SAVAGE, Md. — John Bishop has encountered enough tire dealers who are losing money on auto service sales that he believes they should handle tire sales and auto service as separate business models.
Mr. Bishop, national accounts director for the Automotive Training Institute (ATI), trains dealers and shop owners across the U.S. on how to run their businesses effectively. As part of this training, he will present a seminar titled “The Difference Between a Tire Model and a Service Model: Why You Can't Run Your Service Department Like a Tire Department,” on Sept. 23 during the International Tire Exhibition & Conference (ITEC).
“They do differ because of the margins,” Mr. Bishop noted. “If you want to drill down to the cost of doing business, the tire store vs. the auto service store, and you break down the margins for parts and service vs. tires, all those things need to be evaluated separately.”
He cited a statistic from tire manufacturers' market research that at any given time, only 5 percent of a tire dealer's market is ready to buy tires. As a result, a dealership has to take care of the whole car and build relationships with customers.
“That's why we're having this (ITEC) class, to kind of get into their belief system that hey, tires are profitable, more profitable than service actually, but we don't change tires every 30 minutes or every hour, so we need to get into the service business,” he said.
One issue Mr. Bishop told Service Zone he will present more in-depth at ITEC is that there are different key performance indicators (KPIs) to measure tire sales and auto service sales. He said he teaches dealers that a tire department should be measured by 21 KPIs, while an auto service department should adhere to 39 KPIs.
For example, a tire customer wants to come in and be out the door with new tires in 30 minutes to an hour, while an auto service customer will drop off a vehicle for a day and wants it fixed right the first time.
“What that means for me as a business owner is that I have to have a system in to get them in right away, and at the same time educate them on me, the good feelings of 'oh, by the way, we can also service your car,'” Mr. Bishop explained.
Another KPI is for a shop to have different outlines ready for tire customer callers vs. auto service callers, he said. Tire shoppers will come into the shop based on how well the counter person answered their questions on the phone, while auto service customers are looking for a repair solution at a fair price.
Mr. Bishop noted that compensation for the two business models also must differ.
“Today your techs are very intelligent people who have to have a lot of education and a lot of ASE certification and a lot of knowledge to fix some of the cars today,” he said. “They get paid differently because the techs, their compensation programs are different than persons doing maintenance, oil changes and tires, so you have to measure the labor differently.”
A 43-year veteran of the tire and automotive industries, Mr. Bishop has worked for Goodyear in the tire wholesale, commercial, retail and service sectors, as well as in multiple managerial roles with independent tire dealerships prior to joining ATI.
He described his job at ATI as helping tire dealers “get out of their comfort zone and realize that things are changing.” To have a healthy business that grows, Mr. Bishop said independent dealers need to pay attention to the right details to take care of customers.
“Think about it, we're there to solve (customers') problems, make them happy and get them to come back.”