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.

Counterfeits: Do they hurt your business?

This from today's AMN:
U.S. Looking at Anti-Counterfeiting Trade Agreement with Trade Partners

Posted: Nov. 8, 2007, 10 a.m., EST

From AAIA's Capital Report

WASHINGTON -- During a press conference on Capitol Hill, U.S. Trade Representative Susan C. Schwab announced that the U.S. and several key trading partners are looking to negotiate a trade agreement to strengthen the worldwide fight against counterfeiting and piracy. Canada, the European Union, Japan, Korea, Mexico, New Zealand and Switzerland are currently participating in the talks about the Anti-Counterfeiting Trade Agreement (ACTA). The countries are looking to come to agreement on international cooperation, improving enforcement practices and providing strong legal framework for intellectual property rights enforcement. The agreement is not meant to amend any existing agreements. Rather, it is seen as a higher benchmark which countries can join voluntarily.

Other benefits to an ACTA agreement are seen to be the possibility of harmonized standards between countries and an improved ability to combat the increasing danger of health threats from counterfeit pharmaceuticals and foods. Schwab indicated that there is no stated deadline for the conclusion of negotiations, though the U.S. would like to move forward quickly. The initiative has received immediate support from the Copyright Alliance, an advocacy group which is comprised of members from a wide range of industries.

Interesting idea, but I don't see CHINA listed in the countries "looking to come to agreement".

Ripley's Believe It or Not

I received this information from the people at AAIA, but I'm just not sure I believe everything I read. (Plus, there was a typo on it that I fixed.)

Of course, now that it's been posted to a blog, it must be true, right? I read it on the internet. Seriously, this research was conducted by Opinion Research Corporation, so I'm sure the information is correct. It just doesn't "feel" like all these changes are happening yet. What do you think? Are you seeing similar behavior changes in your market area?

Consumers Reach Tipping Point on Gas Prices Spike: Survey Reveals Dramatic Behavior Changes
BETHESDA, MD – Nov. 7, 2007 – With gas prices heading for $4 a gallon, consumers are making dramatic changes in driving and vehicle care behavior to save money, according to results of a new study by the Automotive Aftermarket Industry Association (AAIA).

Nearly six in 10 people surveyed claim their driving behavior has changed due to rising gas prices. One-third of motorists surveyed stated that they would make changes when the price of gasoline reached $3 a gallon, and another 32 percent would invoke driving behavior changes if prices reach $4 a gallon, according to the survey conducted by Opinion Research Corporation.

When asked how their driving behavior has changed because of rising gasoline costs, 90 percent said they are driving less and 75 percent revealed that they are better maintaining their vehicle. Other specific behavioral changes were carpooling more (31 percent), purchasing more fuel efficient vehicles (30 percent) and making greater use of public transportation (24 percent). Additionally, more than half of consumers claim they are capable of performing light maintenance and repair jobs themselves.

"The fact that motorists are more aware of how proper vehicle maintenance will improve fuel efficiency is great news for the automotive aftermarket," said Kathleen Schmatz, AAIA president and CEO. "Properly maintained and operating vehicles are not only more fuel efficient, they are safer and more environmentally friendly.

"And we are delighted to see that 54 percent of consumers consider themselves do-it-yourselfers with light maintenance and 12 percent feel they are capable of doing medium maintenance and repair jobs. This counters claims that the DIY market is dying."

Interviews were conducted online with 500 people, 21 years of age or older, who are responsible for the purchasing of fuel and the maintenance and repair of the vehicle they drive. The data was weighted according to gender, age and geographic region. The maximum error range is plus or minus four points at a 95 percent confidence level.

For more information on the survey, e-mail Rich White at rich.white@aftermarket.org or call 301-654-6664. For more information on tips and advice for simple vehicle maintenance and care to improve gas mileage, contact the Car Care Council at www.carcare.org.

About AAIA
AAIA is a Bethesda, Md.-based association whose more than 23,000 member and affiliates manufacture, distribute and sell motor vehicle parts, accessories, service, tool, equipment, materials and supplies. Through its membership, AAIA represents more than 100,000 repair shops, parts stores and distribution outlets.

Safety in our Business

Saw this in AAIA’s Capital Report and thought it might interest you…Injury and Death Rates for Mechanics Exceed National Average. The Bureau of Labor and Statistics (BLS) has released an article in Compensation and Working Conditions Online that concludes automotive technicians are more likely to be killed or injured on the job than the average U.S. worker. The article reports that from 2003 to 2005, 147 technicians were fatally injured at work – a death rate of 5.3 per 100,000 workers. The fatality rate for all occupations is 4.0 per 100,000 workers. Additionally, there were 15,560 nonfatal injuries and illnesses to technicians in 2005, down roughly 10 percent from 2003. There were around 954,000 U.S. technicians during this time.
Most of the injuries and illnesses reported during 2005 were due to contact with an object or equipment or overexertion. Assaults and violent acts accounted for 30 percent of workplace fatalities in 2003-2005. Homicides accounted for 44 percent of assaults and violent acts, while self-inflicted wounds made up the remaining 56 percent. The national average for fatalities due to assaults and violent acts is 15 percent. For the full analysis, visit www.bls.gov/opub/cwc/print/sh20070521ar01p1.htm .