Crushing the Independents

Adam Wright NewsletterIndependent repair facilities are a thorn in the side of dealership service departments.  In the eyes of the average consumer they offer a product that is virtually identical to that of dealerships, namely maintenance and repairs to their vehicle.  There is a perception on the part of the consumer that the best technicians often own their own shops, that they will get better prices with individually owned facilities or that the guarantee of work will be better if they have more person-to-person accountability.  This is why 60-70% of customers disappear from the service drive after the base warranty expires.

Why does the dealer body allow these small bottom feeders to eat up market share and steal away high value customers?  Much of the problem arises from the fragmented nature of the franchise model that is the dealership world.  Owners naturally act in what they see is the best course of action for themselves to the exclusion of all others.  In the extreme case, all dealers are an island unto themselves.  Hence, we have a business model that allows small independents to continue operating profitably.  If, however, a concerted effort were made by dealership service departments, IRFs could be crushed in short order.

The great example from modern times of a large well-organized campaign to eliminate small competitors and take their business is Wal-Mart.  For decades anywhere a Wal-Mart opened typically meant the end of several local stores that had previously provided the same products.  How Wal-Mart accomplished that is simple – guaranteeing the lowest prices, a wide selection and backing their products with a refund or easy return.  Sam Walton didn’t focus on the percentages in the short term, just the bottom line dollars and the long-term benefits that come from having a local monopoly.

So how to achieve a similar result?  It starts with each service department asking itself – do you have the commitment to being truly great and dominating your local market?  Are you sick and tired of letting the little guys eat up your market share and sucking up the “gravy”?  If the answer is “yes”, then here are a few of the necessary steps.

  1. Out convenience them
    • Offer loaner vehicles
    • Better hours – yes, this means Saturday AND Sunday!
    • Streamline the drop-off and pick-up process so it is quick in and out
  2. Eliminate the walls between Parts and Service
    • Pricing must be low
    • Maintenance items such as filters and brake pads must be in stock
  3. Ruthlessly minimize all expenses
    • Lean personnel
    • Police the policy outlays
    • NO overtime
  4. Get ALL THE WAY into the tire business
  5. Run a shameless price match guarantee
    • Never allow them to undercut you on price
    • Know what local competitors are up to, get their ads, watch their signs, secretly shop them on a regular basis
    • Beat them over the short term with lean or near zero profits on the basics like oil changes, tires, filters and fluid services
  6. Personal Accountability
    • Having customers dealing with the same individual throughout the process builds trust
    • Give customers a better knowledge of the dealership’s guarantees of quality and service

Remember, dealerships truly do have better techs, parts, and facilities.  Prices have always been competitive.  It’s time for the customer to know that, too.  If you are truly sick of losing your customers to inferior independents, get started today.  If you would like help or to discuss strategies on crushing your local competition, give M5 a call today!

Written by Adam Wright

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