Mon, 03/07/2011 - 13:32

SEMA News—March 2011

Preparing Your Business to Survive

Best Practices

By Steve Campbell

This series of SEMA News stories is based on the idea of using reliable and repeatable methods to ensure business success. In coming issues, we will delve into a range of topics aimed at developing Best Practices through knowledge, motivation and skills.

 
Whether bracing to endure earthquakes, floods, hurricanes and tornadoes or man-made events, such as terrorism or other crimes, including physical and cyber attacks, every company should take steps to survive, recover and resume operations in the event of catastrophe.

The first step in a preparedness plan is to recognize the most obvious threats. Company owners or managers probably already know whether the business location is in danger from wind events, wildfires, earthquakes or flooding, but it’s also advisable to check with local, state and federal agencies to learn about other possible threats that may not be well known.
Photo Courtesy Greg Henshall/FEMA
   
While most business people enjoy planning for success, preparing for disaster is equally crucial. Whether bracing to endure earthquakes, floods, hurricanes and tornadoes or man-made events, such as terrorism or other crimes, including physical and cyber attacks, every company should take steps to survive, recover and resume operations in the event of catastrophe. Basic preventative measures apply to any type of disaster or business interruption, but specific measures tailored to geographic or regional conditions should also be considered.

It goes without saying that the better you prepare and organize, the less down time your company will have to endure, reducing the time it takes to spring back into profitable operation.

Recognize the Greatest Threats

The first step in a preparedness plan is to recognize the most obvious threats. Company owners or managers probably already know whether their business location is in the path of wind events, wildfires, earthquakes or flooding, but it’s also advisable to check with local, state and federal agencies to learn about other possible threats that may not be well known. In addition to local civil authorities, company officers may consult FEMA hazard maps for the area in which the business is located. The various resources listed at the end of this article also provide information about specific events and how to prepare for and survive them.

Protect People First

 
Executive Summary:
  • People Come First: Take steps to protect and account for your people. An emergency walk-through with key people is a must.
  • Anticipate Likely Scenarios: Think in advance what operations are critical to your business, and what you might do to restore them quickly.
  • Maintain Emergency Supplies: In a worst-case scenario, you’ll need enough food, water, medical and communications supplies to hold out while the situation stabilizes.
  • Protect Your Phone and IT Capabilities: Consider an emergency generator, a redundant server system and online backup. Train your IT team on how to restore your system ahead of time.
   
People are every business’ most important asset, and protecting employees should be the top priority. Emergency management experts suggest you establish a chain of command as the first step in developing the company’s crisis-management procedures. Fix responsibility for who will handle specific duties early in an emergency, but also train backups in the event that the top tier is not available. Encourage employees to learn first aid and CPR.

Set up redundant communications systems so that employees have more than one way to reach management and vice versa following an off-hours incident. Establish a calling tree, for instance, in which one person calls three others, those three call three more and so on until the entire company is covered. Base the tree on a priority calling order so that those most critical to the company’s operation are notified earliest about what has occurred and what recovery plans to implement.

The secondary communication system might consist of a group e-mail notification or a call-in voice recording that notifies employees of company status. Another option is an out-of-state contact where employees can transfer information in the event that local phone lines are tied up but long-distance lines are available. Provide employees with all of the numbers or e-mail addresses in a form that they can keep with them in a wallet or a purse.

Be sure to consider any special needs required by people with disabilities, both in providing for communications and, should it become necessary, in evacuation or other plans that require mobility. Ensure, too, that employees know the emergency plans for their childrens’ schools or after-school care facilities, and review all plans with employees at least once per year.

Evacuation or Shelter in Place

If a catastrophic event occurs during business hours, it may be necessary to either evacuate the company’s facilities or remain in place because of dangerous conditions outside. In either event, keep a log-in system for employees and visitors so that you know who is in the building at all times. Map out and post at least two exit paths from various locations in the building, and tell employees where they should congregate if they are told to exit or an alarm sounds.

Establish responsibilities for evacuation procedures with a chain of command for who calls authorities, such as police or the fire department, who shuts down and locks up the building and who performs a head count using the log-in sheet. Once outside, account for all employees and guests. Also establish who determines whether it is safe to re-enter a facility or if employees and guests should seek shelter elsewhere or go home.

If the facility is intact but dangerous conditions exist outside, it may be necessary to take shelter in place. Plan ahead for this contingency by stockpiling emergency supplies and assigning duties to those who will be charged with directing employees and conducting a head count using the log-in sheet. Plan and practice both evacuation and seeking shelter within the facility.

Emergency Supplies

 

Sufficient food and water are the most obvious needs for people forced to take refuge at some place other than their homes.

Stockpile a water supply that consists of at least one gallon per person per day for drinking and sanitation, and store it in transportable containers.
Photo Courtesy David Fine/FEMA

   
Sufficient food and water are the most obvious needs for people forced to take refuge at some place other than their homes. Stockpile a water supply that consists of at least one gallon per person per day for drinking and sanitation, and store it in transportable containers. The food stocks should include a three-day-per-person nonperishable supply that may include canned or dried goods. Be sure to include a manual can opener if canned goods are included.

Communications devices should be included with the emergency rations. If electric power is lost, phones that plug into a power outlet will be useless. Phone companies generally maintain their own emergency power sources, though, so keep an old-fashioned telephone on hand—the type that uses a handset wired directly to the base station and connects to the phone lines through a wall jack. Also keep a battery-powered AM/FM radio and extra batteries as well as a National Oceanic and Atmospheric Administration (NOAA) weather radio if a station broadcasts in the area. NOAA stations transmit National Weather Service hazard information 24 hours a day in addition to non-weather emergency alerts, including those for national security and public safety.

Emergency stores should also include common-sense items, such as flashlights with extra batteries, a first-aid kit, tissues, paper plates, paper towels, toilet paper and an assortment of tools, including an adjustable wrench for turning off utilities, a hammer, shovel and pry bar. Some items that are less-often considered but may become essential are a whistle with which to signal for help, dust-filter masks in the event of debris in the air, moist towelettes, garbage bags and plastic ties for sanitation and even blankets and pillows.

If there is a chemical emergency, employees may need to seek protection in a sealed room. If this is a potential risk, keep waterproof plastic sheeting and duct tape with the emergency kit, and ensure that employees are told to move to an interior room with as few windows and doors as possible as soon as the danger is discovered. Establish one room per floor in the case of multi-story buildings or one per structure for multi-building facilities. Close the business; lock the doors and windows. Turn off all ventilation systems, move everyone into the room along with the emergency stores (unless they have been contaminated) and then seal the room with the plastic sheeting and duct tape. Listen to the radio or other available sources for news and instructions, and remain inside until given the all clear.

If employees must take shelter in place, a readily available reserve of cash is also recommended in the event that travel is limited for an extended period but nearby stores are open. Credit cards are also handy to have; however, they require electricity for scanning.

Keep two copies of important records, one in a waterproof/fireproof container on the premises and a second off-site. The records should include building plans, insurance policies, employee contact lists, bank records, supplier and shipping contact lists and emergency and law-enforcement contact lists.

Almost all disaster recovery plans maintain a computer backup system in case hardware is destroyed, and most recommend a portable generator in the facility to power emergency systems.

Fire Safety

Fire is the most common type of disaster and may accompany other types, so develop and post procedures on how to alert fire services quickly from any location in the facility. Have all structures inspected for safety, and ensure that they are in compliance with codes and regulations. Install smoke detectors and extinguishers and consider more stringent measures, such as a sprinkler system, hoses and fireproof doors where necessary. Test employee warning systems periodically, ensuring that there are provisions for the hearing impaired as well as non-English speakers.

Starting Anew

Before a disaster has a chance to wreak havoc, create a plan to follow for after the danger has passed and it’s time to reopen. Determine which employees understand the company best and should, therefore, be involved in putting the plan together. Include all departments, and assess the company’s internal and external systems. Determine which staff, materials, procedures and equipment are necessary for the business to function both fully and on a low-level interim basis. Critical operations to consider include emergency payroll, financial decisions and accounting. Consult your insurance provider to ensure that the business and its employees are fully covered.

Also, decide how you would proceed if essential machinery or even buildings were damaged or destroyed. Could you borrow or rent alternatives? Make initial contact with alternative suppliers, shippers and other emergency resources you might need to call on in order to sustain operations. Develop relationships with them, establishing personal contacts. In addition, ensure that key employees have the tools they will need to run the business, including keys, codes, inventory and personnel, and establish that ever-vital chain of command in case one or more supervisors is unable to perform right away. If your business is housed in a building or complex with others, talk with their managers about their emergency preparations and train with them to develop compatible systems and procedures.

What happens in the event of an emergency is partially determined by its type and severity, but preparation can minimize the damage. Whether to go or stay, what help to seek and how to sustain operations are all dependent on forethought and planning. This article hits the main points to consider, but it is not all-inclusive. Contact the additional resources shown below to develop a thorough plan for the conditions that exist in your area, and do it now. The next disaster you hear about might be the one coming through your front door.

Should You Have Business Interruption Insurance?

 
Additional Resources:

U.S. Department of Homeland Security
www.dhs.gov
www.ready.gov/business

Federal Emergency Management Agency (FEMA)
www.fema.gov/business/guide

American Red Cross
www.redcross.org

U.S. Small Business Administration
www.sba.gov

   
It’s important to consider that for many of us, even small interruptions in business can be significant. Many companies today are heavily dependant on the phone, the Internet and internal IT systems to do business. Heavy winter storms or summer lightning can knock out these business tools, quite possibly for days at a time. A small fire can cost weeks of productivity while you remodel. These kinds of interruptions can shut down your company’s ability to take orders, run the payroll or communicate with your customers. Data loss can impact your company revenue, reduce productivity and damage your company’s reputation. These days, with so much of our business done through electronic systems, it doesn’t take
a disaster of biblical proportions to impact the bottom line.

Business owners may already have property insurance, but a more specific type of policy, known as business interruption insurance, is needed to protect the profits that an owner would have seen had there been no problem. There are several types of business interruption insurance, but as a rule, the more specific types of perils covered—fire, windstorm, vandalism, earthquake, flood, etc.—the better. This kind of coverage is usually available through the same companies that offer property insurance. Typically, they are written to allow recovery of a percentage, say 80%, of your losses.

Experts say that in order to make a claim to restore your lost profits, you’ll likely need to have financial records and business documents available fairly quickly to establish the value of your claim. For that reason, off-site storage, IT backup plans and/or an electronic archive system hosted by a remote server might be the most important disaster preparations you can make. —JS

Mon, 03/07/2011 - 13:32

SEMA News—March 2011

Preparing Your Business to Survive

Best Practices

By Steve Campbell

This series of SEMA News stories is based on the idea of using reliable and repeatable methods to ensure business success. In coming issues, we will delve into a range of topics aimed at developing Best Practices through knowledge, motivation and skills.

 
Whether bracing to endure earthquakes, floods, hurricanes and tornadoes or man-made events, such as terrorism or other crimes, including physical and cyber attacks, every company should take steps to survive, recover and resume operations in the event of catastrophe.

The first step in a preparedness plan is to recognize the most obvious threats. Company owners or managers probably already know whether the business location is in danger from wind events, wildfires, earthquakes or flooding, but it’s also advisable to check with local, state and federal agencies to learn about other possible threats that may not be well known.
Photo Courtesy Greg Henshall/FEMA
   
While most business people enjoy planning for success, preparing for disaster is equally crucial. Whether bracing to endure earthquakes, floods, hurricanes and tornadoes or man-made events, such as terrorism or other crimes, including physical and cyber attacks, every company should take steps to survive, recover and resume operations in the event of catastrophe. Basic preventative measures apply to any type of disaster or business interruption, but specific measures tailored to geographic or regional conditions should also be considered.

It goes without saying that the better you prepare and organize, the less down time your company will have to endure, reducing the time it takes to spring back into profitable operation.

Recognize the Greatest Threats

The first step in a preparedness plan is to recognize the most obvious threats. Company owners or managers probably already know whether their business location is in the path of wind events, wildfires, earthquakes or flooding, but it’s also advisable to check with local, state and federal agencies to learn about other possible threats that may not be well known. In addition to local civil authorities, company officers may consult FEMA hazard maps for the area in which the business is located. The various resources listed at the end of this article also provide information about specific events and how to prepare for and survive them.

Protect People First

 
Executive Summary:
  • People Come First: Take steps to protect and account for your people. An emergency walk-through with key people is a must.
  • Anticipate Likely Scenarios: Think in advance what operations are critical to your business, and what you might do to restore them quickly.
  • Maintain Emergency Supplies: In a worst-case scenario, you’ll need enough food, water, medical and communications supplies to hold out while the situation stabilizes.
  • Protect Your Phone and IT Capabilities: Consider an emergency generator, a redundant server system and online backup. Train your IT team on how to restore your system ahead of time.
   
People are every business’ most important asset, and protecting employees should be the top priority. Emergency management experts suggest you establish a chain of command as the first step in developing the company’s crisis-management procedures. Fix responsibility for who will handle specific duties early in an emergency, but also train backups in the event that the top tier is not available. Encourage employees to learn first aid and CPR.

Set up redundant communications systems so that employees have more than one way to reach management and vice versa following an off-hours incident. Establish a calling tree, for instance, in which one person calls three others, those three call three more and so on until the entire company is covered. Base the tree on a priority calling order so that those most critical to the company’s operation are notified earliest about what has occurred and what recovery plans to implement.

The secondary communication system might consist of a group e-mail notification or a call-in voice recording that notifies employees of company status. Another option is an out-of-state contact where employees can transfer information in the event that local phone lines are tied up but long-distance lines are available. Provide employees with all of the numbers or e-mail addresses in a form that they can keep with them in a wallet or a purse.

Be sure to consider any special needs required by people with disabilities, both in providing for communications and, should it become necessary, in evacuation or other plans that require mobility. Ensure, too, that employees know the emergency plans for their childrens’ schools or after-school care facilities, and review all plans with employees at least once per year.

Evacuation or Shelter in Place

If a catastrophic event occurs during business hours, it may be necessary to either evacuate the company’s facilities or remain in place because of dangerous conditions outside. In either event, keep a log-in system for employees and visitors so that you know who is in the building at all times. Map out and post at least two exit paths from various locations in the building, and tell employees where they should congregate if they are told to exit or an alarm sounds.

Establish responsibilities for evacuation procedures with a chain of command for who calls authorities, such as police or the fire department, who shuts down and locks up the building and who performs a head count using the log-in sheet. Once outside, account for all employees and guests. Also establish who determines whether it is safe to re-enter a facility or if employees and guests should seek shelter elsewhere or go home.

If the facility is intact but dangerous conditions exist outside, it may be necessary to take shelter in place. Plan ahead for this contingency by stockpiling emergency supplies and assigning duties to those who will be charged with directing employees and conducting a head count using the log-in sheet. Plan and practice both evacuation and seeking shelter within the facility.

Emergency Supplies

 

Sufficient food and water are the most obvious needs for people forced to take refuge at some place other than their homes.

Stockpile a water supply that consists of at least one gallon per person per day for drinking and sanitation, and store it in transportable containers.
Photo Courtesy David Fine/FEMA

   
Sufficient food and water are the most obvious needs for people forced to take refuge at some place other than their homes. Stockpile a water supply that consists of at least one gallon per person per day for drinking and sanitation, and store it in transportable containers. The food stocks should include a three-day-per-person nonperishable supply that may include canned or dried goods. Be sure to include a manual can opener if canned goods are included.

Communications devices should be included with the emergency rations. If electric power is lost, phones that plug into a power outlet will be useless. Phone companies generally maintain their own emergency power sources, though, so keep an old-fashioned telephone on hand—the type that uses a handset wired directly to the base station and connects to the phone lines through a wall jack. Also keep a battery-powered AM/FM radio and extra batteries as well as a National Oceanic and Atmospheric Administration (NOAA) weather radio if a station broadcasts in the area. NOAA stations transmit National Weather Service hazard information 24 hours a day in addition to non-weather emergency alerts, including those for national security and public safety.

Emergency stores should also include common-sense items, such as flashlights with extra batteries, a first-aid kit, tissues, paper plates, paper towels, toilet paper and an assortment of tools, including an adjustable wrench for turning off utilities, a hammer, shovel and pry bar. Some items that are less-often considered but may become essential are a whistle with which to signal for help, dust-filter masks in the event of debris in the air, moist towelettes, garbage bags and plastic ties for sanitation and even blankets and pillows.

If there is a chemical emergency, employees may need to seek protection in a sealed room. If this is a potential risk, keep waterproof plastic sheeting and duct tape with the emergency kit, and ensure that employees are told to move to an interior room with as few windows and doors as possible as soon as the danger is discovered. Establish one room per floor in the case of multi-story buildings or one per structure for multi-building facilities. Close the business; lock the doors and windows. Turn off all ventilation systems, move everyone into the room along with the emergency stores (unless they have been contaminated) and then seal the room with the plastic sheeting and duct tape. Listen to the radio or other available sources for news and instructions, and remain inside until given the all clear.

If employees must take shelter in place, a readily available reserve of cash is also recommended in the event that travel is limited for an extended period but nearby stores are open. Credit cards are also handy to have; however, they require electricity for scanning.

Keep two copies of important records, one in a waterproof/fireproof container on the premises and a second off-site. The records should include building plans, insurance policies, employee contact lists, bank records, supplier and shipping contact lists and emergency and law-enforcement contact lists.

Almost all disaster recovery plans maintain a computer backup system in case hardware is destroyed, and most recommend a portable generator in the facility to power emergency systems.

Fire Safety

Fire is the most common type of disaster and may accompany other types, so develop and post procedures on how to alert fire services quickly from any location in the facility. Have all structures inspected for safety, and ensure that they are in compliance with codes and regulations. Install smoke detectors and extinguishers and consider more stringent measures, such as a sprinkler system, hoses and fireproof doors where necessary. Test employee warning systems periodically, ensuring that there are provisions for the hearing impaired as well as non-English speakers.

Starting Anew

Before a disaster has a chance to wreak havoc, create a plan to follow for after the danger has passed and it’s time to reopen. Determine which employees understand the company best and should, therefore, be involved in putting the plan together. Include all departments, and assess the company’s internal and external systems. Determine which staff, materials, procedures and equipment are necessary for the business to function both fully and on a low-level interim basis. Critical operations to consider include emergency payroll, financial decisions and accounting. Consult your insurance provider to ensure that the business and its employees are fully covered.

Also, decide how you would proceed if essential machinery or even buildings were damaged or destroyed. Could you borrow or rent alternatives? Make initial contact with alternative suppliers, shippers and other emergency resources you might need to call on in order to sustain operations. Develop relationships with them, establishing personal contacts. In addition, ensure that key employees have the tools they will need to run the business, including keys, codes, inventory and personnel, and establish that ever-vital chain of command in case one or more supervisors is unable to perform right away. If your business is housed in a building or complex with others, talk with their managers about their emergency preparations and train with them to develop compatible systems and procedures.

What happens in the event of an emergency is partially determined by its type and severity, but preparation can minimize the damage. Whether to go or stay, what help to seek and how to sustain operations are all dependent on forethought and planning. This article hits the main points to consider, but it is not all-inclusive. Contact the additional resources shown below to develop a thorough plan for the conditions that exist in your area, and do it now. The next disaster you hear about might be the one coming through your front door.

Should You Have Business Interruption Insurance?

 
Additional Resources:

U.S. Department of Homeland Security
www.dhs.gov
www.ready.gov/business

Federal Emergency Management Agency (FEMA)
www.fema.gov/business/guide

American Red Cross
www.redcross.org

U.S. Small Business Administration
www.sba.gov

   
It’s important to consider that for many of us, even small interruptions in business can be significant. Many companies today are heavily dependant on the phone, the Internet and internal IT systems to do business. Heavy winter storms or summer lightning can knock out these business tools, quite possibly for days at a time. A small fire can cost weeks of productivity while you remodel. These kinds of interruptions can shut down your company’s ability to take orders, run the payroll or communicate with your customers. Data loss can impact your company revenue, reduce productivity and damage your company’s reputation. These days, with so much of our business done through electronic systems, it doesn’t take
a disaster of biblical proportions to impact the bottom line.

Business owners may already have property insurance, but a more specific type of policy, known as business interruption insurance, is needed to protect the profits that an owner would have seen had there been no problem. There are several types of business interruption insurance, but as a rule, the more specific types of perils covered—fire, windstorm, vandalism, earthquake, flood, etc.—the better. This kind of coverage is usually available through the same companies that offer property insurance. Typically, they are written to allow recovery of a percentage, say 80%, of your losses.

Experts say that in order to make a claim to restore your lost profits, you’ll likely need to have financial records and business documents available fairly quickly to establish the value of your claim. For that reason, off-site storage, IT backup plans and/or an electronic archive system hosted by a remote server might be the most important disaster preparations you can make. —JS

Mon, 03/07/2011 - 13:32

SEMA News—March 2011

Preparing Your Business to Survive

Best Practices

By Steve Campbell

This series of SEMA News stories is based on the idea of using reliable and repeatable methods to ensure business success. In coming issues, we will delve into a range of topics aimed at developing Best Practices through knowledge, motivation and skills.

 
Whether bracing to endure earthquakes, floods, hurricanes and tornadoes or man-made events, such as terrorism or other crimes, including physical and cyber attacks, every company should take steps to survive, recover and resume operations in the event of catastrophe.

The first step in a preparedness plan is to recognize the most obvious threats. Company owners or managers probably already know whether the business location is in danger from wind events, wildfires, earthquakes or flooding, but it’s also advisable to check with local, state and federal agencies to learn about other possible threats that may not be well known.
Photo Courtesy Greg Henshall/FEMA
   
While most business people enjoy planning for success, preparing for disaster is equally crucial. Whether bracing to endure earthquakes, floods, hurricanes and tornadoes or man-made events, such as terrorism or other crimes, including physical and cyber attacks, every company should take steps to survive, recover and resume operations in the event of catastrophe. Basic preventative measures apply to any type of disaster or business interruption, but specific measures tailored to geographic or regional conditions should also be considered.

It goes without saying that the better you prepare and organize, the less down time your company will have to endure, reducing the time it takes to spring back into profitable operation.

Recognize the Greatest Threats

The first step in a preparedness plan is to recognize the most obvious threats. Company owners or managers probably already know whether their business location is in the path of wind events, wildfires, earthquakes or flooding, but it’s also advisable to check with local, state and federal agencies to learn about other possible threats that may not be well known. In addition to local civil authorities, company officers may consult FEMA hazard maps for the area in which the business is located. The various resources listed at the end of this article also provide information about specific events and how to prepare for and survive them.

Protect People First

 
Executive Summary:
  • People Come First: Take steps to protect and account for your people. An emergency walk-through with key people is a must.
  • Anticipate Likely Scenarios: Think in advance what operations are critical to your business, and what you might do to restore them quickly.
  • Maintain Emergency Supplies: In a worst-case scenario, you’ll need enough food, water, medical and communications supplies to hold out while the situation stabilizes.
  • Protect Your Phone and IT Capabilities: Consider an emergency generator, a redundant server system and online backup. Train your IT team on how to restore your system ahead of time.
   
People are every business’ most important asset, and protecting employees should be the top priority. Emergency management experts suggest you establish a chain of command as the first step in developing the company’s crisis-management procedures. Fix responsibility for who will handle specific duties early in an emergency, but also train backups in the event that the top tier is not available. Encourage employees to learn first aid and CPR.

Set up redundant communications systems so that employees have more than one way to reach management and vice versa following an off-hours incident. Establish a calling tree, for instance, in which one person calls three others, those three call three more and so on until the entire company is covered. Base the tree on a priority calling order so that those most critical to the company’s operation are notified earliest about what has occurred and what recovery plans to implement.

The secondary communication system might consist of a group e-mail notification or a call-in voice recording that notifies employees of company status. Another option is an out-of-state contact where employees can transfer information in the event that local phone lines are tied up but long-distance lines are available. Provide employees with all of the numbers or e-mail addresses in a form that they can keep with them in a wallet or a purse.

Be sure to consider any special needs required by people with disabilities, both in providing for communications and, should it become necessary, in evacuation or other plans that require mobility. Ensure, too, that employees know the emergency plans for their childrens’ schools or after-school care facilities, and review all plans with employees at least once per year.

Evacuation or Shelter in Place

If a catastrophic event occurs during business hours, it may be necessary to either evacuate the company’s facilities or remain in place because of dangerous conditions outside. In either event, keep a log-in system for employees and visitors so that you know who is in the building at all times. Map out and post at least two exit paths from various locations in the building, and tell employees where they should congregate if they are told to exit or an alarm sounds.

Establish responsibilities for evacuation procedures with a chain of command for who calls authorities, such as police or the fire department, who shuts down and locks up the building and who performs a head count using the log-in sheet. Once outside, account for all employees and guests. Also establish who determines whether it is safe to re-enter a facility or if employees and guests should seek shelter elsewhere or go home.

If the facility is intact but dangerous conditions exist outside, it may be necessary to take shelter in place. Plan ahead for this contingency by stockpiling emergency supplies and assigning duties to those who will be charged with directing employees and conducting a head count using the log-in sheet. Plan and practice both evacuation and seeking shelter within the facility.

Emergency Supplies

 

Sufficient food and water are the most obvious needs for people forced to take refuge at some place other than their homes.

Stockpile a water supply that consists of at least one gallon per person per day for drinking and sanitation, and store it in transportable containers.
Photo Courtesy David Fine/FEMA

   
Sufficient food and water are the most obvious needs for people forced to take refuge at some place other than their homes. Stockpile a water supply that consists of at least one gallon per person per day for drinking and sanitation, and store it in transportable containers. The food stocks should include a three-day-per-person nonperishable supply that may include canned or dried goods. Be sure to include a manual can opener if canned goods are included.

Communications devices should be included with the emergency rations. If electric power is lost, phones that plug into a power outlet will be useless. Phone companies generally maintain their own emergency power sources, though, so keep an old-fashioned telephone on hand—the type that uses a handset wired directly to the base station and connects to the phone lines through a wall jack. Also keep a battery-powered AM/FM radio and extra batteries as well as a National Oceanic and Atmospheric Administration (NOAA) weather radio if a station broadcasts in the area. NOAA stations transmit National Weather Service hazard information 24 hours a day in addition to non-weather emergency alerts, including those for national security and public safety.

Emergency stores should also include common-sense items, such as flashlights with extra batteries, a first-aid kit, tissues, paper plates, paper towels, toilet paper and an assortment of tools, including an adjustable wrench for turning off utilities, a hammer, shovel and pry bar. Some items that are less-often considered but may become essential are a whistle with which to signal for help, dust-filter masks in the event of debris in the air, moist towelettes, garbage bags and plastic ties for sanitation and even blankets and pillows.

If there is a chemical emergency, employees may need to seek protection in a sealed room. If this is a potential risk, keep waterproof plastic sheeting and duct tape with the emergency kit, and ensure that employees are told to move to an interior room with as few windows and doors as possible as soon as the danger is discovered. Establish one room per floor in the case of multi-story buildings or one per structure for multi-building facilities. Close the business; lock the doors and windows. Turn off all ventilation systems, move everyone into the room along with the emergency stores (unless they have been contaminated) and then seal the room with the plastic sheeting and duct tape. Listen to the radio or other available sources for news and instructions, and remain inside until given the all clear.

If employees must take shelter in place, a readily available reserve of cash is also recommended in the event that travel is limited for an extended period but nearby stores are open. Credit cards are also handy to have; however, they require electricity for scanning.

Keep two copies of important records, one in a waterproof/fireproof container on the premises and a second off-site. The records should include building plans, insurance policies, employee contact lists, bank records, supplier and shipping contact lists and emergency and law-enforcement contact lists.

Almost all disaster recovery plans maintain a computer backup system in case hardware is destroyed, and most recommend a portable generator in the facility to power emergency systems.

Fire Safety

Fire is the most common type of disaster and may accompany other types, so develop and post procedures on how to alert fire services quickly from any location in the facility. Have all structures inspected for safety, and ensure that they are in compliance with codes and regulations. Install smoke detectors and extinguishers and consider more stringent measures, such as a sprinkler system, hoses and fireproof doors where necessary. Test employee warning systems periodically, ensuring that there are provisions for the hearing impaired as well as non-English speakers.

Starting Anew

Before a disaster has a chance to wreak havoc, create a plan to follow for after the danger has passed and it’s time to reopen. Determine which employees understand the company best and should, therefore, be involved in putting the plan together. Include all departments, and assess the company’s internal and external systems. Determine which staff, materials, procedures and equipment are necessary for the business to function both fully and on a low-level interim basis. Critical operations to consider include emergency payroll, financial decisions and accounting. Consult your insurance provider to ensure that the business and its employees are fully covered.

Also, decide how you would proceed if essential machinery or even buildings were damaged or destroyed. Could you borrow or rent alternatives? Make initial contact with alternative suppliers, shippers and other emergency resources you might need to call on in order to sustain operations. Develop relationships with them, establishing personal contacts. In addition, ensure that key employees have the tools they will need to run the business, including keys, codes, inventory and personnel, and establish that ever-vital chain of command in case one or more supervisors is unable to perform right away. If your business is housed in a building or complex with others, talk with their managers about their emergency preparations and train with them to develop compatible systems and procedures.

What happens in the event of an emergency is partially determined by its type and severity, but preparation can minimize the damage. Whether to go or stay, what help to seek and how to sustain operations are all dependent on forethought and planning. This article hits the main points to consider, but it is not all-inclusive. Contact the additional resources shown below to develop a thorough plan for the conditions that exist in your area, and do it now. The next disaster you hear about might be the one coming through your front door.

Should You Have Business Interruption Insurance?

 
Additional Resources:

U.S. Department of Homeland Security
www.dhs.gov
www.ready.gov/business

Federal Emergency Management Agency (FEMA)
www.fema.gov/business/guide

American Red Cross
www.redcross.org

U.S. Small Business Administration
www.sba.gov

   
It’s important to consider that for many of us, even small interruptions in business can be significant. Many companies today are heavily dependant on the phone, the Internet and internal IT systems to do business. Heavy winter storms or summer lightning can knock out these business tools, quite possibly for days at a time. A small fire can cost weeks of productivity while you remodel. These kinds of interruptions can shut down your company’s ability to take orders, run the payroll or communicate with your customers. Data loss can impact your company revenue, reduce productivity and damage your company’s reputation. These days, with so much of our business done through electronic systems, it doesn’t take
a disaster of biblical proportions to impact the bottom line.

Business owners may already have property insurance, but a more specific type of policy, known as business interruption insurance, is needed to protect the profits that an owner would have seen had there been no problem. There are several types of business interruption insurance, but as a rule, the more specific types of perils covered—fire, windstorm, vandalism, earthquake, flood, etc.—the better. This kind of coverage is usually available through the same companies that offer property insurance. Typically, they are written to allow recovery of a percentage, say 80%, of your losses.

Experts say that in order to make a claim to restore your lost profits, you’ll likely need to have financial records and business documents available fairly quickly to establish the value of your claim. For that reason, off-site storage, IT backup plans and/or an electronic archive system hosted by a remote server might be the most important disaster preparations you can make. —JS

Mon, 03/07/2011 - 13:32

SEMA News—March 2011

Preparing Your Business to Survive

Best Practices

By Steve Campbell

This series of SEMA News stories is based on the idea of using reliable and repeatable methods to ensure business success. In coming issues, we will delve into a range of topics aimed at developing Best Practices through knowledge, motivation and skills.

 
Whether bracing to endure earthquakes, floods, hurricanes and tornadoes or man-made events, such as terrorism or other crimes, including physical and cyber attacks, every company should take steps to survive, recover and resume operations in the event of catastrophe.

The first step in a preparedness plan is to recognize the most obvious threats. Company owners or managers probably already know whether the business location is in danger from wind events, wildfires, earthquakes or flooding, but it’s also advisable to check with local, state and federal agencies to learn about other possible threats that may not be well known.
Photo Courtesy Greg Henshall/FEMA
   
While most business people enjoy planning for success, preparing for disaster is equally crucial. Whether bracing to endure earthquakes, floods, hurricanes and tornadoes or man-made events, such as terrorism or other crimes, including physical and cyber attacks, every company should take steps to survive, recover and resume operations in the event of catastrophe. Basic preventative measures apply to any type of disaster or business interruption, but specific measures tailored to geographic or regional conditions should also be considered.

It goes without saying that the better you prepare and organize, the less down time your company will have to endure, reducing the time it takes to spring back into profitable operation.

Recognize the Greatest Threats

The first step in a preparedness plan is to recognize the most obvious threats. Company owners or managers probably already know whether their business location is in the path of wind events, wildfires, earthquakes or flooding, but it’s also advisable to check with local, state and federal agencies to learn about other possible threats that may not be well known. In addition to local civil authorities, company officers may consult FEMA hazard maps for the area in which the business is located. The various resources listed at the end of this article also provide information about specific events and how to prepare for and survive them.

Protect People First

 
Executive Summary:
  • People Come First: Take steps to protect and account for your people. An emergency walk-through with key people is a must.
  • Anticipate Likely Scenarios: Think in advance what operations are critical to your business, and what you might do to restore them quickly.
  • Maintain Emergency Supplies: In a worst-case scenario, you’ll need enough food, water, medical and communications supplies to hold out while the situation stabilizes.
  • Protect Your Phone and IT Capabilities: Consider an emergency generator, a redundant server system and online backup. Train your IT team on how to restore your system ahead of time.
   
People are every business’ most important asset, and protecting employees should be the top priority. Emergency management experts suggest you establish a chain of command as the first step in developing the company’s crisis-management procedures. Fix responsibility for who will handle specific duties early in an emergency, but also train backups in the event that the top tier is not available. Encourage employees to learn first aid and CPR.

Set up redundant communications systems so that employees have more than one way to reach management and vice versa following an off-hours incident. Establish a calling tree, for instance, in which one person calls three others, those three call three more and so on until the entire company is covered. Base the tree on a priority calling order so that those most critical to the company’s operation are notified earliest about what has occurred and what recovery plans to implement.

The secondary communication system might consist of a group e-mail notification or a call-in voice recording that notifies employees of company status. Another option is an out-of-state contact where employees can transfer information in the event that local phone lines are tied up but long-distance lines are available. Provide employees with all of the numbers or e-mail addresses in a form that they can keep with them in a wallet or a purse.

Be sure to consider any special needs required by people with disabilities, both in providing for communications and, should it become necessary, in evacuation or other plans that require mobility. Ensure, too, that employees know the emergency plans for their childrens’ schools or after-school care facilities, and review all plans with employees at least once per year.

Evacuation or Shelter in Place

If a catastrophic event occurs during business hours, it may be necessary to either evacuate the company’s facilities or remain in place because of dangerous conditions outside. In either event, keep a log-in system for employees and visitors so that you know who is in the building at all times. Map out and post at least two exit paths from various locations in the building, and tell employees where they should congregate if they are told to exit or an alarm sounds.

Establish responsibilities for evacuation procedures with a chain of command for who calls authorities, such as police or the fire department, who shuts down and locks up the building and who performs a head count using the log-in sheet. Once outside, account for all employees and guests. Also establish who determines whether it is safe to re-enter a facility or if employees and guests should seek shelter elsewhere or go home.

If the facility is intact but dangerous conditions exist outside, it may be necessary to take shelter in place. Plan ahead for this contingency by stockpiling emergency supplies and assigning duties to those who will be charged with directing employees and conducting a head count using the log-in sheet. Plan and practice both evacuation and seeking shelter within the facility.

Emergency Supplies

 

Sufficient food and water are the most obvious needs for people forced to take refuge at some place other than their homes.

Stockpile a water supply that consists of at least one gallon per person per day for drinking and sanitation, and store it in transportable containers.
Photo Courtesy David Fine/FEMA

   
Sufficient food and water are the most obvious needs for people forced to take refuge at some place other than their homes. Stockpile a water supply that consists of at least one gallon per person per day for drinking and sanitation, and store it in transportable containers. The food stocks should include a three-day-per-person nonperishable supply that may include canned or dried goods. Be sure to include a manual can opener if canned goods are included.

Communications devices should be included with the emergency rations. If electric power is lost, phones that plug into a power outlet will be useless. Phone companies generally maintain their own emergency power sources, though, so keep an old-fashioned telephone on hand—the type that uses a handset wired directly to the base station and connects to the phone lines through a wall jack. Also keep a battery-powered AM/FM radio and extra batteries as well as a National Oceanic and Atmospheric Administration (NOAA) weather radio if a station broadcasts in the area. NOAA stations transmit National Weather Service hazard information 24 hours a day in addition to non-weather emergency alerts, including those for national security and public safety.

Emergency stores should also include common-sense items, such as flashlights with extra batteries, a first-aid kit, tissues, paper plates, paper towels, toilet paper and an assortment of tools, including an adjustable wrench for turning off utilities, a hammer, shovel and pry bar. Some items that are less-often considered but may become essential are a whistle with which to signal for help, dust-filter masks in the event of debris in the air, moist towelettes, garbage bags and plastic ties for sanitation and even blankets and pillows.

If there is a chemical emergency, employees may need to seek protection in a sealed room. If this is a potential risk, keep waterproof plastic sheeting and duct tape with the emergency kit, and ensure that employees are told to move to an interior room with as few windows and doors as possible as soon as the danger is discovered. Establish one room per floor in the case of multi-story buildings or one per structure for multi-building facilities. Close the business; lock the doors and windows. Turn off all ventilation systems, move everyone into the room along with the emergency stores (unless they have been contaminated) and then seal the room with the plastic sheeting and duct tape. Listen to the radio or other available sources for news and instructions, and remain inside until given the all clear.

If employees must take shelter in place, a readily available reserve of cash is also recommended in the event that travel is limited for an extended period but nearby stores are open. Credit cards are also handy to have; however, they require electricity for scanning.

Keep two copies of important records, one in a waterproof/fireproof container on the premises and a second off-site. The records should include building plans, insurance policies, employee contact lists, bank records, supplier and shipping contact lists and emergency and law-enforcement contact lists.

Almost all disaster recovery plans maintain a computer backup system in case hardware is destroyed, and most recommend a portable generator in the facility to power emergency systems.

Fire Safety

Fire is the most common type of disaster and may accompany other types, so develop and post procedures on how to alert fire services quickly from any location in the facility. Have all structures inspected for safety, and ensure that they are in compliance with codes and regulations. Install smoke detectors and extinguishers and consider more stringent measures, such as a sprinkler system, hoses and fireproof doors where necessary. Test employee warning systems periodically, ensuring that there are provisions for the hearing impaired as well as non-English speakers.

Starting Anew

Before a disaster has a chance to wreak havoc, create a plan to follow for after the danger has passed and it’s time to reopen. Determine which employees understand the company best and should, therefore, be involved in putting the plan together. Include all departments, and assess the company’s internal and external systems. Determine which staff, materials, procedures and equipment are necessary for the business to function both fully and on a low-level interim basis. Critical operations to consider include emergency payroll, financial decisions and accounting. Consult your insurance provider to ensure that the business and its employees are fully covered.

Also, decide how you would proceed if essential machinery or even buildings were damaged or destroyed. Could you borrow or rent alternatives? Make initial contact with alternative suppliers, shippers and other emergency resources you might need to call on in order to sustain operations. Develop relationships with them, establishing personal contacts. In addition, ensure that key employees have the tools they will need to run the business, including keys, codes, inventory and personnel, and establish that ever-vital chain of command in case one or more supervisors is unable to perform right away. If your business is housed in a building or complex with others, talk with their managers about their emergency preparations and train with them to develop compatible systems and procedures.

What happens in the event of an emergency is partially determined by its type and severity, but preparation can minimize the damage. Whether to go or stay, what help to seek and how to sustain operations are all dependent on forethought and planning. This article hits the main points to consider, but it is not all-inclusive. Contact the additional resources shown below to develop a thorough plan for the conditions that exist in your area, and do it now. The next disaster you hear about might be the one coming through your front door.

Should You Have Business Interruption Insurance?

 
Additional Resources:

U.S. Department of Homeland Security
www.dhs.gov
www.ready.gov/business

Federal Emergency Management Agency (FEMA)
www.fema.gov/business/guide

American Red Cross
www.redcross.org

U.S. Small Business Administration
www.sba.gov

   
It’s important to consider that for many of us, even small interruptions in business can be significant. Many companies today are heavily dependant on the phone, the Internet and internal IT systems to do business. Heavy winter storms or summer lightning can knock out these business tools, quite possibly for days at a time. A small fire can cost weeks of productivity while you remodel. These kinds of interruptions can shut down your company’s ability to take orders, run the payroll or communicate with your customers. Data loss can impact your company revenue, reduce productivity and damage your company’s reputation. These days, with so much of our business done through electronic systems, it doesn’t take
a disaster of biblical proportions to impact the bottom line.

Business owners may already have property insurance, but a more specific type of policy, known as business interruption insurance, is needed to protect the profits that an owner would have seen had there been no problem. There are several types of business interruption insurance, but as a rule, the more specific types of perils covered—fire, windstorm, vandalism, earthquake, flood, etc.—the better. This kind of coverage is usually available through the same companies that offer property insurance. Typically, they are written to allow recovery of a percentage, say 80%, of your losses.

Experts say that in order to make a claim to restore your lost profits, you’ll likely need to have financial records and business documents available fairly quickly to establish the value of your claim. For that reason, off-site storage, IT backup plans and/or an electronic archive system hosted by a remote server might be the most important disaster preparations you can make. —JS

Mon, 03/07/2011 - 13:32

SEMA News—March 2011

Preparing Your Business to Survive

Best Practices

By Steve Campbell

This series of SEMA News stories is based on the idea of using reliable and repeatable methods to ensure business success. In coming issues, we will delve into a range of topics aimed at developing Best Practices through knowledge, motivation and skills.

 
Whether bracing to endure earthquakes, floods, hurricanes and tornadoes or man-made events, such as terrorism or other crimes, including physical and cyber attacks, every company should take steps to survive, recover and resume operations in the event of catastrophe.

The first step in a preparedness plan is to recognize the most obvious threats. Company owners or managers probably already know whether the business location is in danger from wind events, wildfires, earthquakes or flooding, but it’s also advisable to check with local, state and federal agencies to learn about other possible threats that may not be well known.
Photo Courtesy Greg Henshall/FEMA
   
While most business people enjoy planning for success, preparing for disaster is equally crucial. Whether bracing to endure earthquakes, floods, hurricanes and tornadoes or man-made events, such as terrorism or other crimes, including physical and cyber attacks, every company should take steps to survive, recover and resume operations in the event of catastrophe. Basic preventative measures apply to any type of disaster or business interruption, but specific measures tailored to geographic or regional conditions should also be considered.

It goes without saying that the better you prepare and organize, the less down time your company will have to endure, reducing the time it takes to spring back into profitable operation.

Recognize the Greatest Threats

The first step in a preparedness plan is to recognize the most obvious threats. Company owners or managers probably already know whether their business location is in the path of wind events, wildfires, earthquakes or flooding, but it’s also advisable to check with local, state and federal agencies to learn about other possible threats that may not be well known. In addition to local civil authorities, company officers may consult FEMA hazard maps for the area in which the business is located. The various resources listed at the end of this article also provide information about specific events and how to prepare for and survive them.

Protect People First

 
Executive Summary:
  • People Come First: Take steps to protect and account for your people. An emergency walk-through with key people is a must.
  • Anticipate Likely Scenarios: Think in advance what operations are critical to your business, and what you might do to restore them quickly.
  • Maintain Emergency Supplies: In a worst-case scenario, you’ll need enough food, water, medical and communications supplies to hold out while the situation stabilizes.
  • Protect Your Phone and IT Capabilities: Consider an emergency generator, a redundant server system and online backup. Train your IT team on how to restore your system ahead of time.
   
People are every business’ most important asset, and protecting employees should be the top priority. Emergency management experts suggest you establish a chain of command as the first step in developing the company’s crisis-management procedures. Fix responsibility for who will handle specific duties early in an emergency, but also train backups in the event that the top tier is not available. Encourage employees to learn first aid and CPR.

Set up redundant communications systems so that employees have more than one way to reach management and vice versa following an off-hours incident. Establish a calling tree, for instance, in which one person calls three others, those three call three more and so on until the entire company is covered. Base the tree on a priority calling order so that those most critical to the company’s operation are notified earliest about what has occurred and what recovery plans to implement.

The secondary communication system might consist of a group e-mail notification or a call-in voice recording that notifies employees of company status. Another option is an out-of-state contact where employees can transfer information in the event that local phone lines are tied up but long-distance lines are available. Provide employees with all of the numbers or e-mail addresses in a form that they can keep with them in a wallet or a purse.

Be sure to consider any special needs required by people with disabilities, both in providing for communications and, should it become necessary, in evacuation or other plans that require mobility. Ensure, too, that employees know the emergency plans for their childrens’ schools or after-school care facilities, and review all plans with employees at least once per year.

Evacuation or Shelter in Place

If a catastrophic event occurs during business hours, it may be necessary to either evacuate the company’s facilities or remain in place because of dangerous conditions outside. In either event, keep a log-in system for employees and visitors so that you know who is in the building at all times. Map out and post at least two exit paths from various locations in the building, and tell employees where they should congregate if they are told to exit or an alarm sounds.

Establish responsibilities for evacuation procedures with a chain of command for who calls authorities, such as police or the fire department, who shuts down and locks up the building and who performs a head count using the log-in sheet. Once outside, account for all employees and guests. Also establish who determines whether it is safe to re-enter a facility or if employees and guests should seek shelter elsewhere or go home.

If the facility is intact but dangerous conditions exist outside, it may be necessary to take shelter in place. Plan ahead for this contingency by stockpiling emergency supplies and assigning duties to those who will be charged with directing employees and conducting a head count using the log-in sheet. Plan and practice both evacuation and seeking shelter within the facility.

Emergency Supplies

 

Sufficient food and water are the most obvious needs for people forced to take refuge at some place other than their homes.

Stockpile a water supply that consists of at least one gallon per person per day for drinking and sanitation, and store it in transportable containers.
Photo Courtesy David Fine/FEMA

   
Sufficient food and water are the most obvious needs for people forced to take refuge at some place other than their homes. Stockpile a water supply that consists of at least one gallon per person per day for drinking and sanitation, and store it in transportable containers. The food stocks should include a three-day-per-person nonperishable supply that may include canned or dried goods. Be sure to include a manual can opener if canned goods are included.

Communications devices should be included with the emergency rations. If electric power is lost, phones that plug into a power outlet will be useless. Phone companies generally maintain their own emergency power sources, though, so keep an old-fashioned telephone on hand—the type that uses a handset wired directly to the base station and connects to the phone lines through a wall jack. Also keep a battery-powered AM/FM radio and extra batteries as well as a National Oceanic and Atmospheric Administration (NOAA) weather radio if a station broadcasts in the area. NOAA stations transmit National Weather Service hazard information 24 hours a day in addition to non-weather emergency alerts, including those for national security and public safety.

Emergency stores should also include common-sense items, such as flashlights with extra batteries, a first-aid kit, tissues, paper plates, paper towels, toilet paper and an assortment of tools, including an adjustable wrench for turning off utilities, a hammer, shovel and pry bar. Some items that are less-often considered but may become essential are a whistle with which to signal for help, dust-filter masks in the event of debris in the air, moist towelettes, garbage bags and plastic ties for sanitation and even blankets and pillows.

If there is a chemical emergency, employees may need to seek protection in a sealed room. If this is a potential risk, keep waterproof plastic sheeting and duct tape with the emergency kit, and ensure that employees are told to move to an interior room with as few windows and doors as possible as soon as the danger is discovered. Establish one room per floor in the case of multi-story buildings or one per structure for multi-building facilities. Close the business; lock the doors and windows. Turn off all ventilation systems, move everyone into the room along with the emergency stores (unless they have been contaminated) and then seal the room with the plastic sheeting and duct tape. Listen to the radio or other available sources for news and instructions, and remain inside until given the all clear.

If employees must take shelter in place, a readily available reserve of cash is also recommended in the event that travel is limited for an extended period but nearby stores are open. Credit cards are also handy to have; however, they require electricity for scanning.

Keep two copies of important records, one in a waterproof/fireproof container on the premises and a second off-site. The records should include building plans, insurance policies, employee contact lists, bank records, supplier and shipping contact lists and emergency and law-enforcement contact lists.

Almost all disaster recovery plans maintain a computer backup system in case hardware is destroyed, and most recommend a portable generator in the facility to power emergency systems.

Fire Safety

Fire is the most common type of disaster and may accompany other types, so develop and post procedures on how to alert fire services quickly from any location in the facility. Have all structures inspected for safety, and ensure that they are in compliance with codes and regulations. Install smoke detectors and extinguishers and consider more stringent measures, such as a sprinkler system, hoses and fireproof doors where necessary. Test employee warning systems periodically, ensuring that there are provisions for the hearing impaired as well as non-English speakers.

Starting Anew

Before a disaster has a chance to wreak havoc, create a plan to follow for after the danger has passed and it’s time to reopen. Determine which employees understand the company best and should, therefore, be involved in putting the plan together. Include all departments, and assess the company’s internal and external systems. Determine which staff, materials, procedures and equipment are necessary for the business to function both fully and on a low-level interim basis. Critical operations to consider include emergency payroll, financial decisions and accounting. Consult your insurance provider to ensure that the business and its employees are fully covered.

Also, decide how you would proceed if essential machinery or even buildings were damaged or destroyed. Could you borrow or rent alternatives? Make initial contact with alternative suppliers, shippers and other emergency resources you might need to call on in order to sustain operations. Develop relationships with them, establishing personal contacts. In addition, ensure that key employees have the tools they will need to run the business, including keys, codes, inventory and personnel, and establish that ever-vital chain of command in case one or more supervisors is unable to perform right away. If your business is housed in a building or complex with others, talk with their managers about their emergency preparations and train with them to develop compatible systems and procedures.

What happens in the event of an emergency is partially determined by its type and severity, but preparation can minimize the damage. Whether to go or stay, what help to seek and how to sustain operations are all dependent on forethought and planning. This article hits the main points to consider, but it is not all-inclusive. Contact the additional resources shown below to develop a thorough plan for the conditions that exist in your area, and do it now. The next disaster you hear about might be the one coming through your front door.

Should You Have Business Interruption Insurance?

 
Additional Resources:

U.S. Department of Homeland Security
www.dhs.gov
www.ready.gov/business

Federal Emergency Management Agency (FEMA)
www.fema.gov/business/guide

American Red Cross
www.redcross.org

U.S. Small Business Administration
www.sba.gov

   
It’s important to consider that for many of us, even small interruptions in business can be significant. Many companies today are heavily dependant on the phone, the Internet and internal IT systems to do business. Heavy winter storms or summer lightning can knock out these business tools, quite possibly for days at a time. A small fire can cost weeks of productivity while you remodel. These kinds of interruptions can shut down your company’s ability to take orders, run the payroll or communicate with your customers. Data loss can impact your company revenue, reduce productivity and damage your company’s reputation. These days, with so much of our business done through electronic systems, it doesn’t take
a disaster of biblical proportions to impact the bottom line.

Business owners may already have property insurance, but a more specific type of policy, known as business interruption insurance, is needed to protect the profits that an owner would have seen had there been no problem. There are several types of business interruption insurance, but as a rule, the more specific types of perils covered—fire, windstorm, vandalism, earthquake, flood, etc.—the better. This kind of coverage is usually available through the same companies that offer property insurance. Typically, they are written to allow recovery of a percentage, say 80%, of your losses.

Experts say that in order to make a claim to restore your lost profits, you’ll likely need to have financial records and business documents available fairly quickly to establish the value of your claim. For that reason, off-site storage, IT backup plans and/or an electronic archive system hosted by a remote server might be the most important disaster preparations you can make. —JS

Mon, 03/07/2011 - 13:22

SEMA News—March 2011

Fresh Data Confirms Pros’ Views: Accessories Influence New-Car Sales

By Steve Campbell

Influence of Accessories on New-Vehicle Sales

A new study commissioned by SEMA entitled “Influence of Accessories on New-Vehicle Sales” confirms what those involved in new-car sales, vehicle dealerships and the customization of new vehicles have believed for years: Accessories help sell new vehicles.
Courtesy of Galpin Auto Sports

A new study commissioned by SEMA indicates that aftermarket products influence about 1,180,000 new-vehicle sales each year. The automotive marketing research and consultancy firm AutoPacific collected and analyzed consumer data to quantify the effect that accessorization has on the sale of new vehicles. The resulting report, “Influence of Accessories on New-Vehicle Sales,” details the findings.

The study looked at the persuasive effects created by accessory products, including which ones are likely to create the greatest influence. It delves into which vehicle types are more likely to be purchased based on product availability. The data also provide information about the influence customized vehicles have on the decision to purchase new vehicles by a range of different consumers, including those who do not normally modify their cars or trucks as well as those who do and, in some cases, those who are most zealous about customization. It also examines consumers’ perceptions of specialty-equipment products versus OEM aftermarket products.

The report is now available free for download by SEMA members ($199 for non-members), and it confirms what those involved in new-car sales, vehicle dealerships and the customization of new vehicles have understood for years: Accessories help sell new vehicles. In recent interviews, professionals in all three camps provided independent commentary that supported the assertions found in the study.

“The idea behind personalized display cars is that people see things they haven’t seen anywhere else when they walk into the showroom,” said Beau Boeckmann, vice president of the Galpin Ford dealership in North Hills, California. Boeckmann is also president of Galpin Premier Collection, a dealership for Aston Martin, Jaguar, Lotus, Volvo, Lincoln and Mazda, and Galpin Auto Sports LLC, a specialty-equipment business with an extensive inventory of both performance and cosmetic accessories. “We’re well known for our customized vehicles,” Boeckmann said.

“A customer doesn’t have to design his own car; it’s already right there. He falls in love with it and—boom—he buys it. We’ve sold many vehicles that way. We’ve earned a reputation over the decades of having things that are different at Galpin.”

Source of Product Information—Internet Tops List

How do you generally find out about aftermarket products? Total Modified Plan to Modify Zealots Enthusiasts Participants
Internet 61% 60% 66% 70% 67% 42%
Saw It on Another Vehicle 34% 35% 25% 43% 37% 30%
Friend or Relative 32% 32% 32% 31% 31% 56%
Magazine Advertisement 24% 24% 20% 37% 32% 7%
Magazine/Newspaper Article 24% 25% 15% 33% 28% 10%
Product Brochure 15% 15% 15% 15% 14% 17%
Auto Show 11% 11% 9% 17% 13% 0%
TV Advertising 11% 11% 10% 7% 10% 12%
Direct Mail Advertising 9% 8% 13% 16% 6% 5%
Mentioned in Article 9% 8% 12% 17% 7% 1%
Newspaper Advertisement 8% 8% 9% 6% 7% 10%
SPEED Channel 7% 8% 3% 10% 9% 0%
Auto Club Events 5% 6% 4% 8% 6% 0%
Other Events/Promo 5% 6% 1% 7% 7% 0%
Radio Advertising 5% 5% 4% 5% 5% 6%
Auto Races 4% 5% 1% 6% 5% 0%
AutoPacific Authoritative Automotive Research & Insight

The SEMA/AutoPacific study supports Boeckmann’s views regarding accessorization and display vehicles. It was conducted using input from three distinct groups. First, was an Internet survey of consumers who either already had modified or planned to modify their newer-model (’07–’11) vehicles. A second Internet survey concentrated on consumers who had not modified their vehicles as well as those who may have been influenced by customized vehicles during their purchase decision even though they had chosen not to modify. The third consisted of telephone interviews with supervising personnel for eight major OEMs, including managers and directors of product planning, parts and accessories operations, accessory planning and consumer relations.

As with many industries, the automotive market suffered a decline over the past few years when the recession created a climate of wariness among consumers. In 2007, for instance, as many as 23% of consumers performed some type of modification to their vehicles. By the time the survey was carried out, that number had fallen to 14%, though, it may begin to rise again as the economy rebounds. Thus, the survey concluded, companies wishing to sell accessories to new-car buyers need to target and market to the core automotive enthusiast or help create interest at the time of purchase when consumers are most likely to be influenced.

“We’re always looking at trends, whether it’s at the SEMA Show or one of the numerous car shows we attend to see what’s out there,” Boeckmann said. “My dad always said that he got the best ideas from customers, so we listen to them to find out what they’d like to see. Our marketing is based on a lot of communication. For example, the Mustang specialist for Galpin Auto Sports will get together with the dealership’s Ford manager to talk about what they’re going to build.”

Ray Ott, director of operations for Auto Trim Design of Cleveland, a restyling and accessory installation business, said that a dealership may sometimes need to go outside its own inventory to please a customer and, in the process, build a reputation for accommodating and delivering on specific requests.

“A dealership supports its manufacturers’ parts programs first, of course,” he said. “For instance, the Ford group we work with has its own accessories, and their auto parts warehouse distributor also promotes its accessory lines. But if the customer wants a specific product—a particular tonneau cover or whatever—the dealership will want to get it for him or her. If it’s a brand name that a company such as Myers Distributing or Keystone carries, it’s an easy request to fulfill.”

Modifications—Top Half

What type of modification(s) did you do/plan to do to your vehicle? Total Modified Plan to Modify Zealots Enthusiasts Participants
Different Tires 30% 32% 17% 37% 39% 15%
Different Wheels 16% 16% 19% 25% 25% 2%
Audio Upgrade System 16% 15% 20% 21% 19% 5%
Navigation System 16% 16% 15% 19% 20% 1%
Satellite Radio 15% 14% 19% 14% 14% 2%
Air and Fuel Delivery 13% 14% 8% 28% 14% 0%
Upholstery/Trim 11% 12% 6% 11% 12% 5%
Accessories and Fluids 10% 11% 5% 13% 14% 9%
Electrical, Lighting and Body 10% 11% 7% 13% 16% 0%
Paint/Graphics 10% 10% 11% 8% 13% 4%
Wiper and Washer 10% 11% 6% 11% 12% 11%
Exhaust 9% 9% 12% 20% 9% 0%
Exhaust System Upgrade 9% 10% 6% 23% 10% 0%
DVD/Game System 9% 8% 14% 8% 11% 9%
Roof Rack 9% 8% 15% 5% 8% 4%
Body 9% 10% 3% 12% 10% 12%
Engine/Performance Upgrade 8% 9% 6% 19% 9% 6%
Grille 8% 8% 11% 12% 7% 0%
Ground Effects/Spoiler 8% 7% 13% 8% 10% 1%
           
AutoPacific Authoritative Automotive Research & Insight

The survey points out that simply seeing modified vehicles influences many consumers, which is all the more reason for dealerships to display one or more of them on the lot or in the showroom to attract traffic. And many consumers consult enthusiasts about both vehicles and accessories, viewing them as experts. Vehicle owners who choose to personalize their cars and trucks often have large spheres of influence with other consumers.

“That is really how my dad built Galpin Ford,” Boeckmann said, “and it’s also how we look at building Galpin Auto Sports. Word of mouth is the best advertising there is. We want to make our customers enthusiastic fans of the dealership and the accessories store. The most important thing we can do is make them so happy that they want to come back, bring their friends and refer people to us.”

Nearly 30% of those who either already have modified or plan to modify their vehicles were influenced to buy a certain model by the availability of accessory parts, the survey found. Aftermarket retailers were the number-one source of that equipment at 48%, but 23% also sourced parts from dealerships.

Tony Hinton is general manager of Auto Trim of Denver, a restyling shop and accessory installation business that works strictly with dealerships and does not offer retail services. He said that virtually all of the 150 or so dealerships his company works with each month carry an assortment of accessories.

“They may use different vendors for products other than those we install,” he said, “but we work hand in hand with those other vendors where we need to if the dealership wants to put together a complete package. We might install one or two of our items on an SUV or a pickup—maybe leather, navigation, mobile video—and then incorporate running boards or nerf bars from another vendor. But we try to facilitate all of that activity.”

Fresh Data Confirms Pros’ Views: Accessories Influence New-Car Sales

The survey said that consumers who were not interested in modifications pointed to price rather than warranty concerns as the reason for their hesitation, and all of the industry professionals we spoke with agreed that alleviating warranty concerns is crucial to their partnerships with new-car dealers.
Courtesy of Galpin Auto Sports

The survey confirmed that the Internet is the source most often used by consumers when they search for information.
Second is actually seeing parts on a vehicle, third is friends or relatives and fourth is magazine ads or articles. Since it is impractical to have display vehicles showing all possible modifications, many accessory businesses are using the Internet as a key marketing tool in collaboration with their dealership clients.

“Our website, www.voguetire.com, has a build-a-car feature on it that allows dealerships and their customers to see different looks,” said Kevin Goyak, executive vice president of Vogue Tyre and Rubber Company. Vogue offers not only a range of tires and wheels, but also easily installed accessories, such as grilles, body kits and spoilers, to more than 500 dealerships each month. “We also use catalogs that are individualized by brand,” Goyak said. “They include all of the products we offer as well as price sheets. We can also custom-make a catalog with the dealership’s name on it. Our salespeople go in with everything they need to make a good sales call.”

The survey said that tires and wheels remain the most-sought modification, followed by audio and navigation. The majority of consumers who personalize their vehicles have someone else do the installation, though, experienced enthusiasts are more inclined to do the work themselves.

“Tires and wheels are the easiest things to change on a car, and they’re easy for a dealership to handle,” Goyak said. “The next item for our dealerships is usually a grille, which is still a big part of our business.”

Ott said that regional factors can also play a part in what sells and what dealerships are likely to concentrate on. “Up here in Ohio, we see a lot of truck accessories—tonneaus, vent visors, bug shields—and we also do a lot of graphics. Remote starts are also big here in the cold region.”

Influences to Modify Vehicle

  • Adding a feature or functionality that the vehicle did not come with is the number-one reason that would influence non-modifiers to modify their vehicles.
  • Those that were influenced would have a higher likelihood to modify if the accessories were available at the time of vehicle purchase.
What would influence you to modify your vehicle? Non-Modifiers Not Influenced Influenced by
Customized Vehicle
Add Functionality/Features Not Offered by the Factory 47% 47% 41%
Guarantee Not to Void Factory Warranty 33% 33% 35%
Accessories Presented/Offered at Time of Vehicle Purchase 32% 31% 38%
Personalize Styling to My Individual Taste 20% 19% 32%
Able to Include in Monthly Vehicle Payment 14% 14% 19%
Other 16% 16% 7%
Source: AutoPacific Authoritative Automotive Research & Insight

The AutoPacific data looked at the advantages and disadvantages that consumers cited when having accessories installed through a dealership as opposed to a retail store. The survey respondents felt that the greatest benefits of working with a dealership were that the modifications could be completed before the vehicle was delivered using OEM parts that carried the factory warranty. On the retail side, consumers cited better pricing and the perception that the installers were specialists who possessed greater expertise than a dealership might offer, and they also said that aftermarket retailers offer higher-quality products. Goyak pointed out that financing also plays a part in making accessory sales more attractive through a dealership. The customer can roll the cost of modifications into the purchase price of the vehicle and add only a relatively small amount to the monthly payment.

“Financing has finally loosened up,” Goyak said. “The last two years have obviously been a challenge, but dealers are now more excited about being in business. That is definitely looking brighter.”

One-third of people say they would be influenced to modify their car, if they were guaranteed not to void the factory warranty, and all of the industry professionals we spoke with agreed that alleviating warranty concerns is crucial to their partnerships with new-car dealers.

“We are very particular about the products we buy,” Hinton said. “They have to meet International Organization for Standardization criteria, and all of our products have to have a minimum of a three-year and 36,000-mile manufacturer’s warranty. Our installers are also very specialized. They are SEMA certified and ASE certified in their particular fields of expertise.”

Goyak said that everything his company sells must meet or exceed the factory warranty on the vehicle, so Vogue matches the OEM warranty, and Boeckmann said that warranty plays a large part in which specialty-equipment manufacturers the Galpin businesses deal with.

“Most not only warranty their own part, but also other parts that might be affected if there were a problem,” he said. “The reason we’re in business is to give confidence to customers. If a customer has a problem with one of our installations, we’re going to take care of it for him.”

Even consumers who might not be inclined to personalize a vehicle’s looks or performance might consider adding a feature or function that didn’t come on the vehicle from the factory, according to the survey. Consumers were also more likely to make those types of modifications at the time they purchased a car or truck.

“We go after vehicles and trim levels where our product would seem to fit,” Hinton said. “In many cases, for instance, ordering a factory navigation system may require the customer to upgrade to an expensive package or a high-end trim level. But the customer may not want bigger wheels, a bigger engine, certain trim additions. All he wants is navigation. We are able to provide that kind of product à la carte to satisfy that particular customer’s demand.”

The largest accessory influence on consumers shopping for new cars or trucks came from customized vehicles on display in the showroom, followed by seeing personalized cars or trucks on the road and vehicle brochures.

“A display car often gets the customer’s appetite working,” said Boeckmann. “They’ll buy a car that has upgraded wheels at the dealership but then drive it across the street to the accessory store and get a body kit and an exhaust and other performance parts. It becomes like a hobby to a lot of people. That’s a lot of fun, and that’s the whole key to it. We try to make it fun for our customers.”

The SEMA/AutoPacific survey makes it clear that the availability of accessories has a positive influence on new-car sales. In the next issue of SEMA News, we’ll look at some of the other data from the perspective of new-car dealerships and OEM strategies regarding accessorization.

Mon, 03/07/2011 - 13:22

SEMA News—March 2011

Fresh Data Confirms Pros’ Views: Accessories Influence New-Car Sales

By Steve Campbell

Influence of Accessories on New-Vehicle Sales

A new study commissioned by SEMA entitled “Influence of Accessories on New-Vehicle Sales” confirms what those involved in new-car sales, vehicle dealerships and the customization of new vehicles have believed for years: Accessories help sell new vehicles.
Courtesy of Galpin Auto Sports

A new study commissioned by SEMA indicates that aftermarket products influence about 1,180,000 new-vehicle sales each year. The automotive marketing research and consultancy firm AutoPacific collected and analyzed consumer data to quantify the effect that accessorization has on the sale of new vehicles. The resulting report, “Influence of Accessories on New-Vehicle Sales,” details the findings.

The study looked at the persuasive effects created by accessory products, including which ones are likely to create the greatest influence. It delves into which vehicle types are more likely to be purchased based on product availability. The data also provide information about the influence customized vehicles have on the decision to purchase new vehicles by a range of different consumers, including those who do not normally modify their cars or trucks as well as those who do and, in some cases, those who are most zealous about customization. It also examines consumers’ perceptions of specialty-equipment products versus OEM aftermarket products.

The report is now available free for download by SEMA members ($199 for non-members), and it confirms what those involved in new-car sales, vehicle dealerships and the customization of new vehicles have understood for years: Accessories help sell new vehicles. In recent interviews, professionals in all three camps provided independent commentary that supported the assertions found in the study.

“The idea behind personalized display cars is that people see things they haven’t seen anywhere else when they walk into the showroom,” said Beau Boeckmann, vice president of the Galpin Ford dealership in North Hills, California. Boeckmann is also president of Galpin Premier Collection, a dealership for Aston Martin, Jaguar, Lotus, Volvo, Lincoln and Mazda, and Galpin Auto Sports LLC, a specialty-equipment business with an extensive inventory of both performance and cosmetic accessories. “We’re well known for our customized vehicles,” Boeckmann said.

“A customer doesn’t have to design his own car; it’s already right there. He falls in love with it and—boom—he buys it. We’ve sold many vehicles that way. We’ve earned a reputation over the decades of having things that are different at Galpin.”

Source of Product Information—Internet Tops List

How do you generally find out about aftermarket products? Total Modified Plan to Modify Zealots Enthusiasts Participants
Internet 61% 60% 66% 70% 67% 42%
Saw It on Another Vehicle 34% 35% 25% 43% 37% 30%
Friend or Relative 32% 32% 32% 31% 31% 56%
Magazine Advertisement 24% 24% 20% 37% 32% 7%
Magazine/Newspaper Article 24% 25% 15% 33% 28% 10%
Product Brochure 15% 15% 15% 15% 14% 17%
Auto Show 11% 11% 9% 17% 13% 0%
TV Advertising 11% 11% 10% 7% 10% 12%
Direct Mail Advertising 9% 8% 13% 16% 6% 5%
Mentioned in Article 9% 8% 12% 17% 7% 1%
Newspaper Advertisement 8% 8% 9% 6% 7% 10%
SPEED Channel 7% 8% 3% 10% 9% 0%
Auto Club Events 5% 6% 4% 8% 6% 0%
Other Events/Promo 5% 6% 1% 7% 7% 0%
Radio Advertising 5% 5% 4% 5% 5% 6%
Auto Races 4% 5% 1% 6% 5% 0%
AutoPacific Authoritative Automotive Research & Insight

The SEMA/AutoPacific study supports Boeckmann’s views regarding accessorization and display vehicles. It was conducted using input from three distinct groups. First, was an Internet survey of consumers who either already had modified or planned to modify their newer-model (’07–’11) vehicles. A second Internet survey concentrated on consumers who had not modified their vehicles as well as those who may have been influenced by customized vehicles during their purchase decision even though they had chosen not to modify. The third consisted of telephone interviews with supervising personnel for eight major OEMs, including managers and directors of product planning, parts and accessories operations, accessory planning and consumer relations.

As with many industries, the automotive market suffered a decline over the past few years when the recession created a climate of wariness among consumers. In 2007, for instance, as many as 23% of consumers performed some type of modification to their vehicles. By the time the survey was carried out, that number had fallen to 14%, though, it may begin to rise again as the economy rebounds. Thus, the survey concluded, companies wishing to sell accessories to new-car buyers need to target and market to the core automotive enthusiast or help create interest at the time of purchase when consumers are most likely to be influenced.

“We’re always looking at trends, whether it’s at the SEMA Show or one of the numerous car shows we attend to see what’s out there,” Boeckmann said. “My dad always said that he got the best ideas from customers, so we listen to them to find out what they’d like to see. Our marketing is based on a lot of communication. For example, the Mustang specialist for Galpin Auto Sports will get together with the dealership’s Ford manager to talk about what they’re going to build.”

Ray Ott, director of operations for Auto Trim Design of Cleveland, a restyling and accessory installation business, said that a dealership may sometimes need to go outside its own inventory to please a customer and, in the process, build a reputation for accommodating and delivering on specific requests.

“A dealership supports its manufacturers’ parts programs first, of course,” he said. “For instance, the Ford group we work with has its own accessories, and their auto parts warehouse distributor also promotes its accessory lines. But if the customer wants a specific product—a particular tonneau cover or whatever—the dealership will want to get it for him or her. If it’s a brand name that a company such as Myers Distributing or Keystone carries, it’s an easy request to fulfill.”

Modifications—Top Half

What type of modification(s) did you do/plan to do to your vehicle? Total Modified Plan to Modify Zealots Enthusiasts Participants
Different Tires 30% 32% 17% 37% 39% 15%
Different Wheels 16% 16% 19% 25% 25% 2%
Audio Upgrade System 16% 15% 20% 21% 19% 5%
Navigation System 16% 16% 15% 19% 20% 1%
Satellite Radio 15% 14% 19% 14% 14% 2%
Air and Fuel Delivery 13% 14% 8% 28% 14% 0%
Upholstery/Trim 11% 12% 6% 11% 12% 5%
Accessories and Fluids 10% 11% 5% 13% 14% 9%
Electrical, Lighting and Body 10% 11% 7% 13% 16% 0%
Paint/Graphics 10% 10% 11% 8% 13% 4%
Wiper and Washer 10% 11% 6% 11% 12% 11%
Exhaust 9% 9% 12% 20% 9% 0%
Exhaust System Upgrade 9% 10% 6% 23% 10% 0%
DVD/Game System 9% 8% 14% 8% 11% 9%
Roof Rack 9% 8% 15% 5% 8% 4%
Body 9% 10% 3% 12% 10% 12%
Engine/Performance Upgrade 8% 9% 6% 19% 9% 6%
Grille 8% 8% 11% 12% 7% 0%
Ground Effects/Spoiler 8% 7% 13% 8% 10% 1%
           
AutoPacific Authoritative Automotive Research & Insight

The survey points out that simply seeing modified vehicles influences many consumers, which is all the more reason for dealerships to display one or more of them on the lot or in the showroom to attract traffic. And many consumers consult enthusiasts about both vehicles and accessories, viewing them as experts. Vehicle owners who choose to personalize their cars and trucks often have large spheres of influence with other consumers.

“That is really how my dad built Galpin Ford,” Boeckmann said, “and it’s also how we look at building Galpin Auto Sports. Word of mouth is the best advertising there is. We want to make our customers enthusiastic fans of the dealership and the accessories store. The most important thing we can do is make them so happy that they want to come back, bring their friends and refer people to us.”

Nearly 30% of those who either already have modified or plan to modify their vehicles were influenced to buy a certain model by the availability of accessory parts, the survey found. Aftermarket retailers were the number-one source of that equipment at 48%, but 23% also sourced parts from dealerships.

Tony Hinton is general manager of Auto Trim of Denver, a restyling shop and accessory installation business that works strictly with dealerships and does not offer retail services. He said that virtually all of the 150 or so dealerships his company works with each month carry an assortment of accessories.

“They may use different vendors for products other than those we install,” he said, “but we work hand in hand with those other vendors where we need to if the dealership wants to put together a complete package. We might install one or two of our items on an SUV or a pickup—maybe leather, navigation, mobile video—and then incorporate running boards or nerf bars from another vendor. But we try to facilitate all of that activity.”

Fresh Data Confirms Pros’ Views: Accessories Influence New-Car Sales

The survey said that consumers who were not interested in modifications pointed to price rather than warranty concerns as the reason for their hesitation, and all of the industry professionals we spoke with agreed that alleviating warranty concerns is crucial to their partnerships with new-car dealers.
Courtesy of Galpin Auto Sports

The survey confirmed that the Internet is the source most often used by consumers when they search for information.
Second is actually seeing parts on a vehicle, third is friends or relatives and fourth is magazine ads or articles. Since it is impractical to have display vehicles showing all possible modifications, many accessory businesses are using the Internet as a key marketing tool in collaboration with their dealership clients.

“Our website, www.voguetire.com, has a build-a-car feature on it that allows dealerships and their customers to see different looks,” said Kevin Goyak, executive vice president of Vogue Tyre and Rubber Company. Vogue offers not only a range of tires and wheels, but also easily installed accessories, such as grilles, body kits and spoilers, to more than 500 dealerships each month. “We also use catalogs that are individualized by brand,” Goyak said. “They include all of the products we offer as well as price sheets. We can also custom-make a catalog with the dealership’s name on it. Our salespeople go in with everything they need to make a good sales call.”

The survey said that tires and wheels remain the most-sought modification, followed by audio and navigation. The majority of consumers who personalize their vehicles have someone else do the installation, though, experienced enthusiasts are more inclined to do the work themselves.

“Tires and wheels are the easiest things to change on a car, and they’re easy for a dealership to handle,” Goyak said. “The next item for our dealerships is usually a grille, which is still a big part of our business.”

Ott said that regional factors can also play a part in what sells and what dealerships are likely to concentrate on. “Up here in Ohio, we see a lot of truck accessories—tonneaus, vent visors, bug shields—and we also do a lot of graphics. Remote starts are also big here in the cold region.”

Influences to Modify Vehicle

  • Adding a feature or functionality that the vehicle did not come with is the number-one reason that would influence non-modifiers to modify their vehicles.
  • Those that were influenced would have a higher likelihood to modify if the accessories were available at the time of vehicle purchase.
What would influence you to modify your vehicle? Non-Modifiers Not Influenced Influenced by
Customized Vehicle
Add Functionality/Features Not Offered by the Factory 47% 47% 41%
Guarantee Not to Void Factory Warranty 33% 33% 35%
Accessories Presented/Offered at Time of Vehicle Purchase 32% 31% 38%
Personalize Styling to My Individual Taste 20% 19% 32%
Able to Include in Monthly Vehicle Payment 14% 14% 19%
Other 16% 16% 7%
Source: AutoPacific Authoritative Automotive Research & Insight

The AutoPacific data looked at the advantages and disadvantages that consumers cited when having accessories installed through a dealership as opposed to a retail store. The survey respondents felt that the greatest benefits of working with a dealership were that the modifications could be completed before the vehicle was delivered using OEM parts that carried the factory warranty. On the retail side, consumers cited better pricing and the perception that the installers were specialists who possessed greater expertise than a dealership might offer, and they also said that aftermarket retailers offer higher-quality products. Goyak pointed out that financing also plays a part in making accessory sales more attractive through a dealership. The customer can roll the cost of modifications into the purchase price of the vehicle and add only a relatively small amount to the monthly payment.

“Financing has finally loosened up,” Goyak said. “The last two years have obviously been a challenge, but dealers are now more excited about being in business. That is definitely looking brighter.”

One-third of people say they would be influenced to modify their car, if they were guaranteed not to void the factory warranty, and all of the industry professionals we spoke with agreed that alleviating warranty concerns is crucial to their partnerships with new-car dealers.

“We are very particular about the products we buy,” Hinton said. “They have to meet International Organization for Standardization criteria, and all of our products have to have a minimum of a three-year and 36,000-mile manufacturer’s warranty. Our installers are also very specialized. They are SEMA certified and ASE certified in their particular fields of expertise.”

Goyak said that everything his company sells must meet or exceed the factory warranty on the vehicle, so Vogue matches the OEM warranty, and Boeckmann said that warranty plays a large part in which specialty-equipment manufacturers the Galpin businesses deal with.

“Most not only warranty their own part, but also other parts that might be affected if there were a problem,” he said. “The reason we’re in business is to give confidence to customers. If a customer has a problem with one of our installations, we’re going to take care of it for him.”

Even consumers who might not be inclined to personalize a vehicle’s looks or performance might consider adding a feature or function that didn’t come on the vehicle from the factory, according to the survey. Consumers were also more likely to make those types of modifications at the time they purchased a car or truck.

“We go after vehicles and trim levels where our product would seem to fit,” Hinton said. “In many cases, for instance, ordering a factory navigation system may require the customer to upgrade to an expensive package or a high-end trim level. But the customer may not want bigger wheels, a bigger engine, certain trim additions. All he wants is navigation. We are able to provide that kind of product à la carte to satisfy that particular customer’s demand.”

The largest accessory influence on consumers shopping for new cars or trucks came from customized vehicles on display in the showroom, followed by seeing personalized cars or trucks on the road and vehicle brochures.

“A display car often gets the customer’s appetite working,” said Boeckmann. “They’ll buy a car that has upgraded wheels at the dealership but then drive it across the street to the accessory store and get a body kit and an exhaust and other performance parts. It becomes like a hobby to a lot of people. That’s a lot of fun, and that’s the whole key to it. We try to make it fun for our customers.”

The SEMA/AutoPacific survey makes it clear that the availability of accessories has a positive influence on new-car sales. In the next issue of SEMA News, we’ll look at some of the other data from the perspective of new-car dealerships and OEM strategies regarding accessorization.

Mon, 03/07/2011 - 13:22

SEMA News—March 2011

Fresh Data Confirms Pros’ Views: Accessories Influence New-Car Sales

By Steve Campbell

Influence of Accessories on New-Vehicle Sales

A new study commissioned by SEMA entitled “Influence of Accessories on New-Vehicle Sales” confirms what those involved in new-car sales, vehicle dealerships and the customization of new vehicles have believed for years: Accessories help sell new vehicles.
Courtesy of Galpin Auto Sports

A new study commissioned by SEMA indicates that aftermarket products influence about 1,180,000 new-vehicle sales each year. The automotive marketing research and consultancy firm AutoPacific collected and analyzed consumer data to quantify the effect that accessorization has on the sale of new vehicles. The resulting report, “Influence of Accessories on New-Vehicle Sales,” details the findings.

The study looked at the persuasive effects created by accessory products, including which ones are likely to create the greatest influence. It delves into which vehicle types are more likely to be purchased based on product availability. The data also provide information about the influence customized vehicles have on the decision to purchase new vehicles by a range of different consumers, including those who do not normally modify their cars or trucks as well as those who do and, in some cases, those who are most zealous about customization. It also examines consumers’ perceptions of specialty-equipment products versus OEM aftermarket products.

The report is now available free for download by SEMA members ($199 for non-members), and it confirms what those involved in new-car sales, vehicle dealerships and the customization of new vehicles have understood for years: Accessories help sell new vehicles. In recent interviews, professionals in all three camps provided independent commentary that supported the assertions found in the study.

“The idea behind personalized display cars is that people see things they haven’t seen anywhere else when they walk into the showroom,” said Beau Boeckmann, vice president of the Galpin Ford dealership in North Hills, California. Boeckmann is also president of Galpin Premier Collection, a dealership for Aston Martin, Jaguar, Lotus, Volvo, Lincoln and Mazda, and Galpin Auto Sports LLC, a specialty-equipment business with an extensive inventory of both performance and cosmetic accessories. “We’re well known for our customized vehicles,” Boeckmann said.

“A customer doesn’t have to design his own car; it’s already right there. He falls in love with it and—boom—he buys it. We’ve sold many vehicles that way. We’ve earned a reputation over the decades of having things that are different at Galpin.”

Source of Product Information—Internet Tops List

How do you generally find out about aftermarket products? Total Modified Plan to Modify Zealots Enthusiasts Participants
Internet 61% 60% 66% 70% 67% 42%
Saw It on Another Vehicle 34% 35% 25% 43% 37% 30%
Friend or Relative 32% 32% 32% 31% 31% 56%
Magazine Advertisement 24% 24% 20% 37% 32% 7%
Magazine/Newspaper Article 24% 25% 15% 33% 28% 10%
Product Brochure 15% 15% 15% 15% 14% 17%
Auto Show 11% 11% 9% 17% 13% 0%
TV Advertising 11% 11% 10% 7% 10% 12%
Direct Mail Advertising 9% 8% 13% 16% 6% 5%
Mentioned in Article 9% 8% 12% 17% 7% 1%
Newspaper Advertisement 8% 8% 9% 6% 7% 10%
SPEED Channel 7% 8% 3% 10% 9% 0%
Auto Club Events 5% 6% 4% 8% 6% 0%
Other Events/Promo 5% 6% 1% 7% 7% 0%
Radio Advertising 5% 5% 4% 5% 5% 6%
Auto Races 4% 5% 1% 6% 5% 0%
AutoPacific Authoritative Automotive Research & Insight

The SEMA/AutoPacific study supports Boeckmann’s views regarding accessorization and display vehicles. It was conducted using input from three distinct groups. First, was an Internet survey of consumers who either already had modified or planned to modify their newer-model (’07–’11) vehicles. A second Internet survey concentrated on consumers who had not modified their vehicles as well as those who may have been influenced by customized vehicles during their purchase decision even though they had chosen not to modify. The third consisted of telephone interviews with supervising personnel for eight major OEMs, including managers and directors of product planning, parts and accessories operations, accessory planning and consumer relations.

As with many industries, the automotive market suffered a decline over the past few years when the recession created a climate of wariness among consumers. In 2007, for instance, as many as 23% of consumers performed some type of modification to their vehicles. By the time the survey was carried out, that number had fallen to 14%, though, it may begin to rise again as the economy rebounds. Thus, the survey concluded, companies wishing to sell accessories to new-car buyers need to target and market to the core automotive enthusiast or help create interest at the time of purchase when consumers are most likely to be influenced.

“We’re always looking at trends, whether it’s at the SEMA Show or one of the numerous car shows we attend to see what’s out there,” Boeckmann said. “My dad always said that he got the best ideas from customers, so we listen to them to find out what they’d like to see. Our marketing is based on a lot of communication. For example, the Mustang specialist for Galpin Auto Sports will get together with the dealership’s Ford manager to talk about what they’re going to build.”

Ray Ott, director of operations for Auto Trim Design of Cleveland, a restyling and accessory installation business, said that a dealership may sometimes need to go outside its own inventory to please a customer and, in the process, build a reputation for accommodating and delivering on specific requests.

“A dealership supports its manufacturers’ parts programs first, of course,” he said. “For instance, the Ford group we work with has its own accessories, and their auto parts warehouse distributor also promotes its accessory lines. But if the customer wants a specific product—a particular tonneau cover or whatever—the dealership will want to get it for him or her. If it’s a brand name that a company such as Myers Distributing or Keystone carries, it’s an easy request to fulfill.”

Modifications—Top Half

What type of modification(s) did you do/plan to do to your vehicle? Total Modified Plan to Modify Zealots Enthusiasts Participants
Different Tires 30% 32% 17% 37% 39% 15%
Different Wheels 16% 16% 19% 25% 25% 2%
Audio Upgrade System 16% 15% 20% 21% 19% 5%
Navigation System 16% 16% 15% 19% 20% 1%
Satellite Radio 15% 14% 19% 14% 14% 2%
Air and Fuel Delivery 13% 14% 8% 28% 14% 0%
Upholstery/Trim 11% 12% 6% 11% 12% 5%
Accessories and Fluids 10% 11% 5% 13% 14% 9%
Electrical, Lighting and Body 10% 11% 7% 13% 16% 0%
Paint/Graphics 10% 10% 11% 8% 13% 4%
Wiper and Washer 10% 11% 6% 11% 12% 11%
Exhaust 9% 9% 12% 20% 9% 0%
Exhaust System Upgrade 9% 10% 6% 23% 10% 0%
DVD/Game System 9% 8% 14% 8% 11% 9%
Roof Rack 9% 8% 15% 5% 8% 4%
Body 9% 10% 3% 12% 10% 12%
Engine/Performance Upgrade 8% 9% 6% 19% 9% 6%
Grille 8% 8% 11% 12% 7% 0%
Ground Effects/Spoiler 8% 7% 13% 8% 10% 1%
           
AutoPacific Authoritative Automotive Research & Insight

The survey points out that simply seeing modified vehicles influences many consumers, which is all the more reason for dealerships to display one or more of them on the lot or in the showroom to attract traffic. And many consumers consult enthusiasts about both vehicles and accessories, viewing them as experts. Vehicle owners who choose to personalize their cars and trucks often have large spheres of influence with other consumers.

“That is really how my dad built Galpin Ford,” Boeckmann said, “and it’s also how we look at building Galpin Auto Sports. Word of mouth is the best advertising there is. We want to make our customers enthusiastic fans of the dealership and the accessories store. The most important thing we can do is make them so happy that they want to come back, bring their friends and refer people to us.”

Nearly 30% of those who either already have modified or plan to modify their vehicles were influenced to buy a certain model by the availability of accessory parts, the survey found. Aftermarket retailers were the number-one source of that equipment at 48%, but 23% also sourced parts from dealerships.

Tony Hinton is general manager of Auto Trim of Denver, a restyling shop and accessory installation business that works strictly with dealerships and does not offer retail services. He said that virtually all of the 150 or so dealerships his company works with each month carry an assortment of accessories.

“They may use different vendors for products other than those we install,” he said, “but we work hand in hand with those other vendors where we need to if the dealership wants to put together a complete package. We might install one or two of our items on an SUV or a pickup—maybe leather, navigation, mobile video—and then incorporate running boards or nerf bars from another vendor. But we try to facilitate all of that activity.”

Fresh Data Confirms Pros’ Views: Accessories Influence New-Car Sales

The survey said that consumers who were not interested in modifications pointed to price rather than warranty concerns as the reason for their hesitation, and all of the industry professionals we spoke with agreed that alleviating warranty concerns is crucial to their partnerships with new-car dealers.
Courtesy of Galpin Auto Sports

The survey confirmed that the Internet is the source most often used by consumers when they search for information.
Second is actually seeing parts on a vehicle, third is friends or relatives and fourth is magazine ads or articles. Since it is impractical to have display vehicles showing all possible modifications, many accessory businesses are using the Internet as a key marketing tool in collaboration with their dealership clients.

“Our website, www.voguetire.com, has a build-a-car feature on it that allows dealerships and their customers to see different looks,” said Kevin Goyak, executive vice president of Vogue Tyre and Rubber Company. Vogue offers not only a range of tires and wheels, but also easily installed accessories, such as grilles, body kits and spoilers, to more than 500 dealerships each month. “We also use catalogs that are individualized by brand,” Goyak said. “They include all of the products we offer as well as price sheets. We can also custom-make a catalog with the dealership’s name on it. Our salespeople go in with everything they need to make a good sales call.”

The survey said that tires and wheels remain the most-sought modification, followed by audio and navigation. The majority of consumers who personalize their vehicles have someone else do the installation, though, experienced enthusiasts are more inclined to do the work themselves.

“Tires and wheels are the easiest things to change on a car, and they’re easy for a dealership to handle,” Goyak said. “The next item for our dealerships is usually a grille, which is still a big part of our business.”

Ott said that regional factors can also play a part in what sells and what dealerships are likely to concentrate on. “Up here in Ohio, we see a lot of truck accessories—tonneaus, vent visors, bug shields—and we also do a lot of graphics. Remote starts are also big here in the cold region.”

Influences to Modify Vehicle

  • Adding a feature or functionality that the vehicle did not come with is the number-one reason that would influence non-modifiers to modify their vehicles.
  • Those that were influenced would have a higher likelihood to modify if the accessories were available at the time of vehicle purchase.
What would influence you to modify your vehicle? Non-Modifiers Not Influenced Influenced by
Customized Vehicle
Add Functionality/Features Not Offered by the Factory 47% 47% 41%
Guarantee Not to Void Factory Warranty 33% 33% 35%
Accessories Presented/Offered at Time of Vehicle Purchase 32% 31% 38%
Personalize Styling to My Individual Taste 20% 19% 32%
Able to Include in Monthly Vehicle Payment 14% 14% 19%
Other 16% 16% 7%
Source: AutoPacific Authoritative Automotive Research & Insight

The AutoPacific data looked at the advantages and disadvantages that consumers cited when having accessories installed through a dealership as opposed to a retail store. The survey respondents felt that the greatest benefits of working with a dealership were that the modifications could be completed before the vehicle was delivered using OEM parts that carried the factory warranty. On the retail side, consumers cited better pricing and the perception that the installers were specialists who possessed greater expertise than a dealership might offer, and they also said that aftermarket retailers offer higher-quality products. Goyak pointed out that financing also plays a part in making accessory sales more attractive through a dealership. The customer can roll the cost of modifications into the purchase price of the vehicle and add only a relatively small amount to the monthly payment.

“Financing has finally loosened up,” Goyak said. “The last two years have obviously been a challenge, but dealers are now more excited about being in business. That is definitely looking brighter.”

One-third of people say they would be influenced to modify their car, if they were guaranteed not to void the factory warranty, and all of the industry professionals we spoke with agreed that alleviating warranty concerns is crucial to their partnerships with new-car dealers.

“We are very particular about the products we buy,” Hinton said. “They have to meet International Organization for Standardization criteria, and all of our products have to have a minimum of a three-year and 36,000-mile manufacturer’s warranty. Our installers are also very specialized. They are SEMA certified and ASE certified in their particular fields of expertise.”

Goyak said that everything his company sells must meet or exceed the factory warranty on the vehicle, so Vogue matches the OEM warranty, and Boeckmann said that warranty plays a large part in which specialty-equipment manufacturers the Galpin businesses deal with.

“Most not only warranty their own part, but also other parts that might be affected if there were a problem,” he said. “The reason we’re in business is to give confidence to customers. If a customer has a problem with one of our installations, we’re going to take care of it for him.”

Even consumers who might not be inclined to personalize a vehicle’s looks or performance might consider adding a feature or function that didn’t come on the vehicle from the factory, according to the survey. Consumers were also more likely to make those types of modifications at the time they purchased a car or truck.

“We go after vehicles and trim levels where our product would seem to fit,” Hinton said. “In many cases, for instance, ordering a factory navigation system may require the customer to upgrade to an expensive package or a high-end trim level. But the customer may not want bigger wheels, a bigger engine, certain trim additions. All he wants is navigation. We are able to provide that kind of product à la carte to satisfy that particular customer’s demand.”

The largest accessory influence on consumers shopping for new cars or trucks came from customized vehicles on display in the showroom, followed by seeing personalized cars or trucks on the road and vehicle brochures.

“A display car often gets the customer’s appetite working,” said Boeckmann. “They’ll buy a car that has upgraded wheels at the dealership but then drive it across the street to the accessory store and get a body kit and an exhaust and other performance parts. It becomes like a hobby to a lot of people. That’s a lot of fun, and that’s the whole key to it. We try to make it fun for our customers.”

The SEMA/AutoPacific survey makes it clear that the availability of accessories has a positive influence on new-car sales. In the next issue of SEMA News, we’ll look at some of the other data from the perspective of new-car dealerships and OEM strategies regarding accessorization.

Mon, 03/07/2011 - 13:22

SEMA News—March 2011

Fresh Data Confirms Pros’ Views: Accessories Influence New-Car Sales

By Steve Campbell

Influence of Accessories on New-Vehicle Sales

A new study commissioned by SEMA entitled “Influence of Accessories on New-Vehicle Sales” confirms what those involved in new-car sales, vehicle dealerships and the customization of new vehicles have believed for years: Accessories help sell new vehicles.
Courtesy of Galpin Auto Sports

A new study commissioned by SEMA indicates that aftermarket products influence about 1,180,000 new-vehicle sales each year. The automotive marketing research and consultancy firm AutoPacific collected and analyzed consumer data to quantify the effect that accessorization has on the sale of new vehicles. The resulting report, “Influence of Accessories on New-Vehicle Sales,” details the findings.

The study looked at the persuasive effects created by accessory products, including which ones are likely to create the greatest influence. It delves into which vehicle types are more likely to be purchased based on product availability. The data also provide information about the influence customized vehicles have on the decision to purchase new vehicles by a range of different consumers, including those who do not normally modify their cars or trucks as well as those who do and, in some cases, those who are most zealous about customization. It also examines consumers’ perceptions of specialty-equipment products versus OEM aftermarket products.

The report is now available free for download by SEMA members ($199 for non-members), and it confirms what those involved in new-car sales, vehicle dealerships and the customization of new vehicles have understood for years: Accessories help sell new vehicles. In recent interviews, professionals in all three camps provided independent commentary that supported the assertions found in the study.

“The idea behind personalized display cars is that people see things they haven’t seen anywhere else when they walk into the showroom,” said Beau Boeckmann, vice president of the Galpin Ford dealership in North Hills, California. Boeckmann is also president of Galpin Premier Collection, a dealership for Aston Martin, Jaguar, Lotus, Volvo, Lincoln and Mazda, and Galpin Auto Sports LLC, a specialty-equipment business with an extensive inventory of both performance and cosmetic accessories. “We’re well known for our customized vehicles,” Boeckmann said.

“A customer doesn’t have to design his own car; it’s already right there. He falls in love with it and—boom—he buys it. We’ve sold many vehicles that way. We’ve earned a reputation over the decades of having things that are different at Galpin.”

Source of Product Information—Internet Tops List

How do you generally find out about aftermarket products? Total Modified Plan to Modify Zealots Enthusiasts Participants
Internet 61% 60% 66% 70% 67% 42%
Saw It on Another Vehicle 34% 35% 25% 43% 37% 30%
Friend or Relative 32% 32% 32% 31% 31% 56%
Magazine Advertisement 24% 24% 20% 37% 32% 7%
Magazine/Newspaper Article 24% 25% 15% 33% 28% 10%
Product Brochure 15% 15% 15% 15% 14% 17%
Auto Show 11% 11% 9% 17% 13% 0%
TV Advertising 11% 11% 10% 7% 10% 12%
Direct Mail Advertising 9% 8% 13% 16% 6% 5%
Mentioned in Article 9% 8% 12% 17% 7% 1%
Newspaper Advertisement 8% 8% 9% 6% 7% 10%
SPEED Channel 7% 8% 3% 10% 9% 0%
Auto Club Events 5% 6% 4% 8% 6% 0%
Other Events/Promo 5% 6% 1% 7% 7% 0%
Radio Advertising 5% 5% 4% 5% 5% 6%
Auto Races 4% 5% 1% 6% 5% 0%
AutoPacific Authoritative Automotive Research & Insight

The SEMA/AutoPacific study supports Boeckmann’s views regarding accessorization and display vehicles. It was conducted using input from three distinct groups. First, was an Internet survey of consumers who either already had modified or planned to modify their newer-model (’07–’11) vehicles. A second Internet survey concentrated on consumers who had not modified their vehicles as well as those who may have been influenced by customized vehicles during their purchase decision even though they had chosen not to modify. The third consisted of telephone interviews with supervising personnel for eight major OEMs, including managers and directors of product planning, parts and accessories operations, accessory planning and consumer relations.

As with many industries, the automotive market suffered a decline over the past few years when the recession created a climate of wariness among consumers. In 2007, for instance, as many as 23% of consumers performed some type of modification to their vehicles. By the time the survey was carried out, that number had fallen to 14%, though, it may begin to rise again as the economy rebounds. Thus, the survey concluded, companies wishing to sell accessories to new-car buyers need to target and market to the core automotive enthusiast or help create interest at the time of purchase when consumers are most likely to be influenced.

“We’re always looking at trends, whether it’s at the SEMA Show or one of the numerous car shows we attend to see what’s out there,” Boeckmann said. “My dad always said that he got the best ideas from customers, so we listen to them to find out what they’d like to see. Our marketing is based on a lot of communication. For example, the Mustang specialist for Galpin Auto Sports will get together with the dealership’s Ford manager to talk about what they’re going to build.”

Ray Ott, director of operations for Auto Trim Design of Cleveland, a restyling and accessory installation business, said that a dealership may sometimes need to go outside its own inventory to please a customer and, in the process, build a reputation for accommodating and delivering on specific requests.

“A dealership supports its manufacturers’ parts programs first, of course,” he said. “For instance, the Ford group we work with has its own accessories, and their auto parts warehouse distributor also promotes its accessory lines. But if the customer wants a specific product—a particular tonneau cover or whatever—the dealership will want to get it for him or her. If it’s a brand name that a company such as Myers Distributing or Keystone carries, it’s an easy request to fulfill.”

Modifications—Top Half

What type of modification(s) did you do/plan to do to your vehicle? Total Modified Plan to Modify Zealots Enthusiasts Participants
Different Tires 30% 32% 17% 37% 39% 15%
Different Wheels 16% 16% 19% 25% 25% 2%
Audio Upgrade System 16% 15% 20% 21% 19% 5%
Navigation System 16% 16% 15% 19% 20% 1%
Satellite Radio 15% 14% 19% 14% 14% 2%
Air and Fuel Delivery 13% 14% 8% 28% 14% 0%
Upholstery/Trim 11% 12% 6% 11% 12% 5%
Accessories and Fluids 10% 11% 5% 13% 14% 9%
Electrical, Lighting and Body 10% 11% 7% 13% 16% 0%
Paint/Graphics 10% 10% 11% 8% 13% 4%
Wiper and Washer 10% 11% 6% 11% 12% 11%
Exhaust 9% 9% 12% 20% 9% 0%
Exhaust System Upgrade 9% 10% 6% 23% 10% 0%
DVD/Game System 9% 8% 14% 8% 11% 9%
Roof Rack 9% 8% 15% 5% 8% 4%
Body 9% 10% 3% 12% 10% 12%
Engine/Performance Upgrade 8% 9% 6% 19% 9% 6%
Grille 8% 8% 11% 12% 7% 0%
Ground Effects/Spoiler 8% 7% 13% 8% 10% 1%
           
AutoPacific Authoritative Automotive Research & Insight

The survey points out that simply seeing modified vehicles influences many consumers, which is all the more reason for dealerships to display one or more of them on the lot or in the showroom to attract traffic. And many consumers consult enthusiasts about both vehicles and accessories, viewing them as experts. Vehicle owners who choose to personalize their cars and trucks often have large spheres of influence with other consumers.

“That is really how my dad built Galpin Ford,” Boeckmann said, “and it’s also how we look at building Galpin Auto Sports. Word of mouth is the best advertising there is. We want to make our customers enthusiastic fans of the dealership and the accessories store. The most important thing we can do is make them so happy that they want to come back, bring their friends and refer people to us.”

Nearly 30% of those who either already have modified or plan to modify their vehicles were influenced to buy a certain model by the availability of accessory parts, the survey found. Aftermarket retailers were the number-one source of that equipment at 48%, but 23% also sourced parts from dealerships.

Tony Hinton is general manager of Auto Trim of Denver, a restyling shop and accessory installation business that works strictly with dealerships and does not offer retail services. He said that virtually all of the 150 or so dealerships his company works with each month carry an assortment of accessories.

“They may use different vendors for products other than those we install,” he said, “but we work hand in hand with those other vendors where we need to if the dealership wants to put together a complete package. We might install one or two of our items on an SUV or a pickup—maybe leather, navigation, mobile video—and then incorporate running boards or nerf bars from another vendor. But we try to facilitate all of that activity.”

Fresh Data Confirms Pros’ Views: Accessories Influence New-Car Sales

The survey said that consumers who were not interested in modifications pointed to price rather than warranty concerns as the reason for their hesitation, and all of the industry professionals we spoke with agreed that alleviating warranty concerns is crucial to their partnerships with new-car dealers.
Courtesy of Galpin Auto Sports

The survey confirmed that the Internet is the source most often used by consumers when they search for information.
Second is actually seeing parts on a vehicle, third is friends or relatives and fourth is magazine ads or articles. Since it is impractical to have display vehicles showing all possible modifications, many accessory businesses are using the Internet as a key marketing tool in collaboration with their dealership clients.

“Our website, www.voguetire.com, has a build-a-car feature on it that allows dealerships and their customers to see different looks,” said Kevin Goyak, executive vice president of Vogue Tyre and Rubber Company. Vogue offers not only a range of tires and wheels, but also easily installed accessories, such as grilles, body kits and spoilers, to more than 500 dealerships each month. “We also use catalogs that are individualized by brand,” Goyak said. “They include all of the products we offer as well as price sheets. We can also custom-make a catalog with the dealership’s name on it. Our salespeople go in with everything they need to make a good sales call.”

The survey said that tires and wheels remain the most-sought modification, followed by audio and navigation. The majority of consumers who personalize their vehicles have someone else do the installation, though, experienced enthusiasts are more inclined to do the work themselves.

“Tires and wheels are the easiest things to change on a car, and they’re easy for a dealership to handle,” Goyak said. “The next item for our dealerships is usually a grille, which is still a big part of our business.”

Ott said that regional factors can also play a part in what sells and what dealerships are likely to concentrate on. “Up here in Ohio, we see a lot of truck accessories—tonneaus, vent visors, bug shields—and we also do a lot of graphics. Remote starts are also big here in the cold region.”

Influences to Modify Vehicle

  • Adding a feature or functionality that the vehicle did not come with is the number-one reason that would influence non-modifiers to modify their vehicles.
  • Those that were influenced would have a higher likelihood to modify if the accessories were available at the time of vehicle purchase.
What would influence you to modify your vehicle? Non-Modifiers Not Influenced Influenced by
Customized Vehicle
Add Functionality/Features Not Offered by the Factory 47% 47% 41%
Guarantee Not to Void Factory Warranty 33% 33% 35%
Accessories Presented/Offered at Time of Vehicle Purchase 32% 31% 38%
Personalize Styling to My Individual Taste 20% 19% 32%
Able to Include in Monthly Vehicle Payment 14% 14% 19%
Other 16% 16% 7%
Source: AutoPacific Authoritative Automotive Research & Insight

The AutoPacific data looked at the advantages and disadvantages that consumers cited when having accessories installed through a dealership as opposed to a retail store. The survey respondents felt that the greatest benefits of working with a dealership were that the modifications could be completed before the vehicle was delivered using OEM parts that carried the factory warranty. On the retail side, consumers cited better pricing and the perception that the installers were specialists who possessed greater expertise than a dealership might offer, and they also said that aftermarket retailers offer higher-quality products. Goyak pointed out that financing also plays a part in making accessory sales more attractive through a dealership. The customer can roll the cost of modifications into the purchase price of the vehicle and add only a relatively small amount to the monthly payment.

“Financing has finally loosened up,” Goyak said. “The last two years have obviously been a challenge, but dealers are now more excited about being in business. That is definitely looking brighter.”

One-third of people say they would be influenced to modify their car, if they were guaranteed not to void the factory warranty, and all of the industry professionals we spoke with agreed that alleviating warranty concerns is crucial to their partnerships with new-car dealers.

“We are very particular about the products we buy,” Hinton said. “They have to meet International Organization for Standardization criteria, and all of our products have to have a minimum of a three-year and 36,000-mile manufacturer’s warranty. Our installers are also very specialized. They are SEMA certified and ASE certified in their particular fields of expertise.”

Goyak said that everything his company sells must meet or exceed the factory warranty on the vehicle, so Vogue matches the OEM warranty, and Boeckmann said that warranty plays a large part in which specialty-equipment manufacturers the Galpin businesses deal with.

“Most not only warranty their own part, but also other parts that might be affected if there were a problem,” he said. “The reason we’re in business is to give confidence to customers. If a customer has a problem with one of our installations, we’re going to take care of it for him.”

Even consumers who might not be inclined to personalize a vehicle’s looks or performance might consider adding a feature or function that didn’t come on the vehicle from the factory, according to the survey. Consumers were also more likely to make those types of modifications at the time they purchased a car or truck.

“We go after vehicles and trim levels where our product would seem to fit,” Hinton said. “In many cases, for instance, ordering a factory navigation system may require the customer to upgrade to an expensive package or a high-end trim level. But the customer may not want bigger wheels, a bigger engine, certain trim additions. All he wants is navigation. We are able to provide that kind of product à la carte to satisfy that particular customer’s demand.”

The largest accessory influence on consumers shopping for new cars or trucks came from customized vehicles on display in the showroom, followed by seeing personalized cars or trucks on the road and vehicle brochures.

“A display car often gets the customer’s appetite working,” said Boeckmann. “They’ll buy a car that has upgraded wheels at the dealership but then drive it across the street to the accessory store and get a body kit and an exhaust and other performance parts. It becomes like a hobby to a lot of people. That’s a lot of fun, and that’s the whole key to it. We try to make it fun for our customers.”

The SEMA/AutoPacific survey makes it clear that the availability of accessories has a positive influence on new-car sales. In the next issue of SEMA News, we’ll look at some of the other data from the perspective of new-car dealerships and OEM strategies regarding accessorization.

Mon, 03/07/2011 - 13:22

SEMA News—March 2011

Fresh Data Confirms Pros’ Views: Accessories Influence New-Car Sales

By Steve Campbell

Influence of Accessories on New-Vehicle Sales

A new study commissioned by SEMA entitled “Influence of Accessories on New-Vehicle Sales” confirms what those involved in new-car sales, vehicle dealerships and the customization of new vehicles have believed for years: Accessories help sell new vehicles.
Courtesy of Galpin Auto Sports

A new study commissioned by SEMA indicates that aftermarket products influence about 1,180,000 new-vehicle sales each year. The automotive marketing research and consultancy firm AutoPacific collected and analyzed consumer data to quantify the effect that accessorization has on the sale of new vehicles. The resulting report, “Influence of Accessories on New-Vehicle Sales,” details the findings.

The study looked at the persuasive effects created by accessory products, including which ones are likely to create the greatest influence. It delves into which vehicle types are more likely to be purchased based on product availability. The data also provide information about the influence customized vehicles have on the decision to purchase new vehicles by a range of different consumers, including those who do not normally modify their cars or trucks as well as those who do and, in some cases, those who are most zealous about customization. It also examines consumers’ perceptions of specialty-equipment products versus OEM aftermarket products.

The report is now available free for download by SEMA members ($199 for non-members), and it confirms what those involved in new-car sales, vehicle dealerships and the customization of new vehicles have understood for years: Accessories help sell new vehicles. In recent interviews, professionals in all three camps provided independent commentary that supported the assertions found in the study.

“The idea behind personalized display cars is that people see things they haven’t seen anywhere else when they walk into the showroom,” said Beau Boeckmann, vice president of the Galpin Ford dealership in North Hills, California. Boeckmann is also president of Galpin Premier Collection, a dealership for Aston Martin, Jaguar, Lotus, Volvo, Lincoln and Mazda, and Galpin Auto Sports LLC, a specialty-equipment business with an extensive inventory of both performance and cosmetic accessories. “We’re well known for our customized vehicles,” Boeckmann said.

“A customer doesn’t have to design his own car; it’s already right there. He falls in love with it and—boom—he buys it. We’ve sold many vehicles that way. We’ve earned a reputation over the decades of having things that are different at Galpin.”

Source of Product Information—Internet Tops List

How do you generally find out about aftermarket products? Total Modified Plan to Modify Zealots Enthusiasts Participants
Internet 61% 60% 66% 70% 67% 42%
Saw It on Another Vehicle 34% 35% 25% 43% 37% 30%
Friend or Relative 32% 32% 32% 31% 31% 56%
Magazine Advertisement 24% 24% 20% 37% 32% 7%
Magazine/Newspaper Article 24% 25% 15% 33% 28% 10%
Product Brochure 15% 15% 15% 15% 14% 17%
Auto Show 11% 11% 9% 17% 13% 0%
TV Advertising 11% 11% 10% 7% 10% 12%
Direct Mail Advertising 9% 8% 13% 16% 6% 5%
Mentioned in Article 9% 8% 12% 17% 7% 1%
Newspaper Advertisement 8% 8% 9% 6% 7% 10%
SPEED Channel 7% 8% 3% 10% 9% 0%
Auto Club Events 5% 6% 4% 8% 6% 0%
Other Events/Promo 5% 6% 1% 7% 7% 0%
Radio Advertising 5% 5% 4% 5% 5% 6%
Auto Races 4% 5% 1% 6% 5% 0%
AutoPacific Authoritative Automotive Research & Insight

The SEMA/AutoPacific study supports Boeckmann’s views regarding accessorization and display vehicles. It was conducted using input from three distinct groups. First, was an Internet survey of consumers who either already had modified or planned to modify their newer-model (’07–’11) vehicles. A second Internet survey concentrated on consumers who had not modified their vehicles as well as those who may have been influenced by customized vehicles during their purchase decision even though they had chosen not to modify. The third consisted of telephone interviews with supervising personnel for eight major OEMs, including managers and directors of product planning, parts and accessories operations, accessory planning and consumer relations.

As with many industries, the automotive market suffered a decline over the past few years when the recession created a climate of wariness among consumers. In 2007, for instance, as many as 23% of consumers performed some type of modification to their vehicles. By the time the survey was carried out, that number had fallen to 14%, though, it may begin to rise again as the economy rebounds. Thus, the survey concluded, companies wishing to sell accessories to new-car buyers need to target and market to the core automotive enthusiast or help create interest at the time of purchase when consumers are most likely to be influenced.

“We’re always looking at trends, whether it’s at the SEMA Show or one of the numerous car shows we attend to see what’s out there,” Boeckmann said. “My dad always said that he got the best ideas from customers, so we listen to them to find out what they’d like to see. Our marketing is based on a lot of communication. For example, the Mustang specialist for Galpin Auto Sports will get together with the dealership’s Ford manager to talk about what they’re going to build.”

Ray Ott, director of operations for Auto Trim Design of Cleveland, a restyling and accessory installation business, said that a dealership may sometimes need to go outside its own inventory to please a customer and, in the process, build a reputation for accommodating and delivering on specific requests.

“A dealership supports its manufacturers’ parts programs first, of course,” he said. “For instance, the Ford group we work with has its own accessories, and their auto parts warehouse distributor also promotes its accessory lines. But if the customer wants a specific product—a particular tonneau cover or whatever—the dealership will want to get it for him or her. If it’s a brand name that a company such as Myers Distributing or Keystone carries, it’s an easy request to fulfill.”

Modifications—Top Half

What type of modification(s) did you do/plan to do to your vehicle? Total Modified Plan to Modify Zealots Enthusiasts Participants
Different Tires 30% 32% 17% 37% 39% 15%
Different Wheels 16% 16% 19% 25% 25% 2%
Audio Upgrade System 16% 15% 20% 21% 19% 5%
Navigation System 16% 16% 15% 19% 20% 1%
Satellite Radio 15% 14% 19% 14% 14% 2%
Air and Fuel Delivery 13% 14% 8% 28% 14% 0%
Upholstery/Trim 11% 12% 6% 11% 12% 5%
Accessories and Fluids 10% 11% 5% 13% 14% 9%
Electrical, Lighting and Body 10% 11% 7% 13% 16% 0%
Paint/Graphics 10% 10% 11% 8% 13% 4%
Wiper and Washer 10% 11% 6% 11% 12% 11%
Exhaust 9% 9% 12% 20% 9% 0%
Exhaust System Upgrade 9% 10% 6% 23% 10% 0%
DVD/Game System 9% 8% 14% 8% 11% 9%
Roof Rack 9% 8% 15% 5% 8% 4%
Body 9% 10% 3% 12% 10% 12%
Engine/Performance Upgrade 8% 9% 6% 19% 9% 6%
Grille 8% 8% 11% 12% 7% 0%
Ground Effects/Spoiler 8% 7% 13% 8% 10% 1%
           
AutoPacific Authoritative Automotive Research & Insight

The survey points out that simply seeing modified vehicles influences many consumers, which is all the more reason for dealerships to display one or more of them on the lot or in the showroom to attract traffic. And many consumers consult enthusiasts about both vehicles and accessories, viewing them as experts. Vehicle owners who choose to personalize their cars and trucks often have large spheres of influence with other consumers.

“That is really how my dad built Galpin Ford,” Boeckmann said, “and it’s also how we look at building Galpin Auto Sports. Word of mouth is the best advertising there is. We want to make our customers enthusiastic fans of the dealership and the accessories store. The most important thing we can do is make them so happy that they want to come back, bring their friends and refer people to us.”

Nearly 30% of those who either already have modified or plan to modify their vehicles were influenced to buy a certain model by the availability of accessory parts, the survey found. Aftermarket retailers were the number-one source of that equipment at 48%, but 23% also sourced parts from dealerships.

Tony Hinton is general manager of Auto Trim of Denver, a restyling shop and accessory installation business that works strictly with dealerships and does not offer retail services. He said that virtually all of the 150 or so dealerships his company works with each month carry an assortment of accessories.

“They may use different vendors for products other than those we install,” he said, “but we work hand in hand with those other vendors where we need to if the dealership wants to put together a complete package. We might install one or two of our items on an SUV or a pickup—maybe leather, navigation, mobile video—and then incorporate running boards or nerf bars from another vendor. But we try to facilitate all of that activity.”

Fresh Data Confirms Pros’ Views: Accessories Influence New-Car Sales

The survey said that consumers who were not interested in modifications pointed to price rather than warranty concerns as the reason for their hesitation, and all of the industry professionals we spoke with agreed that alleviating warranty concerns is crucial to their partnerships with new-car dealers.
Courtesy of Galpin Auto Sports

The survey confirmed that the Internet is the source most often used by consumers when they search for information.
Second is actually seeing parts on a vehicle, third is friends or relatives and fourth is magazine ads or articles. Since it is impractical to have display vehicles showing all possible modifications, many accessory businesses are using the Internet as a key marketing tool in collaboration with their dealership clients.

“Our website, www.voguetire.com, has a build-a-car feature on it that allows dealerships and their customers to see different looks,” said Kevin Goyak, executive vice president of Vogue Tyre and Rubber Company. Vogue offers not only a range of tires and wheels, but also easily installed accessories, such as grilles, body kits and spoilers, to more than 500 dealerships each month. “We also use catalogs that are individualized by brand,” Goyak said. “They include all of the products we offer as well as price sheets. We can also custom-make a catalog with the dealership’s name on it. Our salespeople go in with everything they need to make a good sales call.”

The survey said that tires and wheels remain the most-sought modification, followed by audio and navigation. The majority of consumers who personalize their vehicles have someone else do the installation, though, experienced enthusiasts are more inclined to do the work themselves.

“Tires and wheels are the easiest things to change on a car, and they’re easy for a dealership to handle,” Goyak said. “The next item for our dealerships is usually a grille, which is still a big part of our business.”

Ott said that regional factors can also play a part in what sells and what dealerships are likely to concentrate on. “Up here in Ohio, we see a lot of truck accessories—tonneaus, vent visors, bug shields—and we also do a lot of graphics. Remote starts are also big here in the cold region.”

Influences to Modify Vehicle

  • Adding a feature or functionality that the vehicle did not come with is the number-one reason that would influence non-modifiers to modify their vehicles.
  • Those that were influenced would have a higher likelihood to modify if the accessories were available at the time of vehicle purchase.
What would influence you to modify your vehicle? Non-Modifiers Not Influenced Influenced by
Customized Vehicle
Add Functionality/Features Not Offered by the Factory 47% 47% 41%
Guarantee Not to Void Factory Warranty 33% 33% 35%
Accessories Presented/Offered at Time of Vehicle Purchase 32% 31% 38%
Personalize Styling to My Individual Taste 20% 19% 32%
Able to Include in Monthly Vehicle Payment 14% 14% 19%
Other 16% 16% 7%
Source: AutoPacific Authoritative Automotive Research & Insight

The AutoPacific data looked at the advantages and disadvantages that consumers cited when having accessories installed through a dealership as opposed to a retail store. The survey respondents felt that the greatest benefits of working with a dealership were that the modifications could be completed before the vehicle was delivered using OEM parts that carried the factory warranty. On the retail side, consumers cited better pricing and the perception that the installers were specialists who possessed greater expertise than a dealership might offer, and they also said that aftermarket retailers offer higher-quality products. Goyak pointed out that financing also plays a part in making accessory sales more attractive through a dealership. The customer can roll the cost of modifications into the purchase price of the vehicle and add only a relatively small amount to the monthly payment.

“Financing has finally loosened up,” Goyak said. “The last two years have obviously been a challenge, but dealers are now more excited about being in business. That is definitely looking brighter.”

One-third of people say they would be influenced to modify their car, if they were guaranteed not to void the factory warranty, and all of the industry professionals we spoke with agreed that alleviating warranty concerns is crucial to their partnerships with new-car dealers.

“We are very particular about the products we buy,” Hinton said. “They have to meet International Organization for Standardization criteria, and all of our products have to have a minimum of a three-year and 36,000-mile manufacturer’s warranty. Our installers are also very specialized. They are SEMA certified and ASE certified in their particular fields of expertise.”

Goyak said that everything his company sells must meet or exceed the factory warranty on the vehicle, so Vogue matches the OEM warranty, and Boeckmann said that warranty plays a large part in which specialty-equipment manufacturers the Galpin businesses deal with.

“Most not only warranty their own part, but also other parts that might be affected if there were a problem,” he said. “The reason we’re in business is to give confidence to customers. If a customer has a problem with one of our installations, we’re going to take care of it for him.”

Even consumers who might not be inclined to personalize a vehicle’s looks or performance might consider adding a feature or function that didn’t come on the vehicle from the factory, according to the survey. Consumers were also more likely to make those types of modifications at the time they purchased a car or truck.

“We go after vehicles and trim levels where our product would seem to fit,” Hinton said. “In many cases, for instance, ordering a factory navigation system may require the customer to upgrade to an expensive package or a high-end trim level. But the customer may not want bigger wheels, a bigger engine, certain trim additions. All he wants is navigation. We are able to provide that kind of product à la carte to satisfy that particular customer’s demand.”

The largest accessory influence on consumers shopping for new cars or trucks came from customized vehicles on display in the showroom, followed by seeing personalized cars or trucks on the road and vehicle brochures.

“A display car often gets the customer’s appetite working,” said Boeckmann. “They’ll buy a car that has upgraded wheels at the dealership but then drive it across the street to the accessory store and get a body kit and an exhaust and other performance parts. It becomes like a hobby to a lot of people. That’s a lot of fun, and that’s the whole key to it. We try to make it fun for our customers.”

The SEMA/AutoPacific survey makes it clear that the availability of accessories has a positive influence on new-car sales. In the next issue of SEMA News, we’ll look at some of the other data from the perspective of new-car dealerships and OEM strategies regarding accessorization.