Let’s all face it, nobody gets into the tire business for the cheering crowds or the recognition and deep respect of our fellow man. If you did, I’d like a sample of what you’ve been smoking, please. No, we’re all in the tire business to make money, but unfortunately that’s been getting a bit harder to do lately.
Matt Winslow, director of speakers and content at Automotive Training Institute, sums up the problem in a nutshell. “Tire margins are very low today.” Winslow points to online sellers such as Tire Rack that have allowed consumers an extremely wide range of options when shopping around for the best price. Some tiremakers now include MSRPs on their websites, and many of you post product prices on your own sites, setting further goalposts for tire buyers. Retailers that “used to make 40-45 points on a tire – they’re lucky to make 20% now. We’re just seeing tire margins really drop.”
As a result, many dealers have begun looking for alternate strategies to help them survive, and a great many have found that the single most important component of these new strategies is to concentrate on TPMS sales and service. As TPMS technology has grown out of infancy, it has become clear that TPMS is in fact an extremely important aspect of tire sales and service that must be handled well at both the mechanical and the customer service levels for a tire business to be successful today.
Far too many customers look at the high cost of replacement TPMS sensors or the fees for service kits and think that TPMS must just be a cash cow for everybody involved. At $100 per sensor or more, customers reason that somebody is making out like a bandit.
Those of us who have worked at the installer level, however, are far more likely to see TPMS as a gigantic kludge; as a distraction taking time away from the things that really matter (and bring in more money) to service a tiny and often cranky part that demands far too much attention and resources.
As it turns out, we are all wrong. While TPMS will never be a promised land of milk and honey, as some of our customers would believe, it can become an incredibly important aspect of your overall profit-and-loss statement.
As Winslow points out, “Today we don’t have ‘valve stem service’ but we have ‘TPMS rebuild.’ We’re replacing the seal that connects the sensor to the wheel, we have the valve core and we usually have the crush nut that attaches it and so forth. Most shops are charging about $8 for TPMS rebuild and they’re paying about $4 for it, so that’s your new profit center.”
Now while that may not seem like loads of profit, do remember that TPMS service kits should be included every time the tire is serviced. That has nothing to do with profit; it’s simply an industry-wide best practice. It has to happen if you’re doing things right – for your customer and your business.
To do things right means leveraging the sales and service of TPMS sensors as a true profit center. That requires a bit of finesse, a few good tools, some training and a willingness to educate your customers. It’s an investment in time and resources that can ultimately pay big dividends down the line in terms of steady income, a lack of headaches and, most of all, happy customers who return again and again.
It All Starts With Pricing
That process begins with making some decisions about pricing. There are several possible approaches to TPMS pricing, and which one or combination of several is right for your shop depends on how you approach your business and your customers.
Scot Holloway, CEO and general manager at Bartec, had this to say regarding pricing: “The first step is to figure out pricing for the ‘walk-in TPMS problem.’ What I mean is, if a customer shows up with a flashing light and simply wants it fixed, what would they charge for the diagnostics and repair work? To me, this is the most expensive service to the customer as they are not getting any benefit or economy of scale from other service work. This should be the advertised TPMS service price, on the board over the counter.
“From there, they can discount, bundle or offer specials based on what other kinds of products or services their customer is willing to purchase,” Holloway says. “As an ex- ample, if a customer shows up with a broken sensor and simply wants it replaced, they would be charged for initial TPMS diagnostics, tire dismounting, sensor removal, sensor installation, tire mounting and balancing, and, of course, the new sensor, and finally the TPMS relearn. However, if a sensor problem was discovered during a tire rotation, or during seasonal tire changing, obviously the shop has flexibility in how they charge for the TPMS work needed to be done.”
Winslow and his colleagues at ATI recommend a form of “Value Meal-style” package pricing, in which the customer is offered a single price which includes the tires themselves and itemized installation-related services such as mounting and balancing, TPMS service and road hazard warranties.
As Frank Rose, a senior consultant for ATI and a shop owner himself, says, “You can actually make money in the tire business, but nowadays you can’t make money on the tires so much. Today it’s not the tire but the package. You have to sell the whole package.”
This approach has the advantage of not letting the customer get caught up in too many choices. Rose wisely notes that, “A lot of times in the tire business you ask the customer, ‘Do you want these tires, do you want balance, do you want this or that?’ If you ask the customers enough open-ended questions, eventually they’re going to say ‘No.’”
Presenting the entire package as a set of necessary services required in order to maximize their investment gives the customer one single price to consider and prevents them from getting bogged down in choosing from a menu of options.
Some shops take another approach and will roll service kit replacement into mounting and balancing or installation prices. Keeping the service kit maintenance effectively invisible to the customer avoids any conversations in which a customer might decide to save a few dollars by refusing a service that they feel to be unnecessary padding of the bill. The drawback to this approach is that by avoiding the conversation you have also lost the opportunity to educate your customers.
Brian Rigney, general manager at Dill Air Controls, says, “Rolling it into the cost or charging it separately is really up to the stores. Some want to show it as a separate item and explain the value. That way a consumer will realize that this store is doing the right thing, whereas by not listing it they may assume another store is ignoring it.”
On the other hand, John Stratton, aftermarket sales manager at Huf North America, strongly disagrees, “I recommend telling the customer of the service and the reasons behind it instead of hiding it in the bill. Honesty is the best policy when it comes to any service provided to the customer.”
Education is the Key
Instead, taking the time to educate your customers about TPMS can literally turn them from potential antagonists to willing allies in your sales process by convincing them that you are operating in their best interest. For example, according to a new consumer survey conducted on behalf of Schrader International, 96% of drivers consider underinflated tires a serious safety issue and 89% think properly inflated tires and an automatic warning system could save their life.
On the other hand, 42% of drivers still cannot accurately identify the TPMS dashboard-warning symbol.
Although this has improved since the last such survey in 2010, when the figure was 46%, this still leaves a great many customers without the most basic (and to drivers, arguably the most important) knowledge about tire pressure monitoring.
That’s bad enough, but if your customers don’t even know what the dashboard light is for, how can you expect them to know why you need to charge them for service kits?
As Paul Wise, director of corporate communications and business development at Schrader notes, “Consumer education (before, during and after TPMS service), as well as a standardized operational TPMS procedure for technicians to follow each and every time, is critical to a shop’s TPMS success.”
One step that can help your customers feel open to being educated in the first place is to essentially ban the use of the term “TPMS” in front of them. TPMS is just a big scary acronym to most people, and even “Tire Pressure Monitoring System” often sounds way too complex to a customer who is not technically oriented.
Instead, talk about “tire pressure sensors” or “tire pressure monitoring” and you will probably find that customers can actually get their heads around the concept and will feel that much more comfortable and empowered. Dill’s Rigney agrees, “We recommend not using the acronym as it is unclear to most drivers.”
But customer education really begins right after the car rolls into the shop. By now, most folks who deal with TPMS on a regular basis are basically familiar with the concept of “Test Before Touch” as an important way of ensuring an audit trail showing that you are complying with the TREAD Act as well as NHTSA regulations regarding TPMS. But it’s also extremely important because it is the initial entry point into the conversation with the customer. This is where you begin the process of education as well as the process of selling. Wise explains, “’Test Before Touch’ is an industry best practice, not only to ensure a repetitive, standardized, efficient TPMS operational procedure, but also to ensure positive TPMS conversations with customers up-front before any service work is done on the vehicle.”
According to Schrader, a good TBT checklist consists of five major steps:
Step 1: Check the TPMS warning symbol on the dashboard
Step 2: Check the valve caps (metal caps should be replaced with plastic)
Step 3: Check the TPMS sensors (with a hand-held scan/diagnostic tool)
Step 4: Print pre-repair audit and documentation
Step 5: With customer now well-informed and with their approval, begin TPMS service.
Once a technician has performed a visual and scan tool check of all four sensors, the results of that audit should be discussed with the customer, preferably in conjunction with a printed audit report. If any of the sensors are not working, then it’s obviously a very good time to discuss replacement. If the techs are worried about damage to the valve stem sensors when they attempt to remove a tire, this is the time to warn the customer of that possibility before any work has taken place.
However, even if everything looks fine and none of the stems are showing signs of corrosion, then this is also the perfect time to explain the critical importance of service kits as the best means to preserve sensor integrity.
This is the TPMS conversation that will take place vastly more often than any other, so it is critical to any strategy for leveraging TPMS as a profit center. You must be able to convince your customers that service kits are not only in their best interests but an absolute necessity.
So in this type of framework you also need to be sure that whoever is holding the “TPMS conversation” with the customer is trained to not only handle the technical aspects of the conversation but also the sales aspects.
If, for example, your tire technician comes out and discuss the results of the ‘Test Before Touch’ process with the customer, they need to be able to explain why a valve stem sensor is corroded and in danger of breaking, as well as discuss the importance of preventative service kit maintenance. If the customer is onboard with that, great. If the customer is opposed to spending a few dollars more, well then it’s time for further education and selling.
Russ Fuller, owner of Orotek, adds, “The key here is training. All counter people have to become trainers. By educating the public on the benefits of TPMS and keeping it functioning properly each and every time they come in for service, this becomes a common expected charge. Anyone who services tires needs to step up the training on both the sales and installation side in order to stay up with TPMS or be left behind. This is a great chance to add extra revenue with a little extra effort on the training side.”
In this situation, there are all kinds of good techniques that can be used. Many shops use point-of-sale displays provided by sensor manufacturers to show customers why sensor maintenance is so important. One great idea I heard from numerous sources was to keep a jar on the front counter with examples of corroded sensors as an unmistakable visual reminder of what can happen to sensors that are not maintained properly.
Some shops will literally refuse to service the vehicle if the customer refuses TPMS maintenance, although this is certainly something of an extreme measure. Others will refuse to warranty the tires, because, as Huf’s Stratton points out, “The rubber grommet on the metal valve will deteriorate over time just as a rubber valve stem will. If not replaced, the customer runs the risk of slow air pressure leaks or even total failure of the valve.”
To put it simply, you’re trying to get the customer to come to the viewpoint that nearly all of us who work with TPMS valve stems share, as efficiently defined by Holloway, “Why would you not replace them is the better question?”
Ultimately, the best part about a strategy for leveraging TPMS as a profit center is that it really is entirely honest. It’s not like you’re trying to sell nonexistent musical instruments to the good people of River City here; you truly are providing a useful, valuable and important service.
Not only is TPMS literally protecting your customers’ lives, but by performing the proper maintenance every time, you are asking your customers to spend a few dollars now to prevent their expensive sensors from being destroyed by corrosion later. Those maintenance costs are a very real form of insurance. This is part one of a two part series. Next month, we will discuss the tools of the trade that you need to have around your shop – the various forms of TPMS scan and relearn tools and replacement sensors.