Goodyear’s New Sales Plan-Is It Worth The Trouble? (by Jeff Short)

Goodyear is going to sell tires direct to consumers online. Their stated motivation is getting their market share of the 80 million “Millenials” who prefer to shop online. Let’s consider the implications for the tire industry and your independent shop.

This plan was unveiled at their January 2015 dealer meeting and involves participating dealers getting an installation fee and a commission for their services instead of actually making their normal markup on the sale.

As soon as I read this news a few things came to mind:

  1. This is big news
  2. If it sells tires, then Michelin and Bridgestone might not be far behind
  3. Some dealers are going to be upset.

So far, numbers 1 and 3 were dead on. I’m not writing this with any ill will towards Goodyear. I know a lot of people that have made a great living selling their products. I do know that this is a major step to take with the hope that they’ll get a piece of the online tire business, which in the US is only 6% of the market. According to Modern Tire Dealer magazine editor Bob Ulrich, that share hasn’t really increased much since 2008. (Maybe that’s because tires might not be the greatest thing to buy online. I get books, skateboards, and toasters, but tires are a little more complicated.)

And then you’ve got to go face the INSTALLER. You know, the guy that tells you that you really should have bought them from him and gotten a better price, different tire, saved the shipping expense, gotten the proper size/ load range/ speed rating and asks the ever popular “take yer ground beef to McDonalds too? So Goodyear is hoping that going directly after the online shopper is worth aggravating their dealers. But as Kyle Stock of Bloomberg News says, “…it’s not a riskless strategy. The Akron-based tire maker’s gambit could run roughshod over it’s best sales staff: the thousands of small businesses… that can easily nudge a customer from one manufacturer to another.”

From the comments I’ve heard and read, the nudging has commenced. Here are just a few examples: Bill Denvir, a tire dealer from Connecticut wrote a letter to Tire Business saying that over the past 10 years independent dealer’s market share has eroded from car dealer, big box store, and price club competition. He states that Goodyear’s plan would convert him from being a tire dealer to “simply be a convenient installation station for online retailers.” He further states, “The Denvir Tire Shop will no longer sell any Goodyear product.” It’s not just him. So far it’s been a negative with everyone I’ve spoken with. I asked Mark Pollard, who operates 3 Wilson Tire outlets in New England, for his thoughts. He said “2 thumbs down.” When I asked if I could quote him, he said “sure, but make it 3 thumbs down.” So who are the potential winners in all of this? My best guess is the “Tier 2” players. And not just Cooper, Hankook, Toyo, and Yokohama because we sell them. General, Conti, BFG, and Firestone might be where dealers turn. I know the reps that supply us with our brands all tout PROFITABILITY as the number one reason why a dealer should consider them. Time will tell if this all blows over, or becomes a turning point. Independent tire dealers, as the name implies, can be awfully independent. Smart manufacturers would be wise to remember this.

Can You Look at My Tires? (by Jeff Short)

That’s the question I hear from my friends and neighbors regularly, and I’m in the wholesale business. You must get it all day long. I wonder how you and your staff answer that question.

Do you just quote state law for fear that the customer will think anything else is you just trying to make a buck off them? What if there was a way to provide your customer with helpful information that will build their trust in you AND provide opportunity for replacing tires sooner than 2/32nds (the law in 42 states)?

Many reliable sources say that tires should be replaced before that state requirement. Consumer Reports magazine stated that their tests indicate tires should be replaced at 4/32nds. The difference in wet braking tests was huge. Independent tests conducted by The Tire Rack confirm these findings.

So, how do you use that information? In a day when many of your customers research these types of questions online, you can offer them this information. Two of the most trusted sources recommend earlier replacement. By sharing this info, you show your familiarity with the online sources they are reading. You show your expertise in a way that doesn’t make a hard sell, but gives them trusted information to make their own choice based on safety and expert recommendation. Many will probably still say, “What would you do?” People will not be surprised when you suggest that tires should be replaced before they are “illegal.”

In conversation with our dealers, I found that some are using a 2,4,6 recommendation. They state that tires are legally worn out at 2/32nds, but should be replaced at 4/32nds for proper wet traction. Below 6/32nds the tires are ineffective in the snow…. “will you be driving this vehicle in the snow?”

What is your policy? Is someone inspecting every vehicle that enters your shop for service? You have to be prepared that if you do not recommend replacement when warranted, the next shop might.  I think many independent dealers want to do the right thing by their customers, so they tend to want to let them slide by (no pun intended) until fall or the summer vacation trip instead of just coming out and saying it’s time for new ones. I’m sure the chain stores have a checklist and someone is asking for the sale.  So here is a way to take it off of you.  Just say, “You have a little to go before they are illegal but Consumer Reports and Tire Rack say they should go at 4/32nds of an inch, so let’s do the right thing and get them off.”

Don’t Hold A Grudge (by Jeff Short)

What exactly is a grudge purchase? The dictionary defines grudge as “resentfully unwilling to give something.” In our case, someone is resentfully unwilling to give their hard earned cash for some smelly black rubber things that the guy at the shop says need to be replaced. A new Xbox, Coach purse, vacation, smart phone? Now for those they are willing to shell out some bucks, but not tires. Of course, there are exceptions. There is the sports car driver that wants the latest from Yokohama or the guy with the raised 4X4 who is happy to spend big on the new wheels and Toyo Open Country RTs. But they are just a slice of the tire buying public. So yes, most tires are purchased grudgingly. You should know that marketing professionals actually study how to better sell grudge purchases. There are actually easy to follow steps that will help you sell more tires, and here’s the kicker… you can sell better tires and make more money.

Actual market research shows that the easiest sales are made by quoting only the lowest price goods. The customer asks for the product, and the salesperson quotes the cheap stuff and tells them “it will do just fine and look at how much you are saving.” This salesperson didn’t have to waste too much time qualifying needs or negotiating the price, let alone studying up on features and benefits. But it doesn’t have to be this way, if you and your crew followed a simple sales process.

Let’s start with Goodyear’s research that shows over 80% of tire shoppers buy whatever the salesperson suggests. It’s just human nature. When faced with having to make a decision on something you know nothing about, you tend to go with the advice of an expert. Just like, if your doctor says you need prescription ABC, you’ll most likely not argue for XYZ. Sure, your tire customer will go online and try to read up, but they’ll take your opinion if you say something like, “you don’t want that brand, they’ll shake your fillings loose.” You are the one with all the power. People are price sensitive. Especially over grudge purchases. But don’t forget that Michelin, Goodyear, Bridgestone, and a few other premium brands make up over half of the replacement tire market. There are huge opportunities for dealers to be making exceptional profit margins on tier 2 brands like Cooper, Hankook, Toyo, and Yokohama. You just need the discipline to have a process and stick to it.

Here are a couple steps to get you started:

1) Adopt a “go-to” brand and learn to sell it well. If it’s one of our brands, we are happy to help. You’ll get better and better at presenting it and your confidence will show.

2) Qualify the buyer to find out what they liked and hated about their old tires. This step will give you insight on what to suggest and which features to play up.

3)Quote the good stuff, and tell them why you’d put them on your car if you were them.

Don’t be thrown off when they say they’re “shopping on price.” What else do they know? They’re saying it to put you on notice that they want a good deal. It doesn’t mean that they want you to research 4 wholesalers websites to find the lowest priced, lowest quality tire known to man. It probably means something more like, “I want a fair price on a quality tire that is quiet, has good wet traction, and won’t wear out too quickly.” That’s what they would say if you asked them the basic qualifying questions. This is all more than worth your time if you have set up your go-to brand with a better profit margin. Extra payback comes from word of mouth advertising that your store gains by selling higher quality tires.

Don’t be afraid to make a fair profit. You and your business are worth it.

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