April 10, 2009 - 2:43:04 PM
Doug M

I own a small motorcycle, ATV and scooter service shop in Martinsburg, West Virginia. We officially opened our doors on 1 July of 2008. We are making enough to pay the shop overhead, but not enough to pay ourselves yet. Luckily my wife has kept her regular job for now. I charge $55.00 an hour for labor and some people have asked me why I charge so little. I am trying to offer the community quality service at affordable prices. The closest dealership charges $89.00 per hour. Do you think low labor rates turn people away thinking they are getting less quality work, or do you think if I stay at that rate that the business will build? Should I raise the rates to make them think they are getting better service? We have been building the business pretty much just by word of mouth since we do not have much in the advertising budget. We do outstanding work, judging by the comments the customers make. But I want to build this business to the point that it can sustain me and a couple of employees. This business is actually my retirement plan, hoping my sons will take it over and I can continue to draw a paycheck from it after I retire. What are your opinions for me to build this to where I want it?

Dear Doug,

I’ll start with the good news. You’re doing almost everything wrong and you’re still managing to break even! Heck, that is actually fantastic news because once you start doing a few things the right way; you’re going to blow the doors off this thing! There are so many ideas I’d like to give you that I’m not sure even where to start. Let’s start with the fact that you’re not charging enough for your services. While I agree that it might be a good idea to slightly undercut local dealership labor rates you certainly shouldn’t be charging only $55 per hour! Furthermore, I admire your desire to offer quality service at “affordable prices,” but if you continue to offer such “affordable prices” you’ll eventually be out of business! (And then you’ll be helping NOBODY!) By the way, you’re right on with your comment about the perceived value of “low-priced” services. I’d never take my bike to a guy who is charging almost HALF of what most shops are charging!

People will pay for good quality work! Customer service is KEY!

Here’s what I propose. Your unique selling position is that you offer BETTER service than the local dealerships at a slightly LOWER price. If the local dealerships are charging $89 per hour, then you should be charging $79 per hour. You just have to be darn sure that you’re doing a better job than the dealerships! (Which shouldn’t be too hard.) Okay, now that we’ve got that out of the way let’s address your fatal flaw in your comment about marketing and advertising.

Doug, word-of-mouth is great but you MUST have an advertising and marketing plan. Now, it doesn’t have to be a giant, expensive, multi-media ad campaign… but you have to have SOME kind of PLAN. And here is what this plan should look like.

ONE: Every cent you spend or every action you take MUST be trackable. So if you take a “Yellow Pages” ad out you have to have a way of knowing every single customer that was sent to your shop from this ad.

TWO: You need to come up with some sort of mechanism to lure potential customers to your shop. Ideally this BAIT would be for something FREE that would cost you little. For example, you could create a brochure or handout that highlights 7 “Little-Known” Awesome Motorcycle Rides around Martinsburg. Do you get where I’m going here? Now you get people coming in to your shop who OWN motorcycles and you’re giving them a free gift that provides REAL value. So the next time they actually need service, well guess where they’re going to go? That’s right! They’re coming to YOU!

THREE: Your marketing plan must be consistent. Let’s say the first step of your “super-low-budget” marketing plan is to distribute flyers to motorcycles parked around Martinsburg. Well, it’s important that you consistently hand out 10 of these per day. (Of course the MORE the better, but it’s more important to be consistent.) This flyer could be as simple as a business card that has your shops name and address on one side and a coupon for the “FREE Map to 7 Secret Motorcycle Tours” on the other! (Here’s a place to get 1,000 business cards for only $26.50! www.PrintPlace.com)

Okay, I could go on forever with this stuff but I think I’ve given you a few solid ideas here. Now go and get them done! If you’re truly building this business for your sons to take over to provide you with a retirement then you must go about this with an attitude that you will NOT accept defeat. Be ready and willing to do whatever it takes to make this work.

Good luck my friend,

Tim Schmidt