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Saturday, 31 May 2003 17:00

Funneling multiple revenue streams into your facility

Written by Tom Franklin

I recently did a seminar for the Nebraska Autobody Association during their "Collision Day" event in Lincoln, Nebraska. Located, as I am, in one of the most populous cities in the world - with arguably the most cars (since we have just now begun a rapid transit system) - I wasn't prepared to address so many shop owners in such lightly populated areas, with so few vehicles to repair. Strategies which work well in a densely populated area like Los Angeles seem not to have much value for shop owners in these small, rural communities. 

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Franklin
There is one strategy that is often scoffed at by shop owners who are surrounded by endless people and cars. I call it "The Funnel Strategy." They don't like it because they're used to doing repairs averaging $2000 or more, and this strategy involves much lower dollar transactions initially. The good thing about this strategy is that it will work anywhere -- even in small, rural communities. In fact, it may work best in small communities.
 
The funnel 
 
Professional salespeople often speak of a "pipeline" or "funnel" of potential new business. For a body shop, this can include a wide variety of easily obtained new business at the input or large end of the funnel, with the big jobs and major referral sources at the output - tip end of the funnel. What most guys dislike about the "body shop funnel" is the low profitability and greater hassle of the available business at the wide end. Many objections arose when suggesting the "funnel" approach to increasing a flow of bigger, more profitable jobs.

The big end of the funnel

• Aftermarket sales of decals, moldings, ground effects, re-styling items, pinstriping, etc. Although these items may be low dollar, they can be high profit and pay for an additional person in the office to handle what may seem like "nuisance" transactions. With the increased flow of traffic, it should be possible to sell more collision repair.

• Air-conditioning recharge and repair. Most shops are doing this already. Others sublet this work. During an economic downturn, can a shop really afford to sublet this potentially profitable source of business? By having an A/C repair specialist on hand and running an ad or placing a large banner out front promoting the service, this "trivial" activity can become a nice supplemental profit center.

• Auto detailing, steam cleaning & pressure washing. By making this a major profit center, a shop can open up an entirely new dimension of activity. In a previous article, I suggested creating a "Vehicle Beautification Center." If a shop is currently using an outside car wash, once again that relationship would be lost, but if a new specialty became more profitable, it would be worth it.

In a family-oriented community, if a shop had the space, it could be useful to get a few plastic swings, slides and other children's playthings to amuse the kids while mom or dad has the car detailed. This activity naturally leads to upselling the fixing of dents and dings and more.

• Auto glass replacement and repairs. Once again, this is an activity that is often sent out to sublet, but could be more profitable done in-house if used to upsell other repairs.

• Auto stereo & sound systems. This is just another aftermarket sales activity, but one with a very specific promotional target. Selling products like these shouldn't be viewed simply as just another profit source. The whole idea is to bring people in for a reason other than collision repair. Collision repair ads rarely work well. Ads for products like stereos can generate both the product business and more collision repair business if done well.

• Brake jobs, tires, tune-ups, timing belts, exhaust repairs and replacements. This raises the issue of whether a shop owner wants to get more deeply into the mechanical repair business. Numerous shops do well by having both mechanical and body repair. When one is down, often the other is up. Both feed work to each other. The best reason to add minor mechanical is to be able to mail reminders on a regular basis and to have customers in the habit of coming in frequently.

• Cabin air filter replacement and service. In major cities with air pollution, this can be a very simple yet very profitable activity. More and more vehicles are coming out with cabin air filters and some have a dash cavity for retrofitting. Check out "cabin air filters" on the web for a variety of sources and information.

• Child and pet safety restraints. More children die from automobile accidents than any other cause. Many people consider their pet as valuable as a child. Promoting your shop as a "Safety Center" could get you free press, some tie-ins with other safety organizations, and many opportunities to promote your shop in general. Your expertise as a "Safety restraint specialist" could also create demand as a speaker or talk show guest. Fear is a major motivator and safety is a major concern. Providing products and solutions can be a major source of added profit.

• Collision prevention device sales. Twenty-five percent of all accidents occur while a vehicle is backing up. Installing oversize rear-view mirrors may prevent some of these. The demand for aftermarket mirrors exceeds $250 million annually. New sonic devices sense objects behind a vehicle and emit a sound to warn the driver. Selling collision-prevention devices may sound counter-productive for a body shop but as the saying goes, no system is fool-proof for a really talented fool. Gadgets may prevent a few accidents, but in the long run, people will still smash up their vehicles. People in the habit of coming to your shop will come back.

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• Commercial vehicle maintenance and repair. Once again, this requires adding a relatively full-service mechanical shop (avoiding overhauls and heavy repairs). Shop owners who have this sideline tell me it beats insurance work in many ways. There is never the kind of nit-picking inspections they get from DRP relationships. Billing is a monthly activity and most pay promptly. When maintenance and minor mechanical services are provided, all body and collision work automatically comes in.

• Complete repainting of high-end and classic vehicles. Most shop owners I've talked with prefer not to do complete paint-jobs. Most vehicle owners are turned away by quotes above $2000 or $3000 anyway, but why turn away those who are willing to pay for a high-ticket job?

• Dash repair and theft damage repair. Most shop owners tell me this activity can be a particularly nasty can of worms. They refer the business to Dash Masters and similar specialists around town. But if there isn't one, it may be an opportunity to get into a specialty in which no one else has an interest. And I've noticed major insurance companies do set up DRP relationships with auto stereo, dash and theft-related repair centers.

• Motorcycle, boat, trailer, and other incidental painting. Some shops I've visited specialized in painting flames to attract this kind of business. Once again, the idea is to funnel in some business that otherwise would have gone elsewhere, and then try to develop it into more profitable collision repairs.

• Oversize vehicle repair. An investment in an oversize frame machine and spray booth can be recovered quickly if there is truck, bus, RV and other large vehicle repair business to be had. Earl Scheib recently opened a subsidiary called "Quality Truck Repair Centers." I noticed they were immediately filled with trucks, buses and other large vehicles. At least in this area, there was a demand for this very profitable specialty.

• Safe driving course tie-in. This relates again to becoming a "Safety Center." While some sublet activities could be profitably brought in-house, other activities should probably just be strategic alliances. A tie-in with one or more driving schools could allow you to educate beginning drivers on the importance of avoiding collisions as well as educating them on what to do and where to go when one occurs. You can't beat starting early to get potential customers in the habit of coming to your shop.

• Spray-on bed liners. This is a no- brainer for shops located in areas where pick-up trucks are plentiful. If other shops are competing for this service, why not add some of the re-styling products or other services mentioned above as a way to promote and attract this business?

• Towing. Purchasing a tow truck is a major investment, but those shop owners I've spoken with who have good relations with the local police tell me towing is a lucrative source of business and more than pays for the capital investment.

• Vehicle rental. One shop owner read the numbers to me. He calculated the profit the average car rental agency makes per vehicle, and it became obvious this would definitely be a profitable sideline for a shop that could afford to get into it.

• Wheel alignment and suspension repair. This service, which is frequently sublet, can be an excellent money-making service as well as a great reason to get customers to come back again and again. It is truly one of the upselling champs to consider.

Multiple revenue streams

During economic hard times there's nothing more satisfying than seeing money come in from many different directions. While I can't imagine a shop adding all of the activities suggested above, it should be possible to incorporate several of these specialties. Starting with an inexpensive specialty and using the revenue to fund another one that requires more capital could gradually build many excellent revenue streams. Meanwhile, the lower profit activities will funnel in a larger quantity of customers, increasing chances for higher quality, more profitable repairs.

An old saying suggests that "familiarity breeds contempt." This may be true of many intimate relationships, but it's only true of a business relationship if the customer is treated badly or dissatisfied with the work. If these less profitable services are provided satisfactorily, the satisfied customer will be back with his or her vehicle when more serious collision repair is needed. And that's when you get to enjoy the most profitable end of the funnel.

Tom Franklin has been a sales and marketing representative and consultant for forty years and is the author of the books, "Business Battlefield Marketing for Body Shops," "Tom Franklin's Top 40 Marketing Tactics for Body Shops," and "Strategies for Greater Body Shop Growth." His marketing company now provides marketing solutions and services for body shops and other businesses. He can be reached for questions or comments at (323) 871-6862, by fax at (323) 465-2228, or by E-Mail: tbfranklin@aol.com.

 

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