Accessory to Profits

Rows and rows of BMWs with tricked-out engines, eye-popping interiors, flashy rims and booming stereo systems fill Pacific BMW’s outdoor showroom. It’s like a scene right out of “The Fast and the Furious,” the 2001 popcorn flick about street racers in Los Angeles. But there’s more to this event than meets the eye.

One part car show, one part sales promotion, the event, dubbed Accessory Fest, is like a mini convention for BMW owners and enthusiasts. In addition to the nearly 125 show vehicles lining the showroom at the Glendale, Calif., dealership, there are vendor displays from nine aftermarket accessory companies, live entertainment and free lunch for visitors. There’s even valet parking and a red carpet to welcome attendees.

Pacific BMW’s Arnold Alsua, parts director, says the event, which is free to the public, appeals to people who have never set foot in the dealership before. “They get attracted by the fact that in one event they can see vendors they don’t normally see,” he says. “These aren’t regular mom-and-pop tuners. We’ve invited top-end tuners.”

By tuners, Alsua means individuals or companies that modify OEM vehicles to look good and go fast. Some of the aftermarket industry’s major tuners, including Vorsteiner Group and AC Schnitzer, have displays at the event. They attract BMW enthusiasts and wannabe street racers, just as Alsua predicts. Nearly 650 people are in attendance.

With the dealership’s staff working the event, it’s clear that Accessory Fest isn’t just about stylish cars. Salespeople and managers oversee the registration booth, helping visitors sign up for raffles. Staff from the parts and service departments mingle with attendees and manage the cashier’s area, which serves an endless line of customers snapping up BMW Performance parts, T-shirts, model cars, coffee mugs and other paraphernalia.

The event rakes in $22,000 in gross sales of parts, accessories and apparel, and funnels in 180 new-car leads a week later. Despite all the hoopla surrounding the event, Alsua says there’s another strategy at play. “If we sell something, that’s a plus, but that’s not what it’s all about,” he says. “For me, it’s really about planting the seed, impressing the customer with what we have to offer.”

Planting the Seeds

What Pacific BMW has to offer is a well-oiled parts department, one that Alsua says reigns supreme in volume sales of BMW Performance accessories. But when new-vehicle sales were sluggish last summer, Alsua knew his department could do more to help the dealership’s shrinking bottom line. That’s when he came up with a simple plan.

For one weekend, Alsua wanted to display a fully accessorized car near the service area and set up a table filled with promotional materials touting BMW Performance accessories. But before that even happened, Alsua started getting calls from vendors interested in participating. That’s when he knew he had a valuable marketing opportunity on his hands.

Knowing the job would be too big for one person, Alsua turned to the Hozman Group, an auto marketing and event-planning agency. The firm specializes in producing Hot Import Nights events — car shows featuring modified and accessorized vehicles — in major cities such as Chicago, Dallas, Los Angeles, Miami and New York. What Alsua had in mind was nowhere near the scale of the events the agency typically produces, but organizing a show for a brand-conscious dealership did present its own challenges.

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Last year, the company was hired by Nissan North America to produce an 18-city tour to promote the new 370Z. A local dealership was at the center of each event, so the agency knew exactly what was needed.

Tapping into Pacific BMW’s customer database, Jason Dienhart, the agency’s executive vice president of business development, employed the same Web campaign — including e-mails, newsletters, blogs, forums and social-networking sites — and traditional grassroots marketing strategies it used to promote the Nissan tour. The dealership did its part by displaying event posters and passing out fliers to customers.

After eight weeks of promotion, Pacific BMW held its first Accessory Fest in October 2009. The event drew three times the number of people Alsua expected, which left him short-staffed. “We were really expecting about 250 people, so we weren’t prepared for the kind of crowd that came in,” he recalls. “We had a line forming outside the door even before we opened the store, so we started handing out food so customers wouldn’t leave.”

The event netted $27,000 in accessory sales, but the dealership took it a step further by e-mailing coupons to attendees shortly after the event. That raked in another $7,500 in sales. Alsua says his dealer principal was so impressed with the event and the e-mail promotion that he asked him to plan a second event at the dealership.

Grabbing Market Share

For the March 28 event, Dienhart and Alsua decided to step up their game and cross-market the event with the aftermarket industry in hopes of reaching a bigger audience. “What I can say is that the aftermarket community is very passionate,” Dienhart says. “Passion is always a good thing when associated with a brand.”

Alsua partnered with a handful of aftermarket companies, including Detail Addict and Gintani, and allowed them to set up vendor booths during the event. In exchange, the companies promoted the fest to their customers via an e-mail campaign. The Hozman Group also employed its grassroots marketing strategy and printed thousands of fliers to distribute at local aftermarket and European body shops.

The agency also reached out directly to car enthusiasts through Web-based forums. Although they only represent about 10 to 15 percent of U.S. drivers, according to the Specialty Equipment Market Association (SEMA), car enthusiasts are instrumental in creating buzz for an event. And because of its close ties with this community, the Hozman Group didn’t have to do much to get that buzz going.

The agency’s cross-platform marketing strategy also helped stretch Alsua’s budget. “We synergized with different markets and brought their customer base to us,” he says. “They might gain a customer from my market base, but I might gain a customer from their side, which I never was able to tap into before.”

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Much like the automotive retail industry, the aftermarket industry was hit hard by the recession. Retail sales of specialty automotive products totaled $31.85 billion in 2008, down from $38.11 billion in 2007, according to the SEMA. But despite the decline, the association’s Consumer Demand Index for performance products and accessories, which measures the purchase intent of consumers over 90 days, has increased every month since December 2009.

Recent market research also shows that the industry is expected to grow by three to four percent in 2010. Much of that growth will come from tires and mechanical parts, including suspension, chassis and driveline components. It’s a profit center Alsua hopes his department can tap into, and one he thinks his dealership’s service department can benefit from as well.

Although the two events earned close to $50,000 in accessory sales, the long-term goal was to retain service customers. Alsua knew his dealership was losing market share to independent repair shops, especially among consumers who had expired warranties. He says his high-profile event was an exercise to dispel the notion that service work at his dealership was overly expensive, and to impress customers with the service staff’s knowledge and expertise.

“The way people communicate with each other has changed, and businesses need to adapt,” Dienhart says. “Events such as these, when executed correctly, build a positive and healthy relationship between the dealers and the customers.” 

Making Dollars and Sense

Although he stumbled onto the idea, Alsua’s Accessory Fest represents the creativity needed to attract consumers. Dienhart says dealers who want to replicate Pacific BMW’s successful events will have to embrace social media, partner with the aftermarket industry and invest a significant amount of time and money. He adds that events like Alsua’s can even be used to promote other aspects of a dealership, as dealers can also host service clinics, ride-and-drives and new-car launches.

Dienhart’s agency requires eight to 10 weeks to prepare for an event. The cost depends on what the dealership wants in regards to the event’s production value, entertainment and hospitality.

“It’s not a small investment to do these types of events,” says Jayson Guzman, the Xs and Os guy behind the Hozman Group’s events. “That’s where it takes the commitment from the dealership. They have to understand that it’s a one-day event, but that it also lives online — pre-event and post-event.”

Alsua says he spent an average of $20,000 on each event and received co-op funds from BMW. He says he easily could have spent twice as much on the events, but couldn’t justify the added cost of a larger and flashier production if it couldn’t guarantee more traffic, leads or sales. The investment he did make, however, is still paying off today.

“The events are really more than meets the eye. That’s because I’m not really running these events just to sell accessories. It’s really more of a marketing push for the whole dealership,” Alsua says. “And we see the return long after the events. We sell cars because of the events and we gain service customers because of the events.”