| Here's a general
description of how the scheme would work for an unethical dealer we'll
call "Bad Bob."
1. Locate in a Large
Metropolitan Area.
Since many of Bad Bob's tactics might be viewed as unethical, he will
target large-population centers where the consumer is unlikely to know
him. Even if he creates some angry customers who might tell a dozen
people, Bad Bob knows he can still prey on hundreds of thousands of
other people who don't know what he's doing.
2. Buy Giant Yellow Page Ads.
This is the key element of the strategy. Dealers have long recognized
that Yellow Page advertising is a critical element in any dealer's
marketing plan. Since consumers generally need door service only a few
times in their lifetime, they will frequently rely on the Yellow Page to
find a local dealer.
In his Yellow Page ad, Bad Bob's strategy is to give the consumer the
impression that he is credible. Here's how he does it:
- Be huge. Bob buys a full-color ad or
even a two-page ad. The consumers figure, "Gee, if he can
afford a giant ad, he must be credible." They don't need to
know that Bad Bob operates out of a house.
- Be first. Bob does whatever it takes to
be listed first. He will often create a company name that begins
with "A," because he knows consumers will often call the
first name on the list.
- Buy multiple ads. He often buys 2-4 full
page ads or a couple of double truck ads. (2- page ads). With all
Bad Bob's ads listed first in the Yellow Pages, the consumer is
extremely likely to call the phone number on at least one of them.
- Use several company names. Bob often
advertises under several company names, so the consumer will call at
least one of his numbers. The consumer will never know that Bad Bob
is actually the only person behind all these companies.
- Use as many brand names and logos as
possible. Bad Bob is usually not an authorized dealer of these
brands, and this tactic is illegal. Bad Bob knows that his Yellow
Page rep will never check it out. Bad Bob often uses recognized
names like Sears and Craftsman. Even if a manufacturer seeks legal
action against Bad Bob, he knows they will often just send him a
"cease and desist" letter. By then, this scheme will have
earned Bad Bob a boatload of money.
- Focus on service work. Bad Bob's ads use
a big photo of a broken spring to target the homeowner who needs
quick service. Service work and replacement parts have always reaped
a lot more profit than new construction work. Bad Bob doesn't worry
about new construction work; the slim profit margins aren't worth
his effort.
- Promise quick response. Remember: Bad
Bob is targeting service work. His ad highlights "24-hour
service" and Emergency service within an hour." Bad Bob
gets in that garage fast, before a reputable dealer claims the turf.
- Mention "Senior Citizen Discount."
This phrase works every time for Bad Bob. He might go ahead and give
seniors some token discount, but he makes sure his "regular
charges" are exorbitant. The Bob laughs all the way to the
bank.
- Promise "Low Prices." Bob
often uses this time-proven phrase, except he doesn't really charge
low prices. Bob knows that homeowners have no clue as to the real
cost of garage door parts.
- Post many phone numbers. In metropolitan
areas, suburban homeowners like to believe the dealer is in their
neighborhood. So, Bad Bob often publishes a different phone number
for each of the major suburbs, but all calls are transferred to Bad
Bob's one location. A bunch of phone numbers is cheap, and they
make Bad Bob look as if he actually reputable.
- Boast "Voted #1 in Customer
Service." This, too, is false advertising, but Bad Bob
figures that his Yellow Pages rep doesn't care, and no one realizes
that Bad Bob is the only one who cast a vote! By the time Bad Bob is
forced to remove this from his annual ad, he will have scammed
hundreds of people for mega-thousands of dollars.
- Look reputable by displaying certain
pictures. Good examples: (1) clean-cut guy with a uniformed
shirt and clipboard, (2) new service trucks with Bad Bob's logo on
them, (3) expensive looking houses. None of these need to be real.
Bad Bob knows his Yellow Page rep can get these images and will even
print Bad Bob's logo on the side of a picture of a blank service
truck.
3. Negotiate Lower Prices for
Yellow Page Ads.
Since the Yellow Pages are Bad Bob's largest expense, he must get the
lowest possible price for these ads. To do that Bad Bob is often part of
a national chain of sleazy door dealers. That way, the chain's
"central office" can negotiate sweet deals with low national
rates.
4. Charge Exorbitant Rates.
These Yellow Pages ads often cost Bad Bob $250,000 or more than $1
million per year. To pay for that, Bad Bob needs to maximize profits. So
Bad Bob doesn't mess with measly 10% mark-ups. He charges 5-20 times
each part's real cost. When the scheme is working properly, Bad Bob
rakes in more than $100,000 per week.
5. Use Subcontractors as Technicians.
Bad Bob needs to motivate his service guys
to cooperate with the scheme. If Bad Bob pays employee-technicians by
the hour, he knows that the tech will have no motivation to rack up a
big bill and finish the job quickly. If the technicians are salaried
employees, Bad Bob usually needs to buy their trucks and tools and pay
benefits and vacation time.
Instead, Bad Bob hires subcontractors who often have their own trucks
and tools, and he pays them an attractive commission on each ticket.
This gives them every reason to generate big tickets with every
customer. Subcontractors are more likely to understand profit motive and
are less likely to wimp out when Bad Bob tells them to rack up at least
$400.00 in charges to each customer.
6. A Warehouse is Unnecessary.
Why should Bad Bob pay for warehouse space, when others will do it for
him? Since most of Bad Bob's income comes from service work, he doesn't
need to own a big warehouse that stocks complete doors. Bad Bob's subs
can pick up springs, openers, parts and replacement sections at any of
several wholesale warehouses in his area.
That's another reason why this scheme works best in large-population
centers. There are always plenty of distribution centers and wholesalers
who unwittingly cooperate with the scheme.
7. A Storefront is Unnecessary.
A storefront might add a little credibility, but Bad Bob knows that it's
really unnecessary and way too expensive. Bad Bob often runs this entire
scheme out of his own house, and his Yellow Pages ads usually don't list
a physical address.
As the ads generate hundreds of phone calls, Bad Bob just takes calls
and collects money.
What if Bad Bob gets caught? No problem. He
just takes his boatload of money and moves on to the next big city.
Note: Many of the above tactics can be
a part of an appropriate marketing strategy, but problems arise when
several of these tactics are used to deceive the public.
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