Jon Spohn has seen his south Minneapolis neighborhood drastically turn over in the last 10 years. Older, long-time customers of his family’s shop, Action Auto Systems, have started leaving the area, and those who’ve stayed have become infrequent drivers (see: infrequent customers).
Less than five miles from downtown, Spohn’s Action Auto is in the middle of what’s been an urban renewal for Minnesota’s Twin Cities region. The customers his dad spent decades winning over have been replaced by a new generation—Spohn’s generation.
“It’s pretty clear every single day the shift that our market’s going through,” says Spohn, 31, a co-owner who runs day-to-day operations at the shop. “It’s all late-20s, early-30s people who are starting families.”
Spohn’s shop isn’t an outlier; on a micro level, the transition his market is going through is indicative of a nationwide shift.
The 80 million or so U.S. citizens considered to be a part of Generation Y (those born after 1980) now account for one-third of the country’s population; that’s larger than the Baby Boomer generation and nearly three times the size of Generation X. By 2025, Generation Y will make up 75 percent of the U.S. workforce, according to research from the Business and Professional Women’s Foundation.
Bottom line: Generation Y will become your shop’s dominant demographic within the next 10 years. And your shop needs to start earning their loyalty now.
To do that, Spohn has helped to overhaul his shop’s operations, marketing systems and overall approach to customer communication. It’s one of the reasons the shop has nearly doubled its annual revenue over the past decade to $1.5 million, and it’s a reason that it has become a neighborhood staple for a generation of customers unfamiliar with its nearly 40-year history.
“These are great customers to have, but they’re different than the ones we’ve always served,” Spohn says. “That means we have to operate differently.
“I need this business running successfully five years from now, 10 years from now, 30 years from now. By paying attention to trends and adjusting to them, you can do that.”
Bring ’Em InFact:According to the 2014 Global Automotive Consumer Study from business research and consulting giant Deloitte, 83 percent of Gen Yers spend four-plus hours researching their vehicle purchasing decisions; 52 percent spend more than 10 hours.Spohn likes to keep his philosophy of marketing very simple: Attract the right people in the right way.
“We want long-term customers who are more worried about getting their car fixed right and keeping it running so they can go about their lives,” he says. “We want loyal, long-term customers that are looking for value, not the cheapest option.”
And unlike conventional stereotypes, Spohn feels his market’s new Millennial makeup is spot on with that.
Eighty percent of Gen Yers plan to buy a new vehicle in the next five years—61 percent in the next three years—according to Deloitte. That’s 64 million car owners and potential customers nationwide.
“These are young people who are starting families, have one or two kids already; some have two vehicles,” he says. “These are people who can be customers for a very, very long time, who appreciate their car being reliable to get to work, to daycare, to soccer games.”
But, then, there’s the question: How do you ensure you capture that market share?
First, some quick numbers: 70 percent of Gen Yers trust online reviews, compared to just 59 percent of all other generations combined, according to Deloitte. Sixty-six percent trust referrals, compared to only 44 percent for everyone else.
Many traditional marketing tactics still work—direct mail, events, etc.—and Spohn still does them.
But think of the Internet as your modern-day Yellow Pages, Spohn says; except, instead of getting a single listing, you get as many as you can generate.
Search engine optimization is critical, so is a solid website with a clear call to action (easy-to-find phone number, address, etc.; Spohn’s shop also has its towing number displayed prominently). Action Auto also uses Demandforce for reviews and online appointments, and encourages customers to leave messages for the shop.
“With smartphones and the Internet, people are used to 24-hour access to everything,” Spohn says. “We want our shop open to them, even when the doors are closed.”
Beyond being able to make appointments, Spohn also has the “Contact Us” messages customers and potential customers can send through the site go directly to his personal mobile phone.
“I don’t want a complaint or question going unanswered because I’m out fishing on a Saturday,” he says. “If there’s an issue, we’re dealing with it right then, and showing them how important our customers are to us.”
Then there’s social media, Facebook in particular, which Spohn thinks is the premier referral source for Gen Y. It’s about “word of keyboard,” rather than word of mouth, Spohn jokes. And his shop does whatever it can to get that word out there.
Trust IssuesFact:Thirty-seven percent of Gen Yers say they “distrust big business,” according research firm Badgeville; and the Pew Research Center says that just 19 percent say that “generally speaking, most people can be trusted.” By comparison, Boomers came in much higher at 40 percent and Generation X at 31 percent.Spohn credits his father, Kurt, for building the foundation that’s shaped the shop’s current approach to customer engagement. It uses the same core philosophies as when Kurt founded the shop in 1975, Spohn says, only the mediums are different.
“I realized in the ’80s that the shops that were going to stay in business were the ones that educated and equipped themselves,” says Kurt, 60. “I went to school and learned about computer systems. We had scan tools very early and always made sure we could fix anything that came in the door.”
And Action Auto combined technical savvy with a guy-down-the-street charm and feel that helped the business connect to its customers.
“It’s funny, because that’s the exact same approach you need today, too,” Spohn says. “We have this whole shift of a younger generation (Gen Y) that doesn’t want to do business with large chains, that doesn’t trust corporations, that wants to spend locally.”
That’s the advantage the independent shop has, if it can earn that trust.
Spohn says that shops need to start thinking of their business more like a doctor’s or dentist’s office. They’re places people must visit, but often prefer not to. Customers expect a high level of competency; performing the job correctly and on time is a minimum requirement.
Then, it’s whatever you can do to stand out.
Action Auto has a modern, comfortable lobby, but, more importantly, it has people in place to perpetuate that image.
“We want a high skill level with everyone here, but we also want our people to be the type of employee that can hop in a car, drive someone home, and when that person gets home, they’ll say, ‘That guy who gave me a ride is a really nice guy,’” Spohn says.
The shop also works to “be there” for customers during the repair process, sending email and text updates and making phone calls—depending on the customer’s preference. They also send appointment reminders, and thank-you notes (both through traditional mail and email) after the repair is complete.
“We want them to see us as partners through the process,” Spohn says. “We want them to know we’re there [for them].
“When someone walks in our door, we want to provide an experience they can’t find anywhere else in town.”
True RetentionFact: While stereotypes of being distracted and unloyal are often attached to Gen Yers, 70 percent of them say they will “always come back to the brands they love,” according to Badgeville.And that’s what led Spohn to the shop’s donate-a-day program.
Spohn noticed there was something “off” almost immediately. The customer, who’d been coming to the shop for years, wasn’t her usual bubbly self. Distant, distracted, distressed, sad—Spohn knew something must be wrong, but wasn’t exactly sure.
“I just asked how she was doing, and she told me she was just diagnosed with brain cancer,” Spohn says. “I was floored. This was someone who lived just four or five blocks from here, we knew her really well.
“It weighed on me for weeks. We just felt like this was someone who’s been so great to us and we need to do something to help.”
Spohn talked to the rest of the team, and they came up with an idea: Donate their shop to this woman for a day.
“We’re normally closed on Saturdays, so we decided to open one Saturday, everyone would work for free, and everything we earned that day would go to this customer and her family,” he says.
They teamed with a local financial company that agreed to match whatever the shop raised.
Spohn and his wife, who runs the marketing for the shop, handed out flyers, got some radio play and hammered the point home through social media.
They were able to write a $6,000 check, which they did that day and hand-delivered to the customer’s door.
“That was one of the best days of my life,” Spohn says. “It was an experience I’ll never forget.”
The shop did it again six months later for another customer, and six months after that, did another fundraiser for another customer at the end of May.
This wasn’t a marketing ploy, and that’s still not why Action Auto holds these events.
Yet, it’s been one of the company’s strongest selling points to young customers.
Whether it be Inc., Forbes, Smart Company, or any other business-related publication, the profile of a socially conscious new generation has been written and rewritten time and time again; Gen Y wants to support companies that are making positive impacts in their communities.
As Spohn puts it, if a shop can do one thing to gain its next generation of customers long term, it’s giving them a reason to believe in you.
“It’s not about making a buck today,” he says. “It’s about creating a company that everyone in our community wants to be involved with and do business with.
“A great business isn’t someone who turns a 20 percent net profit; it’s the shop that can be there when you need them and be there to help.”
Constant Connection
For younger generations, particularly those whose time is consumed by launching their careers and families, time is always at the forefront, says Jim Dykstra.
Jim Dykstra Dykstra’s Auto Three locations near Grand Rapids, Mich.Size: 7,000–13,000 square feetStaff: 24 (total)Average Monthly Car Count: 950 (total)Annual Revenue: $3.8 million (total)
That’s why convenience is of the utmost importance for Dysktra’s Auto, his family’s three-shop business in western Michigan.
And that’s where the company’s Connected Car Club originated.
Dykstra’s Auto uses telematics devices to connect customer vehicles to the shop. The devices, which are created by a side business Dykstra founded, are plugged into a vehicle’s OBD-II port and continually pull the car’s codes to check for changes in its systems.
For customers, it sends out regular driving reports—things like average speed, driving conditions, and other factors that can contribute to MPG gains/losses and overall driver safety. (It’s a big hit with fleet companies, and parents of teen drivers.)
For the shop, it sends out any service codes when an issue arises in the vehicle’s systems.
“The easiest way to explain it is that it’s the car raising its hand to tell you there’s something wrong,” Dykstra says. “Imagine the advantage of knowing your customer is having vehicle issues at the same time or before they even realize it. We can make a basic, initial diagnosis [based] off the code, contact them and either tell them they are fine or set up an appointment.”
In his program, Dykstra’s shop owns the hardware and pays the data subscriptions. The customer simply pays a fee for joining the club, which also includes oil change deals and other incentives.
“This is a market that the aftermarket needs to get into to retain these customers,” he says. “We need to make sure our shops are a part of this conversation.”
Simple Standards
The job of a technician today is more difficult than it has ever been. Increased technology and electronic components in vehicles make working on vehicles much more complicated.
Westside Car Care
Yakima, Wash.Size: 2,200 square feetStaff: 5 (2 co-owners, 2 technicians, 1 service advisor)Average Monthly Car Count: 125Annual Revenue: $450,000
“From what I see, it is harder and harder to be in this industry,” says Brad Witters. “So training and self study are things that are important to be a good technician.”
Witters founded Westside Car Care in 2010 at just 24 years old. The building had been a failing muffler shop, and Witters and his wife and partner, Jessica, transformed it into a full-service repair facility.
Young customers—those in his own generation—don’t remember the days of carburetors and regular mechanical breakdowns. For the most part, they were reared on high-tech, modern vehicles—and they expect shops to be able to fix and maintain them properly.
For Witters’ shop, it’s all been about creating standards of operating to ensure that final results meet customer expectations. His team performs inspections on each vehicle; they have a work-order rack to organize workflow; they maintain communication with customers throughout; and he sends his staff to regular training.
“We approach every job the same way: inspect and diagnose properly, estimate and explain everything to every customer so they can make an informed decision about their car,” he says.
