Going To Plan B

As 2008 draws to a close, the only thing that’s certain is uncertainty. And if you’re retailing winter tires, that uncertainty goes beyond the usual weather concerns into serious supply issues. What happens if a valued customer can’t get the product they want and that you want to sell, because you can’t get it? The options are two: “A” — Watch that customer relationship dissolve as the customer tries another dealer to find their rubber; “B”– Find another brand that will keep the sale in your business and still deliver customer satisfaction. While “Plan B” is the only real option for a good customer relationship, the result is, at best, a time consuming hunt for a distributor that has product and can deliver, or at worst, a buy or swap with a competitor. With the volatility of the winter tire market, you may have to sell products you don’t carry and know little or nothing about; but there are opportunities to minimize the damage and get a better understanding of the potential market. The process starts with a sound plan. This kind of planning doesn’t take a great deal of time or money, but is essential to fill the gaps that are springing up in dealer inventories everywhere.

What do you need?

If you inventory tires, the ability to track sales by size is a basic function of many productivity software packages. If you have that capability, a first step is always to get historical data about seasonal sales and correlate them to your inventory levels. Depending on the functions available in your software, this may be as easy as tracking sales by size, or as difficult as pulling individual work orders and hand sorting by size or vehicle.

The key to making this task quick and easy is to look for the sales that went “wrong” rather than the sales that went “right.” Flags for imperfect winter tire sales are excessive special orders, meaning orders for products normally carried in inventory, and unusual reorder requests to fill low inventories. Tire brand or model is not important at this point; look for problem sizes. It may simplify the problem even more by breaking out passenger car from SUV/light truck sales, or by segregating tire sales by vehicle brand and sorting from most to least popular. If your sales last year for subcompacts like Corolla, Civic or Cavalier for example, were significant, sizes like 195/70R14 or 185/70R15 are logical places to check stock levels. The data can quickly get out of control. It’s important to stay focused on sizes that reached zero, or dangerously low stock levels in the early and middle part of your winter sales season.

Depending on the demographics of your customer base, another approach is to flag sales by dollar volume correlated to individual customers. The idea is to determine what sizes are likely to be needed by the top quarter of fifth of your customer base, and work up a strategy to make sure you can fill their order, either from stock or through a distributor. Again, carving out the data for customers at the top of the “dollars spent” or “dollars per work order” listings keeps the statistical work under control. Why should you buy yourself this extra work? Take a look at these stats for replacement size popularity, compiled by the Rubber Manufacturer’s Association in the U. S.: Note that the top five sizes account for less that 30 per cent of the total available sizes. In fact, the top 10 still account for less than 50 pe rcent of the total. If your shop carries two brand options per popular size, an 80-unit inventory (not including all-season replacement units for damaged or adjusted tires) will have a 50 per cent chance of filling a customer order for a shop with a random spread of customer vehicles. Unfortunately, the key number to consider is that even the most popular size represents under seven percent of the total … unless your shop is next to a tire warehouse, 100 per cent coverage is impossible. The situation for the light truck/SUV market is much different:

In the light truck/SUV segment, five sizes cover 70 per cent of the average market, although this size concentration is diluted by the need to maintain significant all-season/LT product to accommodate consumers who prefer to rely on the aggressive tread patterns of typical truck product along with four-wheel-drive.

The numbers suggest that the light truck market is relatively easy to serve, although proportionately a smaller market for winter product. So how does a business use these facts to develop a plan? Try this checklist:

1. Decide on your commitment to tire sales

Everyone claims that they’re committed to sales, but in this case consider whether tires are a current or planned major component of sales, with service as an adjunct, or a strategy to offer total coverage for a predominantly service business. The difference is profound. A tire shop with service can expect considerable drive-in trade and consumers will expect their size to be in stock, with multiple options. Working with multiple wholesaler/ distributors and watching fill rates daily or weekly is essential to catch the surge of weather-driven demand. Consumers also have price expectations for primary tire shops, which is both a penalty and an opportunity. “Shotgun” direct mail and print/broadcast advertising works well with this customer base, driving volume, but margins will be lower.

A service business with significant tire converge, however, needs to operate by managing customer expectations. More on this important skill below.

2. Data mine your customer list

Every modern shop uses their productivity software to learn about their customer base, but most do little more than track sales per work order and develop targeted mail/E-mail marketing. Since a repair-based shop can’t offer complete winter product coverage from inventory, it’s important to know what potential size a given customer will want combined with the likelihood of a sale this season.

The important information will be the current size mounted on the customer’s vehicle, the wear of the current rubber and most importantly, when the customer last bought winter product, and where. This information will often require additional data fields on the service writer’s front-page data entry screen.

It’s important to set the tire information up as true data fields, just like customer name or vehicle VIN. Although it’s tempting to use the “comments” field available on most programs, the data won’t be easily searchable. And keyword searching won’t work in this case unless your service writer uses a carefully controlled word set and spells perfectly every time, an unreasonable expectation in most shop environments. Many packages are customizable at low cost … adding a field for tire information should be possible for most software, if it’s not available already.

3. Think about sales lost and sales not made

Using winter tire sales data is useful, but every sale made feeds information into your business that will be most useful when that set wears out. Long term planning is great, but it’s possible to learn more from the winter tires you don’t sell.

This takes two tactics, direct and indirect. Direct requires the tech and/ or service writer to actively enquire about winter tires and customer buying intentions. This isn’t a lead-in to a hard sell, but is an information gathering process and has to be low-key to prevent the customer from pushing back against the anticipated pitch.

The other direct method is to get techs to simply note on the work order or on a checklist whether vehicles in the bays are on winter tires (and those that aren’t) as well as those with obviously new all-season product. The goal is to gather enough data to determine a correlation between customer loyalty and winter tire purchases. If regular customers are buying most or all their maintenance and service from your shop, but winter tires elsewhere, it’s time to cha
nge strategy.

Indirect methods include E-mail and paper surveys. Making this work requires keeping them brief and adding an incentive. A weekly draw of respondents for a set of winter wiper blades for example, is low cost and effective. If response is good, the data is more efficiently handled in separate software, rather than manually keyed into the shop productivity package.

In each case, don’t forget the weath- er. We know that snow drives sales, but it’s unlikely that you’ll remember when the storms hit and how badly … if you want to track demand against weather, you’ll want to look to Environment Canada (their website is excellent) or other Internet weather resources to see if you’re getting your share of “panic” sales.

4. Manage customer expectations

You know that you can’t fill every winter tire order from inventory … your customer doesn’t. This disadvantage can be turned into a sales advantage if the sales reminder from the service writer includes the offer to “special order” exotic or unusual brands as well as currently advertised winter product from the majors. While it’s conventional wisdom to use this strategy preseason, it can have more impact after the snow falls and stays for the season. It’s important to point out that an appointment for a fitting three or four days later can be more time effective that waiting for hours at a discount retailer on a busy Saturday afternoon. The key here is to turn the vehicle around promptly and have it ready on time when promised, which needs careful scheduling and a good working relationship with the tire wholesaler/ distributor.

If the data mining process is effective, it should be possible to make the sales appeal earlier for customers with more obscure fitments by a “flag” or notation on the customer’s profile. This can be compiled into a direct mail or E-mail list, or used to remind the service writer to bring up the issue during regular service. Again, remind the customer that their size is uncommon and needs a little lead time to source the right winter tire. Adding storage of off-season tires is a low-cost value-added service that can be as simple as filling underused storage space. While many shops use cube/step vans as a storage room, consider a twenty-foot shipping container. They’re neat, compact and can be bought or leased as needed. They’re also secure and offer good fire protection.

If you’re using storage outside of your primary shop building, check your business insurance to make sure stored tires are covered. It’s difficult enough to restart after a theft or disaster without losing your customers’ summer tires. Remember to remind your techs to note alloys wheels and non-stock tires when the vehicle is in the bay. Where are the stock wheels? There’s a strong chance they’re in the back of the customer’s garage. Sell winter tires for those wheels and the storage service also frees space in the customer’s home.

No matter what a Canadian service business does, a segment of the nation’s driving population will swarm their local garages looking for winter product as the first storm of the season blows. With planning and proper merchandising/ marketing however, you can go a long way toward leveling out those demand surges and strengthen the customer relationship in the bargain.

SSGM

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If regular customers are buying most or all their maintenance and service from your shop, but winter tires elsewhere, it’s time to change strategy

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Unless your shop is next to a tire warehouse, 100 percent coverage is impossible