In the December edition of MTD, Michael McGregor discussed how dealers can capture a bigger piece of the automotive service pie by offering managed auto care. This month, he looks at how dealers can segment their managed care customers into easily targetable groups.
Know your customer. This is important in any business, whether you are selling tires, or you are in my line of work, investment banking.
In marketing managed car care, it’s also important to know your customer so you have a better understanding of who you prefer to do business with and who you want to avoid. You can do this informally by just talking to the customer or more formally, through market research. It can be as simple or as sophisticated as you’d like.
The purpose is to gain an understanding of people’s behaviors, wants and preferences and then group them into targetable consumer segments, so you can spend your valuable marketing dollars transmitting the right message to the right people.
If you are looking to appeal to everyone, I can tell you right now, just promote:
- reliable technicians;
- staff customers can trust;
- work done right the first time, and;
- great customer service.
Those things are like mom and apple pie. Everyone loves them.
But you might want to drill down deeper to see which consumer segments are more attractive to you and which ones match your vision for your business.
In the aftermarket, there are “shoppers” and there are “customers.” Shoppers tend to seek out different service providers for different needs. They shop based on price and still try to do more of their own work, if they can.
In the shopper segment, you’ll find more young men with less income, older men who have more time than money, and those with a slightly lower household income.
They are less loyal to any single operator and are more likely to be swayed by deals.
Spend your valuable marketing dollars transmitting the right message to the right people.
Customers, on the other hand, tend to be more loyal. They prefer full-service locations for the convenience, quality and trust they seek.
While not as price-sensitive as shoppers, customers still seek value for the money. They expect competitive prices, but not necessarily the lowest prices.
A full range of services, to them, implies one-stop shopping. They look for convenient locations close to work or home, and often seek a turnaround time of less than a day. It’s no surprise that people in this segment have the highest household income. Many are older and retired.
A third consumer segment, which I call “trusted shop,” consists of people who are more likely to come to you because they like the personal service and attention you can provide. They also place high value on trust and quality. For this group, the more you advertise a price or provide coupons, the more you will turn them off.
You might even offend them with discounts or a message that is centered around price. They’re the opposite of the price-sensitive consumer.
Will you offer more full-service car care with its higher cost structure to attract loyal “customers” or will you offer more tire-related and undercar services, knowing that you’ll appeal more to the price-sensitive and less loyal “shoppers?” And where do “trusted shop” consumers fit into the equation?
When we offered managed car care, we targeted customers who liked the convenience of full-service car care and the perceived value of having their auto service needs handled for one predictable monthly fee.
But here’s what was best about this group: three-fifths were women, they mostly owned used cars, fewer were married, fewer owned their own homes, and more were gainfully employed.
They were an easily identifiable group. They needed and loved us.
To market managed car care, once you segment customers according to their wants, preferences and behaviors, you can decide which group you want to target. Then, think of how changing the traditional six “Ps” of marketing — product, price, place, promotion, people and process — will appeal to more members of your targeted group.
Don’t try to be all things to all people. Pick one group and be all things to that one group.
Don’t worry too much about alienating the other groups. The aftermarket is so fragmented and messy that you’re going to get some of all the rest of them in your store anyway.
But picking up more share of your targeted group can do wonders for your business’ bottom line. ■
Michael McGregor is a partner at Focus Investment Banking LLC (focusbankers.com/automotive/tire-and-service). He advises and assists multi-location tire dealers on mergers and acquisitions. For more information, contact him at email@example.com.