Sales profit margins are getting smaller, and dealerships are looking to service as the profit-making aspect of their business. And there’s one area of service that’s particularly overlooked, especially for how much revenue it can generate: tires.
The good news is that your customers already have a relationship with your store—and they want to build on that. But unfortunately, it seems like there’s an independent tire store on every corner these days, not to mention big name companies like Amazon staking their claim on the tire industry. Here’s how you can fight back and claim your piece of the $30 billion tire industry pie.
Dealerships see their regular customers, at least for oil changes, every 3,000-7,000 miles. And it’s pretty simple to anticipate when customers might need new tires (besides actually inspecting them). By sending them specific tire offers in anticipation of their need, you can get them to come to you, rather than going to an independent shop. This also helps you avoid sticker shock; customers are more likely to purchase tires if they are aware of the need first, rather than having an advisor tack it on the day of an oil change.
Also, your store can implement tire-specific declined service opcodes, allowing for targeted follow-up by a Service Advisor or through a marketing company. In fact, a good marketing company can target customers with specific offers based on certain opcodes for you. There are many reasons why a customer may decline new tires, but if you don’t pursue them—and do so at the right time—you’ll likely miss out on their business.
Good, Better, Best
Customers like having two things when they’re shopping: guidance from a trusted source and options. However, while car dealerships are seen as the authorities in vehicle sales, tire stores are seen as the authorities in tires. The customer thinks, “If all they do is tires, they must be tire experts.”
That’s why you’ve got to change the customer’s perception of the dealership. Establishing your Service Advisors and technicians as tire experts in addition to maintenance experts can help generate more customer traffic. Start by getting your Service and Parts Departments additional training. Your OEM tire representative should be able to help you set this up. With a larger knowledge base to draw from, your staff will be able to make better suggestions.
When you advertise your tires, it’s not enough to just say “we’ve got your tires.” Throwing options at customers can overwhelm them and push them away. Yet giving customers “Good, Better, Best” options not only positions your dealership as the tire experts, it also demonstrates your fully-stocked Parts Department. Plus, helping the customer understand tire pricing generates trust, which drives traffic and revenue.
Competitive Pricing and Added Value
The last hurdle for dealerships to overcome is the notion that independent retailers are less expensive than dealerships. The main way that you can mitigate this difference, though, is by promoting the value customers receive by visiting your store instead. If you’ve established your team as tire experts, you’re well on your way to adding that value. Many dealerships also add free mounting and balancing, road hazard warranties, and other perks along with the sale. Often, independent tire stores simply pocket the customer’s cash.
But even if you are the cheapest tire store around, there’s still the stigma that independent stores are always cheaper. Change that mentality by advertising your competitors’ prices alongside yours. It might sound crazy at first, but showing that your store is the lowest (or even second or third) converts a surprising number of customers because they already have a relationship with you, you’ve added additional value to their purchase, and you have competitive prices. It’s also showing that your dealership is transparent about pricing, which is a major factor in customer purchases.
Where the Rubber Meets the Road
In this quest to capture and keep your portion of the tire business, your best ally is a strong, knowledgeable marketing company, someone who knows the automotive industry inside and out. They’ll be able to seamlessly integrate with your DMS to target those opcodes, anticipate customer needs, and provide professional marketing exactly when it will draw in the most customers. Because if your customers aren’t coming back for tires, your Service Department—and ultimately your dealership—is missing out on significant revenue.
Director of Professional Services
Insights | January 05, 2021