With the recent publication of INSIGHT’s review of the current trends in collision repair industry consolidation, many repair facilities have asked, "What can I do to prepare my business for the future?" What these people want to know is how they can compete in an ever more competitive market for collision repair services.
INSIGHT believes that one of the best methods individual collision repair facility operators can use to firmly establish their position in their local market is to create a comprehensive marketing strategy focused on growth. One of the advantages potential consolidators hope to capitalize on is their ability to create a recognizable brand image for their centers. Beating them to the punch will make that task much more difficult to achieve.
In this month’s feature article, INSIGHT details the steps necessary to create a complete marketing strategy and the core concepts of a detailed local market analysis.
Developing a solid marketing strategy is the starting point in creating a user-friendly marketing plan that you can actually use in your shop. A marketing strategy is a statement of direction. In a simple and direct manner it addresses the following questions:
Answering these questions requires a shop to undertake three distinct steps to create an effective marketing program:
Analyzing where you are now is looking at the local market and how your shop fits into the big picture. With the proper analysis of local market conditions and your position within the market, defining objectives and planning to meet those objectives becomes doable.
The key to doing this well is using a system that helps you analyze the conditions you face in your market. The analysis step is the most important. It lays the foundation upon which the rest of your strategy is built.
The Market Analysis is the most time consuming portion necessary to develop a complete marketing strategy. However, like most things in life, the more effort and thought directed at achieving a thorough market analysis, the more useful and accurate the analysis will be towards creating an effective growth producing strategy.
The market analysis should focus on four areas that affect the success of the repair facilities marketing program. These areas are:
Each of the four areas contains vital information that will dramatically affect the success of your business and future growth potential.
Understanding the local market conditions is crucial to forecasting the future growth of any repair facility’s business. The primary statistics to compile for a personalized market study include local population and local accident statistics.
Understanding population growth and the demographics of your local market can give the thoughtful shop owner valuable insight into the future trends of their market. Is the population increasing or decreasing? Are average household incomes increasing or decreasing? What is the local accident frequency rate? What are the projections for local economic growth?
All of these questions have answers that will impact the long-term health of collision repair businesses in the market. Most, or all, are available from government sources such as the department of transportation, local economic development councils, or local business publications. The chart on page 13 details additional research statistics and potential sources of information.
INSIGHT research shows that virtually 85 percent of the typical collision repair facility’s business comes from repeat business, referrals from previous customers, OE dealer referrals and insurance sources such as DRP and local agent referrals. Identifying your customers based upon these referral sources is therefore one of the most critical aspects of the customer analysis.
To do so you need a shop to compile a customer information form that details why they chose your shop instead of the competition. Many shops have been using a customer information form for years. If your facility does so, a wealth of customer information is now in your hands. If you do not use a customer information form, now is the time to start.
In addition to referral sources, simple address information from the customer base will provide the shop with the ability to determine the geographic distribution of your business. If you use a computerized management system, many of these programs offer the ability to export a customer database.
With customer information in hand, many repair facilities find the best method for analyzing their customers is to use the old map and pushpin approach. To do so, purchase a large-scale map that covers your entire market area. Using your customer information, place pushpins for each customer at their home address. Different color pushpins can be used to classify the customers based upon referral source, vehicle type, insurance company or other information at the shop’s discretion.
Most repair facilities that create this pushpin map will see patterns develop in the geography of their customer base that can be valuable at directing future marketing efforts. For example, in neighborhoods that show very few customers, outdoor advertising can be used at high traffic areas in these communities to build shop awareness.
A wide variety of computerized software is also available that performs geographic pushpin analysis. Its utility for your facility will depend upon the strength of the mapping available for your local market, and your ability to produce the customer database in a computerized form that can be imported into the software.
Remember, gear your studies towards where your customers are, and why they come from those areas.
With an understanding of the market you draw from, and the number of registered vehicles in that market, you can develop a rough market potential figure. Based upon a repaired accident frequency of 10 percent and an average repair order of $1500, multiply the number of registered vehicles by $150 to determine the total market that your facility draws from.
Along with an analysis of a shop’s customer base, a detailed analysis of competitors provides valuable information. Locate all of the competitors within your local market on the pushpin map. Include in your analysis both independent and OE dealer collision repair facilities.
Start a file on each competitor and build a dossier of specific information about the size of their facility, the number of technicians they employ, the insurance and dealer referral sources they maintain and the advertising and marketing efforts they use against your facility.
Much of this information can be garnered from covert sources, such as friendly insurance appraisers and suppliers.
Analyze the Yellow Pages for competitor advertisements as well as local newspapers, television and radio advertisements.
Try and find a correlation between your customer analysis and the geography and advertising activities of your competitors.
The most important items for each in these five areas can include the following:
In next month’s issue, INSIGHT will detail the steps necessary to set goals for growth and how to develop and implement a marketing plan.
Reprinted from the August 1997 Issue of Collision Repair Industry INSIGHT.
© 1997 Collision Repair Industry INSIGHT. All Rights Reserved
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