Hidden Costs

One of the many things Dad drilled into my head over the years was, "If you insist on buying new vehicles, then you need to drive them 'till they drop or you're just throwing good money down the toilet. I mean, why would anyone pay for a car that devalues by 20 percent the moment they drive it off the lot?"

I won't discuss the validity of Dad's argument, nor the accuracy of his devaluation claim. I'm just acknowledging the fact that the apple doesn't fall far from the tree in this case -- the two vehicles Cindy and I have right now are a '91 4-Runner and a '96 Dodge Ram. (We haven't had a car payment in eight years.)

Of course, when you buy a vehicle with plans to drive it until it drops, many of your maintenance decisions are affected. For example, we've always had most of our maintenance done at Dobbs Tire & Auto Centers, because they have a fixed-forever guarantee. Once they fix something other than that which has normal wear and tear, if it ever breaks again you get the parts and labor free.

Late last week, however, I learned the hidden cost of fixed forever when the break lines on our Ram sprung a leak. After analyzing the problem, Dobbs informed me that to replace the break line they'd need to remove the gas tank, and that the whole job would be about $600 parts and labor after sales tax.

As luck would have it, about six months ago William Morris of Oakville Automotive joined Yellow-Tie here in St. Louis -- and his shop is only about three miles from my house. So I decided to give Bill a call and find out what he had to say about the repairs Dobbs proposed.

First, Bill confirmed that the tank would need to be removed to replace the entire brake line, and that the $600 price tag was about right. But then he added, "Of course, most of the time you can simply cut out the bad spot, flair the ends and patch the line back together -- saving you a couple hundred on labor costs."

That's when I realized the hidden cost of Dobbs' fixed-forever guarantee -- they never offer the simple solutions that save their customers money. Instead, they simply replace the entire part -- no matter the cost of parts or labor -- which saves them return-visit repair time that would be free under their guarantee.

I think Dobbs is missing the boat on this one. Perhaps they've never thought this through and don't realize the cost of this guarantee from my perspective. If I was planning to sell the truck tomorrow, for example, then I'd have paid $200 for a guarantee that has zero value to me.

Or maybe they know full well, but have simply chosen to do business this way. (If that's the case, I'll applaud them for their focus as I drive my truck to Oakville Automotive.)

What I can tell you is this. They didn't ask me a single question about my intentions with the truck, so they have no idea whether I value their guarantee. And they didn't explain all of my repair options. Instead they simply gave me one option and asked me to make a yes/no decision.

Do you know the hidden costs your company's uniqueness are generating for your customers or clients? Have you done the math from their perspective? Are you giving your customers all their options, or crossing your fingers hoping they won't learn about the alternatives on their own?

It literally costs nothing to increase the value of your relationship with customers and prospects by being up front on these issues.

If Dobbs had explained my options, I'd probably have let them replace the entire line -- extra labor and all -- because it's a pain in the ass to take the truck from one auto mechanic to another.

But Dobbs didn't give me all my options, Bill did.

Guess who's fixing our truck.

Gill E. Wagner, Sage of Selling
President of Honest Selling
Founder of the Yellow-Tie International Business Development Association

Comments

[Curtis]

"(You'll look like the smartest and most well-prepared person on the planet.)"

And he will be. I have taken this advice and done the (difficult, i admit) work up front, and it works wonders.

It is this kind of advice that has me enthusiastically recommend people to your site. It is also the reason I am selective about who I send here. I know too many people who are unwilling to do their homework.

By the way, any recommendations on how to learn to "get very goood at reading people?"

[Gill Wagner]

Some bullet-point thoughts based on all the comments above:

* Unless I've read something in the prospect that tells me to do otherwise, I will always default to providing all options to a buyer. I will, however, start with a short summary and then provide only detail if/when they ask for more.

* Jeremy makes a good point. Dobbs management may have a strategy to do exactly what I proposed, but their front-line staff didn't implement it. I have no way of knowing that. If that's the case, I'd recommend two books on running companies and managing people. "The Great Game of Business," by Jack Stack. And "The Dream Manager," by Matthew Kelly. I think the answers to Jeremy's questions are in those two books.

As for Peter's two questions.

1) You must get good at reading people. Paying very close attention to body language -- watch for signs they're disengaging from the conversation -- works wonders. (It requires you to learn how to observe carefully while you're presenting information.)

2) Write the detailed explanation. Then write a one-page summary of that detail. If it's HUGELY detailed, write something between the two. Then when you present the information, start with the summary, watch how they react, add more detail from there. In many cases, they'll key in on one point in the summary -- the point that meant the most to them -- and you'll be able to page through your detail to that item and go over it with them. (You'll look like the smartest and most well-prepared person on the planet.)

[Jeremy Nulik]

I think that you are asking Dobb's to take on the role of a "trusted adviser" or just, in general, customer-centric model of behavior.

I see your point, though. They should have asked questions to see what you wanted to do - What are your intentions with this truck? How long have you owned it? Do you plan to sell the truck soon or trade it in? Etc.

However, Curtis raises a good point. How can you make that attitude and approach important to a front line employee? How can you make a caring/adviser role the default behavior for guys who are just doing their job.

I would check out this guy - Patrick Lencioni (http://www.tablegroup.com/). He recently wrote a book about the 3 signs of a miserable job. In it and on his website, he outlines ways to make attitudes like the one that you are hoping the Dobb's guys would have important to all employees.

Happy selling to the "Best Business Connector in St. Louis."

- Jeremy

[Peter Eastman]

I think there are several issues here, partly because there are several kinds of decision-makers - in this case, some who just want to make a yes-no decision without the details, and those who like all the relevant pros and cons so they can make the decision that works best for them.

My problem is judging that for the prospect. We sell behavioral emergency safety training - often called aggressive behavior or crisis intervention training - and we routinely have prospects who don't have enough knowledge about the topic to ask intelligent questions, nor enough experience to competently judge quality differences between the providers.
Any advice you have about how to
a. determine how much information a prospect needs.
b. create materials that are sufficiently informative without being overwhelming.

Thanks!
By the way, I really enjoy your columns. There is always something to think about.

[Gill Wagner]

Curtis,

My intention wasn't to tell Dobbs to change the way it does business -- that obviously works for them. But even if their strategy is to not patch -- only replace -- they could have kept a 23-year customer happy had they informed me of the other option.

"We can replace the line for $600. There are other mechanics in the area who will patch it for you if you prefer. You'll probably save $200 or so on labor costs, because they won't have to pull the gas tank. Of course patches don't last as long as new.

"Would you like us to replace it, or do you want to try to find someone else who can patch it and save a couple hundred?"

My internal thought process would have been something along the lines of, "Is $200 worth the pain in the ass it would be to find someone and take the truck to them?"

I know me pretty well. Dobbs would have gotten the work. And they wouldn't have needed to change their operating procedures one whit to do it.

[Curtis]

Normally I would agree with you entirely, but this time I don't.

The 'fixed forever' guarantee is simple and well executed. Rather than ghetto-rig fixes on your car, as many shade-tree mechanics would have, they give you a professional replacement, according to the manufacturers specifications. If they patched here and there they would increase their costs of training as they begin to document all of the little non-standard options they used to fix problems here and there.

The option that William gave you is the right one for a 10+ year old car fixed by a much smaller outfit than Dobbs. But if William wants to grow significantly he will have to innovate ways to keep costs standardized while keeping customers happy. Dobbs has figured out how to do this.