5 minute read 2 months ago
COVID-19’s Impact on Tire & Auto Shops – Jumping Into The Unknown of The First 30 Days
COVID-19 has changed the world as we know it almost overnight, leaving many small businesses stretched thin and scratching their heads looking for answers. The federal government has taken a step back to allow local governments to manage this process, resulting in varying degrees of mitigation enacted depending on where you are.
Cities, counties, and states all have differing degrees of mandates impacting business operations that eventually lead to a shelter in place order. In the end, these all lead to customers staying home, and businesses forced to work remotely or shut down unless deemed essential services.
For shop owners, there’s a silver lining in all this chaos. Federal guidelines have deemed tire, parts, and repair shops as critical infrastructure that are essential. Because of this, shops are allowed to remain open while other businesses close.
It’s no surprise that customers often don’t understand that businesses outside of doctors and grocery stores are still open. If they do understand this, they still may be scared that they could catch the virus or are perhaps unsure of their job security and want to reduce expenses now that unemployment is rising significantly.
These are all never-before-seen headwinds that are generationally world-changing. Remember that people are starting to treat their homes like a bunker. How can you get them to venture back out to the real world (safely)?
For those that can ride out the storm, things will eventually return to normal. Things will get better. Changes in consumer behavior suggest people are keeping their vehicles longer, resulting in an aging vehicle population. Extending vehicle ownership will result in the long-term growth of the repair industry over the next 5-10 years, putting your shop in a solid position in the future.
Because we don’t know what we don’t know, we’re guiding our clients and readers in 30-day increments. We expect to publish 2 more of these guides to help shop owners through these tough times.
So, without further ado, how can you jump into the unknown and bridge the gap from today to tomorrow?
1. Safety first.
If you haven’t already, change your policy to focus on sanitation. Disinfect customer vehicles before and after performing service. Your techs could get infected, resulting in time off, while customers are afraid they could be infected. Reduce the risk to both by taking some extra time when cleaning.
When adopting this new procedure, let customers know in your marketing communications.
Bonus tip: In addition to disinfecting, offering no contact drop-offs, pickups, and payment options, complimentary pickup and delivery service can all be extra incentives to schedule service.
2. We’re Still Open
Let your customers know that you’re still open during this time. Many aren’t aware that you are allowed to remain open and can still service vehicles.
Reach out to your existing customers with an email, text, or phone call. Put a notice on your website. Post on social media and Google My Business explaining the situation. Update your marketing materials accordingly.
Bonus tip: We do not recommend direct mail for this step. While the USPS says that COVID-19 isn’t being spread by mail, rumors can change sentiment quickly in this environment. Keeping your direct mail footprint low might be a good idea, depending on your market.
If you’re light on cars, have service advisors start doing callbacks for customers who have declined work or have maintenance coming due. Consider your tone, voice, and approach, and make sure your staff is sensitive to the current environment.
Bonus tip: We recommend doing callbacks on an ongoing basis.
We believe many consumers are in a bunker mentality right now and might need an extra push to open their doors. For shops that embrace discounting, focus on existing customers – give them an “off-menu” or special offer in addition to pickup/delivery, drop off, and disinfecting their vehicle.
Bonus tip: We never recommend that our clients differentiate their brand with price.
5. Market for new business
When selecting marketing channels, we recommend starting where people are looking for you already – digital search (organic & ads), Waze, etc. then moving to Facebook & social media ads. Each channel merits some on-the-fly testing for messaging in this new environment.
Bonus tip:Nextdoor recently started doing local offers. Engagement is also up 80% since COVID-19 became mainstream news.
6. Focus on fleet services
With many businesses temporarily unable to use their vehicles, they may be open to repairing them now, especially with shutdowns active or on the horizon.
Bonus tip:Fleet business should be an ongoing effort for your shop to diversify its revenue.
7. Reach out to used car dealers & wholesalers
Backfill idle tech time with used car repair. Wholesale means lower profit margins, but it can be a good source of cash flow.
Bonus tip 1: Don’t push off retail work for this. Negotiate that their lower rate will mean a lower priority than retail so you can maintain focus on your key customer base.
Bonus tip 2: Ask to leave a card with the vehicle so you’ll have a new customer in the future.
8. Reach out to essential business employees
Who’s still driving? Essential business employees. They’ll still need oil changes and tires, but breakdowns are more problematic now than ever.
Bonus tip: Try some messaging that supports first responders, nurses, and doctors during this difficult time.
9. Awareness ads
When the country returns from hibernation and people start to venture out again, they’ll need their vehicles repaired. Positioning yourself for recovery could lead to taking an increased market share. HBR classified recession customers and consumption into 4 groups
- Slam-on-the-brakes (financially distressed)
- Pained-but-patient (short term negative, long term optimistic)
- Comfortably well-off (slight pullback)
- Live-for-today (carry on as usual)
- Treats – indulgences
- Essentials needed to survival or well-being
- Postponables – can be reasonably put off
- Expendables – unjustifiable.
Your goal is to build awareness of your brand when people in all categories shift down their consumption patterns.
Bonus tip: Community support, medical professional support, and being sensitive to the current environment are necessities at this stage.
10. Reduce expenses & build efficiencies
Best case scenario: Plan out how you can do things more efficiently. Now’s the time to take a look and see how you can do things better. Is there a process that you can tweak? How can you streamline operations once things open up again?
Worst case scenario: Your work has dried up, and expenses exceed revenue. Map out what your expenses are and who to contact. Consider lenders, landlords, employees, and vendors. These will be tough and painful conversations, but you may need to have them. Work towards extended terms, deferred payments, reduced hours for employees, and ask for flexibility; they all would rather maintain a long-term partnership than the alternative.
Bonus tip: The SBA has economic injury disaster loans at low-interest rates for small businesses. Applying early could help prevent future headaches. Also, pay close attention to the current proposed “Phase 3” legislation, particularly the SBA 7(a) loan program
This is a tough time for everyone, and as business owners, we understand what you are going through. Throughout all of this, don’t forget to take the time to prepare for a rebound. We’re all going to pull through this.
If you’re looking for a quarterback to help you manage all the pieces so you can sleep easier at night, we’re here to help.