New focus: Pre-installation, big retail groups

Off F&I menus, LoJack sales perk up

New focus: Pre-installation, big retail groups

LoJack’s Ortiz: Turnaround plan
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A couple of years ago, LoJack Corp. was starting to look like an afterthought.

Sales were trending down as LoJack's anti-theft system, typically sold to car buyers by dealership F&I managers, competed for attention with extended service contracts, guaranteed asset protection policies, fabric guard and rustproofing.

Then company CEO Randy Ortiz had an insight: Get LoJack out of the F&I department -- where it often got lost on menus listing a dozen or so products -- and into the showroom.

To do that, the company would offer to pre-install LoJack devices on a dealership's vehicles before customers buy them. Then the store's salespeople could pitch it -- and possibly close sales -- before car buyers enter the F&I department.

If a car buyer declined to purchase LoJack's service, the dealership would simply deactivate the system's radio transmitter.

"On the showroom floor, we can present the value proposition," Ortiz told Automotive News. "Now we're not part of a list of 12 or 15 products that the F&I manager pitches in a compressed period of time."

The pre-installations give dealerships a strong incentive to pitch the product. LoJack's $695 list price allows dealerships a generous profit margin, but if a customer doesn't buy it, the dealership eats the cost.

According to Ortiz, dealerships can make money as long as they sell at least 40 percent of their pre-installed LoJacks. Sales rates have ranged as high as 90 percent, Ortiz said.

The pre-installations were the first step of LoJack's turnaround. The next step was to get the field organization to prioritize engaging big dealership groups. "Our salesmen were calling on any dealership in their territory -- whether it was AutoNation or a mom-and-pop store that sold two LoJacks a month," Ortiz said.

So Ortiz, 56, personally met with senior executives of the major dealership groups, many of whom he knew from his days as general manager of Ford and Lincoln-Mercury sales.

"Our relationships [with major dealership groups] had atrophied a bit," Ortiz said.

When Ortiz arrived at LoJack, he already had a working knowledge of turnarounds, courtesy of Ford. Ortiz, who had joined the automaker in 1982, had risen through the ranks in Ford's sales operation.

By 2006, Ford was in deep trouble, a situation made worse when the recession started in late 2007. By the time Ortiz retired from Ford in 2010, the company was starting to regain market share.

At LoJack, the pre-installation marketing plan that Ortiz introduced in the third quarter of 2012 seems to be working. Last year, sales rose 6 percent to $140 million, and fourth-quarter revenue jumped 20 percent year-on-year to $40.5 million.

Pre-installed LoJack tracking systems generated half that revenue, Ortiz said.

Lojack's technology has remained essentially unchanged since the company was launched in 1978. A technician hides a radio transmitter somewhere in the vehicle. If that vehicle is stolen, the signal is activated and police track the vehicle to its location.

As of Dec. 31, 2012, police agencies in 28 states had agreed to track LoJack-equipped vehicles, but the Canton, Mass., company began to drift into trouble when the country was hit by recession.

Ortiz arrived in 2011 and introduced his new marketing plan a year later. After two years of declining revenues, Lojack sales rose in 2013. But it's too early to declare victory, as revenues remain well short of Lojack's 2008 sales of $199 million.

Ortiz is counting on another marketing gambit to boost sales. LoJack has teamed with TomTom NV, the Netherlands-based maker of automotive route guidance devices, to create a vehicle fleet tracking system for businesses.

You can reach David Sedgwick at dsedgwick@crain.com.


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