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 Post subject: closing ratios
PostPosted: Wed Dec 20, 2006 11:36 am 
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Hi guys:

I recently came across the following:

If 10 people walk into a jewellery store and ask a question about:
REPAIR: 9 out of 10 will go ahead with the repair.
CUSTOM: 7 or 8 out of 10 will have the item made.
BUY FROM CASE: 3 out of 10 will buy from the case.

How do these figures stack up against your experience?

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PostPosted: Wed Dec 20, 2006 1:06 pm 
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Hi,

For repairs it would be 100% in my experience. The others depend on talent of the sales person/goldsmith.


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PostPosted: Mon Jan 01, 2007 1:40 pm 
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Doos wrote:
Hi,

For repairs it would be 100% in my experience.


Raise your prices.

Neil

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PostPosted: Mon Jan 01, 2007 1:44 pm 
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Quote:
Raise your prices.

Neil, that's funny!

I would have to agree....with Doos that is.
100% of folks wanting an item repaired will leave it with us, if we agree to do it.


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PostPosted: Mon Jan 01, 2007 2:29 pm 
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I’m quite serious. If you meet no resistance on the price, you aren’t charging enough. Put another way, if you are doing $50k/year in repair business and raise the prices by 50%, you’ve just added $25k directly to your bottom line. If your closing ratio drops to ‘only’ 80%, you’re still up by $10k and are now working 20% less! You can either take that time and money home or spend it on things like doing better work, better marketing or just pay your employees better (which usually results in better employees). The work improves, morale improves, jobs get done on time and customers feel that although you may not be the cheapest, you’re the BEST.

Neil

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PostPosted: Mon Jan 01, 2007 3:29 pm 
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Hi Neil,

The problem is that a drop of 20% in repairs may also mean a drop of 20% in sales. If you let them go to the neighbour, they might not come back.


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 Post subject: Repair pricing
PostPosted: Mon Jan 01, 2007 5:05 pm 
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Neil .... doos:

The problem with repair pricing is that for years it was a "customer service" used as a loss leader to cury favor with ones "regular clients".

Today firms are faced with two problems:

1: The cost per square foot of store space is high.

2: Bench Jewellers are a dieing breed, the need is not being met by schools that have a teacher/student ratio of 1:15 and graduates are expecting a "living wage".

The only sane answer is to price for a return on per square foot occupied on the same basis as the store front. This will allow the firm to pay a high enough wage to attract and retain bench jewellers with experience and knowledge. This in return will give the firm a reputation of expertise that customers can count on, after all repairs are a matter of trust. The client can count on that special piece being treated with care and being returned "as good as new". It also does away with the PITA surcharge that some repairs attract, if the price is the same for all classes of repair (not the same price for all but a set price on each class). The store down the street charges less, ok let them live with it. Anyway just my thoughts on it :)

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PostPosted: Mon Jan 01, 2007 5:53 pm 
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Doos,

I agree, and a 20% walk out rate is huge. My guess is that you could raise prices with no significant affect on sales at all. I have been through this process before and I’ve walked others through it as well. Jewelers are scared to death of charging for their skills and it’s a terribly self-destructive habit. The reason that people bring repairs to you instead of your competition is not because they have a perception that you will be cheaper, it’s because they have a perception that you are the right person to work on their treasures. Maybe it’s because you are convenient to get to but mostly repair jewelers are a destination. Hopefully they’re right but either way people will drive all the way across town to get to you.

I don’t know your market but I’m pretty familiar with the stores around me and what they charge for various things. Let’s take a sample job:

Size down a new 14k gold ring that somebody got for Christmas from a 6.5 to a 6. Now!. That’s a mainline repair job that everyone will see several times this week, right? At the cheapest store I know, that job costs about $10 retail. At the most expensive it’s closer to $100. Pretty much everybody sees that same high closing rate of 90%+ so what’s the difference? The most expensive stores tend to have higher visibility locations with higher overhead and they tend to have more employees out front doing sales while the cheap shop tends to be one guy doing everything. Those sales people aren’t just window dressing. The repair I just described involves two visits to the store and in both cases they are taking the opportunity to sell more merchandise and additional repairs. Stone tightening, resets, rhodium, expandable shanks, and sizing for other rings all come to mind but what about matching earrings or the ring that they really wanted instead of the one that their husband bought on ebay? Even a tiny closing rate on this stuf can make a huge difference. They get the repair sale AND they sell more merchandise. What about the middle? For $40 you get a shop with a single worker who does everything too, and he also closes 90% of the customers that walk in the door with repair. No extra employees, no higher rent, just more money. He’s selling his expertise and customers are happy to pay it. They know it’s cheaper down the street but they want to leave it with someone they can trust. People see him as worth more because he charges more.

The bottom is a trap and it’s almost always fatal for businesses. That $10 jeweler hasn’t sold a 3 carater in her life. The only custom work she sells is knocking off designers for less money and she does a crummy job of it because she can’t afford the proper tools or to take the time to do a proper job. She spends 80% of her time doing work for other jewelers who then double or triple her prices to the public and then she goes home wondering why she works her fingers to the bone (literally) and doesn’t have any money left over to show for it. Nuts. If that’s you, here’s my advice. Raise your price to $15 immediately. Then raise it again to $25 in 6 months and again to $30 next New Years. Charge a 50% ‘rush’ charge for while-you-wait service. You just took it from $10-$45 in a year! Half or more of your customers won’t even notice! If some of that money goes into offering a better service, they’ll notice because they’ll like it better and they'll send their friends.

If you’re in one of those flea market locations or some similar place where you have a row of $8 workers next door, move out. The customers you want aren’t shopping there anyway.

Neil

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PostPosted: Mon Jan 01, 2007 6:35 pm 
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I think jewelers around here do it differently. We just send out the repairs to a specialized contracted repair shop and double the prices. No worries about labour or overhead. It's like a battery replacement job .. great profits.

The small shops that do have their own benchpeople create stuff that dont need repairs (well not unless you throw the ring under a truck).


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PostPosted: Mon Jan 01, 2007 7:00 pm 
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Wolf,

Can you believe the nerve of those benchies, expecting to make a living wage?

Many years ago, I was an MBA student and I needed to prepare a business case study. The business I chose was Hughes Airwest, a now long defunct airline. At the time, Hughes had a lock on the route from Denver to Salt Lake City but they found that the planes were only about a third full. The curse of airlines is that most of the costs are things like equipment, fuel, insurance, and crew salaries, which are all fixed costs. They don’t change with the number of tickets you sell. The flights have to be scheduled years or even decades in advance in order to get FAA approval and it’s incredibly difficult to change. Hughes wanted to sell more tickets to SLC so they had a sale. Half price! They figured that three times as many tickets at half the price each would be fine. It didn’t work out that way. People don’t fly to Salt Lake because of the price of the ticket, they fly because that’s where they want to go. Cheap tickets won’t change that, at least not much. The result of the sale was that pretty much the same people still wanted to go to Salt Lake as before, but now they only paid half as much to get there.

What does this have to do with jewelry repair? Lots. If you charge $10 for a repair, that’s what they’ll pay. That’s what they’ll think it’s worth and they won’t even know that you’re employees are collecting food stamps because you can’t afford to pay them or that the ones with any sense go get a real job somewhere else. It won’t bring you more business because the people don’t get jewelry repaired because they liked the price quoted, they get things repaired because they were in need of repair.

Neil

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PostPosted: Mon Jan 01, 2007 7:06 pm 
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Doos,

Not so different. Most jewelers here outsource their repairs as well. You choose who to send which job to, you are responsible for when it gets completed and you are responsible for it while it’s in your subcontractors possession and you are the one that the customers will feel is responsible for the craftsmanship, be it good or bad. Whether the worker is an employee, a contractor, or you do it yourself is a tiny detail to most people. You say you double the prices … why not 2.25x? Why not 1.75x?

It's worth noticing that with most simple repair type jobs, the task of taking in the job, returning it and collecting the money is more work than that actual bench worker is doing. That part is almost always done by either the owner or employees, as is the added task of dealing with the contractor(s).

Neil

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PostPosted: Mon Jan 01, 2007 7:27 pm 
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The thing with repairs jobs is that they may take time indeed. Also a great time for you to bond with the customer if done right.


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 Post subject: repairs
PostPosted: Mon Jan 01, 2007 8:02 pm 
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Hi Everyone,

I must agree with Doos on this one - especially bonding with the customer.

I recently bought my mum a peridot ring from QVC :oops: I know, I know - but it was a lovely ring, and a good price.
However, their ring sizer is rubbish, and the ring ended up being two sizes too big.

We have four jewellers in our town to choose from - and believe me, they will NEVER get my custom again.

One flat refused to do the resizing when he discovered it was a QVC ring,
the second qouted £10, then raised the price to £20 because it was QVC
The third, told me I was wasting my life watching TV - he got an earful and threats about disability discrimination.
The fourth refused even to touch the ring - claiming QVC jewellery was well known to explode on contact!!!

Had any of these jewellers even been polite, they would have had both repeat custom and referrals. But their sour grapes over QVC will very probably shorten their trading days.

A little politness, even friendliness goes a long way.

Love gemmsong

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PostPosted: Mon Jan 01, 2007 8:17 pm 
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If jeweler #2, the only one who was willing to do the job, had quoted you $25 to to the job in the first place, complimented you on your excellent taste and offered you a lovely pair of matching earrings, how would that have gone? He would have got a repair sale, possibly an earring sale and a referring repeat customer, right? In none of the 4 was the problem that you were unhappy with the price. If, indeed, the ring is fundamentally defective (which is entirely possible), he could have politely explained to you what was wrong, what could be done to fix it and at what price. Even if you didn't do the deal, you would have gone away thinking that this was a first class store and your chances of going back next time would be greatly increased. This would be the 1 out of 10 repair customer that walks away without closing a deal and even that has good potential for downstream sales.

I have no problem with the idea that sales takes time. I was just defending the point that since you're doing half of the work, it's entirely fair that you get half of the money. In the case of that sizing I described above, you're probably doing 80% of the work.

Neil

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Last edited by neil on Mon Jan 01, 2007 10:14 pm, edited 2 times in total.

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PostPosted: Mon Jan 01, 2007 9:12 pm 
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Hi Neil,

Thanks for your reply, and I fully endorse the concept of a good wage for a good days work - it should never be any other way - irrespective of the type of industry.

I placed that post in agreement with Doos sentiment - of establishing rapport with your customer.

The day I tried to get my mums ring resized, instead of coming home happy, with the job achieved - I came home with the ring still too big and having been insulted by four so-called professionals. Ask yourself why?
Because I didn't buy from them originally - that fact was quite clear - as several wasted my time [ and their own] ranting about how many people are now buying from QVC.

In reality, most of those "lost sales" were not lost sales at all - as these small jewellers had nothing like QVC's range to offer in the first place.
Certainly, none of the four shops I visited had even one peridot to choose from.

It seems to me they turned down business, they could certainly have used.
Indeed in one of the shops, I was veiwing a lovely matching Rennie Macintoch Set - which I may well have bought had the jeweller not be so rude to me.

Any business needs customers, and cultivating relationships costs nothing - if a potential customer enters your premisses - the least you can do is be polite - who knows, that customer maybe a millionaire - it's happened before.

I hope ultimately to start up a business, designing and selling jewellery, and I've been putting as much thought into customer care, as I have my designs. It's a well known fact in marketing that it is ten times easier to sell to a current customer, than it is to acquire a new customer.
Repeat business is the "bread and butter" of most businesses - and though the old adage "the customer is king" has been out of vouge for many years now - I plan to remember it.

A customer well treated will give lots of free advertising - but a customer mistreated will do you untold ddamage.

I know I'm just a beginer, but that's my thoughts on the matter anyway.
Sorry for the rant :oops: but that ring resizing issue really annoyed me.

Love gemmsong

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