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The automotive aftermarket must stop selling at the lowest price


7/2/2009

In no industry is selling at the lowest possible price more prevalent than the troubled auto industry, where the “Best Price” advertising and the lowest cost per vehicle are the only ways these dealers sell their wares.
 
By Ron Dahlhaus
General Parts Group LLC, New Jersey


Chances are that if you are a reading this article, you have encountered the art of the deal: The never-ending sales negotiation between buyer and seller where the lowest price gets the sale. In no industry is this way of doing business more prevalent than the troubled auto industry, where the “Best Price” advertising and the lowest cost per vehicle are the only ways these dealers sell their wares. Take a good hard look at the state of “that” industry and at what we are all becoming.

Taking lessons from Big Brother and selling us right down the river alongside them is not where you want to be.
How many times a day are we frustrated or convinced (you make the right emotional call here) that we need to sell at a lower price to match or beat the competition? Is it that we need to drop prices in order to make more sales, or that we need to find a cheaper line just to compete with the competition?

This is an every-hour, every-day occurrence in the average counter professional’s day. However, we all want to make more money as inflation drives the cost of everything up.

Insurance, housing, food, gasoline all go up, while our salaries stay the same. We are not public servants for whom salary increases are a given. Two to 5 percent salary increases are the norm. We however are not “given” anything. We need to earn our increases. But how do you do so when all we want to do is sell cheaper? How can we make more money under these circumstances? Easy, I say. Provide and sell value.
“Sell value.” Great, but what the heck is value, you might ask? Start by getting your co-workers together and write down what you do better than your competition.

Do you deliver faster, do you offer machine shop services, do you have a better inventory, can your customers buy online from you? The next step is to provide external events that others cannot provide because they are selling based on price only. When was the last time you offered a true training class?

When was the last time you held an open house, a tool event or a car show? It’s as simple as using your parking lot as a car show or as elaborate as a full-blown open house with vendors, exhibitors and giveaways. If you want to be more than a low-cost provider, you must deliver more than the next guy or you are no better.

Today’s training classes offer an excellent opportunity to show that you are much more interested in your customers’ business survival beyond the sale. Start out doing two events a year, maybe one late winter, one in the fall.

You must charge a nominal fee, maybe an incentive for more part sales could work, but offer nothing more at this event than the training class and a light dinner or snack.

Do not make the mistake of attempting to sell a product at the event. Your customer will see right through this and will never return. Make sure the topic is relevant, such as new advances in hybrid technology, brake electronics, or getting more from scan tools. Many manufacturers offer training courses for a fee, while some are free. At the end of a three-hour evening training event, make sure the technician comes away with a workbook and a certificate to put on his wall.

A nice touch would be a letter letting them know how proud you are of them. You and your workers need to sell this event as a value. Over time, these types of events will make you the supplier of choice, as the good customers will surely recognize the value beyond an extra dollar for an air filter.
Getting behind value selling is a business lifestyle change. In the beginning, the feeling that this just is not working would make it easy to convert back to the “Race to the Bottom” way of selling.

Get every staff member, owner, manager, counter staff, stock person and driver behind the mindset that “telling” your story is the only way for this to succeed. Thinking of new ways to provide value, provide an event or provide an extra service is the next challenge.
Making sure everyone knows what you do is the easy part, because you’ve already done it.

Racing to the bottom in terms of price is a race to death and we surely do not want to be in the second row of the court that Chrysler and GM have just returned from.  
  Previous Comments
avatar   Chris   star   3/12/2010   4:48 PM

There have to be limits on how low we're willing to go. It costs money to manufacture, ship, and stock a part. That money has to come from somewhere. You guessed it -- the customer. If the price is set too low, the money can't come out of shipping or stocking, because they're pretty well fixed price-wise. It has to come out of quality. So, the company switches brands, and sells some part out of who-knows-where. Price wars start with the competition. Lather, rinse, and repeat.

This is a very steep and slippery slope we're on, and it has to stop.




avatar   Andrew S. Davidson - Kragen/O'Reilly Auto Parts   star   12/13/2009   4:00 PM

Quality and service do count for something. The biggest key in this is actually listening to what the customer is telling you. Most counterpeople that I listen to have this tendency to push the overall quality, instead of listening to what the customer says, and focus on that. Customers always seem to want to tell you the story of what they are doing, and listening to this and engaging them works wonders. For instance, customers looking for brake jobs. If they have a heavy truck, ask if they do a lot of towing. I can make the sale on our Carbon Metallic Performance Friction line, or at least Wagner Thermo-Quiet Ceramics every time for these customers, as opposed to the store brands, because of the quality and use for such applications. Learn your products and listen to your customers. If you can apply the use of the product to them, they would be willing to spend the extra $10-$20.



avatar   TIM S @ OREILLY AUTO PARTS   star   11/17/2009   1:53 PM

WE ALL SELL SIMILAR PRODUCTS AND FOR THE MOST PART HAVE SIMILAR PRICEING THEY KEY TO VALUE IS SELLING THEM SERVICE IF YOU CAN DELIVER BETTER SERVICE THIS WILL DRIVE SALES WE ALSO OFFER THE TECH CLINICS AND HAVE CUSTOMER APPRECIATION DAYS AND CAR SHOWS ALL 3 ARE BIG HITS AND GO A LONG WAY TO INCREASING SALES THE BOTTOM LINE BETTER SERVICE BRING REPEAT CUSTOMERS REPEAT CUSTOMERS LEARN TO TRUST YOUR OPINION AND RECOMENDATIONS



avatar   T. Scott   star   8/7/2009   3:24 PM

You all must have a different type of customers than I have at the last 4 places I worked. Most of my customers would take a rebuilt water pump then to pay $5.00 more for a new one. If you can sell the more expensive parts good for you. I personally would prefer to sell Wix filters to all my but generally have to sell house brand. They generally don't even want to pay the Fram mid price.



avatar   Kevin T.   star   8/4/2009   3:07 PM

Since I am an avid internet surfer, I read up on the reviews about the parts we carry, peoples complaints on forums, etc. One particular product I consistently try to steer people away from is Fram. They are the best at *marketing* but not quality. Finally I decided that proving why another filter is better might be the right approach. So I cut away 1/4 of the diameter of a Fram 3387A and Wix 51040. This little demo makes the sale on the Wix almost every time. So maybe *proving* why its better is the right idea. Let them see it for themselves.



avatar   Tom Souffrain   star   8/3/2009   4:33 PM

Service has to be worth something



avatar   Justin Reed   star   8/3/2009   3:18 PM

Very good article. I am from a town in Alabama and on the back counter this does fall true. On the front counter this doesn't pass as much. Time after time after time. The customer has it in their head that he or she wants the cheapest part we have in the store. The difference between a lifetime warranty and a one year warranty starter is about ten to twenty dollars. As far as our house brand brake pads with are lifetime warranty and a cheap yellow box brand with a one year warranty is two to ten dollars. after explaining the difference in quality as well as warranty they still want the cheapest part in the store. This is aggravating because you know that they are wanting an inferior product and you can't change their mind for an extra five or ten dollars.



avatar   Steve Abrams   star   7/20/2009   2:43 PM

The whole point of selling value is a excellent idea when you consider that the value is giving them something that the competition doesn't have. Serve the customer better than the competition and they will eventually stop shopping the competition. If they ask for a starter sell them a starter and everything they need to install it, if they are a professional deliver it faster than the competition would...even if you have to match a lower price every now and then.



avatar   T. Scott   star   7/10/2009   8:20 AM

But Mark the only problem with that theory is if you didn't mark down the price you miss the goal by $75.00 not just $3.00 because the customer bought it somewhere else.



avatar   Mark S Gundling   star   7/9/2009   3:34 PM

very good point cause when ya mark down to match prices we are losing cause we're not hitting the sales goals for that month cause we priced match a $3 difference when that $3 would been greater in sales month totals!!!



avatar   Shawn B.   star   7/9/2009   11:59 AM

wouldnt it defeat the purpose of telling customers your parts are better if they really arent? why not carry good quality brands, at the right price? isnt that what "value" is all about?



avatar   William T. Hart   star   7/5/2009   10:16 AM

Good article! There is no gain when you discount it. Maybe it's bending a truth but to suggest that our parts are better than a competitor to maintain the orig. price is a good idea?















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