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Gearing up for new commercial realities.

Kevin McGirl, president of sales-i, a sales enablement software provider with hundreds of customers large and small across the US automotive and heavy duty aftermarket.

Automotive industry delegates preparing to attend this season’s SEMA and AAPEX virtual conferences will have much to ponder about the road ahead after this uniquely challenging and disruptive year.

The pandemic had a swift and significant impact on the globally integrated automotive sector, with multiple challenges converging at once against the backdrop of already slowing global demand. We saw many US automotive manufacturing facilities and assembly lines close down overnight, huge disruption to the global automotive supply chains, particularly surrounding Chinese parts exports, as well as falling and unpredictable demand in all vehicle categories and across the multi-million-dollar aftermarket sector.

"To ringfence existing business, distributors have increasingly acknowledged how important it is to understand and predict the needs of loyal customers."

 

A chain reaction.

The pandemic hit, US road users significantly reduced their mileage. From private motorists to buses and heavy-duty trucks, the highways were, in some instances, eerily quiet. This has had a significant impact throughout the automotive supply chain. Firstly, with less vehicles on the road, there have been fewer collisions. Estimates show Seattle alone has seen 50 percent fewer collisions since the government introduced measures to control the spread of Covid. With less need (or, in the circumstances of a lockdowns, opportunity) to use vehicles there has been less wear and tear reducing demand for parts and garage maintenance work. What’s more, many vehicle owners have delayed inspections or discretionary repairs, and some government transportation agencies have relaxed controls and inspections, meaning fewer visits to garages and repair workshops.

These unique dynamics have unsurprisingly hit the finances of industry players across the sector, with many forced to switch from profit seeking mode to focus on cashflow management, and ultimately, survival. This is particularly the case among smaller players who typically have limited resources and have become increasingly cash poor due to muted or reduced sales.

One of the biggest lessons many aftermarket providers are learning from the crisis so far is how much they rely on what can very often be a small pool of loyal customers. Indeed, for many players at the smaller end of the scale, without the regular repeat business of a handful of longstanding customers they simply wouldn’t be able to continue trading. Having had their revenue streams disrupted for months, parts manufacturers and distributors, are naturally looking for any advantage they can to protect valuable revenue from existing customers, particularly with competitors circling and adopting more aggressive pricing policies to lure customers away.

 

It's all in the data.

To ringfence existing business, distributors have increasingly acknowledged how important it is to understand and predict the needs of loyal customers. Consequently, we are seeing operators turn to sales enablement technology in this quest to help them better understand customer buying patterns, identify under and over performing sales lines and, ultimately, maximize each opportunity. With sector and geographical differentials at play as the health crisis unfolds in the US and around the globe, distributors need crystal clear visibility of their existing customer base to capitalize on new and emerging sales opportunities. Too many aftermarket suppliers carry swathes of data on their customer relationships yet fail to adequately collate it, let alone use it to inform sales strategy. In an era when taking advantage of precious cross and up selling sales opportunities as they arise will be important for maintaining cashflow, many players are finding a data-driven sales strategy can give them the edge through unique insights as to how their customers behave.

Since the advent of the crisis, many market providers have turned to technology in other ways to do better business – be it to streamline back office systems, sell direct to market through e commerce platforms or upgrade their CRM strategies. There are many gains smaller players in the industry can make through increased technology adoption – be it better operational efficiency, improved productivity or more strategic sales and we expect tech solutions to continue coming to the fore in 2021 as operators look to establish themselves on a more proactive, responsive footing.

"We are seeing operators turn to sales enablement technology in this quest to help them better understand customer buying patterns, identify under and over performing sales lines and, ultimately, maximize each opportunity."

 

A bumpy road ahead?

With no clear pathway out of the current crisis, the US automotive industry, much like all other areas of the economy, is going to have to live with uncertainty for some time yet. Sadly, not all players are likely to survive and some analysts believe the aftermarket sector will take some years to return to 2019 levels. But, as with any crisis there will still be opportunities ahead. For large multinational car manufacturers and smaller parts distributors alike, agility will be key to navigating the crisis – be it in developing new working practices, harnessing new technologies, better understanding and pivoting their supply chain strategies and adopting data driven selling. The aftermarket sector has already shown remarkable resilience in the face of once in a generation challenge and will no doubt return to growth once more, albeit with fresh challenges in an entirely new environment.

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