Wednesday, July 27, 2011

Why Collaborate? Four Examples of Successful Industry Marketing Collaborations

Note by David Carlisle: This past week I was in Detroit to recognize the accomplishments of a few UAW groups that had really moved the needle. During the in-between times I chatted with an NAPB steering committee member about the value of this past year’s supply chain collaboration focus day. “Huge” was the response – they are working with another OEM in collaborative cross-docking and dealer deliveries. In one region they are saving one-third of the DDS miles and millions of dollars. So, we do “get” what collaboration is all about. Other industries get it too. We need to get more of it.

There is no doubt that industry collaboration represents a substantial challenge. Different company objectives, priorities, cultures, and, of course, budgets have to be aligned behind a single effort. The larger the group, the greater the resources…and, the greater the potential for discord. When talking to companies about collaboration, the question on everyone’s mind is always “who’s in, who’s out?” Indeed, building a collaboration group is not unlike building a house of cards; if one company wavers, the whole thing can come crashing down.

Though there are certainly barriers to collaboration, particularly when it comes to public, customer-facing efforts, we can take comfort in knowing that other industries have already taken the leap…and landed safely on the ground. Four collaborative marketing efforts stand out:

1. Go RVing: The Recreational Vehicle Industry Association has engaged in collaborative marketing since 1997. Targeted print and media ads point customers to GoRVing.com, an interactive website where consumers can learn more about RV camping and travel. Go RVing has a robust social media presence, including an active Facebook page with over 61,000 fans. The $8.25 million “Phase IV” campaign, launched in 2010, promotes the affordability of RV vacations with the tagline “Go Affordably. Go RVing.”


2. got milk?: Hailed as one of the most successful ad campaigns in history, got milk? was launched in 1993 when fluid milk processors in California agreed to fund promotion efforts. The campaign was licensed nationally in 1995 for use in print ads featuring celebrities with “milk mustaches.” Now with an interactive website promoting various health benefits, the campaign is managed by the National Fluid Milk Processor Promotion Board, which has an approximate annual budget of $110 million.


3. Pork: Be Inspired: The National Pork Board’s original campaign, Pork: The Other White Meat, was also cited as one of the most memorable campaigns of all time. This campaign promoted pork as a healthy option and, according to the National Pork Board, stemmed the decline in pork sales. This year the Pork Board is launching its new $11 million Pork: Be Inspired campaign, which aims to increase sales by targeting customers who already eat pork.


4. Orbitz.com: In response to the growing popularity of travel booking sites such as Expedia.com and Travelocity.com, five airlines pooled $145 million to develop Orbitz in 2001. With its exclusive deals and appealing functionality, Orbitz quickly became one of the top three travel booking sites. After an IPO in 2003, Orbitz was acquired by Cendant Corporation for $1.25 billion in 2004.

Bottom Line: The collaborative industry marketing concept has already been tested and validated by other industries. Some of the campaigns featured above are approaching their 20th year, a testament to the results they have generated for their respective industries. We can learn from these examples to forge even more successful collaboration efforts in the service parts space.

Thursday, July 21, 2011

Genuine Schmenuine, It’s All the Same, Or, At Least Your Customers Think So

In our summer focus groups with real customers, we ask people what Genuine parts are and where they can get them. It’s actually pretty amusing. Just for auto, we have a $30-$50 billion dollar industry in the States selling stuff at a premium that pretty much nobody understands.
The Mecca of Genuine is CAT, and you can’t find much on the virtues of Genuine on their website. Most of the auto OEMs have little to nothing about Genuine on their websites, or if they do it is buried 15 clicks deep. Exclude GM from this group. GM recently switched from Mr. Goodwrench to “Certified Service” – based on our focus groups, this was a good move.

Let’s think about this. Imagine another big product category: snack foods. Sales of snack foods in the U.S. hit $64 billion in 2010. If snack foods were like auto parts, you’d go into a grocery store and 70% of the stuff in the aisle would be generic, like “A&P Snack.”Well, companies like Frito-Lay aren’t going to let that happen.

They continuously bombard all forms of media, extolling the virtues of their brands. They put their vending machines in public schools and give the schools kickbacks that pay for books and football jerseys. It’s the American Way. We all know what Fritos and Ruffles mean and why we prefer them.
But, people don’t know what Genuine parts and service mean, so, they don’t prefer them.

Bottom Line: We don’t need Genuine parts vending machines in public schools for oil filters and struts. But, it seems that we really do need to educate our customers on what Genuine – or whatever we call it – really means. Sort of like the Nutrition Facts on the backs of food packages, which help customers make informed choices. We need to help our customers understand what they’re buying.

Friday, July 15, 2011

Just Who Are You Anyway? Focus Group Learnings on Emerging Digital Service Customers - David Carlisle

Preface: Since 2006 we have been probing into attitudes and behaviors of our motor vehicle service customers. In 2010 and 2011 we surveyed nearly 13,000 service customers. The past two surveys started to focus on Emerging Digital Service Customers (EDSCs). They represent about one-third of the current service customer base and are growing rapidly like a virus in a Petri dish. The surveys were like X-rays; they provided us with a snapshot of these customers, but offered limited dimensionality. We needed to talk to these EDSCs. So, this summer we are conducting 10 focus groups. The next group is next Tuesday at 6:30 PM, when we will be talking with young mothers. We are 40% of the way through this process and here’s what we’ve found. NAPB members can sit behind the mirror and eat pizza with us if they have the time. Call Jess.

There are some pretty brilliant service parts executives out there who know just about everything. Sometimes I envy them. I have always taken a certain measure of pride in my ignorance … coupled with the ability to figure important stuff out. In my training book, “Handbook for the Recently Hired,” I talk about thinking dumb and unlearning. This comes in handy…real handy when listening to our weekly focus groups of EDSCs. Just who are these people, anyway?

EDSCs are 22-32 years old and have almost no brand loyalty. I say almost, because three brands – Honda, Jeep, and Subaru – seem to arouse passion; other brands are white refrigerators. Our focus group EDSCs are all college educated and seemingly have good jobs. But, money is very tight. It will probably be tight until they are senior citizens – we are in a prolonged post-boom period and things have changed here in the states. Male/female car maintenance role models have evolved; men are just as clueless as women were thought to be in the 50s. Sexism is still alive, but it has gone underground. It is largely irrelevant, but still annoying, to today’s educated female. This customer base is our legacy; baby boomers are very, very different and dying out.

EDSCs generally don’t read print media, “People” and “Us” excluded, unless their parents give them their magazines. They get their information online from customizable news and information aggregation sources like iGoogle. They love coupons and specials; they comb the internet looking for them. They rely on Yelp and Google for reviews and actually take the time to read them, because they distrust the star ratings. They read these reviews carefully, as if they were movie reviews crafted by Manohla Dargis.

EDSCs depend on “My Guy” for advice regarding vehicle maintenance and repair. “My Guy” could be a local mechanic who has won their trust, their dad, or another knowledgeable relative. They generally follow the instructions of “My Guy” unless they have reason to do otherwise.

EDSCs generally don’t trust dealers because of up-selling during common maintenance and aggressive free inspections that resemble police interrogation rooms in the Bronx. Jiffy Lube, other chains, and IRFs do the same, but dealers are held to a different standard – I call it “guilty until proven innocent.” EDSCs have inherited knowledge that dealers are more expensive and they always, always, cite labor rates to prove their point. It is unknown or irrelevant to them that many IRFs now have nearly as high labor rates. Fundamentally, EDSCs really do not understand the role of the dealer and the processes that the dealer uses. Not surprising, because these processes were designed by 50 year-old corporate men who think that these processes make great business sense for the dealer, fixed operations, service training, customer management, sales, marketing, pricing, finance, product development, field organization staffing roles and responsibilities, … and, well, golly, of course, the customer. This does not mean that AutoMD and RepairPal will be the winners because of better processes and newer approaches. RepairPal made a fatal mistake by replacing David Sturtz with finance geeks; David knew what he was doing, but the money wasn’t there. AutoMD is really out to sell parts … to folks who don’t use them. They are off-market. Go figure. All this reminds me of “Gone With The Wind” – Clark loving Viv with all that fire in the background.

EDSCs who really do love their Honda, Jeep, or Subaru dealers talk unabashedly about how they will switch out of dealer service once they are out of warranty. They have already abandoned the dealer for LOF maintenance due to cost and convenience issues, whether real or perceived.

EDSCs generally do not know how often to get an oil change and depend on the sticker in their windshield or their car’s oil service reminder warning. They don’t know how to reset the service reminder because they do not read the owner’s manual (after all, most manuals are printed and not digital). They generally have no idea what synthetic oil is and whether or not they should use it. EDSCs explanations of “genuine” parts are amusing – or frightening from the OEMs’ perspective. Aggressive IAM advertising and misappropriation of certain terminology has led them to believe that they get genuine parts from NAPA, AutoZone, Jiffy Lube, Goodyear, and their local “My Guy”. Are “genuine parts better?” It’s hard to convince them that anyone would put a bad part on their car.

EDSCs say that safety is a big factor when selecting the car they drive. But, when asked about parts safety, they say, “I have never thought about that.” They distrust big car companies because of past violations – they cite Toyota’s recalls in particular. They still love their Toyotas, but are not so passionate about the brand. They have divorced the product from the company. Ford, Chevy, and others are generally in the same boat as Toyota.

EDSCs read headlines, but will only click on something that shakes their beliefs and/or is about their specific make or model. They are very careful with their clicks, as if clicks were in short supply. They are extremely cynical and sensitive to OEM propaganda in any and all media. They can’t imagine a good reason for going to an OEM’s website unless it was to look at new cars.

Bottom Line: We identified some of the characteristics of EDSCs through previous end-customer surveys, but these focus groups have added a third dimension to a formerly flat picture. Unfortunately, the picture is rather bleak – EDSCs are entirely uneducated about genuine parts and suspicious of dealer service due to cost and trust concerns.
Timeout: This is the next generation of service customer that we are handing off to our next generation of corporate aftersales management to handle. This legacy is not unlike the riddle of national debt that our politicians are handing off to today’s 20 and 30-somethings. The easy thing to do is to deny their existence, and then take early retirement. I certainly would not want to be 55 years old and stuck with this customer base and today’s dealer processes. Can’t tweak the system enough to get through this one.
It will be an uphill battle to change EDSC attitudes and, consequently, their behaviors, but it is imperative that we find a way. A successful approach will target these customers with relevant, click-worthy content that challenges their beliefs using facts and data. Our task over the next few weeks is to figure out exactly what content fits this bill.

Thursday, July 7, 2011

AutoMD Negotiator

We have been following the rise of third-party repair sites (AutoMD, Driverside, RepairPal) with interest over the last couple of years. Looking at recent web traffic statistics, it appears that AutoMD is poised to unseat RepairPal as the leader in this space. According to Alexa, AutoMD’s web reach is up 7% in the last three months, while RepairPal’s is down 49% (perhaps they are running out of money for paid search advertising?). We also discussed a key leadership change within RepairPal in an earlier blog.


Recently AutoMD.com has been actively promoting a new tool: the Negotiator. AutoMD claims that this service is the solution to consumers’ price shopping quandary: “We call shops and negotiate for you, so you won’t overpay for auto repair.” How the Negotiator works in a nutshell: The user enters his vehicle and repair information, receives quotes to his inbox, selects one and schedules an appointment – all without picking up the phone.

To find out more, we submitted a wheel bearing replacement for a 2000 Hyundai Sonata. In a few hours, we received three quotes for the repair in our inbox, all from independent shops or chains, ranging from $450 to $611:


For more data points, we entered three more repairs. After receiving more quotes back from the Negotiator, we decided to call the shops directly for quotes to see how they would compare. The table below tabulates the rather interesting results:


Three out of the eight quotes we received from the Negotiator were roughly equivalent to the quotes we received when we called the shops directly. The other five…weren’t. Below is a summary of our conversation with each shop:


We were unable to obtain quotes from three of the places we called; one seemed to be out of business, and the other two immediately informed us that they didn’t do the type of repair that we requested. For two more places, the price we received when we called was nowhere near the Negotiator quote. How do you get a quote for $850 when the part alone costs $1610? (we think the Negotiator requested a gasoline injector, not a diesel).

It appears that sometimes the Negotiator actually called the service provider directly (in the case of the chain franchise), but they never revealed that they were calling on behalf of AutoMD. Other times, it seems that they didn’t call at all, because surely they would have been told, as were we, that the shop didn’t perform those types of repairs. In those cases, the Negotiator may have used generic repair quotes from books and tables.

Confused by the results, we called up AutoMD pretending to be a shop. We asked how we could sign up to be considered for the Negotiator. As it turns out, there are no fees or surcharges for service providers that want to be listed on AutoMD. This means AutoMD (or US Auto Parts who really runs the show) is funding this tool themselves. This also means there is a call center somewhere scheduling repairs that is full of people who know nothing about cars. Furthermore, there are no requirements for service providers who wish to be listed. Shops are asked to provide basic information but there is no certification process, at least according to the person we spoke with.

When using the Negotiator, there are no selection criteria besides price – and sometimes the cheapest is the cheapest for a reason. When entering a repair request, the Negotiator doesn’t allow the user to restrict his search to certified providers or specify whether he would like genuine parts. There is no option to filter for providers that offer loaner vehicles or other conveniences, which are critical for those of us who only have one vehicle or who need Wi-Fi to check email when waiting for our vehicle during a workday.

The Negotiator claims to save users time and money, but the results of our phone calls suggest a need for caution. Without a robust process for collecting service provider information, how can the user be assured that the service provider selected by the Negotiator is a legitimate business? Based on our phone calls, the Negotiator also missed the boat on some crucial information; imagine a user’s frustration if he showed up to an appointment scheduled through the Negotiator, only to find that the selected service provider can’t perform the needed repair. Or, if the user’s repair was performed by someone who is unqualified and/or puts a junk part in his car. At the end of the day, finding the lowest price is not the same as finding the best value, but it seems the Negotiator is not programmed to understand this distinction.