Point S celebrates success at Puerto Rico conference

RIO GRANDE, Puerto Rico — The secret sauce behind the success of Point S Tire & Automotive Service USA — the marketing cooperative has doubled its overall size based on revenue over the last five years, buoyed by a 24% increase in sales in 2021 — isn't that complicated.

It's a lot of meat and potatoes.

"It's about execution, doing the basics," Clint Young, chief operating officer, said. "We're good at controlling what we can control."

Even things outside of the group's control, such as the supply-chain difficulty that has affected every independent tire dealer in North America, is food for thought.

"Our team really ham-and-eggs it together to get as much product as we can in our various warehouses for our members to get," Young said.

"I don't know how many new products we brought into warehouse that we didn't have before the last two years, but the list is long. That speaks to the challenge of being able to access products."

The group finally got a chance to celebrate its successes collectively during its 2022 Dealer Conference and Trade Show, held Jan. 26-29 at the Hyatt Regency Grand Reserve Puerto Rico.

Despite the travel difficulty — including the requirement of a negative COVID test performed 48 hours before arrival — around 240 Point S guests, including 55 dealers and their spouses plus Point S staff, and vendors, attended the gathering, held almost two years after the last dealer conference.

"I walked away from that meeting feeling like we knocked a home run out of the park," CEO Walter Lybeck said.

"We had a really good meeting. The energy in trade show was fantastic. We got through our information and training sessions well. There was a lot of time to connect as members. People enjoyed the experience and got what they needed."

The increase in sales over the last five years wasn't the only piece of news that members heard. Among some others:

• The group grew to 257 locations, adding 20 stores in 2021 for the second straight year. In addition purchases from the buying group grew 21% from those locations compared with the 2020 recruiting class.
• Point S as a group registered double-digit sales growth for the fifth straight year.
• With the addition of a location in southern Missouri in January, Point S has locations in 27 states, with the intended goal of being in 50 in the not-too-distant future.
• Around 80 locations are using the group's proprietary All-Trac platform, accounting for nearly 950,000 appointments made by customers online.
• The Point S management group had a Net Promoter Score of 70%, the highest in its history. "That's world-class behavior," according to Devin Barr, Point S marketing director.
• 102 stores were designated as top shops, garnering customer satisfaction scores of at least 95%, an increase of 42 stores from the previous year.
• The group launched the Point S Master Shop initiative, a 14-month-old program aimed at improving dealer profits. Tony O'Billovich, a former manager at Gills Point S in Oregon, will oversee the program as Point S' newly hired national retail specialist.

Member growth continues to feed the success of the co-op. But with a lean recruiting team and acquisitions rare, the appetite for growth is measured one bite at a time.

"At least that's been our makeup to date," Young said. "To put a big huge number out there, … we could do that. How realistic is it to get to 400 or 500 stores in the next three years? The next five years?

"It's hard to measure and hard to forecast that. We do want to keep doing better than what we've done the prior year. Maybe some other opportunities come along to change the dynamic of our structure and allow us to grow in a bigger, faster way. But this has been our pace, getting bigger by a few stores each year."

The basic tenet of the Point S growth strategy can be summarized in one word: Dealers.

Not only do current dealers help to sell the co-op to other independent dealers exploring the option, but they also play a huge role in maintaining the current group.

"We are super-compelling to the independent tire dealer," Young said. "Their decision to join us don't happen overnight, which is part of our ability to retain dealers. When they do join, it's very well thought-out decision. "

He pointed to three factors that attract dealers: the group's ability to show an increase in profitability once they join the group; the support they receive in the home office and in the field; and their ability to get product, especially over the last year.

"Most of the new stores who want to come on board spend quite a bit of time to talking to existing members to validate all the things the sales team is telling them," Young said. "Once that happens. It becomes a no-brainier, especially if we have done our job."

Point S does its due diligence on any prospective dealership, ensuring it has good demographics around them, its size is appropriate, it is retail-focused and that rebranding make sense.

Last year, Point S lost one member, through retirement. "Typically, that's how our losses happen," Young said.

"Our philosophy is and will be, what's good for our member needs comes first," Lybeck said. "When a member needs to cash out, that's what they need to do."

Should a dealer chose to leave the group, all it takes is a 24-hour notice.

"We are an arm of independent, so we'll support them in whatever endeavor they need to do," Lybeck said. "There is no lock, no requirement. We make it as easy to leave as it is group as it is to join it."

In fact, Young said that when the group was exploring expansion into Memphis five years ago, it had identified a handful of dealerships to recruit. Another group came in and bought those dealerships.

"That was kind of a punch in the mouth," Young said.

"But the dealer who had sold out referred Point S to other dealers, and today Point S has outgrown the Memphis warehouse it acquired in September of 2019. That warehouse — actually three separate facilities — now services 18 to 20 Point S retail locations.

"The analysis we did showed that the Memphis market was hungry for group like our," Lybeck said. "Its proven there is a strong base there. That's a big part of the reason we've outgrown that facility."

Much of the product housed in Memphis serves the medium truck and ag/OTR markets. That product, of course, requires more capacity than passenger tires stored there under previous ownership.

The largest dealership under the Point S banner is Gills Point S, which has 35 locations, including 21 in Oregon.

The mergers and acquisition feeding frenzy that closed 2021 certainly caught the attention of Point S.

"My urgency is we need more stories and independents before independents disappear," Lybeck said.

"We need to be in 50 states before it's hard to find independent stores there. We can't control whether (dealerships) acquire stores. We can provide great service to our members. We can help our members be successful, be profitable, hopefully keep them in the business long-term for their families.

"But if a member chose to sell, like a lot did last year, than that's the appropriate answer for them."

Meanwhile, Point S will focus on the basics, Young said, such as educating current and prospective dealers on the group's benefits.

"It's about member success," Lybeck said "It's a strategic initiative of ours that our members can maximize profits. Our hope is to bring members along that are underutilized to make them a stronger member, and we believe that will equate to more units long-term and strong team long-term."