Quality or Price, Which Governs Your Business?

In the 27 years that I owned my independent service company and during my 10 years with United Servicers Association I have had several opportunities to speak with manufacturers and groups of people all wanting to make the service industry better. Price and quality are two words I’ve heard regularly during those conversations but seldom in the same sentence. They can’t both occupy top billing; you have to choose between them. One comes at the expense of the other. If we want high quality service it’s going to cost and if we don’t care about quality than we can cut our price but you can’t have both. We either run our businesses driven by price or by quality. By price I am referring to the amount you charge or receive for your service. Your cost of doing business determines what you must charge to make a profit depending on what it costs you to run a call. By quality, I mean the quality of the service you offer to a consumer. Quality is most often measured by the customer’s perceived satisfaction with their service experience. From how you answer your phone, how you look when you arrive at the house, how quickly you make the repair and how many trips it takes to complete the job. Most manufactures survey their customers to determine what the perceived quality of service received that the warranty service call produced. Manufacturers have learned from study after study that brand loyalty has a direct relationship to a customers experience when their product fails and warranty service is required. In simple terms the studies show that when the experience is good customers will buy or recommend that product but when it’s bad they will most definitely not buy again and may even influence others not to purchase a particular brand. So why then is there continued pressure from manufacturers to keep the price below our costs when they know that a quality experience will go a long way to protecting brand loyalty and their every changing customer base?
Some manufacturers will argue that I’m wrong. They will say that you can have both or at least they expect both, low price and high quality service. I contend that that’s just not possible. Quality or price which will govern your company? Image for me is as important as is the competency of my repair technicians. A dirty, older, plain van does not hold the same respect and credibility of a new clean van with attractive marketing and identification on the side. A technician who needs a shave and a haircut wearing two day old dirty jeans with a Rolling Stones t-shirt doesn’t stand a chance next to a clean freshly uniformed technician. Even if the skills of the first technician are far superior to the second the first impression is a lasting one. I once saw a bill board in Texas that read “Dress your wage” this rings so true in measuring the customer’s service experience and subsequent satisfaction. Clean uniforms and new decaled trucks cost money not to mention the recent roller coaster ride on insurance and gasoline prices. Smart service operators will understand how to calculate their true cost of doing business and will be equipped to determine how a low warranty labor rate will affect their business and its profit goals. Sometimes you just have to say no to some manufacturer’s warranty requests when they’re not willing to pay a fair price for quality service.
Appliance service is a commodity. As such in a commodities market it usually means you’ll be competing on price and you’ll need high volume to survive. I believe there is another way to compete in a commodities market. Take coffee for example. Coffee is a commodity and if you’re just buying raw coffee it’s relatively cheap. Most all of us judge the price of service by the value it represents for us at any given time. If you want a coffee you can get one for $1.25 on the coffee truck or you can pay $5.00 or more for a fancy one at Starbucks. The difference isn’t the taste it’s the experience. The experience is something that we’re willing to pay for. Judging by the line up at Starbucks much of the time this would suggest that we are willing to pay extra for the experience. So don’t be consumed by price. Make sure the experience in dealing with your company is a true quality experience and not only will the consumer be willing to pay a higher price so will the right manufacturers. Some OEM’s work in a price driven world and will never be willing to pay for quality service. Either way make sure they get what they’re paying for.