Are tire marketing groups reaching the saturation point when it comes to recruiting new members?
It depends a lot on the specific region and market niche you're considering, according to a cross-section of marketing and buying groups located across the U.S. and Canada. Some regions of North America have more representation by marketing groups than others. And while a lot of independent tire dealerships haven't yet signed up with any marketing or buying programs, they might not meet the criteria the groups set for new members.
For Dave Crawford, director of marketing in the Baltimore, Md., office of American Car Care Centers Inc., the answer to whether there's a shortage of prospective new members is: Yes and No.
``With quality dealerships in certain areas, you may get some saturation points, but there's still a lot of potential business out there,'' Mr. Crawford said. ``There are a lot of independent dealerships that are sitting on the fence and deciding for whatever reason that they don't want to be part of the program.''
``I think we're finding it more difficult to find dedicated, qualified associates or franchisees for our program,'' said Ralph Chiodo, president of Active Green+Ross Complete Tire & Auto Centre, a Toronto-based chain boasting 30 franchised and 12 corporate-run dealerships.
For Darrell Sept, director of marketing for Sherwood Park, Ontario-based Tirecraft Auto Centers Ltd., finding new members for the Tirecraft associated dealer program ``is a little bit more challenging than it was 10 years ago.'' But Mr. Sept said his company's difficulties are mostly geographical, as did Dan Beach, president of Oxnard, Calif.-based buying group Tire Alliance Groupe (TAG).
Recruiting in Texas recently, TAG found only 10 as-yet-unaligned dealers who met the group's threshold of $2 million in annual sales. Acquisitions and mergers among tire dealerships also are reducing the number of potential new members, Mr. Beach said.
Membership is not a major issue for marketing groups offered by tire manufacturers, such as Goodyear's Gemini Auto Care program, although ``we are always looking to increase participation in the program,'' said Gemini Marketing Manager Cheryl Ward. The question is not finding Goodyear dealers who want to join, but finding independent dealers who are the right fit for Gemini, she said.
Finding (good) dealers
Attracting new members to marketing groups is a function not only of knowing where to look, but also what to look for, according to executives of marketing groups.
Mr. Crawford said he couldn't name any specific regions that have become saturated, but with so many marketing groups-all with strong distributors-it can be hard to enter the market in certain areas.
``There's a point where there's a limited number of quality dealers to attract,'' he said. ``But there also are areas where the competition is not so strong.''
As Mr. Crawford and others made clear, marketing and buying groups aren't just looking for warm bodies to swell the membership ranks. They want dealer members who will hold up their end of the agreement by running a tight, profitable operation.
For Mr. Chiodo-whose organization acquired 11 Sears Auto Center stores in Ontario last year-previous experience and proven ability in running a retail business are musts for an Active Green+Ross franchisee. Experience in the auto or auto service industries is a plus, but not a must, he said.
``It's not necessary that they ran a similar business, but retail-related management experience is essential,'' he said. ``Many people want to get into the business, but they fail in the selection process.''
A well-trained work force also is important to Active Green+Ross, all of whose outlets are expected to perform general automotive repairs as well as sell tires.
``There's a lot of competition for the people who repair and service cars,'' Mr. Chiodo said. ``There are not a lot of young people joining in the business.''
For Mr. Sept, moving into new territories was essential for Tirecraft to find new members.
``In western Canada, marketing groups have a stronger hold than in eastern Canada,'' he said. ``So in terms of recruitment, we've been focusing more of our efforts in eastern Canada, especially the Atlantic Provinces.''
Tirecraft has added 12 new associate stores since last year, bringing its total to 137 associate and 44 corporate-owned stores, he added.
Gemini Auto Care demands high standards across the board from dealer members, according to Ms. Ward. A certain number of bays, certain types of state-of-the-art equipment, ASE-certified technicians, even clean restrooms and well-kept grounds are all factors in which dealers are chosen for Gemini.
``This is a dealer-directed program,'' she said, and it mandates a high level of involvement from dealers as well as giving them a high level of benefits. There are approximately 1,800 Goodyear dealers in the Gemini program, she added-two-thirds independent and the rest company-owned.
Along with the constant search for members arises the question of whether it's common for marketing and buying groups to try and lure new members away from other groups. Again, you get different answers depending on whom you ask.
Saying that member poaching ``happens daily,'' Mr. Crawford said that it's just a matter of looking at the specific dealer and seeing what he needs to entice him to a new program.
``Sometimes it's as plain and simple as offering to clean up his store and give him fresh signage and paint,'' he said. ``Six or seven years down the road, buildings do get shopworn-this is not a clean business. If someone offers him a facelift, the next thing you know, he's not in your program any more.
``If we don't make sure constantly that our members see the value of our program, we'll lose them,'' Mr. Crawford said.
ACCC has 19 distributor members serving 1,104 dealership locations.
On the other hand, Ms. Ward said poaching is a moot point at Gemini, whose members are all dedicated Goodyear dealers. Mr. Sept said Tirecraft also doesn't have problems with poachers. ``This is a small industry, in that everybody seems to know everybody else, and they don't tend to encroach on each other's businesses,'' he said.
Another factor that several executives mentioned is that many dealers belong to more than one group, which also makes poaching a moot point. Tirecraft, for example, is the only Canadian member of TAG, Mr. Sept said, and not only does Tirecraft have no conflict with the buying group but ``we've shown some growth through our support of TAG.''
``There are quite a few dealers who belong to more than one group-that's just reality,'' Mr. Beach said. TAG makes it easy for members, he added, in that it sets its commitment level to its program at a minimum. ``We don't expect them to buy 100 percent of their products from us.''
TAG has about 500 members with approximately 1,600 stores, he said.
A large number of ACCC members also are members of the Michelin Alliance, and ``the two programs enhance each other,'' Mr. Crawford said.
``Our American Radial (exclusive private label) is built by Michelin, and a lot of our programs are supported by MAST.''
There are, however, a number of marketing programs that require members to buy 51 percent of their products and services from them, and ``that shouldn't be,'' Mr. Crawford said.
Gain, keep members
In the end, as Mr. Crawford suggested, all the executives agreed that the way to gain and keep members is to listen to dealers' needs, give them what they want and keep them sold on the value of the program.
``Ours is a rich, value-added program,'' Gemini's Ms. Ward said. ``Our dealers want a program that gives them a national warranty; they want a program where all members have ASE-trained technicians; and so on.''
Proprietary products-which dealers can't get unless they belong to the group-also are a major selling point, according to Mr. Beach. ``We have our focus on proprietary products,'' he said.
``Sears offers Michelin tires that no one else can carry; similarly, we have some models of major, flag brands exclusive to us, from Continental and Pirelli.''
While markets have basically stayed the same in the past 15 years, and profitability and competition are still key issues, there are a lot of products on the market that didn't exist 15 years ago, Mr. Crawford noted. It's up to marketing groups to provide the products and services that are most relevant to dealers now.
``If you ask a dealer what he needs, he won't always tell you specifically,'' he said. It's the job of the marketing group, he and the others suggested, to discern and anticipate those needs.
And if the marketing groups themselves don't persuade dealers, market conditions and competition often will, according to one marketing group executive who asked to remain anonymous.
``When Wal-Mart comes into their area and disrupts their world, they may be starting to look at marketing groups,'' he said.
A related story on marketing and buying groups is on page 9.