KEY WEST, Fla.(March 15, 2002)—It wasn't the easiest of speeches for Dave Snyder to make, and not because he wasn't prepared.
But with Royal Caribbean's Majesty of the Seas ocean liner bobbing in fairly rough water, just standing at the lectern was challenging as Mr. Snyder outlined plans for Tire Centers L.L.C.'s T3 dealer marketing program for the coming year.
While the ocean calmed shortly after the ship left Miami for a four-day cruise, it was full steam ahead for T3, which is looking to enter four new markets and add about 100 dealers over the coming 18 months, Mr. Snyder said.
Those moves would give T3—established only a year and half ago—350 participating dealers, according to Mr. Snyder, TCI's vice president of small tire marketing and sales. And to support this dealer expansion, which will come from existing regions as well as new territories, he said TCI will add four warehouses over the same time period.
“With TCI's small-distribution skills, we think new markets are the right thing for us,” he told 107 dealer couples attending the company's “Great Escape” incentive cruise to the Caribbean in late February.
TCI is evaluating eight potential markets, Mr. Snyder said, without being specific.
And while the locations of the new warehouses also remain under wraps, he said each would range in size from 25,000 to 40,000 square feet, with the first one set to open in April or May. The other three will follow with openings scheduled for the third quarter of this year, early next year and in mid-2003.
Mr. Snyder said TCI is reviewing the potential of the various markets to determine where to locate the warehouses. Currently the Duncan, S.C.-based unit of Michelin North America Inc. operates 28 distribution centers in the U.S. in 21 states.
TCI launched the T3 dealer program (the 3 stands for selection, value and service) in August 2000 initially as a defensive measure, Mr. Snyder said, in order to retain about 100 passenger and light truck tire dealers who were TCI customers under the Michelin Alliance Program.
Since then, the program has grown to 250 dealers, “far exceeding our expectations,” he said. These additions are dealers “we didn't have before and were not affiliated with TCI,” he said.
Along with this increase in dealer participation, TCI's sales of passenger and light truck tires also have improved, growing 20 percent last year, Mr. Snyder said, without revealing exact figures. Next year, he is targeting another increase of 6 percent—a percentage that does not take into account tires TCI sold as part of Ford Motor Co.'s recall of Firestone tires last year. Including those tires, the company is looking to grow its small tire business by nearly 10 percent.
Long-term, TCI sees T3 reaching 600 to 800 dealers, but Mr. Snyder said it's important the program doesn't grow too fast.
“We need to be geared up to service the new dealers and not bring on anyone we can't service,” he said.
With that in mind, Mr. Snyder said he has directed the group's marketing staff to focus this year on making sure current T3 dealers are taking full advantage of all the program's elements.
Known prior to its purchase by Michelin as one of the nation's largest independent commercial tire dealerships and retreaders, TCI had not really focused on its small-tire business, Mr. Snyder said.
The retreading and commercial operations always had well-thought-out plans, he explained, while the small-tires segment was driven more by the deal and whether “we could make money on it.”
But times changed, and shortly after Michelin acquired the Tire Centers Inc. chain in April 1999 from owner Jim Berlin, the company began looking at ways to expand this area as well.
“We believed that for us to be a viable small-tire distributor, we needed to offer more than just a price and good service,” Mr. Snyder said. “We had to provide programs that enhanced the tire buying experience for our dealers' customers.”
Thus T3 was born.
The program is not about selling tires to dealers at the lowest price, Mr. Snyder said. Instead it is a package of tools designed to give “dealers a long-term viability to compete.”
These tools include advertising and promotion support, point-of-sale displays and materials, outside signage and a complete showroom design, a T3 consumer credit card offering 90-days same as cash, a national service warranty and volume-based purchasing programs for equipment, uniforms and payroll systems.
In addition, T3 offers dealers cost-competitive employee benefits programs, training and a TCI-hosted Web site designed to drive customers into their dealerships.
Within the next two months, all T3 dealers also will have real-time access to the T3 extranet—a private Web site allowing them to check on tire availability, prices and to place orders directly with their TCI distribution center 24 hours a day, seven days a week.
T3 dealers must buy a minimum of 51 percent of their tires from TCI to be in the program and can choose from a variety of brands including Michelin, BFGoodrich, Uniroyal, Continental and General and the private brand, Trivant.
Initial cost to join the program is $1,500 to $2,500, which goes toward upgrading the dealer's showroom with new displays, counters and a valance system, said Ryan Wise, TCI's director of small tire marketing. The amount of the initial outlay depends on the size of the showroom, he explained, adding that TCI kicks in any additional funds needed to complete the upgrade.
T3 dealers also contribute $100 to $300 a month based on the number of tires purchased and the share of account the dealership does with TCI. To help dealers get the most out of the program, T3 assigns each one a development manager.
The DDM's job is to coordinate advertising and promotion programs with the dealers they've been assigned, plan grand-opening events, set up training programs and generally make sure their dealers have what they need, when they need it.
The program's 14 DDMs are a major asset to T3, several dealers on the cruise said.
Barry Broadbent of Super Tire in Cortland, Ohio, described his DDM as the “right arm of the marketing end of my company.”
Working with him has allowed “me to do things myself that would be too costly otherwise,” he said.
Jeff Pohlman, owner of Jeff Pohlman Tire & Auto Service in Hamilton, Ohio, said he likes the way the DDMs work with dealers as business partners rather than viewing them as a sales number.
“I just think that's what makes the program different than other programs I looked at,” he said.
Mr. Pohlman said joining T3 last April “has to rack up with one of the best decisions I've made in business.”
He had seen other dealerships aligning with dealer marketing programs and thought he should join one, too. The T3 program, he said, provided the major brands he was looking for and has helped give his five stores a more uniform and professional look “while still keeping the identity we have.” Prior to joining T3, Pohlman Tire offered only private and associate brands. Major brands now make up 70 percent of his business.
T3's frequent delivery schedule also has enabled him to reduce inventory, freeing up operating capital, he said. And, thanks to his DDM, Tony Comarata Jr., he has help with advertising. “It's like having an in-house ad agency working for us.”
Another T3 dealer on the cruise, Mark Rinderle of Rinderle Tire Co., in Milwaukee, had been a Michelin Alliance dealer before joining the program. He said he likes TCI's diversity of brands and knows “if I need a tire tomorrow, it's at my door.”
And since T3 doesn't require him to buy tires in trailer-load quantities, he's been able to reduce the cost of his inventoried tires to $180,000 from $300,000, he said.
Through T3 he also cut his Yellow Pages advertising “big time,” he said.
In 2002, TCI will support T3 dealers with more than $1 million in promotion funding, Mr. Snyder said.
The company has two promotions planned. The first is in connection with, but will be run separately from, Michelin's “Stay Connected” promotion.
For each sale of four Michelin tires charged on the T3 credit card, T3 dealers can provide their customers an additional 10 percent off the purchase price.
TCI will fund the 10-percent discount and the customers also will receive a set of Motorola two-way radios from Michelin, Mr. Snyder said.
Later in the year, T3 will offer customers who purchase four select tires a $50 U.S. Savings Bond.
Mr. Snyder also said he plans to establish a T3 dealer council, consisting of about eight T3 dealer principals who will meet to discuss ways to enhance the program. The first two-day meeting likely will take place in mid-May, he said.
Next year, T3's Great Escape incentive trip will be to Cabo San Lucas, Baja, Mexico.