2006 Benchmark study: The financial picture
Editor’s note: This article is the first in a series examining the results of the “National Glass Association Competitiveness Survey.” Conducted by The MPI Group, Shaker Heights, Ohio, the survey provides a comprehensive view of the performance and business practices of U.S. auto glass retailers and dealers, distributors and wholesalers, manufacturers and fabricators, and others related to the industry. The majority of survey respondents consist of privately held dealer/retailers with annual sales of less than $5 million that depend on auto glass replacement sales for the majority of their income.
Business leaders across a wide array of industries report it’s harder than ever to make a profit, and the same is true in the auto glass replacement industry. The business landscape has changed dramatically in the past 10 years due to domestic consolidation and an influx of new global competitors. At the same time, customers now expect higher quality service, at lower prices.
North American executives across different industries report increases in raw material prices, tightening labor markets and rising healthcare costs. The majority of AGR business owners MPI surveyed reported per-unit costs, excluding purchased materials, increased 6-10 percent the previous year. (See chart 2.) Yet, when asked how much headway their auto glass business had made toward achieving “high performance,” more than half of respondents to NGA’s competitiveness survey said they’d made “significant progress.” Firms cited employee training programs, employee empowerment and benchmarking of other companies as the most popular best practices. It’s disturbing, however, that nearly 30 percent of firms surveyed reported they had not implemented any new strategies or practices.
One of the common denominators that MPI sees among successful businesses is a concerted and consistent effort to gather customer input. Firms that talk to their customers and involve suppliers and other business partners on their advisory councils tend to outperform those that don’t. How you do this is up to you, but make sure that your sales or customer service reps are not the only people talking to customers. This will restrict your flow of information. Savvy managers encourage employees at all levels of the organization to gather customer feedback on business practices, products and performance.
It’s equally important to measure customer satisfaction, focusing on high-profit customers and customer defections. Ask them to grade you on quality, delivery, service, communication and overall performance. Create a public document that you can share with employees, with incentives tied to it.
This is especially important in the AGR industry given the factor with the most positive impact on profitability, according to more than 64 percent of survey respondents, is “new customers in existing markets.” (See chart 3.) What can your existing customers tell you about what you’re doing right, or wrong, in attracting new customers? More importantly, are you listening?