Is there a standard way discounting should be handled in a Service Department?
Ideally, the service director should empower each advisor and the service manager with a certain percentage that they are allowed to discount on repair and maintenance items for the right reasons. This will give the customer a direct level of confidence that his or her advisor is, in essence, an assistant service manager able to accommodate the customer’s needs. It also can expedite the situation and often be the very gesture that convinces the customer to proceed. For discount needs that arise and exceed the advisor’s empowerment, the service director may want to review the situation before the customer is given an absolute “No,” in an attempt to salvage high-dollar or otherwise desirable jobs.
The big picture is that the dealer and service director have a target level of gross profit ratio to be retained vs. the retail sales that are made in parts and labor. In an effort to ensure that customers aren’t going somewhere else because of price, but also to make sure not to break the bank, the dealer and service director should come up with a guideline of what is an acceptable level of discount.
Now, the reason for an actual discounted repair order should be reserved ONLY as a gesture to keep a job from leaving. If the ticket pricing must be reduced for any other reason, it should be handled differently so it can be monitored properly
Some examples of price reductions that are not actually “discounts” are:
· A goodwill policy for customers upset about a circumstance that occurred in your shop.
· “Comebacks” that are due to poor workmanship or incorrect repairs.
· Price reductions to absorb an inaccurate initial estimate.
· Employee pricing, to extend additional benefits to workers.
In each of the above scenarios, reductions should be charged to the appropriate account rather than your applying a simple price discount. Just as a certain level of discount is permissible, each of the categories that require the adjustment for other reasons must be scrutinized. From this analysis, additional training can be administered and policies further refined as needed.
Remember, most customers simply want to see the value in your offerings. So, you should initially take a price objection as a reason to explain why the job is priced the way it is, rather than just arbitrarily offer a discount.
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