A RACE TO THE BOTTOM
By Kian Amirkhizi & Doug Snow
Edited by Steven Valenzuela
(Submitted June 2007 to Mobile Tech News for publication, © 2007 by MATRI-X)

Did you hear the one about a particular race that even the winner does not win? I call it “A Race To The Bottom”.

Before all you Nascar fans start tailgating, let me explain.  This is not a good race; in fact, instead of a celebratory bottle of milk, the winner is more likely to be served nothing more than a mixture of blood, sweat and tears for his efforts.  Eewwww.
 
The practices and results of people claiming to perform interior repair can be separated into three distinct categories; “The Good”, “The Bad” and the “Downright Ugly”. In which category would you rate your work? Let’s find out by examining your position on this next short story.

Imagine for a moment that you have recently purchased a franchise or paid for training in the mobile tech/recon industry. Toward this venture you have purchased quite a few products and equipment to facilitate your new chosen career (which in turn caused your spouse to begin collecting the telephone numbers of divorce lawyers when you first informed him or her of your plan to join this industry). 

Now, imagine that on your first day that you are out in the field in your new truck (equipped with all the extras, including a monthly payment of $575), and you start knocking on doors, seeking those fat, juicy contracts that the guy who sold you your stuff told you would be everywhere...

You go to the first dealership and nervously ask for the used car manager from the receptionist who looks at you like she might gaze at the leavings that cling to the bottom of a dumpster.  You’re excited and worried all in the same time. You have got a lot riding on this venture (mental picture of your spouse in divorce court screaming “I WANT IT ALL!!!”). Even though you went through the training, read all the materials and performed repairs that weren’t too bad in the class, you’re worried that they aren’t good enough for the real world.

Suddenly you realize that this is the time where the rubber meets the road. The gum-smacking, pear-shaped secretary comes in to tell you “he’ll be just a minute”. A few moments pass when the door bursts open and a man bearing a striking resemblance to an ogre with a chronic case of irritable bowel syndrome walks in.  The expression on his face tells you that he would rather be a crash test dummy for cold toilet seats than listen to anybody trying to sell him something as he says:

“Yeah, what is it?”

“Uh, my name is Ken Smith and uh, I just thought I’d drop by to uh…”
As the hardened stare from the used car manager begins to bore a hold in your forehead, a bead of sweat falls from your brow onto your business card.

“…uh, give you my business card, I do leather and vinyl repair”

“We already have someone that does that”

“Oh, well I can…”

“Thanks, but we can’t use you”  He lurches away, taking with him the air of tension that will give you bad dreams for the next few nights.

And so it goes with the next few visits. All of them end up in a similar catastrophic finale. They always have “someone else” or they have been using so and so, whatever the case, there is always some reason that they don’t need you.

The scenario repeats itself until you arrive at Devil’s Den Auto Sales and talk with the used car manager, Lou C. Fer.  Mr. Fer seems happy to talk with you; in fact he’s the first to seem to take a real interest in you. He patiently waits for you to finish your presentation on why he should use you - when you conclude he asks what price you are requesting for your services. You tell him the price and he just stares at you blankly with great pause.

After a moment he says, “Well Mr. Kenny-Boy, we use Joe The Pro Recon, they have done our work for about 5 years. Joe’s really good so I just don’t know…”

Joe The Pro, yeah you know who he is. You know him very well.  You regularly hope and dream that your business will have the contacts and reputation that he does one day. In fact you even had a conversation with him many years ago. You called him up asking questions, explaining that you were thinking of getting into the business.  Quite the gentleman, he took the time to talk with you at length about the business aspect of mobile recon. In fact, much of the pricing that you chose for your business was based upon what you learned from him.

On this particular day, you’ve ran into both the name and the reputation of Joe the Pro from a number of different potential customers that you visited.  You hear stories about how Joe started this business with nothing, developed his accounts and techniques and has begun to be considered the “Magic Man” of the area. His loyal customers would talk at length about his honesty and dependability.  Overall, his repair prices were by no means cheap, but everyone considered them fair. He did excellent quality work for a fair price.

Lou asks, “How long have you been doing this?”  His eyes gleam as if he knows exactly what you are going to do next.

Trying not to lie, you say, “just under a year.”

Lou doesn’t say anything, he just looks at you as if expecting something else, like a fat guy at the front of the line eyeing the last donut.  Then at this moment of desperation, when all hope is fading quickly, your truck payment flashes into your head along with the image of your spouse pointing a finger and saying “if this business doesn’t work you better either find a good buyer for one of your kidneys or forget about having sex EVER again.” That’s when you give in to the temptation to cross the line that you instinctively know you probably shouldn’t - and when you start and stop the race to the bottom.

“I’ll do each car for $15 cheaper than Joe The Pro”. There you said it, that wasn’t so bad…or was it? You feel kind of warm in here now, a little cold sweat starts to form on your forehead. Lou flashes a smile at you and claps you on the back as if you did something good. He tells you to get started. Now you’re off and running. The race has begun – the race that nobody wins.

Let’s talk a little more about Joe. Joe is an excellent technician. He started with a one-week course many years ago, but he attends as much training as he can. He is always experimenting with new products and methods. He participates in community Internet forums and helps his fellow techs across the country when he can (like he did when you were getting started). He has a family, house, cars and one employee. He is totally self-made. Joe started his company in this area when no one even knew what vinyl repair was. He built the market and established prices that were fair to the customer and enough to provide a living wage. 

Now all that’s destroyed like a car driven by a 95 year-old driver who had failed laser eye surgery. What have you really done by beginning this race to the bottom?  The truth is, the action that you take by trying to undercut Joe’s price defines you as somewhat pathetic, perhaps feeling that you are unable to compete with him through the quality of your work alone.  You have not only damaged Joe’s livelihood, but you have also damaged the entire market for mobile recon, affecting a lot of people overall.

Let’s elaborate on the effect of this action.  Pretend that there are a bunch of guys out there looking for customers that decide to do the same thing that you did.  Now that the race is on, prices start to drop, and eventually the customers that you secured by undercutting start telling you that they have been offered cheaper repairs by the a new company in the area.

Bear in mind that there is no commodity to trade here - just time.  Your time, to be specific. Maybe you can start cutting corners, try to find cheaper chemicals, maybe just a few more super glue repairs to try and make up for the lost time. Maybe next time you give those package price deals, you just don’t look as hard for what really should be repaired in the car.

Who suffers in the above scenario? We all do. Competing on price is inevitable to some degree, however when price becomes the only competitive factor, we all lose the game before we can start.  I have a saying, “The only time I make money is when my hands are moving.” Unfortunately we only make money when we are working at the repairing or re-dyeing part of our business. Purchasing supplies (hopefully at www.reconsupplies.com), bookkeeping, organizing your truck, spending time talking with clients are all part of developing your business.  In reality, although these things are important, they do not directly make you money.

The downward spiral of undercutting prices only benefits the hungry technician temporarily. As soon as he gets past the “hand-to-mouth” point, increasing overhead, promotion, and all the other things that accompany building a successful business will require more than the “buying a job” mentality.

What about our story?  Joe the Pro ends up being okay. He looses the account at Devil’s Den Auto Sales, but he is OK with that since he never liked Lou to begin with (something about Lou’s pointy ears, brimstone breath, and lack of cologne). Joe’s other accounts were very loyal to him because of his constant devotion to quality. Joe always took the time to explain the benefits of his durable repair technology and how this would help the car lots to please their clientele. He would always present the idea that when a customer purchases a car they would not be happy with their dealer if they discovered all these “surprise” repairs that started to disintegrate before their eyes.  He would remind his clients how this affected the return (or non-returning) customer.

As for Ken, his life did not turn out exactly as he expected.  Having lost his business, he is currently recovering in a hospital located in a third-world country, arguing with the surgical staff about whether he consented to the removal of one or both kidneys (he misunderstood when they told him it was “2 for 1” week).  His spouse sends him “Get Worse” cards weekly (after a prudent purchase of life insurance on Ken).

The moral of all this? Let’s keep this industry based on quality, talent and skill. My hope is that although there will always be some inherent competition with pricing, the majority of the competition will be based upon customer service and how we perform our repairs rather than the concept of “how low will you go.”