Tuesday, February 3, 2009

More of Automotive Marketing 101: What do I do when there's a RECESSION?

I've gone over several key points of marketing during a recession, but I just read an article by Dave Caracci, former shop technician, shop owner, Bosch, ROL and DANA marketing guy, etc, with about 50 years experience in sales and marketing. He is currently Director of the AAIA Car Care Professionals Network and is Chairman of the University of the Aftermarket Foundation. I've known him for several years and I think he's a pretty straight forward guy.

So, why am I telling you this and why should you care? We recently asked his opinion about the best practices a business should employ during a recession.

Here is his (slightly edited) response: "Because I have learned one absolute about recessions, and for those of us who keep this absolute in mind and act on it, this recession can help us succeed. For the smart, hard-working business person a recession is the best time to grow your business. Let me explain.

In a recession, what do most business people do? Cut budgets, cut expenses and reduce service. When your local new car dealership service department does the above, disappointing their good customers, YOU can grow your business. By making sure the dealerships customers think of you as the best and most personal alternative to that new car guy who just let them down. Promote your business by targeting the dealerships customers now, during the recession and when the good times bounce back, you will have a lot more market share. Instead of cutting expenses to the point of cutting sales, you will have grown your business during this recession. Of course, when business is down, we should all watch expenses as carefully as possible. If you can eliminate or reduce an expense, you should. But, NEVER reduce an expense that might reduce sales. That move is the beginning of the end. I know you’ll agree, because I know that you are seeing companies do this already. For example, how about the parts supplier that cuts expenses to the point that they can’t ship you what you need, when you need it? What do you do for the part? You go to his competitor! In fact, I’ll bet you have suppliers calling on you right now that are saying “Hey, give me a chance at your business when the other guy lets you down.” Smart guys! Instead of cutting and hiding until the recession ends, they are growing their business. How about the check-out lane at Wal-Mart? I stopped going there for anything, after they cut so many check-out lanes that it took three times longer to check out than it did to find what I needed to begin with. I don’t care how cheap they price stuff, I’m not going back in there. Bet you’ve heard that same comment about the service writers at your local dealership. Sound like an opportunity to you?
Now for the point of this entire article: We all keep hearing about dealerships closing or at least being in trouble. They may be trying to keep their service business by cutting prices, but if the service stinks or the dealership closes, what good was a cheap price? Many independents are happily waiting for ‘some’ of the dealership customers to drive into their shops. But, for the smart independent repair shops, this recession is the opportunity of a lifetime to grow your business at the expense of the new car dealers. Let’s go after the vehicle owners who have been using that car dealership for service, before the vehicle owner chooses a shop other than yours. I’ll bet you are up for this market share attack.
I’ll bet you are ready to grow your business during this recession instead of cutting and running. But how do you do it? What kind of marketing methods and tools can you use?
Some of you are already doing it. Some of you have already begun to take market share from failing or weakened car dealer service bays. How about helping each other? How about sharing promotion or sales ideas with the other shop owners via the TechShop blog? Share with us what you are doing to take business away from the car dealer. If we act now by sharing marketing and sales ideas, you can all grow your business, at the expense of the new car dealer, during this recession,
It’s your move."

One of Dave's comments that hits home to me right now is "when business is down we should all watch expenses....but NEVER reduce an expense that might result in sales."

Over the past several months, I have heard from many manufacturers AND distributors about the cost-cutting measures being taken to improve profitability. Cutting hours, cutting hourly workers pay, paycuts in general, reducing benefits, reducing bonuses. MANY of these include letting some salespeople go (translation: "Firing sales people"). Here's my question, "didn't they contribute during good times? Isn't the job of a sales person "to increase sales"? A sales person is frequently the most critical part of any sales process. Without sales people, what are you doing to increase sales? (Cuz I can tell you - you ain't advertising in the trade press more than you used to.....)

Also, don't you think the time to evaluate the effectiveness of your salespeople is during good times, so you'll know who to keep when times get tough? I just get the feeling there is a lot of knee-jerk reactionism going around our industry, though I have to say that when you hear numbers like 4,000 and 6,000 people let go from one company, I hope there's been significant thinking done.

One of my former bosses liked to say that anyone not directly involved with manufacturing our product was "overhead" - I guess that was a nice way to say I was expendable. I would disagree, perhaps I was personally expendable, but the position I filled was not. I was there to help create new sales from new markets and generate additional sales from existing customers. My job was to bring the buyers to the sellers. That type of position is still critical to the success of any aftermarket company in business today. Even though we have additional methods of communication and ways to reach the customer that don't always involve a personal touch, there is still a human element involved. People like to buy from people. I would argue that the personal touch is more important today than every before - so think twice before you let your next best salesperson go.

I think I'm starting to ramble a bit, so I should sign off. This happens when I start with someone else's idea and try to mold mine around it. But I thought Dave made some good points and wanted to share them.

In other news, I leave Thursday for the MACS (Mobile Air Conditioning Society) convention in Dallas, TX. Will keep you posted on new products and industry news early next week, upon my return.

If we post any of your comments in the blog, specifically ways you are increasing market share, or taking it away from dealerships, we may print them in the April issue of TechShop magazine as well.

1 comment:

Anonymous said...

Boy (or girl) do I ever agree with you on the strategy for operating a business during a recession. As you say, what I have seen is reduced service and increases in prices. If I was CEO of a consumer product company I would announce a reduction in prices to break-even and push my employees to slobber all over my customers with appreciation. I would commit to doing this for a year and publicize the fact that we are all "in this together" and that this is our way of showing that we care about our customers. Then stand back and watch the doors get knocked down. I would count on people remembering what we did when they needed it most and expect to keep them for years to come. If not I lost a year of profit but I bet that would all that I lost. I would point this out to my shareholders and suggest that their investment would be enhanced by our action.

On the subject of WalMart they did cut down on checkout lines at our local store for about two weeks. They are back to full steam now and their employees seem to be knocking themselves out to be helpful and cheerful.