January 05, 2018
I once heard influential thinker Michael Porter say that strategy is as much about what you choose not to do, as what you choose to do. Over time, I have found that, while rewarding, choosing what not to do is far harder. It is always tempting to chase sales by stretching into new demographics, new geographies or product segments. Like an elastic band, the further you stretch the weaker the band is at any one point. Therefore, we must choose carefully where to stretch.
Subaru is a great example. In the early 90s, Subaru of America almost went bankrupt chasing better capitalized competitors by extending beyond its all-wheel drive roots and cultivating a mainstream image. The bottom was an unsustainable 80,000-unit annual sales rate. Amid declining sales, Subaru executives found the courage to abandon front-wheel drive models, nearly 50% of the volume at the time, and refocused on AWD, reliability and niche appeal.
Over time, Subaru grow its brand by adding broader meaning to those attributes. This resonated with its core customers, culminating in the “Love Campaign,” which created a decade of uninterrupted growth with sales approaching 650,000 in 2017. Over the past 25 years, Subaru has resisted the temptation to go where the volume is and stayed true to its customers’ core values.
Building a brand starts with a clear understanding about the intersection between your unique capabilities and your core customer needs.
So, where do you start?
First, when attempting to find that intersection, start with examining the buyer values of your best customers, not those who defected. In service, those values probably include your expertise and amenities, especially the convenience of loaner vehicles which your dealership can uniquely provide. Core customers accept the fact that these benefits come at some premium. So long as your dealership delivers those benefits within levels acceptable to them, they will remain loyal.
Next, when it comes to brand-centric growth, it is important to take these unique capabilities and core customer needs and explain and promote the unique value your dealership delivers. For example, look at your invoice. Do you place a value on multi-point inspections, loaner vehicles and other services provided? Do you highlight technician certifications and tenure, or show videos on OEM provided equipment at every available opportunity, online and in waiting areas? I recently saw an independent repair facility employment ad underlining the phrase “no experience required.” Brilliant! But perhaps not the best way to promote its “unique” capabilities!
Once you have your promotions nailed down, then, and perhaps most importantly, build your brand by executing your brand promise every day. Focus on high quality delivery and recognizing that your customers have a choice. You will never be the lowest cost or most convenient, so you must deliver the best value to those who trust you the most.
Your marketing and showroom behaviors often undermine brand-centric growth. Too often ads and sales behavior are not geared to attracting your best customers. With slowing growth and declining front end margins, I believe dealer profitability is an increasing battle for customer quality, not just customer quantity.
Rather than blasting the airwaves with dubious claims, you would be better served by more direct dialogue with customers who value your services.
One retailer I know redeployed broadcast media money to support Mothers Against Drunk Driving and safe driving clinics at local schools. Which do you think results in more consumers oriented to servicing at dealers – the community-focused message or the dubious claims?
In summary, when looking to grow service, you should first look for and satisfy more customers who value your unique attributes. This limits brand stretch, simplifies execution and builds lasting value.
Yes, this means you have to say “No” to chasing customers with low prices and $9.99 oil changes which undermine your brand, disrupt pay plans and do not build a loyal consumer base, as they defect for the next coupon. But remember, the best way to build your dealership brand is to choose carefully where you stretch.