Issue Date: Service Manager July 15, 2009, Posted On: 7/15/2009
Service managers set sights on tire “discounters” Dealerships have always been in the tire business but have been slow to recognize the potential for bringing more service customers onto the service drive. Now many service departments are making up for lost time by successfully going after nearby "discount•bCrLf tire competitors, we're hearing.
We've written about this in the past, but it bears repeating: service departments are able to offer competitive tire pricing versus the so-called "discounters,•bCrLf but they don't always do such a good job of getting that message out to customers.
Instead, most service departments would be well served to be more aggressive in their pricing and marketing of tires. For example, we've talked to dealers who advertise their tires with a simple "$5 dollars over cost•bCrLf price tag. It's simple and effective. Since tires are more of a loss leader anyway, it does you more good to emphasize that your price is low.
Schiller's experiment
Lloyd Schiller, president of fixed operations advisory firm Dealer Service Corporation, has a great idea: conduct a local "shopping exercise."
Here's what Lloyd told us he did recently for a colleague who needed new tires for her 2005 Acura TL.
Lloyd shopped the local Goodyear, Pep Boys and Advance Auto Parts Repair Shop and asked them what it would cost to replace the tires — and he asked for printed estimates.
The answers were a little surprising.
"I expected the Goodyear shop to be expensive, and they were,"Lloyd recalls. But the Pep Boys shop offered a high price featuring "some Chinese tires I'd never even heard of, and I thought I knew them all. I hope they are made of rubber!" he jokes. The Advanced Parts price was high, too.
Then he asked his local Acura dealer in Ft. Pierce, FL, the same question: Guess what, their price was lower than all three of the "discount" dudes. "And they were giving me Michelin Exalto Plus tires" Lloyd adds.
Lloyd even checked out the online tire retailer www.tirerack.com and found that the Goodyear folks were offering tires at 60% over the tirerack.com retail price, and Pep Boys were almost 85% over the price for the Chinese tires (yes, they were on the tirerack.com website, Lloyd says.)
Action items
Lloyd's idea: Do a local shopping trip yourself and then make big copies of the printed estimates you get and post them in your customer lounge and other places where customers will see them. It will help you get across the idea that your prices are competitive with the so-called cheap guys.
Another idea to swipe from the competitors, Lloyd adds, is to post your labor rate in half hour increments instead of an hour. "I saw the Goodyear shop do this, posting their labor rate at $45.50 with an asterisk next to it," Lloyd reports. Down at the bottom the asterisk noted that that rate was per half hour, not a full hour.
Lloyd likes that tactic for a few reasons. One it makes the rate look less expensive. Second, and most importantly, it shows customers that you won't necessarily take a full hour of labor to work on every single piece of work on a car.
