If you are the parent of school-age children, you’ve probably already missed more evening sports helping your offspring deal with homework than any adult should have to. After all, when three-year-olds can work an iPad, what does your 10-year-old need you to help them for? Don’t they have a calculator? Seriously.
If you’re going to spend your time working on math problems, you’d be better off working on this: should you, as part of the larger aftermarket, be working to get your part of the annual $14-plus billion in unperformed maintenance estimated by DesRosiers Automotive Consultants, or the much smaller $73 million in business that dealers are getting instead of your customers each year, advanced recently by J.D. Power and Associates? To me, the answer has to be a resounding “Yes.” To both. While duelling statistics don’t necessarily make for compelling dinner table conversation, this might be different.
On the one hand, the lure of big numbers is nothing to be sneezed at. Even in this age of creeping decimalism, where hundred-million-dollar mergers and acquisitions barely make the business pages, $14 billion should be a number worth paying attention to. And it stays that way, even when you start breaking it down into smaller chunks: based on benchmark behaviour, that’s $207 per invoice, three times a year, available to individual businesses. It would nearly double the estimated $19 billion share of the service market the aftermarket earned in the same period in 2012.
In other words, it’s easy to understand why aftermarket businesses should pay attention to it. Yet it has continued to be elusive for many businesses, who are looking to grow the average invoice of the customer even a little. As one service advisor told me back in 2012, when these huge figures first began surfacing: “Just because we’re not getting the jobs, doesn’t mean we’re not asking. Sometimes customers say no.”
And that’s why it’s important to look at that $73 million number; it’s derived from customers saying “yes” – just not to the independent aftermarket. It represents jobs actually being performed by someone other than your customer, and there is every reason to believe that these same customers might be persuaded to bring their business to independents.
Of course, it might not represent huge dollars for every shop – since not every independent is in a position (geographically or in terms of target market) to go after the dealership customer – but it certainly can add up for the jobber.
I did a little math myself: if about 2,000 shops (the top 10% of the general repair category) were to get this business, it would amount to about $36,000 a year, or slightly over $3,000 a month. Which is nice, though perhaps not enough for a shop to reinvent itself to win over.
The picture gets very different for the jobber. Assuming that half this figure is parts, with the other half being labour (minus a markup; these are retail dollars after all). Multiply by your 10 best shops who are positioned to gain these customers based on focus, quality, and location: that adds up to approximately $100,000 annually. And because the same marketing methods that your shops deploy to attract those dealer customers are bound to attract more general customers as well, that figure could go even higher.
In other words, the one with the most to gain from capturing this business should be at the vanguard. That means you (and your distribution partners, who can do their own aggregate math).
Sure, keep the $14 billion figure in mind, but don’t overlook that comparatively paltry $73 million: think of it as a bird in the hand of the dealer competition that is there for the taking.
— Andrew Ross, Publisher and Editor firstname.lastname@example.org
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