In the tire and service industry, we all need to accept the fact that we’re going to have competition. With competition comes choice. Customers have many alternatives and when lured away by a competitor, we may not get their business back very easily.
In a sense, we can all pay dearly for mistakes. Dealers that don’t understand this will struggle to survive. Just look at some of the household names that have gone by the wayside: American Motors, Montgomery Wards, Blockbuster, Woolworths, A&P, Circuit City to name a few. All these companies lost touch with their customers, and to me, failed to recognize that their businesses did not offer customers a compelling reason to buy from them.
In my first column, I listed five things that I felt will help any retail dealer be more successful. We’ve covered sales, profitability and controlling payroll. These articles were by no means all-encompassing, but hopefully opened a few eyes.
I now want to explore the third point, that of setting your business apart from the competition. We all get caught up in the daily routine and, to a degree, we become complacent. For independents to effectively compete, they need to offer customers something more. It comes down to differentiation, innovation and expertise.
Over the past decade, we’ve all seen the large retailers continue to grow through acquisition and organic growth. They have large advertising budgets focused on building their business and stealing customers from the smaller independent dealers. Their brands have become more dominant and have provided customers with a host of reasons to buy from them including price (or the perception of a great price).
As the large retailers continue to grow, independents need to find ways to set themselves apart. Growth is not unique to this industry. In fact ask yourself this question: What do the following industries all have in common?
• Appliance – Stereo
• Hardware
• Pharmacy
• Furniture
• Supermarkets
• Fast food restaurants
• Clothing retailers
The answer is that they are all dominated by large or national retailers. In many ways, the smaller independents have fallen by the wayside in these industries. Tire and service dealers need to take note or it will happen with our industry, too.
Tire dealers often ask me about the most effective marketing strategy I have seen. I can say without hesitation that the most effective has little to do with advertising, direct mail, websites, social media or reminder programs. Before any of those really have any impact on your business, you’ve got to let consumers know how your business is different from every other business, and communicate why that should be important to them.
Like it or not, tires and basic service have become a commodity. Everyone seems to offer them so, to the consumer, the only differentiator is price. You’ve got to get out of the commodity business. You’ve got to stake your claim on a simple idea or position in the mind of your prospective customers. Basically, determine what do you do in your shop that no other competitor does and how does that benefit the customer.
This may take some soul-searching. My suggestion is to sit down with your team and get everyone’s input. The key question you need to ask yourself is what I call the “so-what test,” meaning, does the consumer think “so-what” when they hear your message? This helps strengthen the outcome.
Here are some ideas that might help create a unique point of differentiation:
• Product – Can you offer a product that is unique or even trendy? Or, can you somehow offer a valuable service to make the product more useful to the customer?
• Service – Same goes for a service. Do you specialize in diagnostics, install lift kits, service 24-inch custom wheels, install custom exhaust? Many dealers will claim to be able to provide these services, but attach a tech’s name to the service to make it more personable and believable, like “custom exhaust by Greg.” If you sell tires and can provide a guarantee of say “29-minutes or less” for a four-tire install; that tells customers that you know their time is valuable. A nice bonus to this approach is you can sometimes raise your prices when you specialize in something.
• Offer – Can you become known by an offer you make? A few years ago, we used to promote a huge tire sale every spring and fall. The sale ran for four days each time, and we focused all our advertising efforts to saturate the market. We saw a big tire sales bump every time, as well as service increases for the weeks following the sale. Large retailers flood the airways with rebates and buy-3-get-1-free offers, but you have to wonder if customers know that there will be another offer next month and don’t feel the need to buy now.
• Message of value – Many times there are things that you fail to communicate, such as extras you provide or services you think should be included. Your positioning might just rest on more effectively communicating what you already do. Are you conducting car care clinics, working with the next generation to prepare them for driving or sending newsletters with driving tips? Promote what you provide.
• Guarantee or warranty – Can you offer a guarantee or warranty so strong that no one else in the market would dream of doing it? This one frightens many dealers, but you probably stand behind your work anyway – you just don’t say so. Come out and boldly announce that you guarantee/warranty results and watch what happens!
• Customer service – Everyone knows the story of Nordstrom’s above-and-beyond customer service. Create your own above-and-beyond program. Word of mouth advertising and social media will make it a hit. A great way to kick this off is to over deliver on the customer’s first experience. Give them something more than they expected, like a gift or related service for free.
• Something unique – Do you provide something in your business that competition does not? This is your “secret sauce.” This might include loaner vehicles, shuttle service or in-store credit. Think about the community and how you might serve its needs. If it’s a commuter market, extended hours might make it easier to get a vehicle serviced, or people might appreciate having their vehicle washed when it’s there for the day.
• Look at the competition – Sometimes you can create a niche by looking for holes in the offerings of your competitors. If everyone in market fails to address a certain problem, boldly grab onto solving that problem and use your competition as the point of difference. This might be telling customers that you specialize in vehicle diagnostics or that you can service their hybrid vehicle.
• Look at your current customers – What common elements exist among your best customers? Take the time to talk to your best customers and ask why they chose your business, why they stay and why they refer others. Look at your competitors more closely. What do they do that you could do better? What don’t they offer that you could? How do they position themselves?
Once you find or develop your strategy to differentiate your business, all your advertising and promotion should be centered around shouting about that difference.
This is your competitive advantage.Commit to it, stay focused on it and resist the temptation to wander off in the next new direction. Make sure your entire team believes in it. This is about building your brand, and it takes time and patience.
The reward is a sustainable business, which ultimately is what differentiates the winners from the losers.
Article courtesy Tire Review.
