The Changing Face of Your Competition

Like many industries worldwide, the automotive industry is experiencing some significant challenges. And the solutions for those challenges are changing the way most segments of the industry - including the independent auto repair and service segment - conduct business.

The most subtle but monumental change for independent automotive service and repair shops has been the invasion by other segments of the industry attempting to incorporate other's core business into their own. They want to grow their businesses by becoming more of a true one-stop automotive service and repair entity. Signs of this include transmission shops performing more general repair, fast lube shops performing additional services and repairs normally performed by other segments of the industry, collision centers offering mechanical repair, tire centers moving into more general repairs, and new car dealerships aggressively seeking customer-pay repairs and service normally provided by independent auto repair shops.

Aftershocks of Dealerships Closing

The most aggressive tactics have come from new car dealerships and former dealerships that have lost their franchises. Some new car dealerships are attempting to make up for lost revenue due to declining new car sales by targeting more of the after-warranty service and repair business.

One of the methods being employed by new car dealers and former new car dealers is offering to collaborate with independent shops. New car dealers are reaching out to independent shops and having them move their operations - or a satellite of their independent operations - into the dealership. Other methods include forming relationships within the automotive aftermarket community by affiliating themselves with parts distribution companies, trade associations, and other aftermarket franchises. There is one franchiser that has accumulated seven aftermarket franchises under its umbrella and is aggressively targeting new car dealers that no longer have a manufacturer affiliation. The seven franchises under the umbrella are providing all of the following services: general repair; exhaust replacement and repair; fast lube; collision repair; paint chip repair; clearcoat scratch repair; bumper repair; wipers and moldings; mirrors; panel blends, headlight restoration; pickup truck spray-on bedliners; carpet restoration and masking; leather, vinyl and cloth repair; deodorizing; customized mat service; weekly refresh service; complete interior reconditioning, maintenance and protection; exterior detailing and paint protection; glass repair; wood grain dashes and steering wheels; factory-style hood scoops, wings and spoilers; stainless grilles; and embroidered floor mats - and, of course, used car sales and all related services such as financing, insurance, etc. Imagine, all of these products and services under one roof!

We believe these examples only represent the beginning of the competitive challenges the independent auto repair industry will face in the coming years. Our observations indicate the independent auto repair portion of the industry has been quite sluggish in responding to this invasion, and now current economic conditions have fueled the need for more customers, based on the decreased spending by each customer. The combination for many independent shops has been lethal.

Ways to Jump-start a Sluggish Business

What can be done? There are several tactics that independent auto repair and collision shops can take. The first tactic is to reestablish a rock-solid relationship with your customers. A large percentage of customer loss is a direct result of diminished relationships. People like doing business with people they like and trust. If you restore these qualities in your relationship with each of your customers, they will have confidence in your ability, and they will more likely remain a loyal customer.

Traditionally, many independent auto repair shops have made customer acquisitions one at a time, and for the most part they still do. Customer acquisition costs are rapidly approaching the level that acquiring one customer at a time will become unaffordable, and independents will be compelled to embrace other marketing methodologies for customer acquisition.

New Ways to Acquire Customers

So how do you acquire larger numbers of customers? One idea is to put an outside representative on staff to solicit business every day. The first objective could be to gain "commercial referrals" by calling on every business in your market area - including your competitors - and letting them know who you are and what you do and, most importantly, asking for their business. We have hundreds of clients that have been doing this for many years and find it to be one of the most successful methods of customer acquisition. Another idea: go after commercial fleet business. You may get more vehicles for the time invested than any other type of customer acquisition method. Another opportunity is what we have termed "unconventional fleets." These types of fleets would consist of apartment buildings, office buildings, shopping malls, real estate offices and employees of commercial fleets, just to name a few.

Our observation of marketing methods being used by many independents indicates that they lag significantly behind the dealers and franchises when it comes to using e-mail and Internet marketing opportunities. Many shops should consider establishing a plan for e-mail use that includes training their service advisers on how to properly construct e-mail communications, e-mail etiquette, how to build e-mails for all of the shop's products and services, as well as how to acquire new customers via e-mail. Improving keyboarding skills to at least 50 words per minute and consistent use of a spellchecker would also be a plus.

In addition to the above training, there should be training on how to organize and file e-mail, how to minimize file sizes including files for photos, how to upload and send photos and how to manage contact information within the e-mail program.

We would advise you to keep a pulse on the competing shops - including franchises and dealers in your market. You might want to make a concerted effort to remain in the know by establishing a relationship with them, which may just lead to additional customers.

The faces of your competitors will continue to change, perhaps more rapidly than in the past. Conducting business has become more complicated and expensive, so shop owners will also need to maximize all operational efficiencies to generate enough additional gross profits to maintain their competitive advantages.

Editor's Note: This article is one of several management articles being contributed to AutoInc. this year by Automotive Management Institute (AMI) instructors. AMI instructors are sharing their knowledge on a variety of topics including ethics, employee training, customer service, increasing profits and other valuable information.

Robert "Bob" O'Connor is president of R. L. O'Connor & Associates Inc., a Seattle-based automotive operations and management training and consulting firm. He is best known globally for his automotive business management workshops, continuous improvement Bottom-Line Impact Groups(®), and his sales training division, the Service Advisor Academy. O'Connor is an instructor approved by the Automotive Management Institute (AMI) and is an AMI EXCEL "Guarantor."