How automotive aftermarket companies can lead in 2015 and beyond

July 24, 2015
It’s possible to use the high sales of certain products to lift other products higher. For example, electrical, steering and suspension parts, as well as fluids and lubricants, all pair well with new brakes

The North American automotive and aftermarket parts market is worth approximately $265.5 billion according to Statistia, and the Center for Automotive Research estimates that it directly employs 843,000 people. It’s a huge industry: demand is high and new businesses are cropping up all the time.

But carving out your own niche in the face of ever-tougher competition remains a major undertaking. In preparation for its report on automotive aftermarket industry trends, sales-i interviewed a number of executives who expressed anxiety about keeping ahead of their competitors. The findings indicated that there were several ways in which they could optimize their operations, improve sales and drive business growth.

Take an analytical approach

If you’re running an automotive aftermarket organization, it’s likely that you’re putting a heavy emphasis on manufacture, sales and delivery of parts – these things are, after all, your core business functions. But if you want to do more than just keep the lights on, it’s worth looking at your products with a more analytical eye.

For example, it’s obvious that it makes good business sense to stock more of your best-selling products, and less of the ones that aren’t selling so well. Best-selling products are brakes, based on the answers of our survey respondents, and less often selling parts are engine parts. Regardless, you don’t want to be caught in short supply when there’s high demand, or with a surplus of stock you can’t move.

In this instance, looking at certain combinations of products is a good way to maximize your company’s revenues. Service parts may not sell like hot cakes on their own, but if they’re sold with wheels or electrical equipment, they can prove a potent double act. Equally, it’s possible to use the high sales of certain products to lift other products higher. For example, electrical, steering and suspension parts, as well as fluids and lubricants, all pair well with new brakes.

With this data, executives are presented with an opportunity to group certain products together in packages – stimulating sales for all of them. Brakes sell well with electrical equipment, and electrical equipment sells well with service parts: a discount offer on all of them when purchased at the same time can simultaneously improve profits for your strongest and weakest products.

Time to change the channel?

It’s highly unlikely that any automotive aftermarket executive is oblivious to the growing importance of digital channels. However, while it’s one thing to acknowledge that e-commerce should be a part of your sales strategy, it’s another entirely to know how to implement it.

The sales-I report asked hundreds of aftermarket executives about their most effective sales tactics – for both driving new business and selling to existing customers. In both cases, the old ways still hold strong: in the latter case, 45 percent of respondents cited face-to-face meetings as their most fruitful technique; in the former, 38 percent said cold calling was their favorite method. Only 5 percent of those questioned said their business was driven by online sales.

It’s clear at this point that, in a purely transactional sense, this is an analog industry – though executives would be well-advised to remember that we’re in a digital age. Happily, when it comes to marketing it’s a rather different story. Social media adoption, for example, is widespread: 72 percent of those surveyed have incorporated it into their overarching lead generation strategy, and 25 percent use it for customer-facing activities. 

Having this kind of presence is beneficial in a number of ways: by making your business accessible in this way, you’re giving it a distinct, human face; you’re able to market directly to your customer base; and it gives you unparalleled insight into your prospects and their pre-sales behavior. You don’t need to be worried if you’re yet to set up a Facebook, YouTube, or LinkedIn account (27% haven’t yet taken to them either) but you do need to understand that you’re in a minority – one that will only shrink over time.

Knowledge is power

Power, more often than not, means higher profits. There is some natural trepidation around data when it comes to sales – something that can be partially attributed to the fact that the industry still employs time-honored, but increasingly obsolete techniques. You can’t quite call it technophobia, but there can be a certain reluctance to embrace the digital revolution.

Understanding your customers and their habits is essential, and big data analytics is instrumental in this. The final part of our report focuses on how executives monitor their customer data. Our findings indicate that – mercifully – only 2 percent aren’t tracking this information at all. The most common areas monitored are customer spend (82 percent) and customer trends (77 percent).

How do they manage this data? 56 percent use sales software, 15 percent use EPOS systems, and 11 percent still use spreadsheets. The latter statistic is one of the more frightening ones: while Excel’s a fine tool, it has no capacity for providing actionable insights or automating data management – using it to monitor customer behavior can be a major drain on resources.

Technology is available to account for both of these problems. Business intelligence software, for example, will notice trends in customer buying habits and can create automated insights and recommendations for your business – if, for example, there’s been a seasonal uptick in steering wheel purchases, you might be informed that it’s a good time to increase your stock and offer special discounts when these items are purchased with other products.

What Business intelligence really offers though, is a microcosm of what technology has to offer a savvy automotive aftermarket company on the whole: a chance to work smarter and with better information, to understand your customers, and be ready to accommodate their needs – before a competitor does it first.

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