Trying to differentiate your shop based on repair quality is a losing argument. Consumers are increasingly less interested in shopping than in “awarding” their business to a company they admire and trust. And insurer shop referrals will begin to hold less sway with more and more consumers.
Those were among the messages that Dick Cross, CEO of Carstar, shared with attendees at the 2009 International Bodyshop Industry Symposium (IBIS) in Berlin in June.
“If some collision repair alternatives arise that are understood, admired, and trusted by consumers, that’s going to beat the blue blazes out of anybody else’s recommendation, even an insurance call center,” Cross said. “Word tracks will become irrelevant. Recommendations from other people, even insurers, will become irrelevant.”
IBIS organizers said they sought Cross as a keynote speaker at the event for two reasons. First, he leads what is arguably the largest collision repair network in the world, with about 400 mostly franchise shops in the United States, Canada, and Australia.
Second, conference moderator David Lingham noted that Cross “is unique in that he doesn’t come from the industry.” The Harvard University-educated, former Navy officer served in a variety of business leadership and consulting roles in other fields before taking the Carstar post in 2005, Lingham said.
Cross began his presentation to the 250 attendees from shops, insurers, and vendors in more than a dozen countries at IBIS by saying he no longer believes in the fundamental marketing concept of “differentiation,” the idea that “in order to have any chance of winning in the marketplace, your specific product or service needs to be different from, distinguished from, your rival’s.”
His reasoning: Time-strapped consumers see more and more goods and services as roughly equal.
“Most consumers believe that their vehicles will be repaired to their satisfaction at any of a number of body shops, and they consider the alternatives basically substitutable,” Cross said.
“To be clear, I’m not trying to persuade you that the value of innovation in your business has diminished. But what I am offering for your consideration is that the attempt with which we’ve grown so accustomed to differentiate the specifics of our products and services in the minds of our customers–in our case, that my body shop will fix your car better than someone else’s or that my paint is better than your paint–this idea…has come to mean dramatically less today than it did in the past.”
Cross said that in his own case, buying a new car used to entail “a full year’s worth of anxiety about which car to buy next.” Now, he said, consumers may decide over breakfast one morning to get a new car, go to the dealership to look at a few, choose a color, and drive home with the new car the same day.
The same holds true for more and more consumers in terms of choosing fuel, tires, oil changes, routine maintenance, and automotive or collision repair, he said. They presume all of the choices will meet their needs. Few can tell the difference between an outstanding collision repair and a mediocre one anyway, and they feel that if their choice doesn’t work out, they will get their money back or come to some other acceptable remedy, he said.
Cross said this trend is particularly evident among those in the Gen X and younger generations, and those in their mid-40s or younger. This increasingly larger segment of the population is also far more swayed in their purchasing choices by the experiences or recommendations (freely shared via Facebook or Twitter) of friends or those they know, he said, than they are by advertising, brochures, radio jingles, or even referrals from those with whom they don’t have a personal relationship, such as an insurance company call center.
“People in their 20s today value their friendships more than their future expectations for wealth,” Cross said. “Their aspirations for their lives have more to do with relationships than they have to do with owning big houses and fancy new cars.
“What that means to us in the collision repair industry is that the cars that these people drive, and how they look, mean a lot less to them than I think they mean to virtually every one of us in this room.
“And pretending that’s not the case with these people who are a growing segment of consumers today, pretending that you’re only requirement for a continuing stream of cars to the door of your shop…is to make these people’s cars look great, is not the way to win their hearts and their business.”
As an example of the “commoditization” trend in the industry, Cross cited the efforts begun by paint companies in previous decades to distinguish their product by “spending tens of millions of dollars on things like free business consulting and free training seminars.”
Once all the paint companies were doing that, they have begun to look all the same again to many shops, he said. What was once a differentiator now has become “unrelated additional costs and largely unappreciated overhead that particularly in today’s economy I think most would like to shed, but everyone is really afraid to be the first one to do so,” he said.
What most shops today want from their paint vendor, Cross said, is solid technical help to paint cars more efficiently, “and damn good pricing.”
So what does the trend toward commoditization mean for collision repair shops?
“More buyers will come to ignore and even be offended by attempts to influence their decisions that don’t come from somebody already close to them,” Cross said. “I think this is particularly true in an industry like ours where in the United States, someone needs us about once every seven years.”
Winning customers will instead be based on making them want to “award their business to you” because they understand, trust, and admire your business, Cross said.
They must experience (and hear from others who have experienced) that your company is genuinely and amazingly nicer than they’ve ever expected in a collision repair experience, he said. They want to see that your decisions and values are ones they respect and share.
“They don’t want to ‘buy something’ from you,” Cross said. “They want to ‘award their business’ to people they like, whose values they respect, who treat them as they would like to be treated, who surprise them with their thoughtfulness, and who inspire them with their character.”
Developing that admiration for your company may involve your communication with them in the form of advertising, Web sites, and marketing materials, Cross said.
But more important are, first, your culture, the sense that everyone within your organization “gets” and shares your values and commitment to the customer, and the willingness to sometimes even sacrifice short-term profits to do what’s right, he said.
Also more important than your marketing communication is the positive experience they have when they touch your company, he added.
Get the culture and customer experience right, Cross said, and you won’t have to worry about the communication and “spending time and money trying to yell at people to convince them that your product is better, because they won’t believe it anyway.”
If insurer direct-repair referrals continue to be successful, Cross said, “I think that will have as much to do with those shops becoming the preferred shop in their community anyway than it does with the insurance recommendation.”
