge for the same job. It sounds as if these shops are trying to win a customer by undercutting the other’s prices. If they’re not undercutting, then they probably have different expenses. Maybe their rent is lower; maybe they don’t offer benefits or they’re not paying industry wages.

“A few months ago, rumors were going around in my shop that I was getting filthy rich at my employees’ expense (I pay my employees extremely well, including a full benefit package). To stop these rumors, I met privately with each of my employees and asked them how much money they thought I made if we had sales of $100,000 in a month.

“Three of them thought I would make $10,000, and one thought I would make $30,000. They were all surprised to learn that I actually lost $15,000. We needed more sales that month to be profitable.

“I believe it’s the same with this customer. The perception is that the shop owner is getting rich at his expense. When you have a customer that’s this upset, I believe you need to meet with him face-to-face and share the real story.”