When I talk with jobbers across Canada, the hot topic that often arises is how to get the shop client to be loyal to the jobber store.
Jobbers will state that earning shop loyalty is a top priority, yet many jobbers fail to have a plan in place to accomplish this. A review of their management processes, and certainly their store budgets, does not support their assertion that loyalty is a priority. I have never seen a budgeted expense line called “client relations.”
It is definitely agreed throughout our industry that it always costs more to go after new clients than to retain existing clients, but it appears many jobbers do not have strong, proven processes in place to ensure client retention.
When a shop leaves a jobber business, the jobber management almost always repeats the same reason for the defection: price. If a jobber took the time and did his homework, I am confident that in more than 60% of cases, he would discover that the migration of the shop to another jobber business really was not due to price. Under closer examination, the real reason would likely be poor service from the jobber store.
If management could get their head around this reason, then it should make a lot of sense that an effective way to grow the jobber business would be the installation of processes that reduce the loss of customers.
Jobber store owners and managers certainly understand the importance of maintaining shop loyalty and always rate it as very important, but many execute their business strategy with a different set of priorities. They spend more money on “buying new shop business”–trying to get more shops to join their business–than on ensuring existing customers are served properly.
When a shop is loyal to the jobber business, the shop buys more frequently, and this is driven by the shop owner’s attitude. He wants to do business with the chosen jobber. The term “loyalty” can also be misunderstood in situations where a shop has no other choice but to buy from that jobber, due to a lack of other options to choose from in a marketplace. This usually only happens in smaller communities, but this is not loyalty. It is simply a shop that is trapped in its marketplace.
True loyalty comes from shop owners who have an extremely positive attitude towards the business relationship between their shop and the jobber business and therefore are very happy, and even recommend the jobber to their shop peers as the place to do business.
Building client loyalty does not happen overnight. The obvious question a jobber would then come up with is, “How can I justify putting money into this area if I cannot measure immediate results in sales?”
Consider that investing in loyalty does show immediate results when measured properly. Some of the areas that should be measured are as follows:
* Measure the total profitability of the jobber store, as you must become focused on profit and not just revenue growth.
* Measure individual shop net profit to the jobber store. There are various short-form methods for this, but keep your measuring practices consistent from month to month and quarter to quarter.
* Measure the number of referrals as loyal clients refer other shops, which reduces your marketing costs, but remember to ask, “How did you hear about us?”or “Why do you want to do business with us?”
* Measure specific lines where increased margins can be obtained. Remember a 1% increase in price can lead to as much as an 8% increase to the bottom line of the store.
Too many jobbers still focus on obtaining new business through the message of price by offering special price promotions. The problem with this strategy is that a shop that came to the jobber for price alone will leave for the same reason, as this type of shop is focused on bouncing around to the best deal available at the time. This is not the future client of the jobber business. This strategy does not build a strong jobber bottom line.
So the question has to be asked, “What is the strategy required to build shop loyalty?”
The fact is that the odds are in favour of the best shops in the industry being able to obtain any product they want from various suppliers in the marketplace. That being said, it is my experience that when a shop decides to leave a jobber, the emotion of the shop owner will be a much more important factor by far than the factor of price in the decision process. A top shop leaves a jobber because the owner is fed up. He has tried to work with the jobber but to no avail. Poor service will create strong negative feelings with the owner. In many circumstances, poor service by the jobber has put the shop owner in an embarrassing situation with his own clientele, such as by not having the vehicle ready on time as originally promised.
The following are the four top reasons why good shop owners take their business from a jobber.
1. Client service
2. Quality of products sold (Fit, Form, and Function)
The first two reasons alone are overriding factors in more than 60% of decisions to leave.
If the jobber is not attending to these issues as a top priority in his jobber business he will not build loyalty.
To overcome losing shop clients’ business, it is time that jobber management put in place processes to catch the problem before it is too late.
Consider following these steps:
1. Review all accounts and identify shops that could possibly leave for the first two reasons mentioned above. (Service and Quality).
2. Visit these shops personally and communicate clearly your understanding about the issue of jobber store service and parts quality (fit, form, and function), and outline the steps you are taking to ensure the shop is never let down on these two issues. If you are in the process of changing store processes to meet these two issues, give the shop owner a timeframe in which he can expect to see definitive results. Thank the client for his business and for taking the time to express his views on your jobber business.
3. Review with your field personnel what they are hearing from the shops identified as having the potential to leave. Don’t forget to ask the drivers as well, as many times they can pick up things that are being said during deliveries. Train your people to listen carefully.
4. Take the time to recognize valuable clients. Treat them well with additional attention to detail such as taking them to lunch or perhaps doing them a special favour, again thanking them for their business and listening to their concerns. Make notes.
5. When trying to get certain shops to return to your business, make sure you go after the right ones. Too many jobbers will take on any shop just to have the sales volume. However these shops also bring back the old baggage they had before they left in the first place. You want the right shops back, otherwise they will end up being the same old cost to the jobber business.
To achieve shop loyalty, the entire jobber staff must be on board with the understanding that you will always bend over backwards for your clients, and that they are empowered to make it happen.
Measuring shop loyalty is a substantial topic and I’ve only exposed the tip of the iceberg in this article, but one additional item must also be addressed by jobber management: reward your employees for client loyalty!
It is not enough just to talk about it. There has to be a “pony” in it for the staff too. Consider additional perks, bonuses, rewards and recognition for achieving consistent shop loyalty in a profitable manner. You can’t do it alone. It takes a team to be number one in business today.
Robert (Bob) Greenwood is President and CEO of E. K. Williams & Co. (Ontario) Ltd. and Automotive Aftermarket E-Learning Centre Ltd. Bob has 28 years of industry-specific business management experience. He has developed shop business management courses for independent service providers recognized as being the most comprehensive courses of their kind available in Canada. Bob is the first Canadian Business Management Consultant and Trainer to be recognized for his industry contributions when he received the prestigious Northwood University Automotive Aftermarket Management Education Award in November 2003. E. K. Williams & Co. (Ontario) Ltd. offices specialize in the independent sector of the automotive aftermarket industry preparing analytical operating statements for management purposes, personal and corporate tax returns and business management consultation. Visit them at www.ekw.ca and sign up for their free monthly management e-newsletter. Automotive Aftermarket E-Learning Centre Ltd. is a leading edge company devoted to developing comprehensive shop management skills through the E-Learning environment. Visit AAEC at www.aaec.ca . Bob can be reached at (613) 836-5130, 1-800-267-5497, FAX (613) 836-4637 and by E-Mail: firstname.lastname@example.org or email@example.com.