Although my business travel has been a bit less in recent years, for the past twenty five years or so, I have zig-zagged across the country in airplanes going from business meetings, to trade shows, to business meetings. The time spent in the air was filled with, computer time, reading, sleeping, talking with strangers and many times wishing that I was something other than a road warrior.
Every now and then I would pick an airline magazine from seat pocket in front of me and flip through the pages. Flight after flight and year after year I would see an ad for a seminar entitled “In Business As In Life - You Don’t Get What You Deserve - You Get What You Negotiate.” The presenter listed was Chester L. Karrass. I was somewhat interested, but never took action to learn more.
However, my brother-in-law, Gary, was enrolled in Karrass’ course through one of his employers. Gary summed the course up in a few words. They are, in negotiating, one needs to ask himself or herself, “If I move off of my price or my position, what’s in it for me (WIIFM)?”
OK, great. I didn’t need to read the book or attend the seminar.
Today, I got to thinking about negotiating and how it hurts most service businesses.
A service company dispatches a technician to complete a repair in a customer’s home. As you know, most customers are looking for the best deal possible. The 80/20 rule kicks in here. Eighty percent of the customers are seeking a better deal. When the repair work is complete and the technician hands the customer the bill, or the customer receives the bill in the mail, many customers believe it is their duty, maybe even their constitutional right, to refuse to pay the bill unless the repair fee is reduced.
The customer is practicing the art of NO-GO-tiation. Nogotiating*, as described below is the art of blatantly undermining the negotiations while claiming to support them with the goal of not reaching agreement. That is true for the customer, up until the customer becomes satisfied that the negotiated fee adjustment meets what he/she believes is fair. Then the customer will settle down. Up to that point it is a No-Go.
The problem is what the giveback does to the company’s bottom line. Most service companies work on slim margins. If a company operates on a 10% net profit and completes a $530 repair, only $53 dollars stays in the bank. If the customer demands a $30 reduction from $530 to $500 on the price of the repair, the profit margin shrinks from 10% to 4% or $23. If that customer presses hard and wants $50 off the margin that repair just dropped half of a percent! Ouch!
Here’s the worst part. By adjusting the repair fee downward, the service company is training their customer to ask for a discount on the next service call. The problem becomes perpetual.
Going back to Karrass’ negotiation premise of “What’s in it for me?” the answer here is perhaps nothing. Saving a customer that continually beats you down on price has little value to your company.
What to do?
The answer is quite simple. Avoid the uncomfortable situation by making a positive change in your service business. Begin quoting repair fees in advance of completing the work. That requires informing customers about your service call fee(s) on the request for service and quoting the repair fee before the work begins.
Now, of course, the only way to do that properly is by dispatching trained technicians equipped with a flat rate pricing system to provide the customer with an accurate repair quote.
For more on using flat rate in your business please watch the following videos on Coolfront Mobile, Coolfront Books and flat rate pricing. There’s also an informative video titled “Simple Math.” If you wish to be educated on flat rate pricing, maintenance agreements and mobile technology, download my eBook, “It’s All Up From Here!”
*Nogotiating: The verb form of nogotiation, the art of blatantly undermining negotiations while claiming to support them with the goal of not reaching an agreement. A favorite tool of old and disconnected politicians that think it's their way or no way.
Source: Urban Dictionary