January’s non-recovery from the 2007 heavy-duty parts market flattening may continue to creep along for sometime. The artificial new vehicle sales cycle turmoil caused by EPA engine emission rulings doesn’t help planning.
Slumping home construction, a weak dollar and the credit crunch don’t clear the economic crystal ball at all…but some recent truck OEM production plans do look promising.
This spotty recovery pattern should remind distributors to review the marketing menu and decide which tactics to fund over the next 12 months. Some assumptions that can be used as targeting guides include:
- When owner-operator confidence is low, they sit on their wallets and don’t respond to many normal marketing efforts. Listen at the counter, they will tell you what else they need.
- Of the four ways to grow sales – get new customers, get different lines, sell more to old customers or reduce the attrition rate of old customers – the last two are the most efficient in the short term.
- Selling more commodity, high-volume products is tough, because demand for them is off and they are most aggressively price-shopped by customers – and price-cut by dealers.
- Customers may be open-minded to trading down in quality if a less expensive solution will suffice. Actively decide how far down the margin slope you will move with second lines.
Here are three programs that heavy-duty parts and service providers can initiate that have been shown in recent slowdowns to be efficient paths to real growth:
- Sell more of the old, niche products to more existing customers. Known as Merrifield’s Marketing Matrix, an experiment done by a national, multi-branch operation got the following results from four different programs.
This distributor got 15 times more incremental sales from programs aimed at selling more established products to existing customers than it did trying to sell new-to-the-firm products to prospective customers.
We also might infer from the results that it is easier for a sales force to master new products than to crack new accounts.
In comparison to any other sales programs, selling more existing product solutions to existing customers will have the highest profit flow-through to the bottom line.
Additionally, this plan will take the least amount of sales effort and expense, while meeting the least amount of price-shopping tendencies.
- Increase account retention by achieving and actively selling unconditional performance guarantees on basic aspects of your product/service package. This is a bold approach, but a great tool to increase overall organizational competence. The performance failures can be used to rethink and improve operational procedures.
- Instead of selling solutions to a customer one at a time, you might suggest to important customers that they consider making you a sole supplier for all of your possible solutions for the long-term.
This aggressive approach assumes that you can present scale economies and system redesign savings that both parties can create and share. You won’t know the reaction unless you ask!
Because slow growth might be with us for a while, it is important to continually sharpen both strategic and tactical focus. This is a perfect time to rethink traditional marketing budgets and programs.
Take this as a prod to harshly examine unspoken customer assumptions and test them against an unpopular slow-growth scenario. Look seriously at marginal personnel.
The best run firms who have been growing profitably for years usually don’t break stride during tough times. They often do well at the expense of over-extended and unfocused competitors who are collapsing.
Taking care of today’s customer needs is the sine qua non of the future. Planning forward, we must continue to look for new ways to better segment and penetrate our local and loyal markets. This is where your payback lurks.
Bill Wade recently has published a new book titled Aftermarket Innovation. He can be reached at www.wade-partners.com. The views expressed in the Guest Editorial are those of the author and do not necessarily reflect the opinions, beliefs and viewpoints of Truck Parts & Service magazine.