In last month’s issue, INSIGHT detailed the steps necessary to perform a local market analysis covering the factors affecting the potential of a collision repair business in any market. In this month’s feature, INSIGHT continues this in-depth examination on developing marketing strategy by focusing on how to put the information garnered during the market analysis to use: setting goals for growth, pre-sale and after-sale marketing and the tools of collision repair facility marketing.
With an analysis of a shop’s local market and current position within that market, management must proceed with goal setting for growth. Every effort needs to be made to ensure that these goals are realistic and achievable. Both short term (1-6 month) and long term (1-5 year) goals need to be outlined.
Goal setting is a temperamental, inexact process requiring a balancing of the management’s personal goals and values against their perceived ability to affect their shop’s performance. What is important to the management? Long-term growth? Increased gross profit? Increased market share? The research performed for last month’s article will point towards achievable goals and the variables to consider in achieving those goals.
Marketing collision repair services involves two main activities:
Pre-sale marketing includes all of the efforts undertaken by the shop to "create awareness" of the facility. Pre-Sale Marketing Activities include:
All of these tools are geared towards creating awareness and projecting a mental image of the facility in the prospective customer’s mind. A facility’s image is marketed through all of the above pre-sale marketing activities, with each area providing support for another. For example, establishing referral volume is much easier if the referral source is already familiar with the shop because of advertising or signage and has received a favorable impression.
Previous INSIGHT articles on marketing have recommended a marketing budget of between three to five percent of gross sales. This figure should include traditional marketing expenditures, such as Yellow-Page and newspaper advertising, and also the incremental costs related to referral volumes.
For instance, a five percent discount reduction (i.e. 25% discount on domestic OE parts vs. 30% normally received) on parts given to a dealer to secure referrals will cost a shop approximately 2.5 percent of gross sales at the 51% parts dollar to labor dollar average nationwide. In simple terms, the cost of the five percent reduction in parts gross profit should be counted as a marketing expense. Similarly, discounts to insurance companies to secure DRP referrals should be counted this way.
With the costs of incremental volume established, the expenditures on support materials, such as targeted brochures for referral sources can be established.
A detailed listing of marketing tools by customer type is shown on page 13.
With a budget for marketing expenditures established, the shop can judge how to allocate this money among available marketing activities based upon their market research.
Building referral volume has always been a major "profit" generator for successful repair centers: long before the advent of structured direct repair programs.
Primarily, these relationships were built through personal contact with the sources of referral and continue to be generated that way today. Once a shop has identified a potential referral prospect through market research and analysis, how does the shop go about "selling" the referral system to the prospect?
The answer is straightforward: consistent, frequent contact with the prospect stressing the benefits of the relationship.
To illustrate the methods of building referral volume we will use a case study shop, ABC Collision Repair, who has identified dealer referral volume as their "best" source of referral work in the short term. This referral work will only come through personal contact with the dealership personnel, i.e. parts manager, service director, and dealer principle.
Shops that are looking toward an increase in dealership referrals as a method of increasing business must make regular contact to sell the referral system to the dealership. Once sold, regular contact needs to be maintained to measure the dealer’s satisfaction with the relationship and to ensure that the program is reaching its maximum effectiveness.
ABC Collision Repair has identified two, mid-size dealerships without body shops as a potential source of referrals. They took the following steps to attract referrals from these dealers:
The initial meeting was held at the dealership with the parts and service director. During the meeting, ABC Collision presented their package focusing on the professionalism of their operation, as evidenced by the knowledge of their numbers and customer satisfaction, and also the direct benefits to the dealer, including increased parts business, increased customer satisfaction and problem solving. Included in the discussion was a determination of the potential volume of referrals, i.e. how many jobs are currently referred by the dealer and what percentage of the dealer’s customer base does this represent. This will enable ABC Collision Repair to project the potential sales increase the referral program will generate and how much that is worth to the shop based upon the five percent marketing budget discussed above.
A follow-up meeting was then held at ABC Collision Repair: this time the dealership principle was in attendance. A tour was conducted of the facility, along with a review of the proposal for the dealership owner. With a favorable impression planted in the dealership principal, Quality presented their ideas on the mechanics of the referral system:
This program could easily be applied to efforts aimed at fleet or insurance referrals. ABC Collision Repair, through their market research, determined that fleet and insurance referrals were long-term goals best addressed by image marketing today.
After-Sale marketing includes efforts to make sure that current customers are satisfied with the service provided and make them into a strong referral base. This is crucially important because Collision Repair Industry INSIGHT research indicates that, on average, 80% of customers are influenced by current customers.
In simple terms, this means that 80% of your customers will buy service from your facility based upon the experiences of past customers who have used, or know someone who has used, your facility and are satisfied with the service provided. The remaining 20% is new business created through Pre-Sale marketing efforts. What does this tell you? CSI is crucial to success.
With a proper marketing strategy and plan, collision repairs can help prepare themselves for the increased competition due to industry consolidation. Inactivity will lead to failure.
Reprinted from the September 1997 Issue of Collision Repair Industry INSIGHT.
© 1997 Collision Repair Industry INSIGHT. All Rights Reserved
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