C1 Cover SO Sept.13 10/8/13 12:40 PM Page C1
Identifying Target Customers
Online Customer Communication
Customer Retention Tips
Certified Express Lube & Auto Service Devotion To Customers, Staff and Community Fuels Success
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01 Federated More SO 10/8/13 12:37 PM Page 1
02-04 Contents SO_Sept 10/8/13 12:36 PM Page 2
18 Certified Express Lube & Auto Service, Crestwood, KY 38 Integrity Automotive, Tucson, AZ Online Customer Communication
Shop Profile: Certified Express Lube & Auto Service
Technology: -Online Customer Communication
24 Case Study: -Buying/Selling A Multi-site Auto Service Business 44 Shop Management: -Challenges of ‘Family’ In a Family-Owned Business
Challenges Of a FamilyOwned Business
Shop Profile: Integrity Automotive
03 ACDelco Value SO 10/8/13 12:36 PM Page 3
02-04 Contents SO_Sept 10/8/13 12:36 PM Page 4
Departments Shop Owner Staff
Executive Interview: Fran Labun, DENSO Products and Services Americas, Inc.
Customer Service: Maximizing Customer Retention Sales & Marketing: Identifying Target Customers
Jim Merle 330.670.1234, ext. 280 email@example.com
Mary DellaValle, ext. 221 firstname.lastname@example.org
Kelly Gifford, ext. 249 email@example.com
Advertising Services Director
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Jennifer Clements, ext. 265 email@example.com Tim Fritz, ext. 218 firstname.lastname@example.org Denise Koeth, ext.274 email@example.com Andrew Markel, ext. 296 firstname.lastname@example.org Ed Sunkin, ext. 258 email@example.com
Director of eMedia/ Audience Development
Brad Mitchell, ext. 277 firstname.lastname@example.org
Maryellen Smith, ext. 288 email@example.com
24 Babcox Media, Inc. 3550 Embassy Parkway Akron, OH 44333-8318
Bill Babcox firstname.lastname@example.org
Vice President/ Chief Financial Officer
Greg Cira email@example.com
Jeff Stankard firstname.lastname@example.org
Beth Scheetz email@example.com
|Shop Owner|September|October 2013
Founder of Babcox Publications
Edward S. Babcox (1885-1970)
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䊚2013 by Babcox Media, Inc.
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06-10 Technology, Training Videos 10/8/13 12:35 PM Page 6
by Uwe Kleinschmidt, CEO, AutoVitals
Motorist Interaction Has Moved Online. Have You?
The numbers are mind-boggling: 134 million smartphones are used in the U.S. alone and every quarter 8% more Americans select a smartphone. If that doesn’t surprise you, maybe the following facts will: 59% of auto service customers under the age of 35 want to be communicated with via mobile applications and 31% of American mobile Internet users say that’s the primary way they access the web. The direction is clear: your service counter interaction with customers needs to be complemented by online interaction. Websites present interactive information and have competition from social networks with easily consumable information. According to Google, motorists look for educational information and parts at a significantly higher degree than searching for services like “auto repair” in your area. Let’s explore ways of provid-
ing educational information, so that your prospects and existing customers don’t get their education from “the Internet” like the lady who found the French model in the famous State Farm commercial. Leverage your website and social networks to engage with prospects and existing customers to provide education, that is coming directly from you, the expert.
Interaction At The Moment Of Need I bet that you not only get solicitations from hundreds of vendors for your website, SEO and Facebook services, but
|Shop Owner|September|October 2013
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06-10 Technology, Training Videos 10/8/13 12:35 PM Page 8
The key is to focus on the value a local business provides to the local community. You are your own brand with these features: Trusted, excellent customer service, personalized recommendations and vehiclespecific information. also, just like your customers, you are asked to consume so much information in your inbox and on your phone, that it’s impossible to process it all. In fact, the amount of data generated on the Internet every minute (YouTube users upload 48 hours of video, Facebook users share 684,478 pieces of content, Instagram users share 3,600 new photos, etc.) suggests that new engagement strategies are needed. The experts at AutoVitals researched the clicks on videos embedded in dozens of auto repair shop websites and the results are disappointing. Videos on the homepage of websites are clicked on between 1% and 9% of the time. Videos as part of blogs embedded in auto repair shop websites below the fold (visitors have to scroll down to watch them) are clicked on less than 0.5% of all clicks on that page. Why are the results so devastating? The answer can be summed up in two words: User Experience. If the information is not presented in the moment of need, it goes by unattended. The visitor of the website should find the answer to the reason why they came to the website in the first place. Educational information presented in the moment of need can be highly
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engaging and useful. But what is the moment of need and how can it be determined? That depends on what audience you are trying to target: • New prospects are looking for a trusted auto repair shop for a perceived big (expensive) repair. • Coupon clippers are looking for the best deal. • Motorists who called another shop already are looking for a second opinion. • Existing customers are looking for a shop’s phone number. • Customers with the vehicle already in the shop are looking for answers to “Why now?” and “What happens if I don’t do it?” • Motorists are looking for a good price on tire services. • All of the above. The good news is that auto repair shops are not e-commerce businesses like amazon.com where no personal contact is possible and all products are commoditized and readily available for price comparison. The key is to focus on the value a local business provides to the local community. You are your own brand with these fea-
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tures: Trusted, excellent customer service, personalized recommendations and vehicle-specific information. One example in our attempt to make it personal is what we call the traffic booster. See the image above as an example. Ron Haugen, owner of Westside Auto Pros, Des Moines, IA, greets his prospective customers right on the search page of Google. Especially because the visitor’s decision to click on a featured link is made within seconds, his business listing stands out and introduces the searching motorist to his business.
Attention Span Matters In every interaction, “time” matters. Motorists’ attention span is low, as they want to tend to their normal
lives. So, it’s crucial to provide the information in layman’s terms and focus on the subject matter that’s important for them to make a decision. After we didn’t find a solution we could recommend to our clients, our AutoVitals TV experts started producing a series of service recommendation videos, which meet the criteria we just established: • Brief (approx. 90 seconds). • Coming from the expert who motorists trust (You!) without breaking the bank. (We have developed a special technology to cost effectively achieve high personalization.) • Conveying the complexity of the technical subject matter so the motorist sees the importance without the attempt to turn the customer into a technician. • Responding to “Why now?” and “What happens if I don’t do it?”
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• Providing an easyto-understand ranking for: Safety relevance; Cost avoidance; and Environmental impact; and • Creating a call to action at the outro. These videos can be used at different moments of need: • During the service counter interaction, on the website or via counter TV with closed captioning. • When selling a phone estimate, using images of the problem area in conjunction with the educational videos. • When sending service reminders, links to those videos will be automatically inserted, if our system is configured for your canned jobs (and, of course, if you use canned jobs). • Searches on Google for educational information lead to the website (see image on page 9).
Combine Your Social Power
association’s wide presence can help in attracting the motorist’s attention. The Automotive Service Councils of California (ASCCA) and AutoVitals have just started a project on Facebook to create a page targeting motorists (see image above). In order to make it really easy for the motorist to find a shop, the location of the motorist is automatically detected and the nearest ASCCA member shops are shown on the map, with the ability to promote the shop’s specialties and values. Search for ASCCA University on Facebook to check it out! SO
Your business is on Facebook, isn’t it? Of course it is. Have you ever thought about amplifying the leverage of your business page in a cost-effective manner? Millions of motorists are on Facebook and have at least one friend who comes across your business page, or the business page of another shop that’s affiliated with the association to which you belong. Where individual reach might be limited, an
Uwe Kleinschmidt is the CEO and founder of AutoVitals in Santa Barbara, CA. The company’s Web-based services focus on the independent automotive repair industry. AutoVitals’ products facilitate highly effective Concierge Auto Repair services, covering all aspects of the service advisor’s interaction with prospective and existing customers. Highly effective and optimized websites, workflow support in the shop, as well as customer retention and social media services are just a few ingredients. He can be reached by visiting www.autovitals.com or calling 1-866-949-2848.
|Shop Owner|September|October 2013
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12 Spotlight_ACDelco 10/8/13 12:33 PM Page 12
ACDelco Salutes Your Independence and Values Your Trust The ACDelco sign in your shop tells your customers they can trust you to install quality parts backed by a more than a century of automotive aftermarket expertise. And for you, it means retaining the independence you’ve worked hard to achieve, yet having a trusted partner to help you navigate the potholes and speed bumps of running a business in the 21st century.
The ACDelco sign is your key to a portfolio of more than 100,000 parts designed for most makes and models, as well as customers’ varying budgets and priorities. And because the right parts are just the beginning of a successful repair order, our growing lineup of ACDelco-licensed tools extends your trust in our parts to the technicians who install them.
Only ACDelco offers a Professional Service Center Program that provides participants with GM OE expertise and engineering leadership; industry-leading technician training; creative marketing programs such as our “Knowledge is Power” seminars; business locators and lead generation; innovative ebusiness solutions; rewards that you can reinvest, spend or share; and an image program that lets customers know you take your business – and theirs – seriously.
Becoming an ACDelco Professional Service Center Program participant is easy, affordable and transparent – the more ACDelco parts you purchase, the more support and services you receive, including discounts on everything from new cars to uniforms. More importantly, you gain access to training and seminars that help keep you and your technicians on the cutting edge of automotive service. Isn’t it time you allowed us to earn your trust? Learn more about the ACDelco Professional Service Center Program by calling 1-800-8255886, prompt 0.
ACDelco www.acdelcotechconnect.com ADVERTISEMENT
12 |Shop Owner|September|October 2013
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14-16 Denso Executive Interview 10/8/13 12:32 PM Page 14
Vice President, Sales Group, DENSO Products & Services Americas, Inc. Fran Labun is vice president of the Sales Group for DENSO Products and Services Americas, Inc., the Long Beach-based affiliate of Japanbased DENSO Corporation. He oversees automotive aftermarket and OES sales for the Americas; U.S., Canada, Mexico, Latin and South Americas. Labun also oversees the product development and sales for Heavy Duty OES and aftermarket channels and directs the DENSO non-automotive product lines for robotics, heat management and hand scanners. Can you provide an example of how one of your leading products/brands is evolving to meet the needs of today’s shop professionals? According to Automotive News, DENSO is the 2nd largest automotive supplier in the world. With Fiscal Year 2012 annual sales of more than $38 billion, DENSO has the stability, strength and OE-level quality that today’s professional installers can rely on now and in the future. We are in it for the long-haul! Our Aftermarket business began in 1982
|Shop Owner|September|October 2013
with one product – spark plugs. Today, we have more than 20 aftermarket products under the DENSO “First Time Fit” brand including A/C compressors, starters, oxygen sensors, alternators, fuel pumps, wiper blades, oil, air and cabin air filters, expansion valves, receiver/driers, condensers, ignition wires, relays, direct ignition coils, fuel injectors, MAF sensors, radiators and evaporators. “First Time Fit” means that because of our OE strength and heritage, the part is guaranteed to fit right the first time, saving the shop owner time and money with fewer comebacks. That also means less time for the technician to make modifications or adjustments and also only having to do the job once; protecting the shop owners reputation with their customers because the customer trusts the
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shop and the parts they install. With even more aftermarket products slated to launch in the near future, it is an exciting time for DENSO’s aftermarket business…and that benefits the shop owner and professional installer by providing a wide array of product choices for their business and their customers. How does a leading manufacturer maintain the strength of its high-quality, branded products in an increasingly price-driven market? Competition is good! It gives our company a chance to shine. We think that when you compare DENSO with other product choices available, we offer an excellent value. There is a Japanese word, “Kaizen” which means continuous improvement. DENSO corporate culture strongly believes in
this philosophy and looks for ways to continuously improve our product, increase efficiencies and reduce costs to provide a better value for our customers. Discuss the “My DENSO Rewards” program and how distributors and techs can reap the benefits. The “My DENSO Rewards” program was launched in July, 2013 and its purpose is to provide an incentive or “rewards” program for WDs, jobbers, shop owners, counter people and professional installers to earn award points by selling the DENSO line of cabin air filters and wiper blades. We plan to add additional products to the program in the very near future. Those who sign up for the program will earn points and have a wide range of items to choose from based on the number
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We think that when you compare DENSO with other product choices available, we offer an excellent value for the installer.
of points they earn. We want shop owners and professional technicians to be aware that in addition to more technical components such as A/C compressors and alternators, DENSO offers high-quality maintenance products such as filters and wiper blades that they can present to their customers as a O.E. quality option. To sign up, go to www.mydensorewards.com. Discuss recent company expansions and how they help your company better serve your customers. On April 1, 2013 we announced the completion of our reorganization under a new name â€” DENSO Products and Services Americas, Inc. The establishment of our Aftermarket Business Headquarters for the Americas in Long Beach, CA, was first announced on October 31, 2012 at the Automotive Aftermarket Product Exhibition (AAPEX) show in Las Vegas.
|Shop Owner|September|October 2013
As part of the reorganization, American Industrial Manufacturing Services in Murrieta, CA, a DENSO group company that produces remanufactured products, including starters and alternators, and repairs common rail diesel fuel injectors is combined with DENSO Sales California, Inc. in Long Beach, CA. This change enhances our aftermarket operations in The Americas and is aligned with the global aftermarket growth plans we announced last year when we introduced DENSOâ€™s Aftermarket Business Unit in Japan. The new organization will be responsible for engineering, procurement, sales, service and planning for aftermarket, heavy duty, OES and nonautomotive products. DENSO has identified these segments for expansion in the Americas with the goal to provide even more quality products and services to our customers. SO
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“Being a shop owner today is much like being the ring master at the circus. All the behind-the-scenes work is played out when the shop doors open. We see our successes or failures on a daily basis, but it’s our job to ensure the customer doesn’t notice something that didn’t go quite right.” – Steve Heggie, Owner
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by Debbie Briggs, contributing writer
Certified Express Lube and Auto Service The Road Less Traveled: Owner Takes Unconventional Route to Shop Owner Status
By all accounts, if you walked into Certified Express Lube & Auto Service in Crestwood, KY, you’d probably think it was owned by a former technician who decided to venture into shop ownership. The waiting area is inviting and features AAA-approved signage. The shop’s four technicians have ample room to work in the shop’s 13 service bays, and customer service is priority number one for each and every repair. All of that’s true — except how a former banker became shop owner in the matter of a few short weeks in 2001. Steve Heggie says he had always dreamed of owning his (current) business, but he started his career in the banking industry at 18, working his way up the ranks until he realized he was in a holding pattern at around age 29. “I realized I didn’t have enough gray in my hair to do the things I wanted to do in the world of banking,” Heggie explains. “That’s when I entered the automotive aftermarket as a salesperson for a Louisville, KY-based automatic transmission parts wholesaler. I became familiar with both transmission and automotive shops since I worked with them daily to help them grow
their businesses.” Fast forward to age 38, when life circumstances — a wife and new baby — prompted Heggie to make his dream of business ownership a reality. “It didn't matter what the business was as long as I was the boss,” Heggie remembers. “Since I’m a sales and marketing kind of guy, I decided not to start a company from the ground up, but to buy one that was already established. Better yet, I thought why not market to someone who is looking to retire, but wants to keep their business going — to leave a legacy?” Heggie’s ad in the March 23, 2001 edition of Louisville’s Business First publication met with much interest and he received many responses, so he looked at several opportunities
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before finding the perfect fit. “A broker presented a transmission shop to me that turned out to be one of my customers who had decided to sell his business,” he says. “I met with him several times and made several offers before he finally decided that I would take good care of his customers and keep the business going.”
Hands-On Ownership Today, techs at the full-service shop repair just about any make and model, be it domestic, Asian or European. Heggie says it’s important to include employees in the day-to-day operations of any business, but especially an independent automotive repair shop that relies so heavily on a cohesive staff to provide top-notch customer service.
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“In my business, we all work together so no one is an island,” he explains. “It’s not a ‘my way or the highway’ mentality. Everyone has input into the daily operations, and I encourage new ideas and suggestions. “I’ve learned money cannot buy happiness in an employee,” Heggie
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continues. “Many simply want to be appreciated, and they want someone to treat them with respect and dignity. In my shop, I try to use the two most underused words in the English language daily: please and thank you. It really makes a difference that you can see and measure.” Heggie says he makes staff training a priority since he understands how important it is for any business to employ knowledgeable staff. “My employees get the latest information in many ways,” he says. “We attend training here locally through several sources, with many part suppliers, dealerships and chains offering training at either a free or reduced price. In the next month, we will be attending training from Automotive Training Group (ATG), and as a member of the local NAPA Business Development Group, we bring training in to benefit the group members. Online training is good, but attending in a class environment works best for us — fewer distractions than doing something at home online.” Heggie says that while staffing levels stay fairly steady at the shop, he does have the need every now and then to fill a vacant position. Who better to help fill it than the Certified techs themselves? “One way to find new talent is to ask our techs who they know,” Heggie
says, explaining that “just like professional athletes, techs tend to move around. “I’ve also found that the best and least expensive way to find new employees is CareerBuilder,” he adds. “As a NAPA Autocare Center, I have free CareerBuilder resume access. It enables me to sit down after a long day and take a look at prospects online. If I find someone who I have an interest in, I can then email, call or text them. It sure beats placing an ad in a newspaper!”
Fueling a Strong Customer Base Heggie admits that attracting and retaining customers is a full-time job in itself, requiring him to maintain a marketing toolbox of sorts to provide customer service reminders and solicit customer feedback as well. “Although it appears to be going the way of the dinosaur, we still do advertise in the phone book,” he says. “You’d be surprised how many older people still go there first. I’m also a big fan of the USPS EDDM (Every Door Direct Mail) program. As a sales and marketing guy, when my shop needs some stimulus, I can put together a mailer, target a section of town, and have my 8-1/2” x 11” mailer in their mailboxes in about a week’s time. “Not only is it affordable,” he says, “it works for us. Current customers and prospects bring in the coupons for months! And, of course, nothing is more effective than a satisfied customer telling someone else. Advertising and continuing to separate your business from the competition is vital for any business.”
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A little healthy competition never hurt either, as Heggie’s “Win Steve’s Derby & Oaks Passes Contest!” proves each year. Heggie says he’s always overwhelmed by the number of entries in what’s become a signature giveaway for Certified. “As a shareholder of Churchill Downs, I receive two passes to both The Kentucky Derby and The Kentucky Oaks,” he says. “We have a drawing that generally starts in early March and runs until mid-April where customers can earn entries based on services they purchase for their vehicle. For example, a brake job may be worth 10 entries, and an oil change may be worth three entries. You would be amazed at both the number of entries and how our customers respond to the program!”
disappointed, but with it, they know what to expect each and every time their vehicle is serviced. “Our shop uses a process in which we approach each vehicle the same way from start to finish,” Heggie explains. “After we receive the vehicle from the customer, we collect vital information from each vehicle, and put a sticker and floor mat inside each. The vehicle is then dispatched to a technician who does a
Dedicated To Success Heggie says running a successful shop boils down to one thing: productivity. Without it, customers are usually
“In my business, we all work together so no one is an island,” Steve explains. “It’s not a ‘my way or the highway’ mentality. Everyone has input into the daily operations, and I encourage new ideas and suggestions.” 22
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performance inspection and then addresses the customer’s concern. “Once we’ve done this, a service estimate is forwarded to the service writer, who then sources any parts we may need, and contacts the customer to receive authorization for the needed repairs. It’s at this time that we give an estimated time of completion to the customer. Our system works great, but if it’s deviated from in any manner, it doesn’t work as well. Sticking to the basics is our key to success.” Another important part of Heggie’s success? Dedication to his craft. It’s not uncommon to receive an email from Heggie at 5:30 in the morning or
for Heggie to be picking up parts on his way to the shop each day. “Being a shop owner today is much like being the ring master at the circus,” he says. “All the behind-thescenes work is played out when the shop doors open. We see our successes or failures on a daily basis, but it’s our job to ensure the customer doesn’t notice something that didn’t go quite right. “As difficult as it is to own and operate a business,” he concludes, “I wouldn’t trade it for anything. I love what I do and I love people! But, I wouldn’t be where I am today without the support and dedication of my wife Lisa.” It’s that kind of devotion to customers, staff and community alike that will keep Certified Express Lube & Auto Service a successful shop for many years to come. SO
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Buying & Selling|An Aftermarket Business
by Art Blumenthal, MBA CBI
Case Study: Selling A MultiSite Auto Service Enterprise Utilizing The Services of a Broker “Sometimes the whole is greater than the sum of its parts, but sometimes the reverse is true and a packaged deal will yield less than the individual shops sold separately…” …Terry Flaherty, seller of 4-shop enterprise “I’m now a firm believer, as I was 30 years ago and will always be, in being prepared for success. In this business, if you can do that, I think there is good money…” …Paul Davidson, buyer of one of the shops
Seller’s Background & Motivation to Sell Just a few short decades ago, when Terry Flaherty was in his early 30s, he set a goal to retire at age 55. “I also set targets for what I wanted to make and my net worth at that age. So when I had been in the auto service business for 35 years as the business got tougher and tougher all the time, for me it was the right time to exit. I turned 59 and wanted to take some time to enjoy life while I still have good health and the vitality to do it,” noted Terry in a recent interview. He continued, “I was a shop owner for the past 15 years. But for the first 20 years of my work career, I was a Midas Corporate employee. I started out on the shop floor as a mechanic fixing cars and then came up through
|Shop Owner|September|October 2013
the system, first to a manager position, then to a multi-shop supervisor and then to a sales management trainer. I was running 11 shops in Salt Lake City for a year or so and then when the company-owned system was broken up, I sought out and pur-
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chased four shops on Cape Cod, which I had two or three years of experience running.” The purchase of a shop in Mt. Ephraim, NJ, happened later. “I had the four stores here on the Cape and we had strong, healthy increases in business…from $2.5 million to $4 million in the four stores. I met up with a guy who used to work for me many years ago in New Jersey and thought that maybe I could replicate what I did on the Cape and make him the lead guy on it. But as it turned out, that was a bit of fanciful thinking. So I ended up with the one shop in New Jersey and barely kept my head above water. It was not a success story like on Cape Cod.”
The Multi-Shop Enterprise: An Overview All shops in the enterprise are established, well-maintained, profitable turnkey operations that already have equipment, invento-
ry and employees in place. Located in charming Cape Cod, MA, three of the businesses offer a buyer a unique opportunity to live, work and relax in one of New England’s most desirable areas. Near the beach and diverse recreational and cultural activities, the location of the three Cape Cod businesses is characterized by an affluent population and limited automotive service competition. The fourth business location, in Mt. Ephraim, NJ, is in one of the major commercial hubs of Camden County, NJ, across the river from Philadelphia.
Selecting a Business Broker In regard to selecting and utilizing the services of a business broker, Terry said, “I first attempted to sell the shops on my own and I didn’t get a heck of a lot of responses to my newspaper ads. It was very awkward trying to deal with the few folks who responded because they did not want to be forthcoming as I tried to get some sense of their qualifications before I started sharing my confidential business information. So I attempted to do it on my own and found it to be uncomfortable and awkward, and ultimately that led me to go with a broker.” Terry continued, “In fact, I didn’t go at first with Art Blumenthal, but went instead with a local broker who had the listing for a couple of years. Although he had some leads here and there along the way, nothing came of them. I found that after I had the opportunity to talk with Art that he really understood the automotive service business and he was able to very quickly analyze my P & L and present it in the most favorable way. He was able to understand which cash flow
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a in retirement on Flaherty happily a in l” ai Tr x Terry and Jenny bo ill hiking the “P ii, wa Ha hu. to Oa p of tri recent e island lled Lanikai on th ca e ac pl t ep sw wind
items were those that could be recast as additional earnings for the owner. So I think it was so much easier dealing with him than any of the efforts previously trying to do it myself or with another broker who had no specialized experience with selling an automotive service business.”
The Business Enterprise: What’s It Worth? Terry said, “From my perspective, Art exceeded what I had in my mind as a minimum acceptable price for my business. In four out of the four shops I sold, he was able to negotiate well and got me a higher sales price than what I otherwise would have by myself for sure. “In regard to selling a multi-shop enterprise, although you may find a buyer who wants the whole group, it’s more likely and you can probably ultimately do better in the sale by breaking up the enterprise into individual businesses. Sometimes the
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whole is greater than the sum of its parts, but sometimes the reverse is true and a packaged deal will yield less than the individual shops sold separately. That’s what happened in my case…he did a better job selling them, with two to individuals and two to a pair of partners.” Based upon his experience, Terry provided valuable advice for potential sellers when he said, “Sit down with your business financials and think about them in terms of a presentation to a buyer. Strike a balance between maximizing cash flow, while ensuring you aren’t killing the goose that lays the golden eggs while doing so. “We all have a tendency as business owners to set up our books in such a fashion as to make sense to us and accomplish the kind of things we want to accomplish, but some of those things may be contrary to making the business attractive to a buyer. The sooner you get at that the better, or you may ultimately face the consequences when determining a sale
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price. Structure your P & L to clearly delineate between business expense accounts and items that may be benefits and perks to the owner. Keep in mind that the sales price ultimately will be a function of cash flow.”
Scope and Timeline of Sales Process Terry was asked about the benefits of time management by utilizing a business broker and said, “I think the key thing there from my perspective was also that there was a great deal of time involved. It’s not as if you list them one day and you’re closing 30 days later. I had a fifth shop that I sold back in 2007 to one of my managers and that was a pretty straightforward deal and went pretty fast. But after I did that, I really didn’t have any managers who had the financial qualifications or breadth of experience needed to own a shop themselves. “So when I was interested in selling them in 2007, I made some efforts to do it myself and I wasn’t in any big hurry and it was something that I did more passively than actively. It was 2009 when I hooked up with a local broker, and he had a two-year listing agreement. Then, in 2011, I hooked up with Art and only then did things really start happening. I was pretty pleased because within 30 to 60 days he had some good qualified candidates. It’s fair to say that we weren’t ever not actively working somebody. They didn’t all pan out, of course. But we had a pipeline we seemed to be working with. “There was a strong sense on my part that the sales were going to happen…never was I thinking ‘Oh my God, am I ever going to find a buyer?’
It was just a matter of patience and confidence in Art.”
Background of Buyer of East Falmouth, MA, Location & Motivation to Buy Paul Davidson spent 27 years as an executive in defense and intelligence, capping his executive career as a senior vice president for a Fortune 500 company in charge of about $100 million a year. In a recent interview, Paul said, “I got tired of eating stress for breakfast and decided it was time to retire. But after about three years of retirement, I was pulling my hair out with boredom…I just couldn’t take it. And as I watched my retirement fund dwindling, I decided to start looking around for something to buy.” When asked how the stress of owning his own auto service business compares to the stress of his former career, Paul replied, “It’s different. In the business I was in, you live on fiveyear contracts. If a big contract is lost, you have to lay off 350 people at a time. They’ve got kids and mortgages and there is a lot of stress in that kind of business role. Sure, it’s great when you win one of those big contracts; signing a $100 million contract feels great. But sometimes you lose. I probably spent 60% of my time on the road, which isn’t particularly good for family life. And I just decided it was time to retire. I’ve got a boat, I thought I’d play golf…it would be great. Which it was for about a year, maybe a little bit more. But you just can’t go from 60 mph to zero too easily, depending on your personality.” Article continues on page 32
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Buyers of Other Locations Business partners Larry Mahan and Dan LaCouture purchased the Hyannis, MA, and Orleans, MA, shops. Larry previously owned a Pontiac/GMC car dealership on the Cape for many years until the Pontiac model line was discontinued. He is a veteran of the automotive business and a very sophisticated businessman. Dan is a former professional hockey player who had to give up the sport after a series of injuries. Joe Piroso purchased the Mount Ephraim, NJ, location.
ness, with good people…so we decided to take the jump.” As far as the purchase process timeline, Paul said, “Dealing with Art Blumenthal or with Terry Flaherty was not a problem. Art was knowledgeable and helpful, he understands the business, he knew the sellers, he’s a prince as far as that all went. Delays occurred in dealing with the bank.
Scope and Timeline of Purchase Process of East Falmouth, MA, Location When Paul Davidson was asked how he decided on the automotive service industry as his next business challenge, he replied, “We looked at a few businesses…an ice cream shop, a heating/ventilation/air conditioning type company and few more. My wife actually found the automotive service opportunity listing on the Internet, so I started doing some research. I even spent a few days across the street at McDonald’s in the parking lot watching the coming and going at the shop.” He continued, “My assessment of this opportunity was that it doesn’t have a tremendous upside. I won’t grow it to five times what it was. But it really doesn’t have a big downside either. So as far as making the decision, we factored in the facts that it was a good location, did good busi-
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Paul Davidson at the counter of his East Falmouth, MA, shop with a customer.
Even though we had hoped for a faster process, the bank slowed us down. So the whole process occurred between January and May. It shouldn’t have taken that long, but it just did.”
Post-Sale Activities & Observations Seller Terry Flaherty is a strong believer in using a broker…and not just any
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general commercial broker, but one who has automotive service experience. He said, “Utilizing the services of a broker allows the client to focus on the business and not be distracted by all of the time spent on packaging, marketing, advertising, qualifying clients, preparing offers, etc.” New business owner Paul Davidson has achieved an increase in sales revenue in his first year of business. “I took over May 21st last year. In 2011, the business did $834,000. Last year we did $924,000. And this year I think we’ll do $1 million. The last time this shop did $1 million was 2006,” noted Paul. He continued by noting that he started working longer hours to achieve that. “I think it was a little short of staff when I purchased the shop, particularly at the front desk. I don’t think we were moving customers through fast enough based upon the amount of work we could take in. So I started working 70 hours per week.” Paul has welcomed the opportunity to “Be Your Own Boss” and is now looking at expanding or purchasing another shop as well. He wanted to share his views with other potential buyers in the auto service industry when he said, “From my perspective, the auto service industry as it once was is gone. It’s a completely different business. There is a new breed of people coming in. There is a bright future, you can run your own shop, you can make good money, and you can make a difference if you hire good people. “My philosophy differs from some in that I believe when people try to take over these shops and start by cutting things, my opinion is that you need to do the opposite. If you infuse a little
Leveraging more than 30 years of experience as both an aftermarket business owner and aftermarket technology executive, Art Blumenthal LLC provides business intermediary and advisory services to both buyers and sellers of industry businesses of all sizes. Art is a member of IBBA (International Business Brokers Association, Inc.). For more information, or to initiate a no-obligation confidential consultation, visit www.art-blumenthal.com.
money and be sure you have staff to do the job, the benefit will be greater than the investment. If you hire highquality people, they will sell themselves, they will sell their work, and you can take in more work. When you are telling people that you would love to help them but can’t see them for a week from now, you’ve lost the business. You just won’t see them again. People expect things to be done now. “I’m now a firm believer, as I was 30 years ago and will always be, in being prepared for success. In this business, if you can do that, I think there is good money. Don’t skimp. Buy good equipment, stock all the parts you can, service your customers as the friendliest shop in the neighborhood and they will come back — 90% of my customers are repeat customers. We go out of our way to make sure they keep coming here. Because once you lose them for whatever reason, they will try every other shop within a five-mile radius before you see them again. It takes you a year to build up a retained customer; it takes about 10 minutes to lose them. It takes you another year and a half to get them back. It’s shortsighted not to be able to keep those customers when you spent so much time and money cultivating them in the first place.” SO
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by Bob Cooper, president, Elite Worldwide, Inc.
The Six Rules
Of Maximizing Customer Retention We all know that there are many things you can do when it comes to customer retention. The list includes follow-up calls, sending out service reminder notices, ongoing advertising campaigns that keep your name at the top of the customer’s mind and scheduling the next visit at the time of car delivery, to name a few.
Yet, there are some timeless rules that are often forgotten. During these tough, competitive times, I feel I can best help you by reiterating the six most important rules when it comes to customer retention. Rule #1. Create a principle-centered culture. All great companies realize that getting to the top, and staying at the top, is dependent on having a culture that is based on principles. As a business owner you need to ensure that you have a clearly defined Mission Statement, you need to share it with all of your employees and you need to constantly keep it at the forefront of their minds. Remember, your “goals”
|Shop Owner|September|October 2013
are what you are going to accomplish, whereas your Mission Statement is what you will be doing along the way. For example, a Mission Statement could read, “It is the mis-
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sion of Elite Auto Service to deliver extraordinary service to our customers and opportunity to our employees, while never compromising our ethics or our responsibility to society.” Rule #2. Offer and deliver a good value. I’m not suggesting that you be the lowest priced or the highest priced in your community. But, I am suggesting that you deliver a good value in return for the price you charge. Companies that charge more than they should just because they typically discover that their profits will go up in the short term, will lose their customer base at the same time. Great companies are competitive, not greedy, and that is why they become, and remain, great companies. Rule #3. Hire the Superstars. The success of your company, and your ability to retain customers over the
years, will be dependent on the people who work with you. As I’m sure you will agree, just being good is no longer good enough, so you need to have employees who truly are superstars. I can only hope you bear in mind that whenever someone buys a product, they will always remember the product, but whenever they buy a service, they will always remember the people who are providing the service. Simply put, your customers’ impression of your business will be only as positive as their impression of the people who work with you. Rule #4. Provide consistency in the experience. Great companies such as McDonald’s, Starbucks and Nordstrom all understand the importance of consistency in service. With any of these companies, before you step into their stores you already have an expectation of what the experience will be.
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The top shops understand this rule, and that is why they have clearly defined procedures for everything they do, from handling the first-time caller, through the entire repair process, to car delivery. When customers feel there is no consistency in service, they will typically look for an alternative service provider. Rule #5. Deliver on your promises. Hopefully you can see how this rule ties into your Mission Statement. If you want your customers to continue to return, then make sure that all of your employees choose their words carefully when they are making a commitment to your customers, and then ensure that they over-deliver on those promises. Rule #6. Never put money ahead of people. All world-class business owners understand that money is the result of doing the right things for the right reasons. When you embrace this rule, you will also discover why the
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world-class businesses will never take their customers for granted. They understand that itâ€™s the trust their customers have in them and their people that is priceless, not their credit cards. In closing, there are a number of things you can do to improve your shopâ€™s customer retention, but the one promise I can make to you is this: These six rules are timeless ones, and if you apply them to your business, you will see more repeat customers. And, unlike your competitors, you will be building a business that will last for generations to come. SO Since 1990, Bob Cooper has been the president of Elite Worldwide Inc., www.EliteWorldwideStore.com, an ethics-based company that helps both struggling and successful shop owners take their businesses to new levels through one-on-one coaching from the industryâ€™s top experts. The company also offers shop owners sales, marketing, and management seminars, along with service advisor training. You can contact Bob at firstname.lastname@example.org, or at 800-204-3548.
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Integrity Automotive owners pictured L-R are: Charlie and Julee Baxley, and Barb and Don Meeker.
“Our biggest success is the relationship building and trust for retaining our customers for a long time.” – Julee Baxley, Owner
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by Debbie Briggs, contributing writer
Integrity Automotive What’s In a Name? Tucson Shop Capitalizes On Quality Repairs and Top-Notch Customer Service “Our pledge to you as our customer is to uphold a sound business practice, with the highest ethical standards, and to exceed our customers’ expectations through providing exceptional customer service and maintaining a professional level of repair.”
The owners of Integrity Automotive make one thing very clear on their website: Integrity isn’t just part of the shop’s name; it’s the basis of everything they do. That was the mutual goal when Charlie and Julee Baxley, and Don and Barb Meeker decided to open an automotive repair business in Tucson, AZ, more than seven years ago in February 2006. Apparently, that commitment to quality and professionalism made an impression on customers. Just three years later, they had outgrown their first facility. Moving Integrity Automotive to a larger location a mile away allowed the owners to expand operations into eight bays, giving the shop’s three techs — two ASE Master Certified and one ASE Certified — more room to work. The move even allowed the owners to open Integrity Diesel in the original shop location. So how did the shop’s reputa-
tion for quality repairs grow so quickly? Good old-fashioned face-to-face networking, which is quickly becoming a lost art in today’s digital world. Julee says she jumped right into her initial role of marketing and advertising with gusto. She not only joined the Better Business Bureau and became affiliated with the ASE Blue Seal of Excellence program, but she also became a member of the Tucson Business Networking Association, Alliance of Construction Trade and Marana Chamber. “I joined every networking group available in our community,” she explains. “My fulltime job was to get the word out, and to develop relationships with other business owners and local community members. Both Don and I are now involved with a number of different networking groups. This and our local reputation are what got this business off the
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Owner Charlie and master technician, Glen.
ground.” Julee also founded a local charity organization called “High Heels for Hope,” which includes e: , pictured L-R ar area business el location crew es Di . ey ive Jo ot , m an to ci techni Integrity Au women working n and Master 2 , Chris, Owner Do rry Je hard to give back to the community base. It’s no surprise all year. Knowing that word-of-mouth referrals from that staying up on ever-changing Integrity’s many satisfied customers industry standards is also a must, Julee still tops the list of effective marketserves as chapter president of the ing strategies. Arizona chapter of ASA representing “Our biggest success is the relationTucson, and she also sits on the ship building and trust for retaining advisory board for Parts Plus. our customers for a long time,” Julee says. “Another asset is that owner Barb Meeker drives our courtesy van Solid Foundation most of the time. How about that — Making those connections early on an actual owner interacting one-onhas certainly paid off in terms of one with many of our customers!” building an impressive customer Also a hit with customers has been
|Shop Owner|September|October 2013
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a referral program in which each customer providing a referral is thanked by letter and entered into a monthly drawing. “We pick four names a month from those who have referred a customer to us, and we send each of them a monetary gift card,” Julee says, adding that they have also donated maintenance discount cards to the local schools for teachers and staff members. “Commu-
nity involvement and networking is critical to operating a successful automotive repair shop today.” Julee says shop appearance has always been a top priority at Integrity Auto; after all, you get only one chance to make a good first impression. “We get many compliments from customers on how well our shop is kept clean and organized,” she says. “We keep it very clean, and also well decorated with the latest colors and trends. We believe it communicates to our customers that they aren’t just a number here. We pride ourselves on providing the best upfront service possible — no surprises!”
Retaining Employees While every shop owner has most likely had to deal with turnover now and then, it can be challenging to find timely replacements who fit in with a shop’s culture. Julee says word-ofmouth advertising and focusing on the many benefits Integrity Automotive offers both have helped attract the right
|Shop Owner|September|October 2013
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employees at just the right times. “Retaining current employees and having low turnover rate is an ongoing challenge,” Julee admits, but the shop’s many benefits attract quality candidates. “We offer insurance benefits; current and active training; family values and atmosphere; and fair, incentive-based pay plans with reasonable expectations for employees.”
Owner Don an
Julee says they often have to look no further than the vendors, tool salesman and local automotive associations for qualified candidates. “Tucson is a big town with a small town feel, and techs talk!” she says. “Relationships with local trade schools have been useful over time, as well.”
Staying Current While community relations has been critical to Integrity Automotive’s success, Julee says new ventures are also
proving invaluable. Take the shop’s website, which offers online appointments and also features mobile responsive web design to make navigation by smart phone users that much easier. “Website presence and constant activity is a must in today’s world,” Julee says. “Online communication is being used more than ever. You have to keep up with the times.” Over the last seven years, one thing that has been invaluable is the shop’s affiliation as a Parts Plus Car Care Center. Julee says the partnership allows Integrity Automotive to offer its customers programs that are mutually beneficial. “Teaming up with Parts Plus has allowed us to offer programs that help our customers during slow economic times, but don’t lose money for our business,” Julee explains. “There are a lot of moneysaving programs in our industry that can boost your profitability.” At the heart of everything they do, Julee says, always goes back to one thing: customer service. “Most consumers today expect and should receive service as a first priority,” she concludes. “Effective communication with not only customers, but employees and suppliers as well, is critical to success.” While no one knows what tomorrow may hold, one thing is for sure — the owners of Integrity Automotive will continue to provide the quality repairs and top-notch customer service their name implies. SO
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by Vic Tarasik, owner, Vic’s Precision Automotive
The Challenges & Opportunities Of ‘Family’ In A Family-Owned Business The phrase “Family Owned and Operated” creates a warm flow of positive emotions when you talk about your company to your customers, especially your female customers. But having family as a part of your business creates a whole new dynamic of which most people are unaware. Navigating the family in a family-run business can be a bit like taking a boat to Alaska’s Aleutian Islands as the ice flow begins to break in the Spring. Make a turn in the wrong direction and you have a disaster on your hands and, in some cases, you may never be
|Shop Owner|September|October 2013
heard from again. Business management advisors are typically separated into two camps regarding this topic. In the first camp, my BottomLine Impact Group coach, John Wafler, has two rules when it comes to hiring family to work in your business: #1. Never hire family, #2. Refer back to rule #1. Over the years, he’s seen many shops with family working for the owner and, in most cases, they did not work out. So his advice has merit based on experience; I only wish I had listened when he coached me not to hire family (more on that later). In the other camp, Rick Schissler, a Silver Fox Advisor, says that there is nothing like working with family. He also speaks from experience, being a part of a family-run company for most of his career. Working for his father and grandfather,
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they knew on a daily basis what was expected from each other and created a work environment that was conducive to success.
Benefits Of Family There are some key benefits of having a family member work for you. First, you know if they padded their resume and whether they went to college or not. You know their talents and skill sets and, in most cases, their temperament. The background check needs to go only as far as the next family gathering. In the auto repair industry, trust is the cornerstone of our service promise, and the stronger the trust factor is at your shop the more effective your service promise will be. So having a trusted family member can help you to reinforce that value-added component of your business. Also, in many cases, family will work odd hours and, in some cases, accept a lesser wage because they know you and look at the big picture as it relates to helping meet the shop’s goals and objectives. This can be helpful in company startups or during slow times.
The Challenges Of Family Some family members feel entitled because you are their brother or sister, and when you aren’t around will use that card with customers, vendors and employees. They may not follow all of the company guidelines you have in your employee handbook. They know that you will give them leeway and treat them differently because they are “family.” But, if you don’t think your employees are taking note, think again. They are,
|Shop Owner|September|October 2013
and if you are not careful you may lose a valued team member because you don’t let them do the same. Even worse, you could be called on the carpet for discrimination by your government agency. Family knows how to push your buttons. While you may be the owner of the company, you can still be viewed as the son, daughter or younger sibling. And that distinct pecking order that was evident while you were growing up can show up again, even though that person is employed by You! One of the biggest challenges though can come from separation, either by their resignation or you terminating them. How do you think your next Christmas dinner will go over when your brother-in-law is sitting across the table from you after you fired him a few weeks earlier? Is hiring a family member worth the hurt feelings? If you do decide to bring on a family member, make crystal clear your expectations up front and express that at work you both wear the employer/employee hat and at the end of the day you put on the family hat. Hold them to a higher standard than the rest of your employees, this way no one will be tempted to feel entitled and your employees will feel that you are using the same measuring stick to judge their performance.
My Personal Experience On Hiring Family After the economic meltdown in 2008, I had some family members who fell on really hard times and lost everything — their business, their home, etc. Concurrently, things were booming in Houston, the shop was
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doing well and we were having a great time at the company. So, we helped them out and gave one of them a job at Vic’s, which was against the advice of my business coach. At first, things worked well as this family member went to work and rose in responsibility, moving from lube tech, to service advisor and eventually to assistant manager. My loyalty to him prevented me from seeing or realizing what was actually going on. Morale began to suffer and car count fell, but the average RO dollars went up to cover for the lost revenue from car count. Employee and customer satisfaction was falling in the process of me turning over some of the responsibilities to him. In attempting to find out the source of the issue, I turned over every rock except one, which was to look hard into this family member’s performance. I did inquire to customers and employees, but they all said, “things were just fine.” What I know now was that the employees were afraid they would lose their jobs if they came forward with information about the family member, and my customers did not want to hurt my feelings. Bottom line. Nepotism can, and will, kill a company if you’re not careful. I didn’t think I was guilty of letting this happen, but I was. A short while ago, the assistant manager and I separated, and while I would like to say it was amicable, it wasn’t. The upside, though, is the RO count is increasing, the average dollars per RO is holding, customers are returning and my employees are happier than I’ve seen them in a long time. My longest-term employee, Lawney, put it to me this way the other day. He said, “I’m having the time of my
life and haven’t been happier here!” That sealed my decision, as he was integral to the shop before and after family arrived. The downside, though, is that a 40-year-old family relationship has been laid to rest. So my lessons learned are this: If you are thinking about hiring family, make sure you do what I didn’t. Here is the short list. • Set very specific guidelines to which you hold that person accountable. • Review performance benchmarks that are within their responsibility on a weekly basis. • Take action as soon as you suspect something is wrong. • View failures as the opportunity to coach. • If you find they are unwilling to follow your guidelines, terminate them right away. Failure to take action will cause more damage from which you may not recover. • If you are going to promote that person to a position of responsibility, make sure they are doubly qualified so it does not appear you are putting them in that role because they are family. Even though I’ve shared a negative experience, there are many positive stories of families successfully working together in our field. If you have a story to tell, please share it with us at Shop Owner magazine. SO
Vic Tarasik is the owner of Vic’s Precision Automotive, The Woodlands, TX, a 30-year industry veteran and long-time 20 Group member. His 10-bay, 7,000 sq.-ft. shop specializes in customer service, in addition to expert vehicle repairs. Vic can be reached at email@example.com.
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Failing to figure out your best target will not only result in wasted marketing dollars, but can also prevent you from achieving sales growth and increased car counts.
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by Tim Ross, president, Mudlick Mail
Identifying Your Target Customer Helps Maximize Your Marketing Dollars Ever notice how in upscale neighborhoods, even the fast food restaurants are nicer? Instead of a bright red roof and the famous golden arches, the McDonald’s in ritzy Aspen, for example, boasts a second-floor fireplace and is housed in a sedate red brick building that blends in seamlessly with the surrounding architecture. The fancier digs reflect McDonald’s understanding that its target market in Aspen is far different than its target market in Akron. The same idea holds true in the automotive repair world, but, unfortunately, too many shop owners fail to realistically identify their ideal market or customer. I often get requests from shop owners who want to advertise to upper-income customers in neighborhoods far from their shops. That approach doesn’t usually yield much success because the households in those areas may not be the right fit for those shops. Failing to figure out your best target will not only result in wasted marketing dollars, but can also prevent you from achieving sales growth and increased car counts. Here
are some tips to help you zero in on the households that are most likely to visit your shop. The first step in identifying your ideal customer involves understanding that as a shop owner, you are what your neighborhood is. Have a shop in a middle-income, suburban market? Your customers will likely be middle-income suburban residents. Located near a wealthy, downtown hub? Your customers may be busy office workers. Whatever the environment, you need to come to grips with the fact that you will have to grow and survive based on the people located within a three- to fivemile radius of your shop.
Demographics & Income Advertisers can supply you with a huge range of demographic information on your neighborhood, but the key component is
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Your ideal customer is usually the highest income customer located closest to your shop.
income. Your ideal customer is usually the highest income customer located closest to your shop. Income drives habits, to which you can better tailor your marketing efforts. For example, people with a lot of money typically aren’t coupon shoppers. They make decisions based on features, benefits and, most importantly, convenience. Lower income customers, on the other hand, are more price-conscious and will respond more to discount offers. Your target market will also influence the type of services you offer. If your
|Shop Owner|September|October 2013
ideal customers are lower-to-middle income households, offering premium services will be difficult because you won’t be able to charge the rates needed to support that structure. For upper-income customers, time is often money, so providing a free shuttle service and longer hours may be the benefits you need to consider offering. Once you’ve identified your ideal customer, you have to make sure your shop, like the McDonald’s in Aspen, matches the market you’re hoping to attract. Here are some factors to consider when
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accomplishing that match: • Shop appearance. Let’s not forget that for some consumers, image is everything. If your shop is dirty, has little curb appeal or looks unsafe, potential customers will pass you by. Your shop doesn’t have to be new, but it should be clean and well maintained (no peeling paint, frayed carpets or cracked floors). • Staff appearance. Is your staff dressed in technician garb covered with grease stains, or are they wearing polo shirts and khakis? And, remember, appearance goes beyond how your staff looks. You need to ensure that your front desk personnel are well spoken and have the customer service skills needed to attract your target market.
your website? If your target market is social media savvy, do you have positive reviews on Yelp, Google and Facebook? If you answered “no” to any of these questions, you may need to spend time repairing your reputation before launching a marketing or advertising campaign. Don’t forget that your ideal customer is going to vary wildly depending on the neighborhood in which you operate, but if you employ the right strategies to target that customer, you can make money in just about any location. SO
• Your reputation. Do you have a good reputation in your community for fixing cars? Do you feature testimonials from satisfied customers on
Tim Ross is president of Mudlick Mail, a leading provider of direct mail campaigns to the automotive repair industry. Mudlick Mail has worked with close to 1,000 automotive repair and transmission shops across the U.S. and Canada, helping them improve their car count and increase sales. The company teaches its clients how to understand consumer-buying habits and shows them how to create effective systems to maximize the value of their marketing campaigns.
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Shop Owner brings independent repair shop owners a wealth of shop management information to help better run their businesses. Founded: 2010...