Published on December 3, 2013

Know your customers and their needs

Tire Business photo by Jennifer Karpus
TIA's Kevin Rohlwing: "The number of miles driven...are flat, which means, coincidentally, that the number of tires being sold is flat."

LAS VEGAS (Dec. 3, 2013) — The main objective of the independent tire dealership is to sell tires to customers.

Figuring out how to do this can be difficult, but deciphering what customers want and how to get it to them can be the key to success.

"People are only driving so much," Kevin Rohlwing, vice president of training at the Tire Industry Association (TIA), said Nov. 6 during a presentation at the Specialty Equipment Market Association (SEMA) Show in Las Vegas.

"This is pretty static; this is pretty consistent with what we've seen over the last 5 to 10 years is that, since the recession, it's flat. The number of miles driven in this country are flat, which means, coincidentally, that the number of tires being sold is flat. You've got more and more people competing for the same amount of sales."

Mr. Rohlwing said the replacement market in 2013 is flat and light truck tire sales are basically flat, however, since the tariff on Chinese-made tires was lifted, "the Chinese imports are going up."

Sales of major brands in 2013 account for 80.2 percent of the replacement market, he said, up from 79.4 percent last year. This means that a little more than 80 percent of sales in the market are going to be of a tire brand name that people recognize, Mr. Rohlwing added, with Bridgestone, Firestone, Goodyear, Dunlop, Michelin and BFGoodrich comprising 43.1 percent of the U.S. tire market.

While independent tire dealers still sell the most the tires to the public, Mr. Rohlwing said the percentages of tires being sold by new-¬car dealerships and other places are growing.

He added that, for the independent tire dealer, "it's the most competitive market this industry has ever seen. And if you don't understand how to reach your buyer, and if you don't understand (how) to reach new buyers, the number is going to keep going down."

Previously, Mr. Rohlwing said, tire buyers were split into three categories: brand buyers, service buyers and price buyers.

For a brand buyer, he said, "whether it's motivated by marketing, a commercial, by what their dad bought or what they've had, they are focused on a brand."

Service buyers, on the other hand, are "going to pretty much take whatever you tell them."

Price buyers just want to know, "How much is this going to cost me to get tires on my vehicle and get my vehicle out the door?"

Mr. Rohlwing said he thinks this logic is outdated.

"I think it still has an effect, but I don't think that you, as an independent tire dealer, can just put every buyer into one of those three buckets and expect to survive in this industry…survive in this age."

He said that Google Inc., in partnership with Compete Inc. — an analytics and research provider — surveyed people who bought tires in the six months leading up to August 2012.

This analysis gave much detail about tire buyers, but Mr. Rohlwing noted that since the survey was done online, people who do not use the Internet were not part of the survey.

Top 3 tire buyers

The Google/Compete study indicated that 8 percent of all people surveyed are "middle income males." These individuals are a Generation Xer with an annual income of $60,000 to $99,999; 72 percent were married and 62 percent had at least one child. Sixty percent had a four-year college degree or higher.

The second biggest group of tire buyers, at 6 percent, is "upwardly mobile females." These women are part of Generation X with annual incomes of $60,000 to $99,999; 72 percent were married and 57 percent had at least one child. Half have some college education or an associate degree.

"Women buy a lot of tires," Mr. Rohlwing said. "And if you're not set up to sell those women tires, you're losing 6 percent of that market."

To round out the top three, "affluent males" are 5 percent of tire buyers. These males also are Generation X members but have annual incomes of $100,000 to $149,999; 83 percent were married and 55 percent had at least one child. Three quarters have a four-year degree and more than half have a Master's or doctorate degree.

Seen another way, about one of every five persons who walk into a tire store will be somewhere in these categories, Mr. Rohlwing said.

These people have jobs and money, so they are probably driving. "And where are they driving? All over the place if they've got kids," he noted. "I got one kid and he keeps my mileage way up. I can't even imagine having more than that."

Tire buyer generations

Mr. Rohlwing then differentiated the four generations of tire buyers, referencing a United Nations study that assisted in training purposes to describe the differing generations.

The Traditional Generation — those born between 1922 and 1945 — are the "oldest people of the buying public," he said.

These are the people who still remember World War II, some are Vietnam War veterans. He said this generation is "OK with going without." They will wait for what they want.

"They value conformity, authority and rules with a defined sense of right and wrong."

Mr. Rohlwing said those in this group are very hierarchical in their thinking. They will want to know who the manager is. They prefer personal contact.

"Chaos in the showroom is not going to do well with this generation," he added, "They need to see defined everything. That's important to them."

The next set of buyers is the Baby Boomers — born from 1946 to 1964 — whom Mr. Rohlwing said have gone through dramatic shifts throughout their lives, including the Civil Rights Movement.

"They want freedom to make individual choices," he said.

Members of this group, according to Mr. Rohlwing, do not necessarily respect titles and are uncomfortable with conflict. They live to work. They, too, prefer personal contact.

"So don't pressure these people for their emails and stuff," he said.

One thing Mr. Rohlwing noted is that this generation is still looking up information online and will conduct "some pretty thorough research" before making a purchase.

Generation X includes those born between 1965 and 1979. This generation is the No. 1 buying group, as demonstrated by the top three buyers. This group works to live, not lives to work, he said, and values its "free time."

The best way to communicate with this generation is through email. As one who belongs to this group, Mr. Rohlwing said, "If you are going to communicate with me, email is the best way to do it."

Lastly, Generation Y includes those born from 1980 to 1994 — those who were born into the era of technology.

Mr. Rohlwing said this generation is confident, technologically savvy and good at multi-tasking, but have a lack of skills in dealing with difficult people.

"As a tire buyer, they are ruled by the information on the screen in front of their face," Mr. Rohlwing said. "So if you don't have information on that screen in front of their face,…if you don't have a mobile app for your website, you just lost Generation Y."

Tire dealers need to think about the buyers, he said, meaning what the Generation Xers and Yers want. Most of the tire buyers now will be the Generation Xers who care about convenience, Mr. Rohlwing said, so if you can't make purchasing convenient for them, then you'll lose them.

Don't fear 'The Rack'

Speaking of convenience, Mr. Rohlwing asked the audience how many were installers for Tire Rack Inc. About a half-dozen or so raised their hands.

"You're losing business," he said to the rest of the seminar attendees.

Mr. Rohlwing presented data from the Google/Compete survey that said when people bought tires online, almost 45 percent of them bought alignments as well.

Those people came back for additional services and those services, along with the tire installation, have to be done somewhere, he pointed out. "We have to be able to reach that market."

Mr. Rohlwing said that some dealers don't want to support Tire Rack, but they should "because a lot of people are buying tires from them" and they have to be installed somewhere.

He added, "And you may be able to build a relationship with them and then when they finally figure out that they could have spent less money just by going to you direct, maybe they won't go back to Tire Rack.

"Don't be afraid — don't be afraid of 'The Rack.' I mean I know that it sounds just icky,…but you've got to face the fact that people are going to keep buying tires from them."

Mr. Rohlwing said that Tire Rack is never going to install tires because it is not part of its business model. The company will continue to have its recommended installers because someone has to install the product.

"And if you're not one of those installers, you've lost that business," he added. "Anybody that's going to buy a tire from Tire Rack in your market is going to go somewhere else…. You've just written off a huge chunk of business."

Online presence

From the surveys in the Google/Compete study, 74 percent said they purchased from a retailer and 46 percent said they did online research. This is a trend that is developing in the market.

The most prevalent ways people are doing their research are through digital and word of mouth. The study said 50 percent went to a tire dealer retailer website.

"If you don't have a website, you are losing business," Mr. Rohlwing said. "You have to have a website; you have to have an online presence."

Mr. Rohlwing admitted if he does not find a company online, he then moves on to another company.

The study said that almost 50 percent of people still go to their friends and family for advice and nearly 45 percent said speaking with a salesperson helped with their buying decision.

To get to that level though, he said a dealer first needs to get those potential buyers into his or her store.

Another factor is that a little more than 35 percent of people said tire consumer reviews counted in their evaluation of what to buy.

"That's really scary," Mr. Rohlwing said. "It didn't necessarily make their opinion, but it certainly formed their opinion."

Another thing to note, he said, is that around 25 percent of participants said they went to a car dealer website for information.

"Car dealers. What are they doing? They're advertising tires. And people are researching on their websites as well," Mr. Rohlwing noted.

How they search

Many people are doing their research from their mobile devices. Mr. Rohlwing said he was surprised to find that about 55 percent of mobile research is done from the home, and people also are researching while at work or waiting in a line.

"How about at the retailer? Anybody have that happen?" he asked. "Anybody have a customer standing at your counter asking you questions, and while (the salesperson is) answering your questions, the guy is online, checking the facts?"

Mr. Rohlwing said many consumers are looking for the company's address and hours when they search the website. They also come to the site to compare brands and prices.

Also worth noting, he said, is that half of those surveyed said they used video to obtain information.

"You have to have some form of video. Whether it's your video, or somebody else's video, they want video," Mr. Rohlwing said.

Some people are first going to YouTube to look for videos, he said, and then to a tire brand website, tire retailer website and lastly, on Facebook or Google+.

However, the independent tire dealer is still considered the most trusted source with consumers.

"So...even though all of this research is happening online, who is the most trusted source? You," Mr. Rohlwing said. "Your opinion is what's going to matter, but you got to get them in the building first."

In this day and age, even older generations are doing research online, he said, noting that "we are not a society of waiters anymore."

Relationship transactions are likely to fade away, he added, as Generation X and Y are in power, so it is all about generational selling—about knowing how to reach buyers.

"We're not looking at just the three simple buckets of brand, service, price. We're looking at the generations."

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To reach this reporter: jkarpus@crain.com; 330-865-6143.

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