I was in a 20-group meeting recently with about 50 top-performing shops from across the country. We surveyed the room to see how far each was booked out. A couple could take cars that same day, one was out six months, and the group average was around three weeks. Obviously, this is a different time than a year ago, when most shops were out three to four months. Customer demand for collision repair is obviously cyclical.
Our industry standard over the years for a marketing budget has hovered around 3-6% of gross sales. These marketing dollars are used for many things like radio, tv, streaming, billboards, Facebook, Google, restaurant placemats, CSI, golf scorecards, bowling alleys, geofencing, loaner cars etc. to infinity.
Let’s start by defining marketing: “Activities a company undertakes to promote the buying or selling of a product or service.” The key word here is, “Activities.” Years back, one of my great mentors who owned many shops explained marketing to me this way: “Please get this, Greg, marketing is EVERYTHING we do!” He elaborated that marketing is not just an expense line in our profit & loss statement. Marketing is MANY things.
- Does our front office smell nice?
- Is it female-friendly?
- When a customer calls our shop, does the person answering do it with a smile, or are they gruff with a snarl and say, “BODY SHOP.”
- Do we have a scheduled drop-off process, or were they told to just drop-off Monday am, only to show up at 8:15am and find four other parties dropping off at the same time with only one available staff member?
- Let’s say the customer stops in to get something out of their vehicle that’s in production. Are they escorted back to their car only to find body filler dust inside and out, parts on their seats, acid music blaring and employees who would pass as Charles Manson’s children?
- Are customers asked in the beginning, “What is most important to you about our repairing of your vehicle?’ If you think this is a dumb question, then start asking it, and you’ll find that most customers have that one thing. Examples: “Could you please buff my kid’s bicycle mark?” or “I hope my interior doesn’t stink like paint.” How about this one when a daughter drops off her mother’s car: “Please contact only me for updates, as my mother is not well and worries a lot.”
The average new car loan is $40,000+ with a $725 monthly payment. Only an insane person would wake up and think, “You know what? I am going to wreck my car today!” In 2023 within two months’ time living in Indiana, I hit two deer. In the first accident, we were headed to the airport for our family vacation, and for the second, I was driving myself to the emergency room. Both vehicles were non-drives. Trust me, there is not one thing fun about a car accident! Every customer just wants this life interruption over with and their lives (including mine) back to normal ASAP. The trouble is some shops resemble the old song “Hotel California:" cars come in, but they can never leave. The liable insurer owes for every single thing we do to correctly repair a car and we must have highly skilled writers/negotiators. The dilemma is we also have a vehicle owner who is praying this nightmare will just be over soon and their car back home in their garage. Understanding our profit and loss statement and hitting our “Break-even” earlier in the month can be a solution to these car hostage situations with insurers. Running a successful collision facility doesn’t take complex calculus equations but just basic math. Every car we repair after hitting our monthly break-even has no overhead expense and can be repaired at a discount. Imagine the customer getting their car home sooner, our shop still maintaining high quality AND business profitability. Some think this is a double standard, as some insurers are getting off the hook. With this strategy, those with in-depth knowledge of their P and L understand we can choose to “Lose the battle to win the war.”
The more we spend on marketing, the higher the customer out-of-pocket expense. It turns into a “vicious cycle.” With proper marketing “activities,” we can leave MORE dollars in our customers’ pockets and take LESS of them to pay outside marketing vendors. There are highly profitable shops — and many of them non-DRP — who spend ONLY 1-2% of their gross sales on marketing while growing double digits year after year. These types of shops understand the definition of marketing. When customers leave our shops as raving fans, we will, over time, dominate our market. This is as certain as the sun rises. So, back to the beginning, what’s your marketing strategy?
