Targeting Generation Y
Barrett Stamps says it with a tinge of excitement: The collision repair industry is in flux.
But the 26-year-old operator of Auburn Collision Center, one of his family’s two body shops in Washington state, isn’t just talking about new technology or materials in vehicles, or the new processes and equipment needed to repair them; he’s not talking about a modern, more business-like approach to operations, either.
That’s all part of it, but the real change is in who will be walking through the shop doors, he says.
Stamps is talking about his customer base—every shop’s customer base—and how drastically it’s about to change.
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, 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 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.
Cars are different. Customers are different. The industry is different.
“So why would we run our shops the same?” Stamps asks. “It’s about a new way of doing business. We aren’t working on old cars, we aren’t working with the same old customers, so we can’t work in an old way. We can’t look at customers the same, and we can’t treat them the same we always have if we’re going to stick around.”
Manager, Auburn Collision Center
Size: 10,000 square feet
Average Monthly Car Count: 90–115
Annual Revenue: $2.1 million
Stamps grew up in his parent’s collision repair business, and after graduating from college, went to work for his father in 2010. He took over as manager of the Auburn store in 2012. (The family has a second location, which Stamps’ father still manages.) In his first year at the helm, Stamps helped decrease key-to-key cycle time from 11.7 to 4.8 days through a new focus on lean operations and more efficient use of shop space. Net profit also rose by 6 percent. Stamps will soon transition into an oversight role for the entire $5.3 million company, in which he will partner with his sister, Kindra.
Robert Goberville, 30
Owner, Xtreme Body & Paint
Size: 4,000 square feet
Average Monthly Car Count: 12–15
Annual Revenue: $280,000
Goberville opened his doors in 2008, turning what he called a “project shop” into a full-time operation. He has slowly grown the business since that time, taking over more space in his building. (He started with roughly 1,600 square feet, and now has 4,000.) Goberville has one painter on staff, and is working to build out the rest of his team to allow himself to work solely in a managerial role. He will launch a mechanical segment to his business later this summer, aimed at expanding customer relationships and attracting more business for his body shop.
Steve Wallace Jr., 33
Manager, Marengo Auto Body & Glass
Size: 18,000 square feet
Average Monthly Car Count: 50–60
Annual Revenue: $2 million
Wallace took over his family’s business unexpectedly at the end of 2012 after his father, Steve Wallace Sr., passed away rather suddenly from brain cancer. Wallace worked in the front office at the time, and had to quickly take the reins of the company to keep it from faltering during a time of transition. Fifty percent of Marengo Auto Body’s work comes from fleet accounts, and Wallace quickly worked to strengthen those relationships during the transition. He helped the business hold steady in 2013, and the shop is on pace for a strong growth year in 2014.
Avoiding the ‘Walmart Effect’
Everything comes down to trust, says Robert Goberville, 30, who started his two-person, Kankakee, Ill., shop at age 24.
“People are just looking for that personal connection in a shop so that they can know they can trust you,” he says. “But that trust doesn’t come easily, especially with young customers. They’re going to do their homework and read up on you and really learn as much as they can. We have to give more reason for them to choose us.”
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.
And, generally, that extra research stems from a natural lack of trust in others.
Thirty-seven percent of Gen Yers say they “distrust big business,” according to research firm Badgeville. The Pew Research Center says that just 19 percent agree that “generally speaking, most people can be trusted.” By comparison, Boomers came in at 40 percent and Generation X at 31 percent.
“For businesses, it comes down to avoiding that Walmart effect,” says Stamps. “Give people a reason to trust you. Consolidation in the industry has brought this kind of ‘Big Box’ feel to collision repair, but you can’t have customers feel that when you’re working with them.”
Transparency is the only way to build real trust with customers, he adds.
For All to See
Steve Wallace Jr., 33, owner of Marengo Auto Body & Glass in Illinois, says shops need to find a way to make the repair process more approachable for consumers. How their vehicle gets fixed is a mystery to most of them, he says, and they have no real way to know if they’re being treated fairly—unless you provide that information to them.
“That needs to become our focus: providing information,” Wallace says.
Wallace has worked to put a strict policy in place at Marengo Auto Body for walking customers through the repair process in his shop. He also works to differentiate his shop from competitors by positioning his team as an “expert source.”
Informing and being an expert are critical for earning customer trust, Goberville agrees. Here’s some insight to both concepts:
Inform and Update. When it all comes down to it, Goberville says, he finds that young customers simply want to become a part of the process; through technology, they’re used to having information at their fingertips, and when getting repairs, they don’t want to be left in the dark.
“You have to give them as much information as you can,” says Goberville, whose shop, Xtreme Body & Paint works with a lot of Gen Y clients. “Cost is a concern to everyone, but if you can break down why this repair might cost $2,400 instead of $1,500 by explaining the procedures, showing them the damage, showing them your equipment, then you’re going to earn their trust.”
Stamps says this can be true for many generations of customers, but is vital for those his age because, often, they are getting repairs for the first time and want to be sure they are not getting taken advantage of.
“After that, it’s all about keeping them updated—again, making sure they’re a part of the process—and being done when you say you will,” Wallace says.
Marengo Auto Body uses AutoWatch to send customers videos and photos of their vehicles at various stages of the repairs. Wallace says he likes to send at least one full update each day to each customer—including a number of photos—but will adjust the frequency based on the customer’s preference.
He and his team also heavily utilize text messaging and email to update customers as well.
“It can be so much easier to send them over the photos or a repair order or a simple update, because they can then look at it on their time and get back to you,” he says.
Become an Expert. 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.
“People think referrals are going away in the digital age, but that’s simply not true,” says Stamps. “[Young customers] are just getting them in different ways.”
Social media and online reviews are your shop’s new referral source, Stamps says. If a Gen Yer sees that their buddy likes your shop on Facebook, that’s the same as a personal recommendation from them.
“You need to have a presence on these sites and you need to actively engage,” he says.
Stamps and his fiancé control the company’s Facebook, Twitter and Instagram feeds themselves. Stamps says it doesn’t take much time to put up a few posts—ones aimed at engaging discussion, not necessarily about collision repair, but rather community and overall vehicle topics. He also makes sure he responds to those who comment.
It’s a similar practice for online reviews: Give your customers instructions to do so, a gentle reminder at the end of the repair process. And monitor those reviews. Make sure you respond and handle negative ones; make sure you thank those who leave you positive ones, Stamps says.
“You want people to view you as that expert, and if they can easily find you online with all these interactions, they’re going to see that,” Stamps says.
Wallace also says that certifications help to distinguish your team from competitors; fleet accounts, as well.
“They can see that if so-and-so company trusts you with their work, they can too,” Wallace says.
Customer Retention for the Long Haul
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.
And 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 research.
What it comes down to, Stamps says, is creating that loyalty through transparent business practices.
“This is an exciting time to be in this industry,” Stamps says. “This is a real opportunity to ensure we’ll be successful long-term. It’s not really an option if you want to stick around.”