Our mission for this blog is to provide information on taxation and other business related topics. Yes, we have strayed a time or two and railed about the dangers of the pending socialist medical program. There is only one way to pay for social program and that is by increased taxes. But I digress.
Today’s blog is on business development. I recently purchased a new car from one of the local “no-haggle” dealers. I thought I had made a good purchase. I later learned otherwise. The vehicle that I traded in was leased. For those that don’t know, the price of a leased vehicle is based, in part, on mileage. This is known as the contract mileage. If you go over the contract mileage amount, then you must pay a surcharge for any miles over and above the stated amount. For example, if your surcharge is $ .15 per mile and you go over the contract amount by 10,000 miles, then you owe $1,500 at trade in.
When I made my deal, I was to make the remaining unpaid lease payments on the old car and the dealer was to pay the mileage overage. Well, that didn’t happen. A month after signing the deal, I received a bill from the finance company saying that I owed for the mileage overage. Needless to say, I was surprised. I called the dealer to make sure that they paid the overage amount.
Guess what? I learned that “no haggle” also means “no recourse”. They said that the deal that I thought I made was too good to be true and I should have known better! In order to maintain my credit rating, I now have to pay the outstanding overage fees. Ouch!
As a result, I will never darken the door of that dealership or any of their other dealerships. They will not get $1 in service revenues from me. They will never sell me another vehicle at this dealership or any of their other dealerships. Further, any time someone wants to buy the same brand of auto, I will refer them to the Austin dealership where I did the exact same deal three years earlier without incident.
I understand their business development model, but I don’t agree with it. The experts tell us that business development takes two forms. First, there is new business. This is where you go out and get a customer that has no prior history with your company. Second, there is maintaining your current business.
In every business development seminar that I have attended, the experts consider maintaining your current business as the business number one development priority. These are the customers that come back time and again. They provide referrals. They are the base of your business. It is said that one unsatisfied customer can harm your business more than ten new customers would benefit it. I believe this statement to be true.
Car dealers and other high volume businesses believe that there are an unlimited number of customers. In a capitalist society this simply isn’t true. Consumers have a choice. They vote with their check book. If you don’t believe, ask Sears, Woolworths, General Motors, Chrysler Motors, and so on. There is a reason that HEB has run every grocery chain on the planet out of town…..and it isn’t just pricing.
When you put your annual business development plan together, don’t forget about your current client base. Don’t be like the “no haggle” guys. Be an HEB.
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