Dec 3, 2009

Are you diversified? During this economic downturn, many businesses continue looking for ways to increase the number of revenue streams, and diversification has become a buzzword. Many view it as a shrewd option and others as nothing more than an additional headache.

Others are skeptical as to how well it would work; those businesses might do well to listen to Paul Zaccaria talk about StreetStyle.

Eight years ago Zaccaria founded StreetStyle, in St. Charles, Ill. But he’d became involved in the aftermarket 10 years earlier in a high-school co-op program and worked at a stereo shop as a salesman.

Learning from the ‘good guys’

Zaccaria says he has always enjoyed stereos and cars, and in high school he often installed stereos in his friends’ first cars. He worked at his high school job for a couple of years, and after graduation he got hooked up with a job from a distributor he had dealt with while working at the shop. The distributor dealt with Pioneer and other car audio suppliers.

“I worked as a manufacturer’s rep and distributor for a long time,” Zaccaria says, opting in 2000 to start his own business. After working with good guys his entire career, he was ready to become his own boss.

“The guy I originally worked for in the stereo shop was a great guy. He was in business for a long time; he’s probably still in business,” Zaccaria recalls. “I learned a lot and picked up several great habits from him. He wasn’t a millionaire, but not many people in this business are. If you get into it thinking you’re going to become rich, it’s not likely to happen, although you can have a very comfortable life.”

A comfortable life built around a career he loved sounded pretty good to Zaccaria, and he had good examples to follow, as each of the bosses he worked for retired early and comfortably – not rich, but comfortable.

“I saw what they did when working for him, took a look around our area and saw that not a lot was going on. I decided it was the time to do it. I didn’t have any kids at the time; I went for it,” Zaccaria remembers.

Well sited

Zaccaria chose his first site well, as that’s where he continues to operate his business from eight years later. Altogether, including installation, retail and office space, StreetStyle has 2,000 sq. ft. to operate within.

Describing the town he’s located in, Zaccaria informs us that, “St. Charles is a fairly affluent area. The average annual household income out here is $150,000. We’re definitely doing a lot of higher-end vehicles, so we’ve got to be clean and respectable, and know the vehicles and the products. There’s not a whole lot of direct competition, but there are a couple of mass merchants such as Best Buy and Computer City – though I don’t know how well they’re doing right now.”

The free-standing building is located in a sort of car-care mall, with a quick-lube shop and Merlin’s Muffler & Brake as neighbors. And, “we’re situated by a Dominick’s grocery store, and a Wendy’s, Krispy Kreme doughnuts, Blockbuster video, etc.,” he notes.

Zaccaria’s good friends with Merlin and they send customers back and forth and help each other out. Zaccaria tells us that he and Merlin have both seen more customers spending money on repairs and maintenance. “Before, a $2,000 repair might inspire someone to buy a new car. Now, they’re saying, ‘Fix it,'” says Zaccaria.

Straightforward approach

Providing more information on those customers, Zaccaria explains that they are the standard slice of demographics: 16- to -50-year-old men. Their vehicles run the gamut.

“We don’t discriminate. We’ll do a lot of contractor trucks, and then we’ll do their personal vehicles, which are often higher-end, bigger-dollar vehicles: Porsches, Escalades, Mercedes,” Zaccaria says.

Describing a typical project, he says, StreetStyle might first work on a client’s wife’s vehicle, usually the typical “soccer-mom,” and put in TVs and a remote start.

“If you can hold onto these customers and build a relationship with them, they have good money and will spend it with you,” he says. “I’ve learned that if you’re honest and upfront with them, and tell them the way it is, most of the time people like that and will respect that.”

That straightforward approach accompanied by dedicated customer service has earned StreetStyle a sterling reputation in the town.

“We treat every car like it’s our own car. It doesn’t matter if it’s a Chevy Cobalt or an Aston Martin, we treat them like they’re our own car we’re installing product in; we don’t hack anything. People see that, and those people have friends. Those friends have a look and listen, and that brings in more business,” says Zaccaria.

StreetStyle doesn’t limit itself to any single side of customization, nor does it limit the vehicles the team works on. “That’s part of being a one-stop shop. We’ll work on pretty much any car or truck, but the truck market right now is a little soft. We do have a couple of contractor accounts, though, and they get a lot of Weather Guard, sidesteps, back racks and other heavy-duty truck stuff,” he says.

Zaccaria also confirms that while people aren’t buying new trucks, they are customizing their older, paid-for trucks. “People are keeping their vehicles longer and spending more money on general maintenance and repair, and fixing the car or truck up versus having a car payment.”

At the core

Breaking down his company’s diversification into categories, Zaccaria explains to us that, “performance, restyling and mobile electronics are the three mainstays of the business.”

Commenting on diversification, Zaccaria says it’s something StreetStyle has always done.

“It’s something we jumped into when we opened up. We’ve always done all three. There was no, as we saw it, one-stop shop around. There aren’t too many places where you can bring a vehicle and have it completely customized,” says Zaccaria.

He adds that SEMA and others have done studies that show if people are going to spend money on accessories, they usually do it within 90 days of a new vehicle purchase, and the average expenditure is approximately $1,500-$1,800.

“Why come here for the stereo, go to another shop for the grille guard and then yet another shop for performance? We try to make it convenient for those customers to do all of their shopping here.” Zaccaria adds that if there are any problems, it’s nice for the customer to only have to return the car or product to one shop.

“A lot of people, especially the older crowd, like that. They don’t want to go from store to store, and they’re not comfortable dealing with someone online, because they never know who they’re dealing with or what they’re going to get,” says Zaccaria.

He adds that if an online retailer sends someone the wrong part, “He doesn’t have to care. He doesn’t have to see you or deal with you. He can afford to screw over a lot of customers and still make money; whereas, if I did that, I wouldn’t be here. This is St. Charles. I live here. I have to look these people in the eye, and when I do, they tell me, ‘You’re honest,’ and I go, ‘Yeah, if I wasn’t, I’d be out of business.’ That goes into the reason we have the picture book.”

The silent salesman

The “picture book” contributes to sales, Zaccaria says: “That, honestly, is huge.”

The story behind the picture book goes back a ways. Zaccaria says that in addition to being a car geek, he’s also a retail geek.

“I pay attention to different displays, how people dress up their stores, and also the clutter and junk some of these stores have. It helps me see what I don’t want to do as well as what I’m doing right,” says Zaccaria. “For example, I think you have to have some glass showcases and keep them clean. Keep them looking professional and polished.”

He also likes to get creative with his displays to tie them into the industry. “The bottoms of my displays are lined with car glass, broken windshields. It’s smashed up, and at nighttime, with the lights on, it gives it a real nice reflection and sparkle. People come in and say, ‘Wow, look at that!'”

The picture book is an evolution of that type of creative retail thinking. “We wanted to show off what we do to give people ideas. It’s an excellent silent salesman. It’s in a prominent spot in the store, so while I’m finishing up with one customer, others can look through the book.”

Zaccaria says that in addition to demonstrating to customers that the shop does quality work, the book will give customers plenty of ideas for their own cars by showing them examples of the work StreetStyle has done. Many of those ideas are things they’d never thought to ask about before.

“They’ll say things like, ‘Oh, I never thought about putting rims on that car,’ or, ‘They do performance, too! I was just coming in to get some nerf bars.’ That’s why it’s a great silent salesman,” says Zaccaria.

He adds that people love seeing real vehicles. Every photo is taken in front of the store, and StreetStyle takes before, during and after photos. He refers to the book as a sales aid.

“People ask why we’re charging a certain amount for an installation, something like a lift kit. I’ll grab the book, and show them photos of the thing all torn down. I’ll say, ‘This is your $50,000 truck. Here are the hours of labor this involves. Look at how disassembled this is. Do you want to do this at home in your garage on nights and weekends? Also, look around at the tools in the shop. Do you have any of this stuff? See the guy working in there? He looks like an old man, but he’s certified and knows exactly what he’s doing; he’s been doing this for years. We’ve got an alignment machine; it’ll be perfectly balanced. Do you really want to do this, sir, or do you want it done right?”

However, the photo book doesn’t make itself. “It’s a lot of work to take nice pictures, develop them, label them all, put them on nice paper and put them in professional sleeves and then put them in a very nice presentation photo album.”

Dealer work: To do or not to do

Commenting on dealer work, Zaccaria says people ask him about it often.

“Out here, you either live and swear by dealer work, or you hate dealer work. I try not to put all of my eggs in one basket and do too much car dealer or wholesale work. I know how much of a pain they can be about getting payment in on time. Net 30 turns into net 60; they stretch it out and stress me out. I obviously have friends in the industry; some do retail stores and some do car dealer work. My buddies who do car dealer work are dying. They’re having a really tough time,” says Zaccaria.

He adds that they used to make fun of him for doing retail work. “They used to say to me, ‘You’re really going to do retail and deal with all of that B.S., the long hours and the holidays?’ And I said, ‘OK, you do the nine-to-five with the car dealers, but you’re waiting to get paid, you’ve got to hunt down keys, find the people, get a purchase order and more. On top of that, a car dealer will say anything in the world to sell a car, and you’ve got to live up to that.'”

Zaccaria reminds that, right now, no one is selling cars.

“I don’t care what state you’re in. The car market is tough. Cars are not selling the way they were, and they’re trying everything. Guys that were relying solely on car dealership business have it tough right now. They’re almost forced to diversify or risk going out of business.”

Website as marketing tool

StreetStyle uses its company’s website to even more present its professional image.

“I know people swear by websites or hate them,” Zaccaria says. “But these days, you almost need a website, especially to let people know who you are, where you are and what you do. With the diversification of our business, it’s almost impossible to sell parts, and so we do not do that yet on the website. But our customers do go online, and there’s a video about our shop. The site tells where we’re located, our hours, e-mail and links to a few manufacturers’ websites. But, I don’t have many of those, just because I want to keep them on my site for as long as possible.”

He adds that photos of his company’s project vehicles are posted there, as well as the latest work and special projects they have completed.

“We try to categorize them so that if you’re looking for video, you can see the mobile video installations we’ve done. We also have a special we put on the home page that we change every couple of months,” Zaccaria adds, noting that the website is intended to drive business to the shop.

It’s a good method for marketing the business, as well, says Zaccaria, adding that StreetStyles has cut back on its Yellow Pages advertising. He also notes that he makes a point of tracking his advertising and asking customers how they heard about the shop.

“Over the last year, we’ve heard from customers that they either saw our website or saw one of our cars at an event. We’ve scaled back other forms of advertising to do more Web marketing and to go to more events. All of that is oriented towards us being a community business,” he says.

He adds that the shows rarely lead to immediate business: “It’s all down the road. You never know who you’re talking to at these shows. They could come to us with a big project, or they might not come to us at all.”

Zaccaria also gives out color-coded 10% discounts on any purchase in the store, which he then uses to determine which events bring StreetStyle the most business.

Diversified path

Lit up by the headlights hitting the horizon of StreetStyle’s future may be their status as bushwhackers, clearing a path for diversification. Tough economic times inevitably lead to consolidation of some sort. Businesses that have seen previously strong revenue streams dwindle to a weak trickle would do well to take a look at the example of StreetStyle.

As for the company’s owner, Paul Zaccaria did get in showing everyone how smart his business model was. “In case you can’t tell, I’m a car guy, and I enjoy my job,” he says. With plentiful sources of income, he’s going to enjoy that job for quite some time.