Military Installation

Dec 3, 2009

For Mike Logemann of Premier Autosound in coastal Chesapeake, Va., having a business location within earshot of the handful of military bases surrounding the Chesapeake Bay means more than just physical security. With an economic downtown that might have put a financial pinch on mobile audio retailers around the country, it has also meant a bit of additional job security.

Since opening the business in 1993 about an hour and a half outside of Richmond, Va., Logemann and his staff have seen near constant annual growth in revenue due in large part to the booming business supplied by the nearby bases: two Marine, two Navy and one Coast Guard. And it doesn’t hurt that those facilities are among the largest in the country; including Norfolk Naval Station, Naval Air Station Oceana and Langley AFB, the latter home to the U. S. Air Force’s 1st Fighter Wing.

“The military influence on our business is huge,” says Logemann. “There’s no doubt that it’s one of the main reasons we’ve been so successful since we opened. That has allowed our area to be cushioned from the bad economy that everyone is feeling right now. The reality here is that the military people have secure jobs and are getting paid, and that’s fortunate for all the retailers in our area, automotive or otherwise.”

Help from the military

Logemann estimates that about 40% of his overall retail business – which itself accounts for about 95% of his total business – comes from sales to military personnel. Having this reliable base of retail clients has allowed him to focus almost exclusively on that work, while having little need for the wholesale dealership business that keeps most retailers afloat.

“[The new car dealers in his area] are mainly small- and medium-sized dealerships and they haven’t embraced accessories much at all, unfortunately,” he says. “In Virginia Beach, which is about 30 minutes away, the big guys have embraced it wholeheartedly, but most of them have in-house accessory shops.

“I don’t understand why our closer dealerships don’t do more aftermarket packages,” he adds, noting that there are Nissan, Scion, Toyota and Chevrolet dealerships “within a baseball’s throw” of his shop, but it doesn’t translate to a steady amount of business. “Occasionally they’ll send a car down for overhead video or tinting, but not nearly as often as I would expect. Other shop owners in other markets tell me they do a killing in dealership work, but we don’t.”

That, fortunately, isn’t much of a concern, with about as much military and civilian retail business as the 7,200-sq.-ft. facility – which is divided about equally between retail and installation space – can handle. Logemann says it’s all for the better.

“Management only stays in place [at most dealerships] around here for a little while, and while the good ones are in their positions, we’ll be doing a lot of work. Then the next day we’ll do none and they’ll be doing their own thing,” he says. “We have a high-traffic, high-visibility location, and our retail customers are more stable for the business. We know how many will come through the door, and that means we don’t live by the fickle whims of the dealership, which might go from 20 cars one month to none the next.”

New business models, new customers

Logemann describes Tidewater, Va.; Virginia Beach, Va.; and Suffolk, Va.; all as being primarily middle income, working middle-class communities for the most part. They all have large military components, and there are very few ultra-high-end businesses: “There aren’t multiple Porsche or Lamborghini dealerships in most of these communities. This is F-250 country around here.”

Despite local drivers’ propensity for tow-capable vehicles, it wasn’t enough to keep a local Ford F-150 plant from shutting down about three years ago. While it was initially “more of a mental blow to the community, people were proud of it,” Logemann says, noting that he sees it simply as a smart business move by Ford.

“It wasn’t totally detrimental because of the military presence here,” he says. “But a lot of people just couldn’t believe it. It was the second-highest producing plant for Ford in the country. In hindsight, though, Ford may have stopped the hemorrhaging before the other major truck makers. People didn’t get it at the time, but they [Ford] seem to know.”

Score one more for the benefits of having thousands of federal employees in your area. But, lest you think that’s the only way Logemann has kept his business afloat, he’s also taken some decidedly proactive steps toward diversification, as well. In addition to his bread-and-butter mobile audio work, he’s also created a name for Premier Autosound in the marine and RV markets.

His shop – which is laid out in a traditional urban, open-floor plan design – has designated spaces for a woodworking shop for custom jobs, and welding and plasma cutting stations vital to his marine and RV work.

“We started dabbling in marine and RV installs a few years ago, and that has been surprisingly good for us,” says Logemann. “We started with simple stuff, TV systems for RVs primarily. That mushroomed into fabricating custom cabinets in our wood shop. Those customers told their friends and so on, to the point where we now sell rooftop Direct TV antennas, satellite TV systems, swapping in high-definition TVs and a lot of other related work.”

Premier Autosound is planning to dedicate about 25% of its showroom space to an 18-ft. jet boat, more or less gutted mechanically, with the engines removed. When completed, the boat will serve as a massive display for the company’s marine installation talent.

“Nobody else in our area has anything else like that, and by the time we have it ready for spring, it’s going to really show our dedication to the marine market in this area. It will get people talking, without a doubt,” he says.

Work for a different kind of marine

Logemann says that this type of diversification isn’t just an opportunity for mobile audio retailers today; it’s a necessity in a market that is shrinking each year.

“Any shop owner has to look at where he wants to be in 10 or 15 years, and decide what their business will look like,” he says. “This isn’t the ’80s, and we can’t just slap a subwoofer in every car that’s going down the road and be successful. Internet retailers are creating a huge pricing challenge for mobile audio, and most of the products that used to sustain a shop like ours are available online at pennies over cost.

“The marine work wasn’t necessary before because the auto work was so heavy,” he recalls. “Our intention was simply to stay in the black. Lo and behold, we probably should’ve been doing it all along. There’s less competition in both marine and RV. Those customers have the money, they already bought the toys. All they need are the accessories.”

To offset the aforementioned price challenges, Premier Autosound focuses its efforts on products that require a technical or time-intensive installation: “The service end is what most shops live and die by today, and it will be even more that way in the future,” Logemann says.

Logemann’s advice to other shop owners who might be considering a move in a similar direction is simple: Be prepared to tailor your business to the needs of a new customer. Even the physical location of a shop catering to RV or marine customers needs to be set up with those needs in mind.

For instance, shops need a physical space that conveys the operation’s knowledge of the new markets. And an RV customer, says Logemann, will likely require secure storage of their high-dollar vehicles while work is being done, and locations that are easily accessible from a major road.

“We have a fenced-in compound and a huge parking lot that would probably fit six RVs on the side of the building,” he says. “Customers have called in advanced to make sure they can get in with their tow vehicle, and they spend so much money on these boats and RVs, you have to have security.”

Most shops don’t have the luxury of having bay doors and work spaces that accommodate a massive RV. But, if a shop doesn’t, and thus doesn’t have the ability to work on an RV in extremely hot or wet weather, it can be a deal-breaker, Logemann notes.

“Other than logistics, you also have to plan that the job will take longer than you expect,” he adds. “Something painfully simple will take hours longer than you expect. Estimating time is difficult at first. You just learn as you go.”

Look, and market, sharp

Of course, quality is as much – if not more – of a concern for RV and marine customers as it is with automotive ones.

“[RV and marine customers] are not necessarily more concerned about quality,” he says. “My BMW and Mercedes customers are very meticulous and they are very hard to satisfy. But all customers are, really. It’s tough, but you strive to do your best on every job.”

And the reward for these additional concerns, says Logemann, can be the difference between simply staying afloat or getting ahead – and it’s not considerably more difficult to attract the new customers.

“Our marketing plan is stupidly simple. It’s just Yellow Pages ads,” he says. “In our area we’ve got four different yellow page books. I’m in the two biggest, with display ads in the five sections that most apply to the work we do.

“The way we see it, you can spend a lot on advertising, or you can spend money on your location and making it better,” he adds.  “We’ve tried radio [advertising] over the years with minimal response and a little local TV, which was all right. But none of those paid off over the long term.”

More than anything else, its word-of-mouth that has done the most to grow the business.

“We don’t even invest that much into our website and we get great traffic on it,” he says. “A lot of that has to do with building a reputation in our area. You follow trade magazines, accessory and boat magazines. And we’re always looking for the next new toy. There is no magic to it, no crystal ball. You try to be first in your market to bring the new products to the customer. You try to have all the cool stuff and be known for that.”

Salute your staff

The final piece of the puzzle for Premier Autosound is building a knowledgeable, reliable staff to keep those customers coming back. Not surprisingly, Logemann finds people through the same reputation-based, word-of-mouth process that attracts many of his customers.

“Finding great staff is honestly done best that way,” says Logemann, who was an installer himself for years before opening Premier Autosound. “Great installers know great installers, and that’s all we hire here.

“We don’t hire salespeople; they’re all installers,” he says. “We’ve always found that installers know best what will work and what won’t, and that’s what the customer needs to know. We have an older staff in comparison to most stores like ours, and all the other guys have been with me a long time. They’re a very good crew, and they understand that increased revenue equals a safe job and regular paychecks.”

With that rock-solid philosophy – along with their sterling reputation and diversified business model – it won’t just be the local military personnel that have secure jobs and paychecks in years to come.