By Mr Retail
One of the biggest threats to our industry is a vendor cutting us out of the sale by making it direct to the consumer. Now to be clear, I am not picking on any brand, but simply stating a fact. Here is another fact; if the consumer isn’t qualified to do their own installation, they are going to come to you for service. Here is where you fit in: JUST SAY NO.
Many small and large vendors offer their products to online sellers in combination with brick and mortar retailers. Some even offer their products direct to consumers, and some brands are almost exclusively direct to consumers.
Now that I have stirred the pot, let’s try and deal with this controversial topic on two fronts. Let’s start with the dollar and cents idea. If you are a very profitable retailer, your bottom line profit is between 10% (industry average) and 20% (you are doing incredibly well). So if you are a VERY labor driven company and do 40% of your gross in labor, then 60% is product. Figuring an average profit percentage of 50% across all categories, that would be 30% of your gross profit is in equipment sales. So, if you do labor only work, you are LOSING anywhere from 10-20% on each of those installs. Keep in mind that many dealers are around 30% of total sales in labor, so that would mean you are losing 15-25% net profit on each of those installs. This is simple math here, everyone. No agenda.
Let’s now talk about the second front. Just say no. If all the 12 volt retailers stopped doing client installs, we instantly kill a lot of the direct to consumer and online business. Imagine what the world would look like two years from now if all of us stopped offering client supplied installs. Many online and direct to consumer companies would be hurt, if not closed. Brands would rethink the importance of their independent retailers as our value would skyrocket. More folks would end up coming to you for their products. It is a win-win.
But the only way for this to happen is if folks quit running their businesses in fear. Our technicians are a hot commodity. We all know that as we would hire more of them in a heartbeat. How about if we start making long-term decisions that are in the best interest of our company and our industry and stop ruining it?
Let me leave you with this one thought. Westminster Speed & Sound has had a policy of NOT installing client supplied equipment for at least 20 years now. But we do have an exception clause that fits for our business model. If our install bay is slow, we will allow client supplied work. We are still losing money, but at the point we are losing “less money” than if the tech simply stands around. On average, each tech probably does 4-7 days of client supplied work per year.
We will also make an occasional exception if someone comes to us that never knew about us and we feel that by working on their vehicle this one time, we could become the first call the next time around. And if they come around a second time with their own equipment, we politely turn them down. I do hope you pay real attention to my third paragraph as the numbers don’t lie. They never have.
Mark Miller
Mark Miller (Mr Retail) is the CEO of Westminster Speed & Sound, an award-winning retailer in Westminster, Maryland. The company was founded in 1969, and Mark took it over in 1990 at the age of 23. He started in the industry in 1986, so he has been at it for a while. Miller has served on the board of MERA, taught seminars in over a dozen different cities, and served on the SEMA New Product Awards judging team. He has been married to his wife Dawn for 33 years now and has four grown children and four grandchildren. His hobbies include being a sound engineer, doing life coaching, and being active in the local and national Porsche community.
On one level I like the idea for some shops. Shops are here to sell gear and expertise. When I was in retail, I absolutely would turn down outside gear and installs when we couldn’t keep up with our own workload. If you’re struggling to keep up 100% of the time, you’re not charging enough, or you don’t have enough staff and location. Or both.
On the other hand, we’re also here to build sustainable clientele. Turning away any job that has outside equipment is great if you can afford to do that due to how busy you are, and if you feel you have enough clients for the future. If you’re happy with the revenue you have coming in with a maxed out current install bay, and you don’t need any more…
Many shops would envy being in that position. It’s a scant few that are happy with the amount of customers coming in, and are willing to turn away new ones who start off less profitable. I didn’t always have that luxury. Even fewer that are totally happy with the revenue of their maxed out shop.
For many of us, clients graduate from buying gear online, or used gear, to buying gear from the shop they’re comfortable with. It takes selling them the experience. It takes proving you’re worth spending a little extra on. It shouldn’t need to be strong armed via boycott.
They shouldn’t feel forced to buy from you because you won’t install it otherwise. That’s not selling your services. It’s not proving why they want to do business with you.
Additionally, selling them labor on only what they came in with, or even ringing them up for just what they came in asking for when it’s all being purchased at your store is not selling. That’s called clerking.
If that person came in your door, how much did you spend to get him there? He’s made it to you in person. What is his experience like now that he’s in front of you? What have you shown him to prove he should choose to do business with you from now on instead of looking online first. Why didn’t he find you before shopping online?
How much attention and selling have you done if you only talk about the gear that he already has in his hand? How likely is he to ever return if you simply turn him away? Can you not turn him into a profitable sale instead of turning him away?
Why not ask why he purchased online? What made him purchase the product he has. Offer better or different solutions. Show him things he didn’t come in asking about. Make him your customer. He clearly likes gear and our industry and he’s here to talk to you.
Treat him like he’s a valuable customer, and often he’ll come back to you and reward you with future purchases in your store. That is, if you did your job of selling him on why to do so…
Online purchase gear isn’t going away. People willing to install it aren’t going away. People starting off doing their own installs aren’t going away (heck, I was one of them and it was terrible until I learned). Embrace them and get back to the art of selling. Don’t rely on fear and strong arm tactics to provide you with customers. Customers with outside gear are not the enemy. They’re customers. We want them around for a long long time…
In a perfect world all of this would function. However, not all customers and or shops care about this. I’m all in favor for increasing awareness, but there are a lot good arguments from both sides and their specific business situation (Geo Location, customer base, economic factor, etc…)
Now if this business model doesn’t fit your needs, then it doesn’t fit, no need to s*** on it. Agree to disagree and move on to another customer, maybe recommend them to another shop that does support that install model.
At the end of the day we should be here to support the industry as a *whole, take the ego out of the equation.
In a perfect world all of this would function. However, not all customers and or shops care about this. I’m all in favor for increasing awareness, but there are a lot good arguments from both sides and their specific business situation (Geo Location, customer base, economic factor, etc…)
Now if this business model doesn’t fit your needs, then it doesn’t fit, no need to s*** on it. Agree to disagree and move on to another customer, maybe recommend them to another shop that does support that install model.
At the end of the day we should be here to support the industry as a while, take the ego out of the equation.
Lol my installs would probably shrink by about 1/3 if I only installed new and purchased from here. And we’re already slower than a glacier. The big blue box doesn’t exactly run a tidy ship
I couldn’t agree more.
One of my sisters kids hes in his 40 and earns 6 figures
Works for the railroad, grew impatient to a proposed sale id made him, metime I had to get a product line
I couldn’t have yet, the rep still hasn’t given me an answer if I could have the line, wont return calls
Nada noting. Its been close to 4 months.
My customer started getting antsy id already collected a deposit from him the deal was made sold ex..
But after x time he’s decided to talk about buying parts off Amazon, I told him to come get his 760 dollars take his business to a retail store.
I wasn’t going to charge him much for labor or markup.
I really wasn’t making anything off the sale to speak of.
But I tottaly refuse to have anything to do with gry market goods.
I’ve seen it when I worked in retail stores. You install it
They come back with r&r requested but the online seller refuses to stand behind the product.
I would not do Free R&R on anything I didnt sale.
Or just tottaly opt out and away from working with anyone who has or threatens buying online items.
The dealers selling online cut the profits so far they cant send it back, seriously ive seen stuff on Amazon so low its as cheap as distributors prices. No profits to speak of.
When I started working in mobile electronics the store I worked at made 50 points on almost every sale the only online was AOL Small retail mom and pop stores made mobile electronics what it became.
Let’s face it cars are not as easy as cut and snip to install in anymore and you cant put anything in the dash now. So why is anyone giving it away?
I’ve got 45 years experience i used to pull 2 knob radios
Out of used car dealers cars to install tape players
Or go down to the junk yard to buy parts.
Because it was the only thing I could do back then. Or id go to a Delco repair shop and pick up parts.
Then 90% of them closed.
If dealers don’t do something now you’ll go by the wayside as the Delco repair shops did.
Automobile will not become less complicated as it is today.
Ok, using your own math, here is what some have said and what we do at our shop….. sell our own product, cost of $100 and make 10-20% (as you stated) so $120 retail and I made $20 profit + 1hr. Install $100= $220…. $120 profit. Now you bring in your own item, 1hr. Install alone is now $150 (plus any shop supplies (+$10) also not included)…$160 profit, So how are we losing money charging more and getting 40% additional profit?? Oh and we give ZERO guarantee so we get paid if it works or not so the gamble is left to the client to decide. Then THEY have to learn are they really saving buying online? I believe this is the process shops should follow which will deter customers from making their poor choice in the first place(trying to save a buck) and we need to show them the math and/or take the extra $$….not say “NO”. In our 25yrs. accepting these jobs makes our shops more friendly and willing to service a new customer because rarely people repeat online shopping after you do their 1st install, and now we have a satisfied/repeat client.
You have one way of looking at the problem in your article but it is flawed trying to say we are losing profits.
MD, I suggest you reread the article. I said 10-20% bottom line, net profit and allowed for a 50% gross margin on product in my analogy.
We have stopped installing product that hasn’t been purchased from our store over 2 years ago, it has had no side affects on our business, we are still booked out with an average of 2-3 week wait.
A lot less stress for all.
I guess to some folks I have my head in the sand or am lost in the 80’s and 90’s. That is pretty funny. As I mentioned, we have 5-7 total days per year when we are not booked doing installs with equipment WE sold to the client. Sounds like we need more marketing articles to help retailers get more clients into their store.
But the most important thing is this: not ONE single person has been able to refute my numbers. You ARE losing money doing client supplied installs. Numbers don’t lie. Sheesh. Take accounting 101 at the community college and learn something.
I DO like the dialogue and welcome it. But if you want to disagree with me, show me numbers, not anger😉.
This is pure fantasy. No way on any god’s earth would you get all retailers to stick to some sort of misguided boycott. In any industry when a hole appears it is filled. All you would do is create a mobile installation boom, wholesalers employing their own installation centers, any number of undesirable outcomes. Its about time certain retailers stopped pointing the finger, looked in the mirror and realised we are in the same industry on the same side. An industry that requires both wholesalers and retailers to work together not blame each other ( yep, as a wholesaler there’s plenty I can say about the frustrations of the condition of stores, lack of social media, holes in boards etc etc ). It is not an us and them, we aren’t enemies and if you think we are then its time to hang up the tools or at the very least stop inciting the riot.
I’m all for this but also very cautious about this idea. Here is a scenario. 18year old walks in with a amp and subwoofer he bought on market place. Your 3 installer bay is only booked 80% full 9 days out. Do you turn this kid away so the trialer park shop (which is known for buring cars down) can take this client, or do you offer to install the customer gear? If you turn it down someone else will put it in. Then they have the opportunity to build a relationship with that client who will buy from you on the next car. Or you install the clients amp and find out it’s faulty, then you get to sell him a new amplifer, which is excatly what happened with this client example.
I don’t want to immediately turn away all client supplied gear. If a guy has a bunch of Chrome Shadow Audison VRX amps from a old install of his and wants them put into his new hot rod I think you would be crazy to turn that away. Maybe he buys new speakers, new wire, new
accessories.
Now I feel like those examples are not what I think this blog was targeted at. But more targeted at Chinese head units. (which we 10000% should all refuse to install, we do unless there is no other head unit replacement option, and if that expection comes up, labour is paid up front, and no expectation the car leaves with a working head unit. This blog i feel like is directed at the skarbage/brazilian bass brands that don’t support the brick and motor stores, and kids come in wanting you to install this sub par new in box gear you didnt sell.
I don’t know where we go from here on this topic. I’m all for charging 20-30% more labour for gear we didnt sell, but much rather just install gear we sold. I have a lot of fear of being a eleitist and turning clients off of our shop. So what do we do about that? I don’t know, but I’m all for showing a united front on keeping money of the of unhelpful online box movers and in the hands of the people with the talet and drive to provid customer solutions.
I contend the idea of JUST SAY NO is a good one IF the installing retailers can agree to and then actually act accordingly: JUST SAY NO absolutely NO EXCEPTIONS. Allowing arbitrary exceptions to the rule creates a situation where there are no real rules. It is hard under the best of “clear rule” circumstances to compel independent business people to act in unison. In this case retailers will blame each other for not holding the line. Perhaps an association of retailers could be created whereby for the good of all, the clear rule would be followed and violators would face heavy sanctions…
Absent that utopia, I contend that when a consumer reaches out to a brick & mortar installing retailer for whatever reason, that retailer can and SHOULD do all possible to turn that consumer into a profitable lifelong customer. The retailer’s responsibility is to provide that consumer with an experience which causes the consumer to come to the conclusion that the retailer is THE ANSWER to all questions and the SOLUTION to all problems. In this way the consumer may be inclined to think of the brick & mortar retailer FIRST when inclined to make future purchases of products or services and when the consumer is making a recommendation to friends to recommend same.
The business (art) of brick & mortar specialty retailing has faced for the last few hundred years and for the next few hundred years will continue to face the challenge of capturing and holding the attention of the consumer. 150 years ago it was the Sears & Roebuck catalog in conjunction with the Wells Fargo wagon delivery service. Today it is the Internet and the vendor’s propensity to by-pass the retailer. Tomorrow…? Either way, when the brick & mortar specialty retailer creates or finds an opportunity engage eyeball to eyeball with a consumer it is that retailer’s best practice responsibility to capture and hold that consumer’s profitable attention.
I think there are two distinct approaches.
1) If you are a busy specialist shop leaning on a repeat client base, booked out a bit, paying good wages for the techs and sales team, then Mark’s approach is plausible because exceptions are only at slow times or opportunities you identify when the client is IN THE STORE ALREADY.
2) If you are more of a stack them high, let them fly kind of shop, you are likely installing whatever comes your way – either if you sell it or it’s brought in to you. If that fits your scheduling, technician pay levels, install warranty policy on customer-supplied equipment and other factors without upsetting you bottom line, then continue to do this if it works for you.
The reality is location, showroom presentation, depth of knowledge on the sales AND install side, and nearby competitors if they operate in the similar business model are all other factors to consider. Yes you can raise a tier on the labor rate for customer supplied equipment, but that doesn’t always account for the unknowns on a quote if the equipment is already poorly installed or used and ‘carried in’ and installed without testing that the customer pays for before install. See, it’s not as easy as just saying we do or don’t install customer supplied equipment to every independent retailer. So many factors go into that decision. Not a one-size-fits-all approach.
Though for the true specialist, Mark makes great points. We’ve all had to fire customers who disrupt the flow of your business (the “never again” thoughts) and I think that’s where Mark’s 20 year policy, with noted exceptions, comes from.
1999 is gone and it’s never coming back. Customers buy lots of products online period. Clothes, shoes, toys, arts and crafts, parts, tools, vitamins, supplements, sporting goods, electronics, furniture, should I keep going? And welp… you guessed it… Car Audio.
I swear, most 12volt / car audio shops are soooo behind the times! They keep hoping the 80’s, 90’s, even early 2000’s glory days will come back. They won’t. The new internet world is different. You’ve got to learn to adapt and figure out what works for you and your business.
But do you seriously think a physical trainer says this “ You didn’t buy those supplements from me. So, I can’t train you. “
An interior decorator says “You didn’t buy all your furniture, paint, and fixtures from me. So, I can’t help you.”
Again, should I keep going?
Well… They answer is No!!! They don’t do that. Instead they figure out what they need to charge, and learn to charge correctly for their services. Then, they figure out what they might be able to add to those services as they work with the client.
We are not going to teach any manufacturer or online business a lesson here… simply by refusing to install product that is not purchased from us directly as the brick and mortar shop. It’s not going to happen. I use to be on the other side of the fence on this matter. But I had to eventually learn, I was losing that battle.
Instead I propose this: Come up with a 3 tier price structure on labor/ services.
Labor rates will vary all over the country… so don’t let these numbers mean anything specific. It’s simply just for a reference.
For example.
Price #1 (if you purchase the product new from us)
It’s $99 per hour.
Price #2 (if you purchased the product from us but previously had it installed in a different vehicle)
It’s $125 per hour.
Price #3 (if you didn’t purchase the product from us)
It’s $149 per hour.
(Price #2 is used as your standard labor rate.)
(Price #1 is used as a discounted rate “because we want to take care of our customers who take care of us. I mean they are purchasing the new product from us. So we get to make some of the said “extra bottom line” This can both help promote the idea that you take good care of your customers. And it can also show a value on why it is a good deal to also buy the product from you.)
(Price #3 is obviously a way to embrace working on a vehicle that didn’t purchase the product from you. Because you charge more to do the same job.) Offer a simple bench test as part of the service here… test the product is working correctly before you work on the vehicle as part of this price. It will save you the time from installing something that doesn’t work, save the customer money from having you do the install on something that doesn’t work. But also now open the opportunity to sell them a new product if it doesn’t work.
I realize this is a oversimplification… but you get the idea.
Perhaps we need to rethink our opportunities with potential clients. Shops will spend lots of time and money to advertise and get people in the door. But then when someone does come in… and probably on there own. We will turn them away because we don’t like the way they bought the product? Silliness!
Amazon isn’t going away, crutchfield, eBay, Sonic electronic, and so on… are a real thing. People buy stuff from them in their pajamas at night.
Are you going to get creative and maybe rethink your approach to all this?
Or just cry, wish, pout, and try to punish the online customer. let me know in “2 years” how that works out.
P.S. Great article! It’s also a nice idea in theory. Unfortunately It’s just the wrong idea.
100% Agreed. We have to come together as professionals in our uniquely skilled industry to preserve our future. This will insure an improved future for the manufacturers as well with a customer experience that offers properly matched equipment, with proper & safe professional installation techniques, resulting in a quality performance, and highly increased customer satisfaction. Making the right choice and not settling for a quick buck that fuels our industry’s demise will result in a 100% win for everyone!
As someone that was against the internet, I now see things a bit differently as the times have changed and if you can not see that you are living under a rock or are just stuck in the past. We offer our dealers the ability to take all of our online sales and get paid retail for that sale with little effort, we do not want to ship anything at all! They can link up their inventory and even do pick up in store, where they could then discuss the install with the customer, or make contact at the time of sale to offer that service. The issue is while we have offered this for years now, most do not want to put in the effort to link all of that up and actually stock the product enough to meet the demand. The days of clerking the sale are well past us, consumers are on the internet at all times while they are not being properly educated on the “know it all forums” of the world wide web they are still looking for information to decide what to buy and then in turn they buy it where its easy for them to obtain it. Me personally if i walk into a store to buy X item which i prefer to do, shop locally and brick and mortar, and they tell me they do not stock it but can order it, I just decline and go order it myself online. If we want to stop this as an industry its time to say YES to having inventory on hand and YES to helping educate the customer and show them our value proposition while they are in store. Saying NO because they went elsewhere to buy the product you may or may not have in stock is not the answer, they came to you for your knowledge of installation but you suggest to turn them away? The good salesman would say now that they are in the store I can up sell, provide the best possible service and add on products that meet their needs including installation accessories or even more product that they didn’t even know they wanted to begin with. Alienating a consumer is never the answer, and if you are loosing money on install labor you priced your knowledge and expertise incorrectly.
Amen! I wonder if Mark got a call from his Compustar rep recently?
My store policy for some years has been: “We don’t install anything that was not purchased from us”.
I agree with you on certain level but we could actually get consumer mad and they will loose interest in car audio. 2nd there are brands that are in stores but you may not have a dealer in your area so once again consumer gets mad. In Germany they do this but for different reason they say no if they install a product that is bought off the internet even if they don’t sell that brand they must warranty under German Law. I guess way around this any legimate dealer should be able to go to vendor if no authorized dealer in area and just buy the gear to sell to consumer without a buy in program and i’m sure dealers may actually buy in if they find the gear to be better than expected.