A well-run repair operation can be a tremendous asset to your business. Providing reliable repairs leads to repeat sales, solid profits, a competitive advantage and a reputation in your community as a “real” jeweler. In fact, research by Jewelers of America shows that 86% of those who buy jewelry choose a store based on whether it does repairs.
The flip side is that it takes a lot of training, sound pricing and careful handling at every step to prevent those classic nightmares: damaged, stolen or lost customer jewelry. A poorly managed repair service can irreparably damage customer relationships and create a serious cash drain on your store.
To help you sidestep these pitfalls and get the most from your repair business, we talked with experts and jewelers all over the country to compile this comprehensive, step-by-step guide. It’s one in our “Manager’s Guide” series of articles designed to keep your business prospering.
MARKETING YOUR REPAIR BUSINESS
You need to make it well known that you do repairs. Even if you already have a fairly busy repair shop, you can increase the volume of work through promotion.
Buy newspaper ads. Ken Fellin, owner and president of Baton Rouge Plaza Jewelers, runs a repair sale four times a year. Typically, Fellin promotes the sale in a small newspaper ad that looks like a coupon. The text has a call to action: if you come to the store tomorrow, stone tightening and ring cleaning are free. The ad attracts $1,000 to $4,000 in repair business in a single day. The sale helps this nearly $1-million-revenue Louisiana store reap about a third of its profits from repairs.
Mail postcard promotions. John S. Cryan III, owner of John S. Cryan Jewelers in Southampton, Pa., sends out cards promoting repair services at 10% to 20% off regular prices. The typical response to a 3,000-piece mailing is 100 visits with one to four repair jobs each. Sometimes the promotion flushes out a high-volume customer, such as the woman who brought in 18 rings for sizing. In 1997, repairs accounted for a fifth of revenues for the store, which also serves as a trade shop for other area jewelers.
Use direct-mail promotions. “Tax time in April is the slowest for us,” says David S. Geller, owner and president of Jewelry Artisans in Atlanta. Solution: an April repair sale. Using his customer database (many of the names and addresses are captured from repair take-in envelopes), he does a mailing offering a 20% discount on all repairs and custom work. The promotions have increased his April repair business 25% to 40%. He runs a similar sale later in the year.
Geller, a well-known specialist on jewelry-pricing techniques, also mails thank-you notes to every repair customer, even those who merely had a watch battery replaced. “The way to get more business is to treat people well,” Geller says, noting that if a customer is happy with the first repair, she’ll often return with other items.
But repair promotions aren’t for everyone. David C. Rotenberg, president of David Craig Jewelers in Langhorne, Pa., no longer holds repair sales. “It built foot traffic, but the downside was people who wanted repairs done quickly. We weren’t able to service them because of the volume of business.”
Offer take-in incentives. Underwood’s Jewelers in Fayetteville, Ark., mainly relies on cash bonuses to the sales staff for bringing in profitable repair jobs.
The only traditional marketing for the store’s repair services, which generate about 10% of its $1.5 million in revenues, is a brief mention of them in a TV commercial.
It’s a cliché in the jewelry industry: if you’ve done take-in procedures correctly, someone could open all of your repair-job envelopes, dump the jewelry in a pile on the floor and you could sort out which job belongs to which envelope.
That’s just about what happened to Jon Barry DiNola, owner and president of Yardley Jewelers Inc. in Yardley, Pa. When smoke and flames engulfed his store last October, he had 50 pieces of jewelry on his workbench for polishing and another 450 repair items in the shop safe, both in-house repairs and trade work. Firehoses flooded the store and blew out display cases of jewelry, equipment and reference materials, leaving a six-inch mat of debris mixed with valuables. Repair receipts were soaked and ceiling tiles fell in on the repair shop.
Fortunately, DiNola’s log book of repairs was salvaged and the job receipts could be pieced together after drying. He was able to return every single item to its owner. “Proper take-in procedures are well worth the while,” says DiNola.
As his experience shows, they protect both you and your customer, plus they ensure things go smoothly at the bench and at pick-up. Here are the steps to follow for the best take-in procedure:
Use a three-part job receipt. One copy is for the customer, another is attached to the job envelope and a third – kept separate from the jewelry that’s in for repair – serves as a critical back-up to protect you in the event of a loss or customer dispute. Most stores also note each job in a handwritten log book or computer database as well. Stores have varying approaches to the typical elements of the repair receipt.
Obtain full customer information. After capturing the customer’s name, address and telephone number, ask for the birth date, anniversary date and spouse’s name. These provide additional marketing information and a way to confirm the customer’s or spouse’s identity.
Record a careful description of the jewelry. Sounds simple, but this might be the trickiest part of the take-in procedure. First, it’s important to examine the jewelry under a microscope or loupe in front of the customer. Point out any damage, scratches or signs of wear. You may find things the customer was unaware of – adding to the value of the repair job.
Next, measure the dimensions of the item and the size of any stones – both diameter and height (if possible). Don’t write down a stated carat weight for any stone that’s in a setting. How can you be sure of the weight unless you take the stone out of the setting? If you do that, you’re open to accusations of stone switching.
For chains, record length, weight and a description. To document where a chain was broken, measure from the jump ring to the break. Some stores also photocopy the chain so that if it later breaks in a different place you can prove your repair wasn’t flawed. Also, count the number of “pearls” or beads for a re-stringing and measure the diameter of each. Don’t worry about length: strands typically shrink after a restringing.
There are two ways to describe the metal and stones. The prevailing approach is minimal: state the color of the metal and the color of the stones or “beads,” even if they’re pearls. According to William P. Herrbold, vice president of claims for Jewelers Mutual Insurance Company, a very general description of the stones or metal such as “yellow metal” and “white stone” is sufficient. In the event of a loss, payment on a claim typically is determined by pre-existing documentation such as an old appraisal or bill of sale.
Some jewelers, however, feel it’s important to identify the metal and the stones fully at take-in to establish trust with your customer. “Customers won’t trust you if you don’t give them a complete receipt,” says Geller. “If you’re not sure, write that it’s either one thing or another, and then call them later when you’ve determined the answer.” The sales staff should write up the identification and the shop foreman should confirm and initial the receipt in front of the customer.
David Craig Jewelers switched from using a general description at take-in to providing a correct identification. “If we’re going to be responsible for something, we better have a good idea of what it is,” says Rotenberg. “We need to make a decision in advance whether to work on it. For instance, if you have a clarity-enhanced diamond, you may decide not to deal with it. When you open up the dialogue with the customer before you begin the work, it’s never a problem, but if you wait until later you’re on the defensive.”
Many jewelers make a quick hand plot of a stone at take-in to protect the store against claims of switching. Some stores do the plotting electronically, through technologies such as Gemprint, which can be used to record the unique characteristics of the gem and provide a printout of stone identity, which then can be attached to the customer’s receipt. The technology creates a digitized record for the store that’s also sent electronically to the Toronto company’s database. Insurance companies and law enforcement agencies use the database to identify stolen gems.
For even greater protection, some stores videotape the inspection of the piece under a video microscope, at both take-in and pick-up – a documentation strategy that Jewelers Mutual views as “ideal.” Other stores go one step further and upload these videotaped images into store management software that also provides tracking and receipts for repairs.
Record estimated value. Of course, you don’t have time to do an appraisal at take-in, but most jewelers record the customer’s estimated insurance value for the piece. If that value seems too high, you can compare it to a similar item in the store and try to come to an agreement with the customer. If the customer still balks, you have three options: do an appraisal, work on the piece while she waits or decline the job.
Consider a disclaimer. Some store take-in forms state that the jeweler can’t be held liable for damage in the event of undisclosed or unstable gem treatments. Jewelers of America’s model repair take-in form was recently updated with this type of statement. Some attorneys and insurance agents, however, question how much protection such disclaimers provide.
An alternative is to state that the store can’t guarantee its repairs for a particular item. This disclaimer appears on Jewelry Artisans’ take-in form. Both forms are available through Atlanta-based Impact Specialties (800-543-4264) and can be customized with your own store identity.
Decline some jobs. “You don’t want to undertake an impossible repair,” says Bill Underwood of Arkansas. “I don’t care how good you are.” He’ll show the customer the piece under a microscope and say, “This is like a house with an inadequate foundation. No matter what we do, it won’t be right. We want you to be satisfied with our store, and we’re so sorry to turn this down.” Underwood’s routinely declines to repair $199 tennis bracelets made of what his staff calls “frozen spit.”
Another way to decline a job diplomatically is to say that repair of gold-plated jewelry, for example, is outside your area of expertise, then refer the customer to another store that routinely handles low-end jewelry.
Hone your staff’s skills. Obviously there’s a place for entry-level people at the front counter. But over time, sales associates should gain skill in estimating prices and evaluating pieces taken in for repair. Ideally, they should know how to use a diamond tester and a microscope, and be able to recognize common stones. (Jewelers of America is creating a Sales Associate Certification program to recognize and raise the professionalism of front-counter employees.)
Professional take-in skills are critical, notes David E. Howard, owner and president of Trade Tech Albuquerque. “There are three people involved in every job: the customer, the jeweler at the front counter and the benchworker. When you write up the job on the take-in ticket, everyone needs to speak the same language so that the project can proceed without delays and redo’s.”
REALIZING PROFITS FROM REPAIRS
Some stores lose money on repairs, others don’t. Many stores don’t even know whether their repair department is profitable.
You’ll need to evaluate not just the total revenues associated with repairs, but whether the department, considered separately from your retail shop, turns a profit. Pricing strategies are one consideration, but the full range of costs involved in doing repairs is equally important.
What to charge. Some jewelry stores simply base their pricing on what the competition charges. Others will set prices based on a mark-up of basic materials and benchworker time. Still others build store overhead and indirect worker costs (benefits, taxes, bonuses, etc.) into the equation as well – a much more realistic reflection of actual cost.
Geller’s Jewelry Artisans store in Atlanta derives 30% to 40% of its $1.6 million in revenues from repair work, using a strategy Geller refined in collaboration with his accountant after he nearly went bankrupt in 1987. “The correct price for jewelry repairs has nothing to do with what your neighbors charge,” says Geller. “You would never call around for the price of a chain. People call around for repair pricing because they don’t know the cost.”
He marks up repair services just as he does jewelry, with retail repair prices incorporating labor as 22% of the amount charged, store overhead 30%, the sales commission 10% and basic materials (marked up two to three times) about 38%. “A dollar spent on a bench jeweler should have the same mark-up as a dollar spent on a piece of jewelry. In fact, it should have more because you might have to do a repair over again for free whereas returned jewelry can be resold.”
Geller’s prices for standard repairs are compiled into a 282-page repair and design price book used by front-counter sales staff. It includes illustrations, cross-referencing and standard vendor information. It’s designed to help salespeople work efficiently and communicate basic repair concepts to customers, as well. The book is available to other retail jewelers through Impact Specialties, which can incorporate custom pricing and store identity information. “I wrote the book so that salespeople, instead of coming to the jeweler to ask what does it take to fix something, would say, ‘I figured this up for repairs. Does the pricing look okay to you?’” says Geller.
He charges more for while-you-wait repairs. “Customers who want this are willing to pay extra, and jewelers have the right to gather the extra money,” he says.
Commissions. Commissions are an important element of Geller’s strategy for running a repair shop profitably. He pays benchworkers 22% of regular labor charges and sales staff 10% of retail sales and repair charges. This approach has its risks: careless work if a benchworker rushes through jobs to earn more commission and low-volume months that might leave a worker in a financial pinch.
Geller’s view is that commissions are an added incentive for salespeople to sell repairs, for benchworkers to work productively and for everyone involved to be eager to handle lucrative while-you-wait repairs. “Our bench jewelers made between $31,000 and $51,000 in 1997. They’re all paid what they’re worth and they all produced four times their salary in revenues,” Geller notes.
Benchworker incentives. If you don’t pay a commission, how do you motivate benchworkers so that labor costs don’t chew up your profits? One approach is to use a standard price list at take-in. A matching price list posted in the shop shows the labor factor for each type of job. Benchworkers use this list to keep track of whether they come in under time or over time for each repair. Those who come in consistently under time get a cash bonus or pay increase.
Outsourcing combined with in-house repairs. Some stores use trade shops for a portion of their repair services to reduce payroll costs and get a reliable mark-up on repair expenses. Gleim Jewelers in Palo Alto, Calif., which attributes about 8% of its $9 million four-store revenues to repairs, uses this approach. Store president Georgie Gleim says she prefers to use her jewelers for quick turn-around jobs and complicated repairs that merit their expertise.
While her store uses a price list, it’s not based on a standard formula or overhead, in part because she hasn’t determined how to calculate overhead. “Every year, I say we have to get a handle on what our costs are. Meanwhile, we try to keep our repair prices based on peer pricing and whether we think we will make money on them,” Gleim notes. The store’s three-time mark-up on trade-shop pricing provides a reliable way to realize profits on those repairs.
HANDLING THE REPAIR
This is when you find out whether the take-in information was adequate and whether the basic identification of the materials was correct. It’s also when your staff needs to tread lightly and know the limits of its knowledge. Some stores post a list (by the ultrasonic cleaner or steamer, for instance) of what you shouldn’t do if you don’t know the history of a stone. Many have a policy of not working on a piece – not even washing it – until an expert gemologist has analyzed the stones. That way if it turns out to be a synthetic or a treated stone that can’t withstand the repair, a jeweler can prevent damage and protect the store against accusations of stone switching.
Once a stone is out of its setting, you could be in for trouble if things aren’t what they seem. Geller recalls how a customer once bullied a novice sales clerk into writing on the take-in envelope that a ring with a clear stone was a 1.27-ct. diamond valued at $13,235. Before he did any work on the ring, he took a closer look and discovered it was cubic zirconia. “I called the lady up and told her ‘We’ve done no work on your ring, and the stone’s not real.’ Her first words were, ‘Funny, you gave me a receipt for a diamond.’”
The customer, an attorney, called in a gemologist who frequently testifies in cases of stone-swapping. The gemologist looked at the ring under a microscope, but he saw no markings on the prongs that would indicate the stone had been removed. “Because we had done no work to the piece, it would have been impossible for her to prove we had switched the stone,” Geller says, adding that, “You have to look at a piece before you start working on it, and you have to speak up.” Had he taken the stone out of the setting, he probably would have had to replace it with a real diamond.
There are greater risks out there for repair shops now that so many treatments are being used on gemstones, says Alan Revere, director of the Revere Academy of Jewelry Arts. “You really need to be a trained specialist in order to conscientiously protect yourself and your customer.” Benchworkers who can properly identify stones can refer to a chart that indicates what stresses and abuse each stone can take.
Not every jeweler has a certified gemologist on site. Those that don’t need to upgrade their knowledge, Revere says. He adds, “Benchworkers always need to ask: ‘Is this a safe thing to do? Am I knowledgeable enough to work on this piece? Am I confident about working on it?’ The bottom line is that if you can’t afford to replace a stone, you shouldn’t work on it.”
Nasty surprises. Sherrie Kysilka, manager of Jewelry Manufacturing Arts at the Gemological Institute of America, recalls a situation before the days of diamond testers in which a colleague failed to run tests to determine whether stones in a ring were natural diamonds. The jeweler noted on the take-in envelope that the five 1/4-ct. stones in a ring were diamonds. After soldering the ring, he slipped it into the pickle pot and it quench-crackled. “It was an expensive, stupid mistake,” Kysilka says, because $6 stones had to be replaced with $1,000 diamonds to make things right.
Even with qualified, knowledgeable benchworkers, accidents happen. The rule of thumb is to call the customer immediately, apologize and offer to let them approve the replacement stone you’ll purchase. “If you have to pay to replace a stone, there’s no reason to be chintzy. You could lose a customer and if they take you to court, you will pay,” notes Geller. For a damaged stone valued under $1,000, he typically surprises the customer by making it into a pendant and then replacing the damaged stone with one of equivalent value and quality. “People understand that you bent over backwards to make things right,” he notes.
Rotenberg of David Craig Jewelers chipped a diamond when replacing the prongs on a engagement ring. “We could have hidden the chip or had it repolished to hide it. But we didn’t,” he said. “We called the client and told him that the chip in his wife’s diamond was repairable or, if he wanted, we’d replace it – whichever he’d like. That $75 repair cost our store $2,100.
“But there’s a nice end to the story,” Rotenberg adds. “The customer called a number of other jewelers in the area to raise the issue of what happened. Then he called our store and said, ‘You have a hell of a reputation. Your competitors told me ‘If anyone’s going to break your diamond, David Craig’s the best one to do it.’”
Benchworker qualifications. There are a number of well-regarded technical schools at which benchworkers can hone their repair skills. But the emerging standard of professionalism seems to be Jewelers of America’s Bench Jeweler Certification™ program, introduced in late 1996. So far, 600 people have been certified.
Among the merits of the four-tiered certification program is that it provides a measure of proficiency that indicates the skill, speed and experience of bench jewelers at all stages of their careers. It also provides feedback indicating where skills need to be refined. “It’s not just a credential you hang up on the wall and bust your buttons on,” says Mark Mann, director of professional certification at JA.
With the demand for qualified benchworkers outstripping supply, you may need to train your own, underwriting their studies at a technical school. And where do you find a person to train? Sometimes it’s a polisher who was hired right out of high school. Other times you may need to recruit from a technical school, poach from the competition or place ads in jewelry publications or local newspapers.
“The reason jewelers can’t find qualified benchworkers is that they don’t pay well,” says Alan Revere. “Take good people, invest in them, train them and let them know they’re valued by investing in them. Then they’ll stick around and you won’t have to worry about finding new benchworkers.”
Remember, says one jeweler, “They could make $18 an hour at a GM plant. Why should they work for you?”
What’s the average pay for benchworkers? According to JCK’s latest salary survey, the median total compensation for male workers in 1996 was $30,100. For female workers, it was $24,000.
INSURING JEWELRY THAT’S IN YOUR STORE
There are two basic issues to keep in mind as you evaluate your insurance coverage:
Primary or secondary endorsement. First, you’ll need to choose whether the endorsement makes your Jewelers Block insurance primary or secondary in the event of a loss, says
Herrbold of Jewelers Mutual Insurance Co. If your insurance is primary, in the event of a fire or theft your policy is used to replace the lost items. In this instance, Jewelers Mutual typically has the jeweler make the replacement and then the jeweler is reimbursed.
If the endorsement makes the coverage secondary, the store has to ask customers to have the loss covered through their homeowners insurance. Is this a conversation you would want to have with hundreds of customers?
Coverage level. The second issue is the value of the coverage. If a high-value item comes in that’s significantly above your normal insurance, you should consider extra short-term coverage. “Don’t cheapen yourself by not informing your insurance company,” says John Cryan of John S. Cryan Jewelers.
It’s also wise to monitor the overall value of repairs in your shop and check at least once a year to determine whether your coverage is adequate. If the value and volume of repairs rise, the amount of your coverage should increase as well.
The worst thing about a theft or fire that results in a loss of jewelry in your repair shop is that insurance doesn’t replace the lost repair revenue; it just replaces the jewelry. Insurance also doesn’t cover losses that occur due to negligence: for instance, if you leave an emerald brooch on a counter, walk away and it’s stolen, you’re not covered.
Stone-switching is another uncovered area. “Insurance companies typically end up denying these claims, and then the jeweler is left to resolve the issue,” Herrbold says. “I suspect a lot of times jewelers just replace the stones and settle with the customer even if they didn’t do anything.”
Some jewelers carry no coverage at all. Most likely they’re just one calamity away from bankruptcy. A jeweler without insurance who faced a situation like DiNola of Yardley Jewelers faced might never recover financially. The fire in his shop destroyed $100,000 in inventory and $200,000 in showcases, computers, tools, microscopes and books.
Even with insurance that readily covered his losses, it took him seven weeks to reopen. And that was only after jewelers from all over his home state of Pennsylvania rallied to help him recover jewelry buried in the debris from the fire and loaned him showcases, trims and equipment. “I couldn’t have opened again without their help. It was hard enough getting our lives back together, let alone setting up a business,” he recalls.
Hopefully, this is where everything you did right so far pays off. The customer doesn’t frown at the jewelry returned to him and demand to use that “eye thingy,” meaning the loupe. There are no questions about the quality of the repair or whether he’s picking up the same gems he brought in.
Some routine aspects of repair pick-up should include:
Identity check. Ask for the repair receipt. If the customer doesn’t have it, ask for photo identification and a description of the item left, the name, phone number and date when the item was left. If someone says he’s come to pick up his mother’s jewelry, call and check with the customer (use the number on the receipt, of course, not the number provided by the customer). If the customer’s wary, just say, “I think we’ll wait for the customer to come in for that. Thanks anyway.”
Also consider calling a customer whose spouse is picking up the jewelry. For all you know, the couple could be in the midst of a bitter divorce. Do this check tactfully, though; you don’t want to appear nosy. Better yet, note at take-in whether anyone else might pick up the jewelry.
Review the work. Show the customer the quality of the repair and compare it to whatever documentation you have of the condition of the item at take-in. The purpose is twofold: to confirm it’s the same piece that was dropped off (sometimes the jewelry looks so much better the customer hardly recognizes it) and to bring attention to the quality of your workmanship.
What if the customer doesn’t like what she sees? “If there’s ever an issue, it’s always in the customer’s favor,” advises Rotenberg. “Even if they’re wrong, I’ll fix it to defend my reputation. If you win an argument with the customer, you’ve lost the war.”
“I don’t hold the position that the customer is always right,” counters Underwood. “Every once in a while there’s a customer who makes unfair, illogical demands. I’ll tell them that, and apologize for not honoring their request. Customers know when they’re trying to pull a skinny, and they respect you for standing up to them. The main thing is for customers to feel they’ve been treated fairly.”
Close out your records. Note that the item was returned on both the store’s copy of the three-part job receipt and in your logbook or computer records. It’s an obvious step, but if you don’t do it, the customer could later claim that the jewelry was never picked up.
Hang on to unclaimed items. Don’t rush to sell the contents of that box of unclaimed jewelry in your safe. Laws vary from state to state on how long an item must be kept before it’s sold. You have to demonstrate reasonable care of the jewelry (that it was kept in the safe) and notify the customer by registered mail in advance of the sale. Even if your state permits sale of unclaimed jewelry after a given period of time, you may be required to send the customer any proceeds realized from the sale over the repair cost.
There’s always the possibility a customer will turn up years later. That happened to Cryan, who recalls someone who asked for the cameo she had left a decade before. He pulled the cameo out of a box with unclaimed pieces going back 20 years. “But I did tell the customer, ‘You’ll have to pay for the mounting.’”
THE BOTTOM LINE
Do repairs right and you could have an experience like Gleim did. A customer had been referred to her after she couldn’t find another Palo Alto jeweler to enlarge and match the pattern on her complicated bangle bracelet. Gleim’s shop could do it and, within the next six months, the customer’s husband spent $30,000 on jewelry for his wife.
“There’s a lot of extra business generated from repairs, such as custom work and selling new gemstones, that doesn’t show up directly,” says Underwood. “The percent return you see on repairs is just the tip of the iceberg.”