Eric Steckling, Pitney Bowes Business Insight
A response to Gladys Edmunds article “Location is important for your small business so do your homework first” published today in USA Today…
Gladys has some good suggestions for marketing techniques to help increase sales, but it is important to note that the right location for a used car lot will likely be different from an auto repair shop because the factors that affect the consumer’s purchasing decision are difference. Specifically, consumers are generally willing to forego convenience to get a good value when purchasing a large ticket item such as a car, whereas convenience may be paramount when taking a car into the shop for routine service. Whenever thinking about location, it is important to consider the “drivers” of the customer’s decision, and use metrics that accurately reflect those factors.
For example, consider your sales drivers. Figure out the largest sources of your business, include drive-by traffic, the Internet, referrals and other advertising. Since a fair number of new customers will come to the lot because of interest in a cretin car they see parked there, it is important maximize those visits by choosing a location on a major “heavily trafficked” road. Additionally, the site should have good visibility, (ie, not obstructed by buildings, trees or other objects) easy access and preferably at or near an intersection or traffic light so passing motorists spend more time stopped in front of your lot. Internet driven sales will be similar if you are looking at sites within one market, but it is important to note that lots located in or just outside of large markets will drive more internet sales then lots located in small isolated markets. Referral and advertising driven sales come down do how you manage your business.
Co-tenancy is not as important for a used car dealership as it is for an auto repair shop because a trip to purchase a car is not as convenience based as having your car serviced. Your customers probably won’t buy a car from you just because they stopped nearby for some fresh vegetables.
The best way to gain confidence in your location decision is to come up with a list of all possible sites your are considering, build a spreadsheet and evaluate them with as much objective data as possible. As discussed, Traffic counts in front of the site should be an important metric to consider. Traffic count data is often available through state or county websites, if not, it may require a call to the county road commission to track down the information. Another important sales driver for nearly all retailers is the number of people within close proximity to your site. Population information is free from the Census Bureau (www.census.gov) . For a used car dealership in a mid-sized market, see how many people are within 7 miles of each site. You could also check with automotive data provider Polk inc. (www.polk.com) to find out how many vehicles (and even the age of those vehicles) are within close proximity to your sites. You can also rank the sites against one another on more objective criteria as well, such as ingress/egress, visibility, number of direct competitors, ect. as additional criteria to see how they stack up against one another.
Also don’t forget to consider the demographics of the residents near the proposed sites. Used car lots typically draw from lower income households that don’t lease or buy new cars. Take a look at your current customers and see if you can draw conclusions about what characteristics make up your BEST customers. If you typically broker high-end or luxury used cars, you will have a different customer then if you bread and butter is cars below $10,000. Demographic data can often be accessed from the Census Bureau or from 3rd party vendors such as Pitney Bowes Business Insight (www.pbbi.com).
If you have insight into sales at similar dealerships in nearby markets (maybe friends or family in the business), it is important to include those locations in your analysis to use as benchmarks against the sites you have chosen.
Lastly, once the sites are ranked, weigh your selection against the cost of the site. If the 2nd best site is only a little worse and much less expensive it may end up being a better investment in the long run.
It may take two or three days to track down all the necessary information to make an informed decision, which is a small amount of time for years of potentially higher sales.
Good luck with your search,
Eric Steckling
Consultant, Client Research
Pitney Bowes Business Insight, Predictive Analytics
34705 West Twelve Mile Road | Suite 200
Farmington Hills, MI 48331
O: 203.796.6452 | M: 248.798.8035 | F: 248.488.5102



