Tire Sales as a True Money-Maker
Tire sales have traditionally held a perception in the industry of being notoriously low-margin work that few feel is worth the effort that goes into offering the service to customers. Managing inventory, competing with big-box tire stores and learning effective selling techniques are but a few of the traditional deterrents.
But according to some in the industry, that mindset could very well be antiquated. A study by the National Automobile Dealers Association (NADA) found that not only did 15 percent of vehicles in a service department need tires, but also that 75 percent of customers buy tires from the first person who recommends them and 78 percent of customers have their vehicles serviced where they purchased the tires.
That last number is key, says Derek Johnson, service manager at Dallas Dodge Chrysler Jeep Ram in Dallas. The service work that can be gleaned from tire sales has a direct relationship to service department profitability, as well as customer retention, loyalty and brand awareness. It’s also what convinced Johnson to begin focusing on tire sales in his department, leading him to become the largest tire seller among all FCA dealerships nationwide.
Johnson was the service director at one of the largest dealership shops in Tesxas for six years before he joined Dallas Dodge as its service manager two years ago. He now manages 44 technicians, 13 service advisors, a service manager, two shop foremen, four cashiers, four valets and a drive manager—a team that collectively works on 3,700 vehicles per month. Since he joined the organization, the department has seen year-over-year growth of 10 percent.
Johnson’s service department has always operated with a keen eye on the numbers. A large whiteboard hangs in his office on which he tracks labor rate, customer service scores, repair order count, gross profit goals of $20,000 per day.
The only way to achieve those lofty goals is with a laser focus on customer service, Johnson says. Ultimately, customer retention comes down to taking care of customers and making sure you can service all of their needs. That’s why Johnson was tasked with incorporating and ramping up tire sales when he was hired at the dealership.
“It’s a priority because if you don’t sell tires, you lose the brakes,” he says. “If somebody else does it for them, that’s who they’re going to go to. The benefit of putting tires on a customer’s vehicle is in building a relationship with them.”
Expert Advice: Bob Atwood, NADA Academy service instructor
The well-run service department of today, Bob Atwood says, is one where fewer repair orders are written per day but with more hours on each of those repair orders. And one of the best ways to achieve that, he says, is at the time of write up by spending a significant amount of time with the customer and the vehicle. At that time, one of the items that he says absolutely should be examined, yet is frequently overlooked, is tire wear. Atwood breaks down the keys to successfully making tires a focus in your service center.
- Conduct a Proper Walk-Around. The problem we have with a lot of dealers is that the service advisors at the time of write up do not do a proper walk around of a customer’s vehicle. Here’s what that should look like: Greet the customer at the car, look for preexisting damage, walk around, sit in the car, turn the vehicle on, see if there are any lights on the dash, crank the wheel hard right, crank it hard left, look at tire wear. That’s why Goodyear and Firestone sell tires at ridiculously low prices. They know 78 percent of those customers are going to come back, have the car serviced with them and that’s when they’re going to make the money.
- Provide Visuals. I recommend having three different tires in the service drive to serve as a visual tool for selling: a brand-new tire painted green, a half worn-out tire painted yellow and a worn-out tire painted red. If the customer needs tires, I grab the red tire, roll it over to the customer and I have an easy visual tool to explain why the vehicle needs tires.
- Have Options. Then, instead of presenting the price as take-it-or-leave-it, the service advisor should be presenting good, better, best options to the customer. If you give someone choices, they’ll probably pick one of the options you’re presenting, and chances are, they’re probably going to go with the most expensive options.
- Have an Accurate Inventory. Finally, the other key is having the tires in stock. If you have to put the customer in alternate transportation, who’s going to pay for that? Usually the service department. The issue is that you lost technician time because he was just waiting around for the parts department to go across town and buy that emergency part. You can’t get that time or that profit back. So, you need to track lost sales so once you get a history of that part, the parts department will put it in inventory and you’ll have those tires in stock as necessary.
Johnson says that when many dealers incorporate tire sales, they do so with little emphasis. The problem with that, he says, is that you don’t sell many tires that way—sometimes as little as 100 per month. That wasn’t the route Johnson decided to take, and instead, he brought his staff together, explained the benefits of tire sales and the route they were trying to take, and instituted a thorough new walkaround process.
The service advisors are now required to greet the customer and introduce themselves, walk around the car with the customer, checking the engine lights, looking for dents and dings, and checking tire wear. It’s up to the service advisors, not the technicians, to identify all of those opportunities, which Johnson says has increased efficiency on the back end. His drive manager, in particular, is tasked with ensuring the walkarounds are completed and emphasizing to service advisors the importance of the walkaround.
Finally, taking advantage of vehicles at the end of the warranties has also been key, Johnson says, because that’s generally when the original tires are nearing the end of their lives. Thus, performing the remaining warranty work is the ideal opportunity to broach the subject of replacing their tires.
In only a few months, Johnson was able to make his dealership the largest tire seller in the Chrysler dealership network nationwide, by more than 700 tires. Overall, the dealership sells nearly 400 tires per month. It’s not difficult, Johnson says; it simply comes down to making a commitment and holding your staff accountable.