With January behind us, all the dust from the New Year and holiday shopping season is behind us. But the picture in the rear view mirror isn't pretty.
Most retailers are suffering what they call the "post-holiday blues." Stock prices of most tumbled after their reports of "a challenging season." Challenging? Corporate guys always have a nice way to say, "We blew it."
Although most suffered, two of the harder hit ones were Sears, who watched shares tumble 13 percent while Kmart reported a 7.4-percent decline. They each reported that sales were down by 9.2 percent and 5.7 percent respectively. So what happened?
In short, retailers discounted early and often. They wanted to get the shoppers (who were waiting for holiday bargains) into their stores. The good news—the discounting worked. People did shop. But those deep discounted prices cut away at retailer's profits. Most retailers claim that it was a holiday season that they would just like to forget.
But what's more disturbing is that I see this exact same pattern happening in repair shops. I've learned to call it the "Cycle of Doom."
Let's back up a minute. Yes, we saw an economic downturn in 2008 and 2009. The landscape changed. But I assure you one thing—the money didn't disappear. The money moved—like money does—but it didn't disappear. There are no money fairies that swoop down and take it. Those who had money may no longer have it. Those that didn't have it may have acquired it. It moved. It didn't disappear, and I'll prove it in a minute.
At the repair shop level, all too many times I've seen shop owners panic. They start cutting their pricing to get customers. Labor rates get reduced. Packaged services offer more for less. They're doing the same discounting that retailers tried. It doesn't work.
In other words, this "Cycle of Doom" is where shop owners try to sell their services to people that don't have money. When they do sell something, they realize that those sales didn't generate a profit. So they go back to the chopping block and cut something else to attract even more customers. All that does is just perpetuate the cycle.
On the other hand, consider that 108-year-old automobile manufacturer, Rolls-Royce. In 2012 (note that's after the worldwide economic downturn) Rolls-Royce achieved its best sales in company history, selling 3,575 Phantom and Ghost models.
So now you're thinking, "Well, yes, but they're worldwide." But the funny thing is that the U.S. regained its position as the biggest single market for Rolls-Royce sales, overtaking China.
If you find that confusing, you'll love this. 2012 marked another company record for the 'Rolls Royce Bespoke' personalization program. Ninety-five percent of Phantoms and 73 percent of Ghosts were ordered with some level of personalization. So it's not good enough to just get a Rolls—it's got to be personalized. And I don't even want to think about the costs for those options.
So what does all this mean to you, as a shop owner? Well, I said it before, the money didn't go away. It just moved. If you're even thinking of jumping onto that "Cycle of Doom," stop! It's not going to get you anywhere. Well, maybe to the proverbial "poor house," but that's all.
The answer lies in shifting your target market. You've heard the old one about trying selling ice to Eskimos, right? Well, the same thing applies to your local marketing.
Though a lot of people in the marketing game won't tell you this, more than 70 percent of the success of any advertising campaign is the direct result of your target market. It's about the who—"Who are you trying to sell to?"
In other words, are you selling what people want to the people that need it—and are close enough to you to make your shop convenient—at a price level that they can afford and also lets you operate profitably?
Just to be clear, when I ask if you're selling what people want, I am really talking about the value of what you're selling. Let's face it. Your tires aren't any rounder or blacker than the next guy's. So what are you really selling? And how are you attracting that customer looking for (and recognizing) the value in what you're selling? You know there's a difference in the bait used when you're fishing for perch or whales, right? The same applies to your repair shop marketing.
Next time I'll detail the strategies you need to put your repair shop marketing into "four-wheel-drive." It's all about attracting the right people and proving to them that you're their best choice. It's sort of like making you the Rolls-Royce dealer in your market.
Matthew Lee, is an automotive service marketing specialist and author of the book, "The Official Guide to Auto Service Marketing," which offers "no-cost" and "low-cost" marketing strategies for auto service businesses. For a copy of the book, visit www.JustTheBestMarketing.com.