A Lesson From Southwest

A Lesson From Southwest

Who is guilty of trying to be all things to all customers? Well, maybe we shouldnt try to be.

Who is guilty of trying to be all things to all customers?
Well, maybe we shouldnt try to be.

Soon, the Motor & Equipment Manufacturers Association (MEMA) will release a study commissioned to examine our industrys excess inventory dilemma. Counterman magazine supported this comprehensive study, which was conducted by Northwood University and supported by the Automotive Aftermarket Industry Association (AAIA), the Automotive Warehouse Distributors Association (AWDA) and the Specialty Equipment Market Association (SEMA). In next months issue, we will elaborate what is currently taking place to manage excess inventory.

In a recent interview with those who conducted the study, something very interesting caught my attention. It had to do with the psychology behind the concept of differentiation, which is really at the very core of what this study set out to reveal.

During the very early stages of the study’s preparation, a team of scholars at Northwood felt that there was more to the excess inventory dilemma than the usual suspects: parts proliferation, using inventory to gain market share and excessive returns. Instead, the study sought to not only analyze these standard habits, but more importantly, to try to reveal the psychology behind these inefficient practices. Thats where things got interesting.

It has become clear that the psychology of aftermarket competition lies at the core of our inability to effectively and efficiently manage our inventories. To illustrate, lets talk about the concept of differentiation.

Our industry is unique, right? Just about every industry is populated by those who believe their industries are unique. Yet most grapple with the same types of problems and challenges faced by the automotive aftermarket.

In other words, no one is unique in feeling unique. What every industry has in common is the need for company and product differentiation. Thats where the psychological barriers come into play.

The best example of differentiation is Southwest Airlines. The entire airline industry is losing money, except Southwest Airlines. Southwest uses an entirely different cost structure than the norm in the airline industry. By doing so, they must turn their backs on certain customers. However, because they are focused, they are able to put together a set of activities that much more efficiently satisfies the needs of their core customers. In other words, they make money.

Lets apply that to a prevailing practice in our industry: Trying to serve the needs of every customer, whether they be DIY or wholesale. Certainly, youre focused if your mix is 80/20 in favor of either customer type, right? Well, apparently not. Southwest completely turns its back on a certain type of customer who demands certain types of services and conditions. Theyre happy to do so, and they make no apologies. Southwest would love to serve those other types of customers, but only under Southwests own terms and conditions – not the customers.

Who out there is guilty of trying to be all things to all customers? Were all guilty.

You certainly cant argue with the success of OReilly and their 50/50 mix. Nor can you argue the success of Southwest. And, what about the psychology behind it all?

Who will be the first to say, “I dont need your business since you dont fit my organizations prototype customer I’m set up to serve?”

You May Also Like

What Will the ‘COVID-Era Consumer’ Do in 2022?

The beauty of the automotive aftermarket is that the economic conditions always seem to work in the industry’s favor.

Online Shopping

Remember the tariffs? Nathan Shipley does. Back in 2019, “that’s all we were talking about as an industry,” Shipley recalled, during his “Aftermarket Outlook 2022” presentation this past November at AAPEX.

Looking back at the “Distribution Preview” in the January 2019 issue of AMN/Counterman, aftermarket leaders consistently expressed concerns that former President Trump’s tariffs – and China’s retaliatory tariffs – could disrupt aftermarket supply chains, leading to higher prices and even production interruptions. Tariffs remained on their radar in January 2020, although it looked like the aftermarket was weathering the storm.

Right To Repair, Trade Associations And You

In the fight for Right to Repair legislation, aftermarket trade groups can’t do it alone.

Veterans Can Be Heroes Off the Battlefield Too

Veterans bring an incredible amount of value to the civilian workplace, in terms of nontechnical and technical skills.

Veterans and Vehicles
What’s Really Driving The Automotive Aftermarket’s Growth?

NPD’s Nathan Shipley looks at the many moving pieces contributing to the industry’s recent spike in demand.

aftermarket growth
Strength In Numbers

The automotive aftermarket is filled with great people. In fact, many say it’s our strong suit.

Teamwork automotive aftermarket

Other Posts

Never Stop Learning

With so much internet-based training content available, it’s never been easier to expand your knowledge base.

Continuing Education
Welcome To 2035 – What Things Might Look Like

The future is what we make it. We need to start addressing technology now so 2035 becomes a bright future.

Future of Transportation
Seems Like Everybody’s Talkin’ About Electric Vehicles

Not only are people talking about EVs, but according to the latest U.S. sales figures, they’re also buying them.

Tesla Electric Vehicle
Still Time To Nominate Someone For Counter Pro Of The Year

We’ll be accepting nominations through Aug. 1.