Good, Better, Best Rebuild Options

Guest writer Ron Wilson tackles the gold standard of componentry in this week’s blog post: “Good, Better, Best Rebuild Options.”

Over the years working in the service areas of a dealership (regardless of the brand) we have most likely heard the customer say the dealership “gold plates” the component rebuild. Which means: Price is too high, over builds the components, not providing options to the customers. 

Often the dealership will provide discounts on a rebuild to meet the customers’ pricing concerns. Discounting cuts into the dealers’ profit margins and doesn’t address the image of being overpriced. 

The dealership can address the complaint by providing repair/rebuild options that will meet the individual needs of the customer. The marketing concept “Good, Better, Best” (GBB) is a pricing and marketing strategy to address the various customers’ price points and the life expectancy of the component/machine. Below is a breakdown of the concept from the customer’s view:

• Good:
• • Price level: Lowest
  • Quality Level Basic
  • Essential repair/rebuild with minimal extras.
  • Meets customer life expectancy of the component- just one more season, get it through this year and will the trade/auction/sell machine.
  • Minimal warranty expectation
• Better:
• • Machine mid-life rebuilds.
  • Balancing out the component rebuild with the life expectancy of the overall machine.
  • Due to the increased level of rebuild an increase in warranty/life expectancy is expected. 
  • Increased price level due to increased level of rebuild (additional parts and labor) to complete the rebuild.
• Best:
• • Highest level of rebuild.
  • Additional warranty coverage available
  • Higher expectations relating to the level of parts and labor required to complete the rebuild.
  • Maybe considered equal (or remarkably close) to a new component
  • Higher level of warranty coverage, with possibly extended warranty offering available

Benefits of the “Good, Better, Best” Strategy:

• Market Segmentation: Allows the dealership to meet the needs of a wider customer base with varying repair/rebuild budgets and expectations. 
• Customer Choice: Empowers and includes the customers in the repair/rebuild process to choose the repair/rebuild level that best meets their needs and financial capacity.
• Revenue Optimization for the Dealership: Increases potential revenue by capturing sales across different price points. Many customers may be going to your competitors because the repair options are available within your dealership.
• Provides standardized and consistency to the rebuild process: Standardization and consistency improves turn time, quality of work, and fewer job interruptions due to waiting for decisions from customers.
• Upselling Opportunities: Provides the customers an opportunity to move up to a higher price tier based on the additional added value and features.

Implementation Tips

• Clearly Define Features: Make sure each tier is well-defined in terms of features and benefits. A common understanding between those that have established the price, rebuilds the components, and the salesforce that communicates the various levels of rebuilds to the customers.
• Transparent Pricing: Clearly communicate the differences in pricing and what customers get at each level. Utilize visual diagram/cut away images to show what is included within each rebuild level.
• Customer Feedback: Use customer feedback to refine and adjust the tiers to better meet customer needs and preferences over time.
• Regular Reviews: Periodically review and adjust the tiers to ensure they remain competitive and aligned with market demands.
• Utilized the Dealer’s Rebuild History to Establish Rebuild Level: The dealers rebuild history can be a great starting point to identify which subcomponent to include in which rebuild level.
• Work Closely with the Dealers OEM: Gain input from the OEM based on their historical information and awareness of other dealers that have already developed these offerings.
• Visit with Your Customers to Identify what the various Repair Options should Include:  This can be done as part of a customer focus meeting, Parts and Service Sales team conduct interviews, and examine what the competitors are providing.

Using the “Good, Better, Best” pricing model can help businesses effectively segment their offerings, appeal to a broader audience, and maximize their revenue while being more competitive in the marketplace and providing a level of rebuild the customer can select that best fits their needs.

Look at the article “The Good-Better-Best Approach to Pricing. Why every company should consider a tiered model.”  Written by Rafi Mohammed and published in the September-October 2018 Harvard Business Review.

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