Rising demand for automotive parts and services is spurring new growth and revenue opportunities in the global aftermarket. With the overall market value expected to hit $722.8 billion by 2020 (according to Global Industry Analysts), a wide range of businesses operating in the industry stand to benefit.
However, the sales environment is – as it has always been – tough, and competition for new customers is fierce. Larger parts and service providers are dominating the industry, undercutting their smaller rivals on price. These bigger businesses can also afford to produce a near exhaustive range of products, as well as invest significantly in go-to-market technologies.
As a result, commoditization is increasing and a price war has started. When consumers are unable to distinguish between two suppliers’ parts and services, their decision largely comes down to cost. This makes it increasingly difficult for smaller players to compete. Complacency is not the solution, however; sales and marketing teams need to put their experience, skills and knowledge to good use and give their businesses a competitive push.
To overcome commoditization, brands need to become as non-generic as possible. An important starting point is revisiting and revising the sales and marketing strategy. A thorough review of the four Ps – product, price, place and promotion – is fundamental to improving sales.
Product
A product must meet market demands. Instead of focusing on their competitors, smaller companies must research their customers and get to know exactly what they need. Only then can they assess rival products and spot any gaps or missed opportunities.
If, after this in-depth review process, a company realizes that its products and services are no better or worse than those of its competitors, it’s time to think innovatively. One option may be to develop a whole new product line. That said, it’s not always possible to design differentiated automotive parts because one is often very much like another.
In cases like this, companies can also consider including value-adds in their offers, such as a free or reduced-cost maintenance plan to ensure equipment stays in working order. Customers are attracted by affordable deals that offer superior personalization and convenience. And, if they like the service they receive, they’ll usually come back again.
Price
In a price war, discounting becomes an all too common sales tactic. While it does boost sales in the short-term, discounting can damage a brand’s reputation in the long-run. A brand synonymous with cheap deals will eventually become just that – cheap. Loyal customers will look elsewhere for quality and sales teams will rely on one-off transactions at low prices. Unable to offer their customers a real reason to stay, brands that rely too heavily on discounting will battle to build true relationships that stand the test of time.
To avoid the dangers of discounting, smaller companies need to make sure that a variety of business factors are used to achieve sustainable and effective pricing. This should never be left solely in the hands of top-level executives. Sales, marketing, business development and finance directors all have their own agendas and this will invariably push prices up or down – irrespective of market trends, competitive product launches and sales seasons.
Businesses must pay attention to how the aftermarket is performing, and price their products accordingly. This will ensure that their products are neither too cheap or too expensive, but offer customers good value for money.
Place
Sales teams need to look for customers in all the right places. This requires a far more proactive approach than simply cold-calling lists of possible contacts. Today’s digital environment is full of business opportunities – if you know where to look. Salespeople need to harness data-driven technologies to hunt via multiple channels, such as social, email and mobile, with greater success.
Software, such as a customer relationship management (CRM) system, can track each customer interaction in real-time. As it gathers information, it can build a comprehensive profile of each customer that includes their buying habits and preferences. This helps salespeople stay on top of their relationships, deliver a more personalized service, and offer up- and cross-selling opportunities where relevant.
Promotion
Regardless of how good or relevant a product is, this alone won’t a guarantee a sale. Customers have so many options these days. To grab their attention, companies need to put greater thought behind initiatives that support customer retention, such as seasonable offers, loyalty schemes and other value adds. This means that sales and marketing teams must work closely together, to promote and sell the brand successfully.
When shopping around, customers often look for more than just a product or a service. They want expert advice too. A good way for a business to become a trusted partner is to generate useful content like website blogs, product reviews and comparison guides. A supply of well-written information that helps answer customer questions and solve some of their issues, will position a company as an aftermarket leader.
To overcome commoditization in the automotive aftermarket, smaller players must make sure that they stand out from their competitors. Ultimately, this comes down to one simple objective – providing customers with more value than their rivals.
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