Archive for May, 2008
From Digital Dealer Magazine May 2008
by : Peter Batten
Your online store is just as important as your showroom, and the reason why is clear: 70 percent of new vehicle buyers use the Internet to vehicle shop, as do 61 percent of used vehicle buyers (2007 J.D. Power and Associates New Autoshopper.com & Used Autoshopper.com studies). But, as you may have noticed, simply having a web site will not increase your traffic, leads, or sales. In fact, a flaccid web site can do more harm than good as potential customers quickly ascertain that they will not find the information they want and leave your site in favor of a big portal or automaker site. But it does not have to be that way. You can make your dealership web site a best-in-class consumer destination with the features and tools that give your customers the comprehensive content, intuitive navigation, and breadth of information found on leading portals and manufacturer sites. That’s right: your site can be as impressive as any automotive site out there. And you can do it all with a minimum of development time.
Lifestyle search capabilities
With a lifestyle search, a consumer can search for vehicles that match their needs without having to know any esoteric vehicle information. For example, a customer can search by body style, like SUV, coupe, or convertible, instead of having to start searching by make and model. Many consumers do not know what exact trim they want; they just know they need an SUV because they carry cargo on slippery roads, or a compact because they want to save on gas bills. Lifestyle searches are intuitive for consumers, allowing them to find the vehicle they want with the least amount of hassle and frustration.
Powerful comparison features
A J.D. Powers and Associates study focusing on best practices on manufacturer web sites found that consumers loved powerful comparison tools that allowed them to compare multiple vehicles at one time (2006 Manufacturer Web Site Evaluation StudySM – J.D. Powers and Associates). They found that side-by-side and advantage-based comparisons are especially useful because shoppers can quickly scan the results and even print out results for future consideration. There are several companies who can equip your web site with a robust comparison tool in record time.
Vehicle images and videos
The same J.D. Powers and Associates study cited above found that consumers gravitate to vehicle images and videos, which put them immediately in the virtual driver’s seat. Videos are especially valuable for demonstrating functionality and versatility of a vehicle including: acceleration, cornering, stopping, and much more. Color changes and interior shots are invaluable for helping the consumer to experience the vehicle and for generating excitement and the desire to buy. Consider including a comprehensive equipment listing for each of your vehicles alongside a detailed photo that consumers can click to view different angles, interior shots, colors, and live-action video. Build-A-Car tool tied to your inventory
The advantages of a Build-A-Car tool on your web site have been well documented. Give consumers the opportunity to design the car of their dreams and they will stay on your site longer, return again and again, and convert into a valid prospect at a higher rate. Bump this tool up to the next level by integrating it with your inventory so customers can see what you have available.
Online credit applications
You want prospects to become buyers. An additional feature to help you meet this goal is the online credit application. By including a secure link to a credit application that a customer can immediately complete, you are saving that customer time and hassle and also converting a lead into a viable prospect. Use the credit application as a virtual shopping cart to close qualified buyers in record time.
I’m not sure why it took so long for me to notice, but it finally occurred to me that the preponderance of dealership radio and television spots feature aggressive, excitable spokespeople ranting at 180 mph about the great deals available at their store. Each dealership seems to be trying to out-yell the next. It’s like all dealership spots are written by a roid-raging Dick Vitale.
Why is this the prevailing tone of dealership ads? Has anyone out there tried something different and been successful? Is this the prevailing tone simply because everyone’s afraid to do something different? Or is it truly the best and most surefire way to sell cars?
One of the prevailing tenets of marketing is to set yourself apart and find a voice and position that you can own. So is there anyone out there who is whispering and being effective? Anyone?
Marketing Strategist/Creative Consultant
Published: May 22, 2008, from iMedia Connection, by: Guy Maser
The following tips will carry your company through the lean times and beyond.
In a challenging economy, you must find new ways to make marketing work more effectively, get more out of marketing investments, and measure and account for marketing decisions. In short, you must make changes. Doing the same things in an uncertain economic environment and expecting the same results is, at worst, a definition of marketing insanity. At best it is a flawed strategy.
How can your company be one of those success stories that market and grow their businesses during challenging economic times? The following strategies will help you allocate marketing investments to better performing programs that will carry your company through the economic downturn and beyond.
A fundamental but sometimes overlooked marketing tenet is to “fish where the fish are.” In other words, invest in those specific, targeted media where you know your customers and prospects will be exposed to your message.
Research shows that virtually all engineering, technical and industrial professionals now use the internet throughout their work process. The same holds true in most B2B markets. But the internet is vast, and the fish you are looking for may be using specific websites where the content is directly related to their information needs. Work with your media partners to identify and target those sites.
While it’s always the right time to purge marketing programs that don’t perform, it may be time to scale back any marketing plans whose results you can’t measure or are unsure about. In other words, re-allocate and “right-size” marketing budgets to measurable programs. Online programs — which are built around delivering visibility, impressions, clicks, leads and customers — are easy to measure.
Integrated marketing means your marketing strategy takes advantage of multiple media, resources and customer touchpoints to create a whole that’s greater and more effective than the sum of its parts. The more that marketing efforts are integrated and comprehensive, the greater impact you can achieve in gaining visibility in your market, qualified leads and sales.
Maintain frequency and consistency
The benefits of regular visibility in the market tend to compound over time as more prospects recognize your company. This improves your opportunity to get on a prospect’s short list of potential vendors and also shortens the sales cycle. A consistent online presence where your customers and prospects are looking for information — including websites, directories, search engines and e-newsletters — will help your company stay visible as well as provide measurable lead generation benefits via online contact.
Push and pull your way to success
Most marketing can be classified as either push or pull: companies push their message out through tactics such as direct mail, advertisements and e-newsletters; and they also establish a presence in online directories, websites and search engines to pull customers in real-time when prospects are searching for information, products and services like those your company offers. Rather than struggling over whether to allocate resources to push marketing or pull marketing, seek out a media partner that has your target audience captive and can offer both push and pull programs under an integrated program.
Focus on quality over quantity
If marketing efforts focus solely on quantity over quality, fewer leads will convert, more sales resources will be wasted, and sales people will begin to distrust marketing’s lead generation programs. Commit to programs in which quality is a key attribute: programs that can deliver interested prospects, provide prospect contact information and offer reports of program performance.
Seek assistance from media partners
The economy is likely forcing you to make harder and smarter decisions about allocating budgets. While you may be facing challenges, you don’t have to face them alone. Ask media partners to demonstrate how their marketing solutions help your company achieve the strategies mentioned above.
- Do they have your target audience’s attention?
- Can they keep your company visible to prospects and customers at all times?
- Do they offer a variety of integrated marketing solutions aligned with your goals?
- Can they provide both visibility and lead generation?
- Do they deliver targeted, quality leads with full contact information?
- Do they provide reports you can use to measure the performance of your marketing and justify your marketing investments?
During challenging times or when things are going well, marketers need to clarify goals and create tailored, integrated marketing solutions that complement the current media mix and extend their companies’ ability to compete and win business in the market. Utilize a wide range of digital media advertising and marketing solutions. Consider keyword ads, email marketing, searchable product catalogs, banner ad networks and industry-leading e-newsletter advertisements. Figure out the right combination and you will deliver the right message at the right time to the right audience and integrate with your traditional marketing efforts.
As marketers, we’re constantly building, tweaking and adapting our marketing plans in an effort to maximize the return on our marketing investment. In doing so, we have to make judgments about which tactics will be most effective. And that’s where, if you’re not careful, mistakes can be made.
One of the most common mistakes I see marketers make is to forget a simple truth that should be obvious. That truth is this: You are not your audience. It’s the same mistake that causes us to buy birthday gifts for our friends that are actually something we’d like, rather than something he or she would enjoy.
You are not your audience. It seems obvious, but forgetting it can have profound implications. Just because you personally don’t respond to direct mail, watch Channel 8 News or like the color red doesn’t mean that’s not the right solution to your marketing challenges. Learning what personal biases you may have is important when designed a campaign meant to influence other people.
So, trust your audience, trust past results and trust the numbers… they won’t lead you astray nearly as often as your hidden, personal biases.
Marketing Strategist/Creative Consultant
Published: May 19, 2008, iMedia Connection
by: Craig Walmsley
Location-based targeting is on the verge of exploding — find out what this technology will soon enable you to do.
In 2005, Microsoft launched a Location Finder as part of its Live Maps service. The application examined the networks a person was connected to, cross checked his IP address, and then predicted where the person was on a map. It was far from 100 percent accurate, but when it was right, it was ever-so-slightly terrifying. Coupling a person’s location with 3D aerial map views, it showed the person a picture of the building he was sitting in with a big “X” on top of it — giving him the simultaneous sensation of being the CIA agent locating a target, the target expecting an incoming cruise missile, and the viewer of a sophisticated, futuristic spy-movie.
Microsoft re-assured users that no personal data was captured, and that everything was completely secure. Nonetheless, it required nerves of steel to retain this application after seeing your location determined with such apparent ease, speed and accuracy — perhaps explaining why Microsoft quietly withdrew this beta after a few months of testing.
This is a shame. Location is a very useful piece of information. Such location-based techniques are a staple of online advertising targeting. Search engines use IP address to determine geography to a very detailed level. New Yorkers searching for “PlayStation” or “Jewelry,” for example, may have much more disposable income than people in Albuquerque, and be much more likely to buy.
Display advertising networks like DoubleClick offer similar services, allowing for detailed geographical targeting down to the level of ZIP codes. So, whatever your qualms about location-based targeting, it is already a significant part of the internet experience. Brands can reach just the highest value customers, who, in turn, see ads that they are more likely to be interested in.
The usefulness of location also explains why people are very willing to share the details of where they are with others. Anyone who has worked in a multi-national company will have noticed people customizing their Instant Messenger to note their location. People who work in different offices will often note their office as part of their name, or, if they are on a trip, update their name to indicate that they are somewhere else. It’s not built into most IM applications, but people find it helpful, so they just do it themselves.
As people work remotely more often, such information becomes more and more useful. This is precisely the thought behind “Dopplr” — a Web 2.0 service that enables users to note their location and share it with friends to determine when they will overlap in a location with any one of their contacts. A smart web platform, it enables users to share location data across services, and create clever mashups. So, for example, someone could map all her trips across the world on Google Earth. Or she could enter an individual trip and then use a web service to create an estimate of the trip’s carbon foot-print.
All of this, however, is only just scratching the surface of location’s utility. Mobile phones have also long had basic location-based services, derived from the cellular networks that they use to transmit signals. These services have generally been limited in usefulness due to the inaccuracy of location, and the lack of an eco-system to support location-based services. Gradually, however, the conditions are changing and three key developments are likely to propel location-based services into the mainstream.
First, the iPhone is revolutionizing use of the mobile web. In February, for example, Google reported that it had seen 50 times more web searches on Apple’s iPhone than from any other mobile handset. People are getting much more used to using the internet from their phones. Google Maps is now available for many different mobile phones, providing a simple way to find information based around a certain location. Google’s mobile search is rolling out city by city, adding local businesses into a mobile search query, so that the results are more relevant.
Second, real-time location determination will shortly become a standard feature of all cell phones. The January iPhone software update added basic location-determination using cell phone towers and WiFi networks to place users roughly on a map. The next generation iPhone is widely expected to include GPS, providing pin-point determination of a person’s location. Indeed, GPS will become a standard feature on mobile phone handsets in the next 12 to 24 months. This plethora of location-based devices will create the opportunity to build all sorts of new location-based services on a powerful platform that people carry in their pockets.
Third, the evolution of Web 2.0 services means that there is a great deal more geographical data available for mobile phones to tap into. Location data can be integrated into available services — for example a portable version of Housingmaps.com — where Craigslist real estate listings are overlaid onto a Google Map – very helpful for anyone looking for a house in a certain area. Equally, an accurate location, coupled with a restaurant booking service like OpenTable.com, would enable someone to access all the restaurants nearby that have bookings available right that minute. Feed that information into Google Maps, and you could have a set of directions to the restaurant, with a picture of what it looks like before you get there — very helpful for the user, and perfect for driving footfall. Indeed, American Express is now launching a Mobile Concierge service, which uses a phone’s location to alert customers to Amex offers, discounts and exclusives in their immediate vicinity.
It is just such opportunity that is driving Yahoo’s new Fire Eagle service — a smart piece of cross-platform web-plumbing that enables users to securely share their location with different applications and services. It can tell any application the user permits where the user is and when, allowing the person to connect together location-based services like Dopplr with social services like Facebook and data from any Web 2.0 service like Google Maps, Flickr or Wikipedia.
Web 2.0 technologies will ensure that location can be used in innumerable different ways, enabling people to innovate to create new, previously unimagined services. By giving the user complete control of how and with whom they share their location information, Fire Eagle should also remove some of those unsettling feelings that scuttled Microsoft’s Location Finder.
Location, therefore, is going to become an increasingly important part of the connected consumer’s life. This is doubtless why Nokia has recently acquired Navteq — a location-based services provider. This is probably also part of the reason Google is looking to develop its own phone. Location will be a major determinant of advertising relevance on the mobile platform, and advertising relevance is Google’s stock-in-trade. It is only a matter of time before longitude and latitude become important variables in the keyword bidding process. In short, “location” may well be the “Next Big Thing” in digital media, technology and advertising.
There may no longer be gold in them there hills, but knowing that them there hills are where you are — that might yet be a gold mine.
By: Pat Ryan, Jr.
From Digital Dealer Magazine February 2008
Every week seems to bring an interesting new study on how consumers are using the Internet in their car buying process. While all of these studies point to the importance of an evolving e-strategy for dealerships, it is not always easy for dealers to glean actionable takeaways from these studies. With all the data flying around, this presents a great opportunity to make sense of it all. Let’s start with the most dramatic headline.
The 2007 Dealer eBusiness Performance study sponsored by Yahoo revealed that 88 percent of consumers use the Internet for research prior to visiting a dealership. At the same time, dealers we hear from typically report 15 to 20 percent of their business coming from their Internet departments.
What happened to the 68 percent of buyers that used the Internet to research vehicles yet were invisible to the Internet department? Simply put, they may have shopped your “virtual frontline” but did so anonymously; some later came to visit your dealership while others bought from your competitor.
Why do the majority of buyers using the Internet choose to stay invisible to your Internet department? Because the majority of Internet shoppers are reluctant to share their personal information online with dealers or third-party web sites and therefore never become a “lead.” The result: the majority of visitors to your “virtual frontline” are invisible and untouchable for your Internet team.
How does this impact my business?
Dealers routinely work hard to engage every guest who walks their lot and shops through the traditional buying process. In the online world, if your vehicle is not competitively priced with similar vehicles in your market, a consumer will leave your virtual frontline for another dealer’s with one click, never returning and never speaking with anyone on your team. Buyers will also “vote” with their mouse by clicking away from vehicles that do not have enough pictures, have poor quality pictures, or lack compelling descriptions.
What makes dealerships vulnerable to these kinds of missteps?
Dealerships traditionally priced pre-owned inventory on a “cost-plus” basis-pricing the vehicle to ensure they have enough room to negotiate with a customer and still sell a vehicle for a strong gross profit. Since pre-owned vehicles are more varied in value because of age, condition, mileage etc., consumers were unlikely to find a similar vehicle to yours across the street, giving dealers the upper hand. However, in the Internet age, customers can see your pricing next to nearly all of the similar vehicles in your market, making cost-plus pricing a barrier to driving traffic from the Internet.
In addition to the consumer being empowered by the Internet, dealers who are inconsistent in putting enough pictures or robust vehicle descriptions online will find themselves clicked past by consumers as well. It’s no longer enough to just be online. Dealers need to excel online by being as diligent in merchandising your online inventory as you are in the presentation of your dealership’s showroom.
How can I maximize my pre-owned traffic from the Internet?
1. Market pricing – Replace “cost-plus” pricing with market pricing by competitive shopping every vehicle versus the competition. This ensures that your pricing will appear fair for its value in online search results. Treat competitive vehicles online the same way you would if they were on the frontline across the street. Price based on the “key strengths” of your vehicles but be realistic given the competition.
2. Consistently execute the online advertising fundamentals – Mystery shop your own dealership to ensure all of your vehicles are online with robust descriptions and pictures. You’d never put a vehicle on the frontline without detailing it. Make sure you detail your online vehicles to the same standard.
3. Mystery shop the competition – Experience your dealership’s “virtual frontline” versus the competition as the consumer will experience it. Go to an online advertising site such as autotrader.com or cars.com and see how your vehicles compare. If you are using market pricing and executing online advertising fundamentals consistently your vehicles should show well, but you may find that your vehicles differentiation is not clear to a potential buyer. For example, you may find that your vehicle is the lowest mileage vehicle in the market. In that case it may be okay to be the highest priced vehicle; you simply need to ensure that your online listings are highlighting the value. Know each vehicle’s online market and ensure that your listings are highlighting the unique value of each vehicle.
With those three simple steps any dealer can ensure that they are maximizing the potential of the online advertising they are purchasing. The key is to execute consistently, the same way you do every day in merchandising the showroom and frontline at your dealership.
A couple of questions today. First, are you still running an ad in the yellow pages? Of course you are, right? And you’re also running an ongoing search engine marketing (SEM) program, right? No? Really?
Here’s the thing. Google is well on its way to killing the yellow pages. In my house, we tossed our yellow pages book the day we got a laptop and wireless internet. If you’re not spending twice as much capturing leads online as you are through the big yellow book, you’re probably missing the boat.
Let’s say someone finds you in the yellow pages. They still have to pick up the phone or drive out to your dealership (or visit your website – your web address is on your yellow pages ad, right?), but online they can be out on your site searching your inventory and completing a financing application in a matter of seconds.
It’s a sign of the times and it’s time to adjust your spending accordingly.
Marketing Strategist/Creative Consultant
by : Glen Garvin
Digital Dealer Magazine, April 2008
Each month millions of potential car buyers go online to research and shop for used vehicles. In fact, studies show that in 2006, 59 percent of all pre-owned vehicle shoppers used the Internet during the buying process. Internet research and shopping is no longer a trend, it’s now part of the dealership sales cycle.
So what happens when someone goes online to research or buy a vehicle? Most consumers will use a search engine to find the information they want, and end up at portals with thousands of vehicle listings. And that means lots of competition for the sale.
Okay, I know what you’re thinking; consumers often narrow their list of potential vehicles by using detailed search criteria and, by default, this will reduce the number of vehicles in the search results. Let’s look at this two ways: First, for the consumers who narrow their search, there will still be competitive listings and it is even more important for you stand out amongst those final listings. Think of it like Dancing with the Stars, you don’t need to stand out in a really crowded field; you just need to be “good enough.”
When the contestants are narrowed down to just the best, you need to differentiate and stand out. Secondly, we should consider the buyer who hasn’t yet decided on their make or model, because they’ll often research many different makes and models. They’ll come across hundreds…maybe thousands of vehicles. There’s no doubt you need to stand out.
But wait, you say, you’ve also paid your third-party lead provider a nice premium for a high ranking on their site. Yes, that will help drive consumers to your listing. But how do you get someone to focus on what you’re selling? What can you do to differentiate your listing and make your vehicle stand out online?
The first step is using enough photos to showcase all aspects of the vehicle. In 1921 the New York Times ran an article entitled “Use of Pictures for Advertising.” It was based on a national study of large retailers and concluded not only that “people want pictures,” but that images used in advertising a) attract attention, b) arouse interest and c) create desire. That was over 85 years ago, but if you think things have changed since then in the world of advertising…not. It’s still the rule of thumb when it comes to promotion. In the retail auto industry, displaying nine vehicle photos is common and probably acceptable, but never less than six. Many dealers see the value of showcasing their vehicles, especially ones that might be uniquely equipped, with upwards of 20 photos.
The quality of the image is also important. This is determined by photo resolution or pixels, short for “picture element.” Pixels are small color samples of the image. The more pixels a digital image contains, the clearer the photo. The industry standard for photos has been 800 x 680 pixels. That might have worked 10 years ago, but not today. With the introduction of flat screen desk monitors, the standard size of monitors has increased to 19 inches. Many people are using screens that measure 23 inches or more. Photo resolutions of 800 x 680 don’t transition well to screens that size. Trying to enlarge the photo beyond its normal resolution doesn’t work either; trust me. You’re going to need a photo with a minimum 1024 x 768 resolution in order for it to appear clear and sharp on someone’s monitor. And here’s something else you should know: blurry, poor quality images are not only a big turn-off to buyers, they make your dealership look second-rate.
Videos are another great way to make your vehicle stand out online. They elicit curiosity because the viewer wants to see what’s going to happen next. Videos can also engage a buyer faster and with more emotional impact than almost any other online sales tool or technique. It’s an ideal format for providing in-depth data on vehicle owner history, emphasizing what options the vehicle has above and beyond the standard package for that make and model, or pointing out the vehicle’s rarity or other unique aspects. Don’t forget to add some flare to the presentation with music and professionally done voice-overs.
You’ll also attract and interest online buyers by focusing on differentiators in the listing’s features and seller notes sections. For example, in the features section, make sure OEM certifications are noted. Many buyers are drawn to certified pre-owned vehicles because it means the car has been fully inspected, is in good condition and comes with a warranty. And remember to provide complete data on unique options and equipment. What is it about this car that makes it a must-have?
In the seller notes section, emphasize selling points such as fuel economy, low mileage, excellent condition, one owner, how well the vehicle was taken care of, any accident history, the maintenance history of the car and availability of maintenance records. Use this section to really sell the vehicle on an emotional and personal level. Emotion leads to elated customers having outstanding experiences when shopping and purchasing a vehicle. This aspect of car sales has largely been ignored online, yet is a critical component of the sales cycle. Describe how the buyer is going to feel when they get behind the wheel of the car. Talk about the lifestyle benefits to owning this vehicle. Create content for this section that will have an impact on the consumer.
Finally, make sure that vehicle history reports from companies such as CarFax and AutoCheck are available. It will make the buyer feel more comfortable with their purchase. Consumers, rightfully so, are fearful of being “had.” These types of reports increase consumer confidence and reduce objections. They also shorten the negotiation and buying process.
Each vehicle in your inventory is unique and has its own story. All of the content in your listing, from photos and audio/visual to features/seller notes, should work together to tell that story in a way that compels a customer to take ownership during the buying process. When that happens, more sales are closed and higher grosses are achieved. It’s a win for everyone – the customer enjoys the purchasing experience and gets the vehicle they want, and the dealers sell more cars at a reasonable profit.
All of us, at one time or another, are charged with coming up with the next great idea for our company. It may be a marketing or advertising idea, a merchandising concept, promotion or even an accounting idea. They’re all potentially valuable and can change the path of your company.
But here’s the thing to remember when you’re working on that new project: the idea is king. Many times, we get ourselves locked into thinking about how we execute the idea – how we launch it, what we name it, what the ad looks like, what color the building is… whatever – and forget to ask ourselves whether the idea itself has merit.
In short, a great idea with mediocre execution is almost always going to better results than a mediocre idea with fantastic execution. So remember. Think first, do second.
Marketing Strategist/Creative Consultant
by : Jim Richter
From: Dealer Fixed Operations Magazine April 2008
A recession is kind of like the common cold; it’s a natural phenomenon, it happens every so often, it’s usually not life threatening, and if you’ve taken reasonable precautions it usually is just an inconvenience. Those who don’t take care of themselves can get pretty sick, but the ones who are in good health to begin with usually ride it out with a minimum of pain and suffering.
Get past the fear!
A recession is a normally occurring correction in our economic cycles. We’d all like to think that our market will continue to climb forever, but that’s not the way things work. When the economy is too good to be true it slows itself down until it levels out and gets ready for the next charge forward again. Dealers who have not prepared for this get hurt; those that have will simply have a downturn for a short time period. If the core profit centers of your fixed operations are sound and fixed absorption is high, then the worst scenario will be fewer profits coming from the variable-based profit centers. Many of my clients have learned this lesson from previous cycles and are better prepared for this one. Others with short memories, who focused their efforts on the quick money from sales are not prepared, and will end up suffering losses again as a result.
Putting basics in place
The first thing to do, if you haven’t already, is to get your parts house in order. Service and collision both feed from your inventory and the more you are counting on them to provide needed revenue, the more important the levels of service from parts become.
- Clean up obsolescence: Remember your parts inventory is all net working capital. At a time when cash becomes a critical factor make sure it’s all usable. Factory based opportunities must be utilized effectively. This means sending back everything you can and applying purchase discounts to scrapping rather than gross profit, which saves tax payments. You’re only kidding yourself if you hang onto this stuff; junk today does not turn into gold tomorrow, it’s only Fools Gold at best.
- Control the backflow of unsold service special orders and police returns from wholesale accounts and your collision center. Review your special order policies and procedures. I often find that these are not being enforced or have never been communicated to new employees. Don’t assume that they are working, Check it out! Contact me if you need to know how to do this.
- Review the DMS settings for stocking levels. Many manufacturers have changed their terms and conditions since the last recession and many managers have not adjusted accordingly. If you’re on multiple weekly orders, or better yet a daily stock order, be sure that you are not stocking more pieces than you need. If they have it and you can replace what you sold today tomorrow, how many do you really need to stock? Frequently it’s only one.
- Cut down on sheetmetal, especially if you can replace it quickly and reliably. This kind of “comfort stock” can tie up a lot of cash.
- Make sure that you are aggressively developing a broad selection of valid stocking numbers through proper use of the lost sales function. Every job that gets finished today is one less special order, and you get paid today, not days or weeks later. It also reduces unapplied time in the shop and reduces work in process, all of which impacts your retained profits.
Review marketing strategies
Recessionary markets become very competitive. Just like the big box retailers are now experiencing, customers are looking for more cost effective ways to get what they need. Price becomes more of an issue than it had been before.
- Review your matrix formulae and price levels. If the revenue levels are dropping and the gross profit percent is still high, you may be pushing business to competitors. Shop yourself on specific parts that are down in sales to see if you are still competitive. When that’s done, adjust your DMS price settings to bring yourselves back in line with the market. Revenue flow is the critical issue now and it’s OK to give up some margin to pick up increased dollars. When the economy comes back you can readjust it then.
- Update your maintenance menus. The dollar has been taking a dive recently and most importers have been adjusting their prices accordingly. The market shopping exercise you did should also lead you to where you need to re-price parts used for scheduled maintenance. Once this is done get it to service so they can do their update and get competitive prices in effect in the service drive.
- Get more aggressive in communicating with your customers, especially the wholesale ones. Just like your prices, the aftermarket has gone up substantially too. Much of what they stock has offshore origins so their prices have gone up as well.
Get ready for the ride
Once you’ve got your basics in place you have to watch the business flow very closely and adjust accordingly. If you have the basics in place, then you should be able to ride out the storm. It’s very much like the person who takes vitamins and extra precautions during the flu season; hopefully he or she won’t get sick, but if they do it’s usually a lot less serious for them than the ones who are not prepared. Get going now!
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