Own the Tire – Own the Customer, Part 2: Selling the Tire
What do dealers need to do to increase their penetration of tire sales? Boasting a measly six percent share of the replacement market clearly indicates there is work to be done. Why do dealers struggle with this basic service while they excel at much more complicated services? I submit to you that the answer is right before your eyes, literally!
People are very visual. We have all heard the old saying “a picture is worth 1,000 words”. This holds true even when it comes to how we purchase things. There is a simple reason why retail stores go to great lengths to provide visually appealing displays for their merchandise–we buy with our eyes!
Car dealerships know this, that’s why they put the nicest of the nice on the showroom floor, and deliver what the customer can really afford out of the inventory around back. This “selling effect” has not fully trickled over into the service department unfortunately. Over the years, there have been some products intended to provide visual aids for service advisors but these have never really caught on. Recently, technology has created the ability to use things like video to assist on selling needed repairs and services. These are excellent tools more dealers should use. In the old days of the corner garage, the mechanic used to drag the customer into the bay and show them. This was the most effective process, but unfortunately not practical or safe to do today.
When it comes to tires all the experts will tell you that this is a very visual sale. We need to provide a process where we can visually show the customer the need, without crawling under the car of course. It’s important to also understand that the visual aspect of this is the reason that the experts say the presentation of tires must be done with the customer. Of course presentation is only part of any selling situation. There are many other factors that need to be considered.
In order to provide dealerships with a simple guide to dramatically increasing their tires sales I have created a simple check list of things you need to have/do in order to dominate this important sales and retention part of your business.
- Have the ability to provide your customer with a visual presentation of the condition of their tires.
- A process that allows this to be presented at the time of write up, with the customer. After an MPI, over the phone is not nearly effective.
- Understand the three (four) keys to tires sales:
Are you competitive? This doesn’t mean the cheapest, but you must be in the ballpark. Hint: If you are still pricing tires, plus labor, plus balancing, plus valve stem, etc. then you not in the park. Also keep your parts manager out of this. Sorry to all my parts friends out there, but the “I must hold a 40 percent gross position created by years of bad pay plans” will never get you close to being competitive
This sounds like price, but it is not. Tires are a commodity, meaning there is very little margin regardless of who you are. Trust me the tire shops make less per tire than you do. They just sell a lot of tires. You will never win selling on price alone. Dealers are afraid of being shopped and for no reason. If you are priced competitive you have no worries. If you allow the consumer to be sold that any old tire will do, then the $99 ad they saw will win out every time. You have to sell the value that as the dealer you understand better than anyone what tires need to be on each car. This means that the same size Michelin and the same size Brand X, are not the same tire. Just ask any customer who put the $99 Brand X on versus the $159 Michelin and they will be happy to tell you the difference. Give your customers credit for being smart enough to make the decision between a tire that was engineered to be on their vehicle versus something that is just round and black. If you educate them they will make the right call every time, I promise.
Retailing 101, you have to have it (or be able to get it quickly) to sell it. Know this: a consumer will never come back to have tires installed, ever! The market has been established (like it or not) and tires are like oil changes that need to be done in a “while you wait” environment if need be. This means you need to have a certain level of inventory and an ability to get just-in-time delivery of what you don’t have in order to be in the game. Fortunately there is great support here with companies like Dealer Tire and others who help take that hassle out of stocking the right tires by offering this type of daily delivery service. To really take advantage of this service however it is important to view your supplier’s inventory as an extension of yours. What does this mean? Simple, banish the phrase, “I don’t stock these tires Mrs. Jones, but I can get them for you this afternoon” from your advisor’s vocabulary. When a customer hears that they immediately think you are buying them from someone, marking it up, selling it to them, and they are not getting a good deal. Try “yes Mrs. Jones we stock those tires, they are at our offsite warehouse so it’s going to take a little bit to get then brought over here. Can I offer you a ride home?” A simple rephrasing of the facts can make a world of difference. Important: This doesn’t mean you can ignore your in-stock inventory, however, as convenience is the ultimate key to this sale and as we know overall satisfaction. Tip: consider adding managing a proper tire inventory to your parts manager’s pay plan.
This is actually part of the keys to tire sales generally understood in the tire industry, but for a dealership it is probably the most important thing of all. The motivation I am referring to is not that of the consumer, but rather your dealership staff to actually WANT to sell tires. As we all know pay plans play a critical role in driving our business objectives. This is no different with tires except that many times the typical Service Advisor (and manager) pay plans are actually counterproductive. If there is a component of gross profit, or hours per RO, or anything else that will be negatively affected by a lower gross, lower labor sale like tires, then you will get what your plan will dictate, no tire sales. The simple fact of that matter is that pay equals employee motivation in our world and if you want to increase your tire sales and the customer retention that goes along with it then you need to make sure your service team is motivated to do so. Even if you decide to keep a gross component in there be sure and add something specifically for tires to counter balance the GP effect, you will see a huge lift in performance if you do.