Tuesday, September 1, 2009

Tales from the Little Red Truck: The $19.95 Tune-up

A-abc actually started out as an appliance repair company. In fact, in the early days, Ahron used to carry his tools in the trunk of his car and run all the calls himself.

Of course it grew from there, but while the appliance department never generated revenue like our HVAC department, it was profitable and it added tremendous value to our company in another important way.

We discovered our list of appliance clients was very responsive to our HVAC offers. It made perfect sense because they had used us before and knew what we were all about. One of the first offers we made to them was a $19.95 a/c tune-up. The price was ridiculously low, but we went one step further by promising they wouldn't have to pay unless they were astounded by our service. In other words, we made them an offer they couldn't refuse.

The response to that offer was really good. We actually averaged over $180 per call (on the initial call), which wasn't great, but it was almost 10 times more than our offer. More importantly, we had converted hundreds of appliance-only customers into HVAC customers. We made a lot more from those clients over the next 5-10 years.

The low-cost tune-up became a regular promotion for us using direct mail, newspaper, radio and more. We limited it to new clients as an "introductory" offer. Although we didn't make much on the initial call, we knew how valuable it was to gain a new HVAC client. Ahron's "better than money-back" guarantee made it easy for people to try us. I can't ever remember anyone refusing to pay.

Here's a copy of the letter.

2 comments:

  1. Hi, Bob. How did you convert a service you advertised as $19.95 into an average of $180/call? How did you get customers not to see that as a sort of bait-and-switch and get upset? Did any get upset with you, and how did you handle it? We need more "tales from the little red truck", especially details about how you actually made the jump from $19.95 to $180 without losing the customer along the way.

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  2. Well Ryan, the key to doing it is to make sure you give them EVERYTHING you would give to someone paying full price. That way there's no trickery or cheating going on. The reason the average call was $180 was because we were selling repairs, upgrades, equipment and maintenance agreements--when needed.

    The $19.95 offer was legitimate. That's all they had to pay and they got a complete tune-up of their system. Even at $180 per call, we probably lost money initially but we gained new clients and made much, much more from those clients down the road. It wouldn't have worked if we went out and did a shoddy tune-up or our guys didn't "astound" the client.

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