A few weeks ago, the Federal Reserve announced that it would purchase $600 billion in U.S treasuries. What does this mean? What could it mean to your shop?
Very high inflation will cause prices and the cost of living to go way up. That will hurt your customers and your business in several ways. Is it possible to fix it? What can we do right now to stay busy and profitable in the face of high inflation that may continue for years?
The Problem Begins
When the Federal Reserve purchases treasuries, it has one goal in mind: inflation. The government is scared to death of deflation, so it actually encourages slight inflation at all times.
Problem is, energy and food prices are already increasing. And the injection of cash that the Federal Reserve is conducting will only push those prices higher.
According to John Mauldin, writing in Forbes, this “is going to help devalue the dollar and has already caused a rise in commodity, energy, and food prices.”
Who Gets Hit the Hardest?
As a business owner, you might not immediately feel this inflation that much. The group hardest hit by rising prices of energy and food is middle and lower income families, who will lose their slim margin of discretionary income.
Prices will go up, but their income will stay the same, leaving less and less leftover money to spend on what they view as non-essential purchases.
In the past, when lower income families have seen their discretionary income level drop, they have resisted maintaining their cars…meaning that those repair shops that have a significant percentage of lower-end customers will rapidly lose their customer base and the ability to survive.
Surviving the Storm
There is a way out! Shops that can attract higher-end customers are in a great position to weather this storm!
What makes a higher-end customer? Customers who have a larger discretionary income or large nest-eggs is the easy answer. Also, customers who have the ability to increase their income, such as small business owners and professionals.
It’s not entirely about having discretionary income, though. It’s also about that customer understanding the importance of maintenance and understanding the value of the higher-end customer service and repair that your shop can offer over a dealership or chain store.
Shops that can find customers with both of those traits will do well in any economic situation, especially the one we’re heading into.
So how do you find those customers? What’s the ultimate secret to surviving in this economy, no matter how bad it gets?
Destroy Your Competition
The answer isn’t to continue to play the lower-end customer, lower price game and hope to survive by the skin of your teeth.
No, attracting those higher quality customers is about branding your shop in a way that they respond to.
You have to set yourself apart from your competition, not try to undercut them at their same game. And you have to start doing it now before things get really bad and it’s too late.
What can you do? Yellow Pages is out. Cheap coupons are out. Half-baked attempts at internet marketing are out. Attracting customers with the lowest price is a losing game, and will only serve to put your shop out of business sooner.
So what does work? Targeted direct mail continues to outperform almost anything we’ve found. In our shop, we use direct mail to reach that specific kind of customer with a message that triggers an emotional response.
It brings in people who want a relationship, who trust us, and who want to spend money with us.
A complete internet marketing campaign also works incredibly well. Having an effective website, having it show up at the top of Google, and having an online brand that matches the image we’ve established in the community all work together to bring us high quality customers who find us online and contact us, ready to spend money.
This kind of customer has money and will have money even when things get really bad.
How Do I Get This For My Shop?
Repair shops are in the best shape to survive…we have a better opportunity than any other type of business (except for folks that work for the US Mint, of course). Even with fewer low-income families, we’re still bound to see bigger car counts.
Why? As people have less and less income, they will need to keep their current car for longer in order to avoid high monthly car payments.
But we MUST avoid the pitfall of confusing activity with results. It’s not about having more cars…it’s about having better customers. If you continue to play the price game as car counts tick upward, you’ll put yourself out of business!
It’s the direct mail and internet marketing I’m using to dominate our market despite the recession and despite the hundreds of competitors…and what I plan to use to continue to survive AND GROW despite changing economies through the years.
Recession or not, inflation or not, marketing always has to be sustainable and repeatable, which is why I’ve chosen time-tested ways of building trust with and attracting great customers…no matter what solution you choose, it’s VERY important that you choose marketing that you can measure, track and repeat with success!
If you want these solutions for your shop, call us today at 866-520-3030 and make your shop profitable in this and any economy!