OK, so you’ve already done a comprehensive SWOT analysis to determine your strengths, weaknesses, opportunities and threats. Then you did one on your competition so you know where they are strong and weak. If you haven’t done these, well, that’s a topic for another day.
Conventional wisdom tells us that in order to produce the best outcome – to gain a decided advantage – you should attack your competitors’ weaknesses.
But that’s the easy way. And often the most ineffective in the long term. Besides, attacking a weakness can make you look desperate or negative, both of which are bad.
Going after a competitor’s weakness(es) is a popular tactic and has many proponents. Telling a customer that “Big Tire Store down the street does indeed have low prices, but we take far better care of our customers” implies that the competitor has poor customer service.
This backfires, of course, if that customer feels Big Tire Store has great customer service. Or if that customer sees through the ploy.
Think abut this: People buy from you and your competitors because of strengths, not weaknesses. This is, of course, a matter of perception. How else can you explain Walmart’s perceived low prices superseding its shoddy customer service in a shopper’s mind? At the same time, one person’s view of World Class Customer Service can be quite different from another’s. If you really want to find a competitive advantage, find your competition’s true strengths and attack in a positive and focused way.
Sometimes there are weaknesses in their perceived strengths that you can use to your benefit. A tire store that promotes being in business for 70 years is saying it has been around so long because it’s good. If you were to open a new store down the street, you might promote your newness as a strength – being fully trained and up-to-date on all the new technology implies that you are modern and more current.
The “Buy Local” movement across the country has certainly influenced tire and auto service customers.
The big box store down the street has a recognizable, national brand name and might do a decent job.
Attacking its size means promoting that you’re a local brand, with local people who know the local customer’s specific needs – and buying from you does a lot to encourage local economic prosperity.
That’s a more positive approach, and people like to deal with businesses that send out positive vibes.
Attacking a competitor’s strengths is not a new concept. There was last year’s Samsung commercial with a Samsung Galaxy S3 Smartphone user sitting in a long line for the latest Apple iPhone. It poked fun at how mainstream the “gotta have it now” Apple products are by having the young guy say that he was actually really happy with his Galaxy and was just holding a place in line for his parents.
Being a dealer is a distinct advantage when you go up against much larger, often corporate competition. You have the ability to turn on a dime, make a decision and put a program in place in hours, rather than months. So what are the seven ways you can attack your competition’s strengths?
Number 1: PRICE
Your competition might be offering lower prices, but counter attacking with even lower prices is the expressway to failure. And boosting volume to offset lower prices doesn’t work at all. Just look at all the billion dollar bankruptcies over the last few years. Success means generating a decent GP and solid cash flow. Price wars kill both.
There will always be “price customers,” but they aren’t the vast majority of the buying public. Tire buyers, in particular, weigh many factors, price being one of them. If you have people lined up at your door to buy tires, you’re probably selling them way too cheap. If you aren’t making your unit sales plan, it is not necessarily because your prices are too high.
Some businesses say their competition is beating them with lower prices. Some customers will tell you that the guy down the street has a lower price. Sometimes those situations are true, most times they are not. Whether you regularly price shop the competition or do it on a case-by-case basis, the first thing to do when running into price objection is to verify. Are their apple-to-apple prices lower? What about online buys? The tire price might be lower, but what about shipping and mounting/balancing, etc.? How do the all-in packages compare?
If you find that you are higher, do you need to (or want to) adjust? You’ll have to judge your actions. Is it a common issue or is this price complaint a rare occurrence among dozens of successful sales?
There is another alternative to lowering your prices: Spend more money to increase sales.
When you look at the numbers, it is easier to see just how much a price reduction can affect your business.
If your tire/service store does $1 million in annual sales with a gross profit of $450,000 (45%) and total expenses of $450,000 you are just breaking even. If you lowered your prices by just 2% across the board, the numbers would change to $980,000 in sales and $430,000 in gross profit, or 43.8% gross margin. In order to get back to break-even, you would have to increase sales by $47,400, a 5% increase in sales at your new gross margin. That’s for just a 2% decrease in selling prices.
On the other hand, if you spent an additional $10,000 on customer service or marketing or any activity that caused sales to increase while maintaining margin, it would only take a 2.2% increase in sales to cover that expense.
Choosing to lower price does nothing to make you better. It just lowers your price, which can also have the negative effect of devaluing your program and reputation. By choosing to spend money to enhance customer service or improve marketing, your positive response to competition can improve your business – and drive lasting benefits.
If you absolutely must respond by lowering your price, do it as a temporary reduction. Use a specific time period and monitor the results. Combining a short-term “sale” with improvements in customer service and marketing should pay off and might even make your competitor notice you.
Number 2: CUSTOMER SERVICE
You hear repeatedly that your chief competitor does a good job of taking care of customers. The good news is that improving the customer experience you deliver is within reach; it doesn’t require a big budget or extra staff. All that is needed is a tactical plan and the commitment of time and energy to ensure that all employees have a single-minded focus on the customer.
Plus, attacking a competitor’s outstanding customer service will make you better by causing you to continue improving your customer focus.
Steve Ferrante, a regular contributor to Tire Review, is infatuated with Amazon.com as an example of incredible customer service. There are certainly lessons that can be learned from its customer service practices that apply to all businesses.
In his article, “What Can We Learn from Amazon’s Customer Service? A Lot!” he points to four elements for great customer service. Amazon personalizes the buying experience, keeps you well-informed throughout the process, rewards you for loyalty and has a customer-first commitment when things go wrong (a rare occurrence, to boot).
There are specific customer service activities in which dealers engage, but they usually are small things buyers appreciate, like free loaner cars or follow-up calls or free car washes. In order to see the result of Amazon-level total customer satisfaction, all four elements must be practiced at all times.
It’s an all or nothing proposition. If you’re competing on the customer service/satisfaction field, do as much as you can fully complete and then add elements as you’re able to fully commit to them.
Take a look at your store from the customer’s view. What are they seeing, hearing, feeling and getting from the experience of being in your store? A great customer experience doesn’t require a large, glitzy facility. A clean, uncluttered and well-maintained store staffed by knowledgeable, well-spoken and professional people can provide a world-class customer experience.
Think about this: Your weakest person is the measure of your customer service; you truly are only as good as that weakest link. Many business owners do a great job of taking care of most aspects of customer service only to have one person or a single event ruin the overall experience. A surly, unfriendly employee can undo a great job done by everyone else in the store.
Attack a competitor’s strong customer service by developing a process that identifies your weakest link, then strengthen it. Visualize the customer’s entire tire/service buying process from the first thought of needing service to getting home from a completed purchase. Incorporate a step-by-step process that makes that entire scenario work for the customer and for you. And constantly measure your progress and success and make any needed changes as quickly as possible.
Number 3: SELECTION
Your competitor might have a real strength in the amount of inventory carried and the brands and types on hand. But with SKU escalation, dealers need to be creative if they want to successfully compete with big inventory stores.
Here’s the rub: Customers want their tires right now. Some dealers are convinced they will sell more if they carry more, so they put a lot of capital into inventory. But not many dealers can stock thousands of tires, and without good market knowledge, how do you even know what tires to stock in-house?
So the real question is how good you are at acquiring the tires your customers need. To be successful, you need a supply chain that is efficient, extensive and flexible. And it helps to have a little magic.
I’ve seen dealers lose sales because of “poor inventory,” but the solution can be quite simple. Statements like “I’ll have to call the distributor” or “We don’t have that in stock” need to be replaced by “Let me call my warehouse.” You might have very few tires in the store, but have thousands at your fingertips if your supply lines are well arranged. Besides, “My Warehouse” sounds more impressive than “The Distributor.”
Of course, there are purchase commitments with various programs, but if you can’t get the tires that you need quickly, you’re giving the customer a reason not to buy from you. Remember, each lost sale is a lost customer, and who can afford that?
To succeed against the high inventory competitor, a dealer needs as many suppliers as possible to ensure sufficient supply and broad selection. You might even buy from the competition, if necessary. In that case, you may not make as much on the tires but you took the sale from someone else and have created the opportunity to gain a loyal, long-term customer.
Do the research and find the best options for a consistent, reliable supply of the brands, lines and sizes you will need to meet your market. And invest the time and money necessary to get a better sense of the vehicles and vehicle types populating your primary trade area. This information will be invaluable when working on your in-store inventory, as well as aligning your needs with distributor inventory.
“Yes, I have that in stock” is what your customer wants to hear, and it’s pretty easy to make that statement if you get your “store inventory” properly set up.
Number 4: LOCATION AND HOURS
“My competitor has a better location than me.” Well, that is a distinct advantage that is hard to overcome unless you’re a real estate mogul. If not, then you’ll have to find positives about your location and promote them.
With the right touch, distance and time can be made irrelevant. “Cars, like eggs, are cheaper in the country.” When I was growing up, that was the promo line of a car dealer with a store outside our metro market. That dealer really wasn’t that far away, but the word “cheaper” drove people to drive a few more minutes to check out his car lot.
Years ago, I lived in the suburbs about two miles from the largest shopping mall in the area. But when I had to drive downtown to a store – a 10-mile trip – I found that it was easier to drive, park and get into the stores downtown than it was to fight the mall traffic, find a place to park and walk through a huge mall.
I found that out accidently; your customers should be told.
Find the positives in your location and point them out. It could be a large, easy to access parking lot, unique restaurants and shopping close by or the fact that you are closer and more convenient than one might think. You know the positives of your location, now tell your potential customers.
Attack the competition’s location strength by offering shuttle service or even free loaner cars. No location is convenient when you have to get someone to pick you up.
And what about your store hours? Are you open the correct hours to maximize your sales opportunities? More convenient hours can trump a perceived more convenient location by making it that much easier to do business with you. Make sure your business hours are more customer-focused.
Number 5: EXPERIENCE AND KNOWLEDGE
Thanks to the Internet, your customers are better informed about tires and vehicle service than ever before. That means your counter people, service techs and tire techs need to be a step ahead of the competition and the customer.
Vehicles are more complicated, and you could find yourself with shop equipment that is better than the people operating it. Your toughest competitor recognized the need to train, train and train some more – and so should you. Having a better trained, more knowledgeable staff will always make your business better – and customers will notice the difference.
Many dealers still use the excuse that they are too small or understaffed to send people out of the store for training. They rely on old wives’ tales and older techs “leading by example” to deliver “training.” But in today’s highly competitive tire and service arena, you’ll only survive if you come armed with the best-trained and most expert staff around.
Few would disagree that there is no substitute for having skills, yet many dealers hesitate to invest in even minimal training and certification. Committing to good training is time consum- ing and can be expensive. If you need to train and certify on a budget, see if your suppliers can help. Most are anxious to provide training, but often keep some of those opportunities under wraps.
Ask every supplier if they supply training, and especially if they will pay for it. And think about developing your own training program to help new hires. Make good use of industry training, such as TIA’s extensive Automotive Tire Service and Commercial Tire Service programs; and the existing ASE service specialist training, testing and certification program.
Number 6: ONLINE PRESENCE
A quality website is critical these days, and many of your competitors have great, easy-to-navigate and highly engaging websites.
You might be convinced that it’s impossible to compete with their great websites, that it’s too expensive and too complicated. But there is no good reason to shy away from building the best web presence that you can.
I’ve heard many dealers say that they know they need a website, or to improve their current website or get into social media. We’ve been telling dealers they need good websites since the mid-1990s; today they are as important as the four walls and roof of your bricks-n-mortar location.
For those dealers with no website at all, micro sites often are available through a program distributer or supplier. Many times, they can be personalized to your business with just a little knowledge and time. It’s at least a place to start.
If you have a proper website but your competitor has a better one, there are few ways to attack that. If budget is a concern, spend the time yourself and learn as you go. It might not be as complicated as you assumed. Or have a tech savvy employee do it or, as many of us do when we can’t figure out our smartphones, have one of your children do it.
If you have some budget to work with, there are tire-focused firms that can help you build a new site, or there may be a local company that can assist.
Whatever path you travel, also make sure your website is mobile device-friendly. More and more of your customers are searching for tire and auto services online using their smartphones or tablet computers. If your website has not been optimized for mobile devices, you’ll lose a lot of opportunities to capture new business.
You don’t have to be a tech geek to get excited about website analytics. According to Heather Blessington, CEO of Duo Web Solutions, “There is no point in having a website if you aren’t paying attention to who is visiting it and what they are doing once they are there.”
Your tough competitors are doing this and you should, too. A few key instructions can unlock interesting, live data on what customers are most interested in.
Website enhancements like adding online appointment scheduling can be done without huge expense and will give you the look of a larger, stronger competitor. Making it easier to do business with your company should always be the goal. Your tough competitors are doing these things for a reason. It works for them – and it will for you.
Social media is not a fad. It has become critical to long-term visibility. It is a level playing field, regardless of company size. Focus and dedication allows anyone to compete with another company’s social media efforts.
Whether it’s Facebook, Twitter, Pinterest, LinkedIn, YouTube, Google+ or any of the other social media networks, you can compete with anyone. Social media makes everyone the same size, it’s just a matter of making the effort.
Number 7: EVERYTHING ELSE AND THE DIFFERENTIATOR
Do most tire and auto service shops look the same? The need to stand out from the crowd has never been greater.
Your toughest competitor might have a unique program or offering that is “impossible to beat.” It could be from any of the six areas discussed above. But within all of those areas, a competitor’s strength might expose a weakness or a way for you to one-up them.
If they have a pricing advantage, maybe having a special really low price on Wednesdays for a specific brand of tire would create sales. A competitor using a high tech but impersonal phone system that requires the caller to enter various prompts could be beat by you having a well-trained, real human answer the phone.
Tire selection is a growing challenge, but your differentiator could be as simple as offering a specific, unique line of tires that might give customers the idea that you really can get anything. Stocking tires to fit vintage VWs and Porsches and marketing to the local clubs can bring in customers with those vehicles – and they have other vehicles, too.
Would it make sense for you to compete by staying open just one day a week much later than they do, like 10 p.m.? Bold move, but if your customer base needs greater convenience, that could be a differentiator.
Your tough competitor might have an incredible web presence, but no blog activities. If you’re the real expert in the market, why not start a tire and auto service blog? It will help your web visibility and obviously your social media efforts. I know of some dealers who have actively promoted themselves to local TV and radio stations as the “go-to expert,” so that whenever the stations have a tire or service story, they go to that dealer for expert content.
Do something unique to stand out in the crowd. There are so many things, like the “green” movement, becoming more attune to the needs of female or senior customers, countless things you may already be doing that can be better promoted as your unique strengths.
Your SWOT analysis of your business will point to your inherent strengths. Leverage those as differentiators.
But also take a close look at the reasons why people buy from your competition – their strengths. Work at making at least a portion of their strengths your strengths. There’s nothing wrong with “borrowing” a good idea. The best ideas aren’t new ones, they are ones that work and make you successful.
It is hard work to analyze yourself and your competition, identify the strengths and weakness, put a strategy together, make changes, and practice the stick-to-itiveness that is necessary.
The time and energy spent will pay off. Get creative, stay positive and don’t be afraid to take on the best in your competition.