SPECIAL REPORT: SUCCESS STORIES: DECISIVE ACTION
Photo courtesy of Energy Suspension
How two performance manufacturers are meeting the challenges of an unprecedented slowdown, and what your business can take from their experiences.
At the beginning of the coronavirus pandemic in March, there was much concern about the economic ramifications for the performance aftermarket. Ongoing industry research, however, indicates that motorsports manufacturers and retailers have been busy innovating while adapting to and overcoming the challenges presented by these most unusual circumstances. In fact, specialty-equipment suppliers and resellers continue to express general optimism about their prospects going into 2021, according to research by the Specialty Equipment Market Association and others.
Energy Suspension is a case in point. Based in San Clemente, California, the manufacturer of polyurethane suspension and engine mounting components adopted a number of best practices early in the pandemic and is now among those companies reporting impressive growth.
Another is Hot Shot’s Secret, based in Mt. Gilead, Ohio, which specializes in additives, oils and lubricants, and conducts everything from R&D to blending to bottling and packaging in-house. Its products are carried in over 25,000 retail stores nationwide, and sold internationally as well.
As part of our efforts to highlight and share successful business strategies, we recently spoke with Dennis Grau, the national sales and marketing manager for Energy Suspension, and Kyle Fischer, the director of sales for Hot Shot’s Secret. Following are key takeaways from our interviews, edited for clarity and brevity.
PRI: A good number of aftermarket companies are reporting steady and even growing business despite the COVID-19 interruptions. How would you characterize your company’s situation since March?
Dennis Grau, Energy Suspension: Business has been robust, and I don’t know how to say it any other way. We’ve had to add a second production shift. Our sales took a dip in March when COVID-19 was first announced and [the country was] shut down and there was a lot of uncertainty. But ever since April it’s really taken off. We’ve had to add to our customer service team just to meet the demand and the phone calls. It’s all just short of record breaking.
Nobody wants to be in the middle of a pandemic, [but] certainly I believe that this has created a new awakening or renaissance of former pending projects, or just going back to working on our own cars. We don’t sell direct to the consumer—we respect the channels. And just based on customer volume, I believe that the fact that people are working on their vehicles again is a trend that we’re going to enjoy for a while.
Kyle Fischer, Hot Shot’s Secret: The best way to characterize it is that I think we saw the start of the slowdown, if you will, from the consumer side, just like everybody else did at the beginning. We sell basically through three different vehicles: We sell on our website, direct to the public; we’re carried in original brick-and-mortar stores across the nation; and we also have a direct sales department that sells to independent dealers nationwide.
And I think we saw the web sales start to slow down first, which is your biggest indicator from the consumer side. And then we started seeing the retail and our independent dealer site start to slow down a little bit. So we knew that there was a lot of unknown in the marketplace.
At the beginning of all this, it was a scary time. You know, it was something that we had to look out, forecast, and kind of come up with a game plan to go forward.
PRI: For Hot Shot’s Secret, I suspect now would be the time to talk about how your company responded with the hand sanitizer and anything else that you did.
Fischer: We’re nimble enough that we’re always thinking and evolving. So when this opportunity—well, where most people see a challenge, [we] like to think of it as an opportunity—so we looked at the marketplace and asked how can we supplement our business? What opportunities are out there? How can we help?
And so at the time, there was a huge demand for hand sanitizer. And what we specialize in here is blending, in our chemistry, in our R&D. We have a staff [of experts] here whose job is to formulate chemicals, and those energies are usually spent toward the automotive market. However, you look around and you work with what you have, and we said, “Well, we’ve got plenty of bottling lines here, capabilities of blending and packaging. And at that time, the government put out kind of an all-points bulletin. Any businesses in America that had the capability of blending and bottling and packaging hand sanitizer, the government was creating opportunities and giving approval to help fulfill the demand across America.
So we got the facility approved by the FDA to produce a World Health Organization- and CDC-approved formula of hand sanitizer. And I think we manufactured 300 gallons at first just to put in four-ounce bottles, and we donated all of that to our local hospitals, police, fire, retirement homes, schools, nurseries—places that really needed it. And so it largely was intended just to be a donation thing at first. And it kind of took off from there—word got out that we were manufacturing hand sanitizer here in Mt. Gilead, and calls just kept coming in saying, “I’d like to purchase some for my business. I’d like to purchase for my school.”
At the time we didn’t have it for sale; we had no intentions of going into that industry, if you will. But the phone calls didn’t stop, so we got together and we said it’s an opportunity; we’re fortunate to have the capability to do this, and there’s a large demand, so we can help fulfill a need right now. And, it also is a supplemental revenue right now when we’re looking at a slowdown in our normal revenue stream. So we went ahead and cranked up full production, and we went from a 300-gallon plan to probably millions of gallons at this point now. So it really took off like wildfire to be able to fulfill this incredible demand that we had here in the United States due to the pandemic.
PRI: What about your facilities at Energy Suspension—have you had to change anything in your processes and procedures over the past several months? And how have those changes been received by the employees and staff?
Grau: Yes, we closed for a day to plan. And everybody is taking every precaution that the state requires on social distancing. Every employee has to wear a mask, [use] hand sanitizing stations, and we take everybody’s temperature three times a day, at beginning of shift, then lunch and after lunch.
[And] I think it was well received. I mean, like anyone else, I don’t want to stand in line and have my temperature taken. But we are working, and we’re at full capacity. For the production folks and the hourly employees, there’s as much overtime as they want. So I think it’s a minor inconvenience compared to being able to work.
PRI: Let’s talk about the sales and marketing channels, and some of the other components as well. Would you like to fill us in on those?
Fischer: Sure. This really comes down to just being creative with your business during very tough times…when we have to sit down and create a marketing plan and decide which benefits of this product are the most marketable, if you will. How do we reach the customer? What is the customer looking for?
We had to re-evaluate where the consumer is really at right now. Because when the lockdown hit, now all of a sudden they might be driving 90 percent less than they were, so we can’t market our product the same way. And now some of the benefits of our products, such as increasing fuel economy, miles per gallon—it doesn’t hit home as hard as it does when people are spending a lot of money on fuel.
So we’ve adjusted our marketing to educate. One important thing to get people to understand was that their car is now sitting longer, [so] giving them an education on fuel stabilization. Another would be on the oil side, how oil still gets acidic as it sits. It brings up those types of questions. So we have the same great products we’ve had, but there’s been an alteration in how we position the products and market them to educate not a new consumer, but a new environment that the consumer is in, and having to adjust to how those environmental factors affect our products and how they’re used.
PRI: And in that educating of consumers, how exactly are you guys doing it? Which channels are most effective—web? Print? How are you getting the word out? How are you doing your branding in this climate?
Fischer: Well, we’ve really turned up the wick a lot on digital, [including] social media, [and] even through some email campaigns. We’ve had the greatest reach through digital, and I think this has been seen a lot in the industry, and a lot of our marketing research has shown us that time spent online and your digital reach have gotten a lot further in this environment. Again, because people are at home, they’re in front of their computer, they’re—I hate to put it—bored, and they’re spending longer times online right now.
So when you get a more attentive audience and you know right where they’re at; we re-evaluated our marketing channels and really doubled down a lot on digital to reach that type of audience during this pandemic.
PRI: And of all those digital channels, I’m assuming it’s Facebook and Instagram and all the usual suspects… Which of those channels or which mix has been working best for you?
Fischer: I would say Facebook has been the biggest surprise to me as the most successful. The more attentive that we can have an audience, and the more we can educate an audience, the better for us.
We often look at these marketing channels by reach and how far you can get your message across. We actually try to look at it as how deep we can go with them. I’ll take less eyeballs but a longer ear any day of the week.
Since this has all started, we’ve found that we’re getting more reach on our educational pieces, even through our Facebook videos to our YouTube channel, where we put up a lot of, you know, “sciencey” stuff. It isn’t the real flashy, fun stuff where we have videos of our race cars all the time that people like and share on social media. Instead, it’s actual breakdowns of oil viscosity shearing and how it happens in your motor, and people are really being attentive to it. We’ve seen that really spike up since this pandemic, and I think it’s a byproduct of it.
PRI: That’s an interesting phenomenon that you’re observing, that the type of content that people are consuming, not just the subject matter, but the depth of the content, has changed in this whole thing.
Fischer: Exactly. And we hope it holds. We hope we’ve captured some people that have found a benefit in it. And when we get back to whatever normal will be, [we hope] they will continue to come back for more education.
But we certainly have seen that it’s a benefit to us to be able to deeply tell the science behind our stories. And we found a more attentive audience in the past six months than we have in the past six years.
PRI: In terms of sales and marketing at Energy Suspension, even though you don’t sell direct to consumer, have you had to change your messaging or how you market with your sales channels?
Grau: We haven’t, because I can only assume based on the volume of orders that our customers—at least within our categories—are having similar growth. So we haven’t had to change other than to add people.
But the messaging is the same. Other things we’re doing are a little different because we believe now that people are back turning wrenches on their cars; it isn’t going to be short term. This is going to be a longer-term opportunity. So our R&D team is working extra hard to identify new SKUs that we can add to the line, [and] the production team is expanding, and we have a second shift now. But it’s identifying where we can grow in the marketplace.
PRI: Has anything particularly surprised you as you have adjusted to the changing business climate?
Grau: Certainly the sales growth was not expected, so that was the biggest surprise. But I think that, you know, I spent a lot of years over on the traditional side of the business, and what we’re experiencing now is people are using Energy Suspension parts on general repair. So we’re starting to see some new interest from over on the traditional side of the business with our polyurethane components. So that’s been a really pleasant surprise.
PRI: And for you, Kyle? Are you guys still seeing growth? Where are you right now at this point in the year (late August)?
Fischer: Well, right now we’re absolutely booming, and it has been quite a wild ride. I’ll never forget 2020, I’ll tell you that much. When the hand sanitizer game plan came into play, it really supplemented those first couple of months when, number one, there was a huge need for hand sanitizer, and number two, we had a real slowdown of our oil and additive side of the business.
But by the end of May, and certainly once we were into June, of our three channels, we started seeing numbers going up first in the retail side. That was a good indicator to us, saying, “OK, people are finally getting back out, they’re taking those weekly trips not just to the grocery store, but they’re stopping at the auto parts store and they’re picking up some items.” And this gave us an opportunity. We had a hunch that a lot of people were maybe knocking out some of those automotive projects at home.
Since then we’ve had record high retail sales numbers, higher than our company has ever seen. And I can only credit it to the fact that people are home now using their extra time that they have to pick up some of these automotive projects.
And one more thing to tie it back into how they’re consuming the information: A lot of the educational content we’re putting out is just how-to stuff based on automotive [maintenance and projects]. And we’re hoping we’re smart enough to think that people are consuming that content, then going to the retail store and saying, “You know what, I usually stop by a Jiffy Lube to get my oil changed, but I might change the oil myself. I might add some additive the next time out, or I might try this product.”
Once we really got into July all sides of our business have been really firing [on all cylinders], even our website. Our direct-to-customers is also doing great.
PRI: What are some of the game-changers—things that you started in response to this whole situation that now you’ll probably embrace as a matter of course, moving forward, as part of your business model?
Grau: I think, traditionally, Energy Suspension has been viewed as a classic car line [for those doing] some serious restoration work putting on a body mount. But I think what we’re going to be forced to do is look at new applications, and do a lot more research into replacement rates and percentages of the overall vehicles in operation (VIO), and then see how we can plan our research and development needs accordingly.
What we’re working on right now is a brand-new website that’s going to promote, obviously, our products, but we also want to [educate] our customers on where to buy. We want to reach one step further and come up with a dealer population to help direct consumers. Motor mounts are not something that every DIYer can do, so we want to identify sellers and then drive traffic to them. So the website is our number-one initiative, along with a very robust marketing effort so that we can really drill down and educate the casual enthusiast about our products, and most importantly, the benefits of polyurethane.
Fischer: That is the million-dollar question around here. Regarding the hand sanitizer, we don’t know what the long-term plan is for that. We’re certainly still in the pandemic stage where the demand is there. So we’re going to continue to produce hand sanitizer as long as it’s needed.
Besides the obvious with the hand sanitizer…. I’ll just say that I’m very fortunate to work in a company that’s very creative, never taking anything for granted, always trying to be ahead of the curve. And everybody in this company is encouraged to bring ideas to the table and always try to think of the next thing.
To see that we not only survived, but thrived through this pandemic, it really gives us confidence that we can take on anything. It gives us confidence in [how] we look at problems as challenges and opportunities. I’m sure when the next [challenge] comes, we’ll have the confidence that we’ll make it through and we’ll figure it out.