Thursday, May 13, 2010

What Do Retailers Need to Do to Grow Non-Warranty Parts Sales?

When you ask them, they say they will use wholesale business to drive growth.

“Growing our wholesale client base, sending wholesale representative to new locations.” (AoA retailer)

“We plan to hire a wholesale specialist to grow our wholesale business. We expect this growth in both collision and mechanical parts.” (GM retailer)

“I have been out on the road the last few weeks and stopping in at shops around the local area. I plan on continuing the road trips to a larger area and see what happens.” (Hyundai retailer)

“As Parts manager the only area I can change is Wholesale. We make twenty calls a day and follow up with a fax coupon. We visit shops, e-mail, and send out stickers.” (Infiniti retailer)

“Continued marketing with outside sales calls…targeting fleet repair and independent repair shops.” (Isuzu HT retailer)

“More personal contact with collision and mechanical repair shops. Giving away free items such as pens, hats, scratch pads, etc.” (Kia retailer)

“On the wholesale side there will be a counterman going out on the road as a representative for the dealership as a contact. He will be talking about the dealership, what we can offer his business and also obtaining E-mail addresses so as we can e-mail any promotions, sales, etc.” (MBUSA retailer)

“Wholesale mailings and visits to wholesale businesses where other dealerships have closed their doors.” (Mopar retailer)


Retailers are pretty smart; they know that they only have a 30% - 45% share of the parts market, and the majority share is owned by other companies that serve their wholesale accounts. 100% of all OEMs know that retailers are ill-equipped for doing battle in wholesale – just look at the High/Mid/Low chart that reflects recent Carlisle & Company consumer research. The obstacles are daunting. Very few OEMs do much to help their retailers in this war zone.

Retailers are willing, but not necessarily able. OEMs are able, but not necessarily willing. What about you? Take the test below and see how you score. Give yourself “5” if you are pretty sure you are “Pep-Boys-Like” or better (they are the slobs of the IAM, but better than most retailers), a “1” if you think somebody must be doing this in your company, and a “0” if you have plans, know it is important, and you are sure you will be pretty good once things come together. Some day.

Do you have?
  1. Retailer incentives tied to detailed terms and conditions, including dealer eligibility requirements
  2. Retailer training on wholesale mechanical fundamentals, including targeted training modules to teach retailers to staff various elements of successful wholesale mechanical retailing
  3. In-retailer wholesale feet-on-the-street support providing hands-on consultation and training to retailers in real retailing scenarios
  4. Retailer personnel telephone mystery shopping as means to provide feedback on what is working and not working
  5. Installer (customer) surveys to gauge installer satisfaction with dealer service levels, similar to service customer satisfaction management
  6. Customer/installer segmentation/ lifecycle tracking (active/inactive/prospect/etc.), similar to service customer management
  7. Annual wholesale marketing plan, including both monthly and quarterly marketing programs and execution
  8. Installer prospect lists and opportunity mapping
  9. Feet on the street support to solicit business and build relationships with IRFs
  10. Electronic ordering for installers
  11. Detailed wholesale performance KPIs monitoring and tracking for internal and external dealer reporting
  12. Proactive (maybe even automated) wholesale performance and sustainment communication to retailers
  13. Tactical execution and management of various program elements
  14. Strategic wholesale program tracking and monitoring, including stakeholder reporting
  15. Dealer inventory parts stocking support and incentives (possibly special terms) - this is necessary to increase parts breadth and same-day (60-90 minute) availability to IRFs
  16. IRF account management, including training retailers to make IRF sales calls, helping retailers find local third-party shared field resources, and developing highly targeted marketing programs (lapsed installer direct mail promotions, IRF purchase loyalty, etc.); This could even include developing relationships with national accounts on behalf of retailers
  17. Deployment of all the elements in an integrated and disciplined manner - no single “silver bullet” to achieve retailer results
Here’s how to interpret your scores:
0-16 and 18-26: Means that you are pretty honest with yourself and there is some hope for the future.

17: Means you are delusional, but in a typical way. Consider politics as your next step.

27 – 84: Means you are actually on the journey and should get an “atta boy”; look for some good ideas in the list.

85: Means you are either exceptional, or delusional in a bad way. Watch out for facial tics.

If you have a second channel and think that you don’t really need robust retailer mechanical wholesale capabilities, deduct 50 points.
Bottom Line: Listen to your retailers. VW does this. Listen to what they say they can do – like wholesale. Then help them.

… Also, listen to what they say they can’t do – like oils, lubes, fluids. Identify the barriers, and figure out if they are self-inflicted. We will focus on this next week.

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