We have tried to be retail, wholesale,
and everything in between. We have tried to handle too
many parts on too many types of vehicles. We think that
anyone that drives a used car must be our prospect. Although
this might have been ok 10 years ago, when we had 25%
cost of goods, and very little competition, it simply
doesn’t work today in most markets.
The customers have too many choices,
other than used. These include new, rebuilt, and even
trading in that old or damaged car on a new or newer car
with zero percentage financing, and a payment of just
a few hundred dollars per month.
Many years ago, there were several department
stores that mailed 1” thick catalogs to what seemed
like every person in the United States. Both companies,
Sears and Montgomery Wards, have folded their catalog
divisions, or at least as they existed. Sears still publishes
some catalogs for specialty items, like tools.
Before you choose your customer niche,
consider, do you want to be the low cost provider (like
K-mart), or the high value provider (like Wal-Mart), or
the highest quality and price provider (like Nordstrom’s)?
You can’t be all things to all people. I prefer
the high value formula. No matter which category you choose
or create, it will necessitate saying no to some customers
in other categories.
Are you going to do import or domestic?
Or only a certain make, or many makes but certain years,
or certain products off of those vehicles, like mechanical
or collision parts? After you choose your niche, look
at each of your products and services, and tailor them
to that group. For instance, deliveries may not be important
if you are primarily retail. Corrosion warranties won’t
be important to mechanical customers. Every time you are
considering a new product line, or service, consider how
important or incremental it is to your chosen niche.
Also, spend more time (aim before shoot,
vs. shoot then aim) and do a full cost-benefit analysis
of any new product or service you are contemplating.
We once asked our salespersons how we
could improve sales, and to generate three ideas in writing.
One of the ideas was to do two deliveries per day into
a given area. Now to do this, we would need another truck
and driver, but if it would produce more sales, I was
agreeable. Our Pinnacle system was able to measure exactly
the number of stops daily into the given area, and we
went back and generated reports showing that we were currently
making 16.1 stops per day in that area. I then put together
a mailing campaign for that area, and mailed a postcard
every week touting two deliveries per day. Of course,
the customers liked it, but the real question was “will
they buy more because they like the additional service?”
At the end of 90 days, we re-measured. The deliveries
averaged 16.2 stops at that time (and our average invoice
amount was unchanged). No more double deliveries. This
cost benefit analysis was done before we made the change,
and we decided in advance how to measure the benefit to
us. When possible, try to calculate this in advance. Based
on competitive issues, some markets might need two deliveries,
ours simply didn’t respond, or at least with their