EDITORIAL: Sharpening Our Professional Standards
© 2006 Door & Access Systems
Publish Date: Winter 2006
Author: Tom Wadsworth
Pages 48-54
EDITORIAL
Sharpening Our Professional Standards
PDS: What I Really Think
By Tom Wadsworth, Editor
Our interview with Precision Door Service caused quite a stir. Here’s a quick sampling of reader responses.
· One California reader cussed me out and wrote, “If you publish any more crap like this, take my name off your mailing list.”
· But then, a dealer from Oklahoma said, “Those Precision Door folks are on the right track.”
· “Your interview with Precision Door was interesting, but disappointing,” said an Ohio dealer. “Many PDS answers were vague, rhetorical, and were not challenged with tougher follow-up questions.”
· A 20-year industry veteran from Georgia wrote, “I wish I could have interviewed them because I can assure you I would have had all of them stuttering and biting their lips.”
· A Utah reader thought that PDS’s responses were questionable; he said that he “laughed at some of the answers they gave.”
· A North Carolina dealer also scoffed at Precision’s answers and concluded, “I would be really interested to hear what DASMA really thinks about this business.”
· “The piece was fair and journalistically sound,” said an e-mail from a manufacturer’s rep from Ohio, “but I am curious what your personal opinion of the company is now?”
(For more responses, see Letters to the Editor on page 46.)
The Task Before Us
The critical task here is not to bash or praise Precision Door. Constructive comments, however, can help all of us refine our thinking about a professional approach to garage door repair.
The key task, for all of us, is to develop refined service standards for door dealers. The goal is to have an industry that is known for professionalism and devotion to serving the customer. Every customer should experience the “Lexus approach” to service.
The International Door Association (IDA) has developed an excellent Code of Business Conduct for door dealers. However, in the last five years, questionable practices have rapidly grown and spread throughout the nation. Consequently, it’s time to reexamine our thinking about appropriate behavior, specifically in the service and repair business.
This task is like walking through a minefield. Anyone who attempts to boldly say what’s right or wrong is sure to be criticized. But it’s clearly time for someone to step up to the plate.
In this issue, we’ll dissect some key topics and issues raised by our recent published interviews. For each topic, I’ll attempt to draft a guideline that expresses an ideal business approach to that topic.
My comments are mine alone. They do not represent the position of DASMA or anyone else.
Your comments and criticisms are needed. My contribution as an editor is to provoke a discussion that will result in refined standards for improved professional conduct. Your contribution is to see whether these proposals work in the real world and to send me your input. The more input, the better.
Let the dialogue begin.
THE QUEST FOR FAIR PRICING
For the last four years, I’ve heard, read, and received dozens of complaints that some garage door companies are grossly overcharging consumers for service work. Some of these complaints have reached the public media such as Dateline NBC and many local television and newspapers in major cities nationwide. Consequently, our industry is getting a bad reputation because of a few companies.
Legally, the pricing issue is a delicate one because we cannot participate in “price fixing” or “colluding” to set prices. But we can suggest some general ethical guidelines that help to determine fair business practices in your market.
Rule of Thumb #1:
Comparing Repairing With Replacing
In our fall interview, we asked, “How do you justify a repair bill that is more than the cost of a new door?” The respondent replied that you can’t compare a repair bill with the cost of installing a new door because many new doors are cheap and that their repairs are covered by a lifetime warranty.
To me, this response is not fully satisfactory. I think it’s fair to say that most homeowners will believe that they’ve been ripped off when they realize that the entire door could’ve been replaced for the same cost as the repair.
A door’s sections account for the majority of the cost of the entire door. The hardware of a door is certainly important, but it’s obviously a minor part of the overall material cost. So, when replacing some of the hardware costs more than replacing the entire door (all sections plus all hardware), something’s not right.
Two Conclusions
When your repair cost is that high, I come to two conclusions. (1) Your repair estimate may be grossly inappropriate, and (2) the customer deserves to have the option of replacing the entire door system.
Would you ask a computer technician to repair your computer if the repair cost exceeded the price of a new computer? If an automotive repair shop gave you a repair estimate that exceeded the price of a new car, what would you do? I think most people would leave that shop immediately, never return, and warn all their friends about the shop.
The point: If the garage door repair bill is similar to the cost of a new door system, a professional technician is obligated to notify the customer. Further, if your company’s repair bills are frequently more than $400, then I believe that you’re leaving your company open to the charge of price gouging.
Proposed Ethical Standard #1:
If your proposed cost of repairing a garage door reaches 75 percent of the cost of replacing the door, you should inform the customer of the option to replace the door.
(Note: This would also be a fair standard for vehicles, lawn mowers, computers, furnaces, and any other major appliance.)
Rule of Thumb #2:
Follow the Golden Rule
The Golden Rule (“Do unto others as you would have them do unto you”) has long been a reliable business principle. In the case of garage door repair, the principle might be, “Charge others what you would like to be charged.”
Every garage door company owner needs to ask this question: “If I were in the customer’s shoes, would I pay the charges that I am recommending?”
I suspect that many commission-paid technicians would be eager to charge $400+ repair bills, but would be much less eager to pay those bills.
Since 2002, I’ve heard many stories of repair technicians who quit their jobs because their conscience wouldn’t allow them to continue treating customers like this. The conscience often starts nagging when the customer is an elderly person on a fixed income or any low-income family struggling to make ends meet.
Perhaps you’re saying, “I have huge bills for my giant Yellow Pages ads and my franchise royalties. I need to charge these rates to make any money in this business.” If your business model forces you to charge exorbitant fees, then you should reconsider your business model.
Proposed Ethical Standard #2:
If you wouldn’t pay the prices you charge, then your prices are inappropriate.
Rule of Thumb #3:
Charge Competitive Prices
As noted on page 56, the AAA Approved Auto Repair standards require that all approved repair shops must be known for “fair pricing.” AAA does this by checking a random selection of repair orders to see how the charges compare with average costs in the local market. When you’re the consumer, wouldn’t it be great to know that you’re dealing with a business that has been independently confirmed to offer fair pricing?
In our summer issue, we interviewed an anonymous owner of a garage door repair business (not PDS). That owner said, “When I went into this business, I researched the prices from all my competitors and set my prices accordingly or even less.”
I doubt that this particular research covered “all” competitors. I have reason to suspect that these comparisons included the high-priced service-work companies in that area.
Compared to What?
I have a copy of a 2003 invoice from a new giant-Yellow-Pages-service-work company in that same city. One 1/2-HP belt-drive opener was $425. Ten 13-ball nylon rollers were $136 (for two doors, or 20 rollers for $272). A “torsion bearing kit” was $155. Two 31" springs were $118 … each.
That’s just a sample of all items on this one invoice. The total bill was $2,005.79. (I should note that the total labor charge was only $29.95 … as advertised, I suspect.)
Yes, the repair came with a “limited lifetime” warranty. That might justify an extra $50-$75 fee (for legitimately priced repairs), but in my opinion, this “lifetime” warranty doesn’t justify these gross overcharges.
I know what dealers pay for these parts, and so do you. To describe these charges as “gouging” doesn’t quite fit. In my opinion, “rape” is a better word.
Appropriate Comparisons
My point: When independently researching competitors’ published prices, these grossly high prices should not be considered. If you do, it’s no point of pride to say that your prices are 10 percent less—or even 30 percent less—than “some competitors.” If you routinely compare yourself to the industry’s worst, you can lose the faith and trust of your customers.
I think the practice of researching market prices is a common and recommended business practice. But compare your prices to established businesses that have faithfully served the community for 20 years. If your prices are competitive with established businesses, then you probably have appropriate pricing.
From my investigations, I find that extremely few of these giant-Yellow-Pages-service-work companies have kept the same owner for more than five years. Let’s first let them show some stability, integrity, and demonstrate that their business model can stand the test of time. Then, their pricing might be appropriate to consider when determining “competitive prices” in a given market.
Proposed Ethical Standard #3:
If your parts and service prices are 75 to 125 percent of the average prices of all established door companies in your area, then your parts and service pricing is “competitive” and probably “fair.”
THE QUESTION ABOUT QUOTAS
In our fall interview, the respondent emphatically said, “There are no quotas whatsoever.” In the last few years, I’ve heard otherwise, but I’m glad that the company takes a strong stand on this.
Other sources have told me that this company has a history of emphasizing “call averages” to its franchises. I suppose that “tracking call averages” is not the same as “setting quotas.” But the two are closely related.
A Rip-Off Feeding Frenzy
When a company has a large percentage of technicians who are paid by commission, a history of high pricing, and a strong emphasis on call averages, you have all the makings of a rip-off feeding frenzy.
Or, as one former franchise owner told me, “When you have commission-paid technicians and no standardized corporate pricing guidelines, you’re essentially encouraging deception and price gouging.”
The problem with quotas is that they can easily encourage a technician to misplace his focus. Instead of working toward the goal of a satisfied customer, the quota-motivated technician is working toward the goal of a large service bill. If that technician is also paid by commission, he is all the more motivated to run up the bill and fatten his own wallet.
Keep Quotas Out of the Garage
To my knowledge, sales quotas are legal. However, I doubt whether any of your customers would like the idea that your technician in their garage is under pressure to run up a service bill to meet a certain predetermined total.
If we want our industry to earn a reputation for honesty and professionalism, we should avoid all scenarios that could encourage unnecessary repairs and high prices. And those scenarios would certainly include setting quotas for service bills.
As the IDA’s Code of Business Conduct says, “Dealers should avoid misleading selling techniques and practices that encourage customers to purchase unnecessary products or services.” To be specific, I propose adding the following language.
Proposed Ethical Standard #4:
A professional garage door dealer will not set sales quotas for work performed by service technicians.
THE CUSTOMER DESERVES OPTIONS
Aymee Dudley, PDS customer service manager, said the right thing in our fall interview when she injected, “We also give the customers different options so they can choose which repair option they want.”
In the last four years, I’ve received several reports of technicians who have not offered options, but only presented the customer with one shockingly high repair bill. It would certainly be a positive development if that practice has been completely stopped.
Offering options is a step in the right direction, but I can envision a scenario where the options are (1) small rip-off, (2) medium rip-off, and (3) large rip-off. So, it’s helpful to specify the kinds of options presented and how they are presented to the customer.
Good, Better, Best?
Back in 2002 when Dateline NBC scared the daylights out of many Dallas-area garage door dealers, Gary Staats of Action Door immediately changed his service procedures by giving three options to all customers.
“I’m trying to make our business ‘Dateline proof,’” he told me. “All our customers get all three options: low, medium, and high price options, with a warranty suited to each level.” This approach seemed to work for Staats and his customers.
Three Proposed Options
An excellent idea comes from the automotive industry, where giving options is a key part of the Motorist Assurance Program’s (MAP) Pledge to Customers. In an effort to root out dishonesty in the auto repair business, the pledge requires participating mechanics to provide customers with written recommendations for three categories of repairs. (For specifics, go to www.motorist.org.)
The following is an attempt to adapt these well-crafted options for our industry. Of course, to protect yourself and your customer, any service contract should be approved by your legal counsel.
1. System Failure
The first MAP option is a repair that restores the product from a “system failure” condition. In garage door terms, that means the door will not operate unless the recommended service is performed. For a system failure situation, as the MAP pledge says, service or replacement is required.
A good example is a broken spring or blown circuit board on the operator. Unless this item is replaced/repaired, the door system will not function.
When presenting this option to customers, you might say, “To get your door system working again, we need to _____________. That’s the bare minimum that is required, and we estimate that it will cost $_____ for parts and $_____ for labor. With applicable taxes, your total would be $_____. Do you want me to proceed?”
2. Breakdown Prevention
A second option is a service that prevents an impending breakdown. This means that a specified part or system is near the end of its useful life, as defined by the manufacturer. If the part or system fails, the door will not operate, or it will perform poorly. Service or replacement is recommended.
Example: You are called to service a six-year-old door for an operator problem. When in the garage, you notice that the springs are near the end of their expected rating of 10,000 cycles and are showing signs of fatigue.
You tell the customer, “As you requested, I fixed your operator problem. But I should tell you that your springs are worn and are close to the end of their expected life. When they break, you won’t be able to operate the door. Your springs may last a few more years, but I would recommend replacing them. It would cost $_____, but it’s your call.”
3. Improving Performance
A third service option is improving system performance. This service is also optional, but not as serious as breakdown prevention. It would be a suggestion for parts or service that help the door system to operate more smoothly and quietly. The service is not directly related to a breakdown that would cause the door to stop functioning.
Example: While fixing a broken spring, you notice that the five-year-old steel rollers are noisy, showing signs of wear, and lubrication offers little help.
When presenting this option to customers, you say, “As requested, I fixed your spring, and the door is working again. If you’d like to quiet down the door and help it to run better, I can replace the rollers. It will cost $_____ for parts and $_____ for labor. It’s your option.”
Proposed Ethical Standard #5:
When servicing a garage door system, a professional garage door dealer will offer the customer options, clearly and honestly identifying whether each option will (1) restore the door from system failure, (2) prevent an impending breakdown, or (3) improve system performance.
ALIAS-ITIS: USING MULTIPLE COMPANY NAMES
Precision Door said they do not allow their franchises to use any non-Precision company names in advertisements or in their businesses. However, many other door companies are using this practice.
Multiple names (aliases) usually appear in different Yellow Pages ads as a part of one company’s effort to get the first phone call from a homeowner with a garage door service problem. If the homeowner calls two or three companies for competitive bids, he/she might actually be calling the same company.
As we reported in our winter 2005 issue, America’s Choice was fined $20,000 in 2004 by the state of Georgia for “unfair and deceptive practices,” which included “misrepresenting the identity of the business.” From my ongoing monitoring of this company’s practices, it’s clear that America’s Choice continues to use this multi-name tactic in many markets nationwide.
Deception: The Critical Factor
In 2002, DASMA legal counsel Naomi Angel wrote that this tactic can be illegal if it is part of an overall strategy to deceive the public and avoid scrutiny. The Better Business Bureau’s Code of Advertising prohibits BBB members from using “advertisements that are untrue, misleading, deceptive,” or fraudulent in some other way.
I understand that some door dealers may establish a separate company that handles commercial door business or a company that specializes in other product lines such as hollow metal doors. This practice, since it has no intention to deceive anyone, seems to be legitimate. But if you are using more than one company name in an effort to deceive the public, the practice should be stopped.
Multiple names are not wrong in themselves; the key issue is the reason for having them. Are they being used to deceive the public?
Proposed Ethical Standard #6:
Professional garage door dealers will not use additional company names to confuse or deceive the public.
AT THE MERCY OF THE TECHNICIANS?
In our summer 2006 issue, we interviewed an anonymous dealer who was using giant Yellow Pages ads to promote a garage door service company in a large city. That dealer said, “Business owners in the service industry are often at the mercy of our technicians in the field.”
It caught my ear when the same statement was made in our fall interview: “You’re always at the mercy of the technicians on any given job. You don’t always know what they’re doing.”
The Sign of a Fundamental Problem
At the risk of sounding hard-nosed, I submit that no company should be “at the mercy of technicians.” There’s something fundamentally wrong if a business can’t trust or control the very employees who have direct interaction with customers. In my 18 years in this business, I’ve never heard traditional door dealers complain about being at the mercy of technicians.
In the auto repair industry, technicians generally work in one business-owned location, usually under someone’s direct supervision. But in our industry, technicians are generally alone and out in the field. Consequently, if technician behavior is a concern, door dealers must make extra efforts to supervise the behavior of technicians.
Specifically, for the purposes of this article, the top technician sins are: (1) replacing items that don’t need replacing and (2) overcharging for parts and services. If a technician is guilty of either of these, the reputation of that business can suffer greatly. Why would any technician do this?
Three Reasons to Fear Technicians
I think there are three main reasons for technicians to engage in these unethical activities: commissions, commissions, and commissions.
That’s why I’m not surprised that the anonymous dealer in our summer issue refused to discuss how their technicians are paid. Why duck the question? Why is it necessary to hide the pay structure? I wasn’t asking to know anyone’s specific salary or annual income. I simply asked if technicians are paid a commission.
I suspect that our anonymous dealer was keenly aware of the volatility of this issue. How would your customers react if they knew that your technicians are paid a handsome commission for each service bill? If you fear disclosing that information, then you should think twice about having commission-paid technicians.
Terminating Commissions
My point: If a door business is actually concerned about being “at the mercy of the technicians,” that business shouldn’t use a pay structure that essentially encourages technicians to inflate the bill.
If the pay structure of all commission-paid technicians changed tomorrow to an hourly wage or to a salary, I suspect that the complaints of rip-offs would come to a grinding halt. If you fear that your business model would fail without commission-paid technicians, then you should reconsider your business model.
Proposed Ethical Standard #7:
If a professional garage door dealer chooses to pay a commission to service technicians, the dealer must impose safeguards to ensure that technicians do not abuse the system.
In our next issue, we’ll explore several other ethical issues raised by our recent interviews. Until then, I encourage you to send your comments about these seven ethical standards to daseditor@dasma.com.