American Recycler, November 2008

In 1993, a good friend of mine and fellow auto salvage business owner, DL Fitz, opened a new location about 60 miles south of his family’s existing locations, near Tacoma, Washington. Traffic in the Tacoma area made delivering parts on time very difficult. In response, a new facility at Graham was added to speed deliveries.

DL created a marketing plan that outlined how they would attract retail and wholesale business in the Graham area. Following the plan, they advertised on the back of buses. They figured bus ads were a smart use of their advertising dollars because all the slow-moving traffic would have plenty of time to look at their ads.

They failed to consider, however, that wholesalers were accounting for most of the volume that the Graham facility was adding at the time. The added orders from wholesalers came as a result of reliably and promptly delivering excellent quality parts.

The back-of-buses campaign was expensive and yet the retail market in that locale did not yield the gains they anticipated. Retail generally provided fewer hits per dollar spent; the market was too broad. They were broadcasting to everyone by virtue of the bus ads. No primary customer had yet been identified.

As DL and his father analyzed and discussed the situation at Graham, they realized most of the business was wholesale. So they decided to slowly cut back on their bus-advertising budget.

This point should help illustrate the differences between advertising and marketing. They gained business by cutting their advertising budget in half and focusing their efforts on the wholesalers. They redirected those advertising dollars into marketing directly to their target customers, monitoring the zip codes against the returns. They created a customized list of wholesalers within reach. They added new customers by going after them with outside sales reps.

More direct marketing by mail and personal contact by sales reps caused an even greater surge in their wholesale sales. They still served a retail market, but they were no longer throwing money at it unnecessarily.

Here’s another brief marketing tip. Isolate your top one hundred customers. Put them down on an exclusive list. Then interview them, either personally or through your sales reps. Ask about your competition. Ask your customers what they want or need most. Ask them what pleases them within your service/product structure and what would please them more. You want them to suggest ways in which you could be of even better service or provide a better product. One of them just might give you a clue you hadn’t considered before.

That’s marketing. You define the customer. You make sure he knows who you are and what you provide. Then you go after the customer to see what he really needs and what he really desires. If you can, fill the need and provide the desired service. The return is in part more revenue, which of course you want; but you will also see returns in customer loyalty. It’s something you can’t buy with advertising dollars.

Once you know who your customer is, you use that information to guide all your decisions. This knowledge helps you determine how many parking places you should put in, how many delivery trucks you really need, and what to display in your showroom. It affects all product and services decisions.

Don’t forget to subscribe to Ron's free monthly auto recycling e-newsletter, with news and tips, register at www.autosalvageconsultant.com .

Ron Sturgeon is past owner of AAA Small Car World. In 1999, he sold his six Texas locations, with 140 employees, to Greenleaf. In 2001, he founded North Texas Insurance Auction, which he sold to Copart in 2002. In 2002, his book “Salvaging Millions” was published to help small business owners achieve significant success, and was recently reprinted. In June 2003, he joined the new ownership and management team of GreenLeaf. He also manages his real estate holdings and investments. You can learn more about him at WWW.autosalvageconsultant.com He can be reached at 5940 Eden, Haltom City, TX 76117, rons@rdsinvestments.com or 817-834-3625 ext 6#.