For independent tire dealers, keeping up with change can be one of our biggest challenges. Most of us don’t like change; after all, if we’ve been working hard and enjoying some success, why would we need or want to change anything?

The answer is simple: Everything around us is changing at an accelerating rate. Vehicles are changing, tire sizes and types are changing, auto service is changing, regulations are changing, and the workforce is changing. Lots of these changes are pretty obvious and we work with them every day.

Others are not so obvious, and in order to be successful as tire and auto service businesses, we need to better understand what is happening in our market and with our customers. Only then can we decide the actions needed to get ahead of these changes and remain successful.

Keeping existing customers happy while gaining new ones comes from understanding who they are, where they are, and what their needs really are. Shifting demographics are not always obvious, and your market area is constantly changing on all levels. According to a research report in the April 2012 issue of Retail Leader, 76% of retailers had altered their product mix due to changing demographics. Many retailers recognize changes and act on them.

A successful marketing plan includes strategies to maintain existing customers and ways to identify and engage your target customer – that “best customer” that every business craves. Finding your target customer involves figuring out who has a need for your specific products and services and what their demographic characteristics are, including age, gender, location, income, education, marital/family status, occupation or ethnic background.

Options also are available to dig into their specific vehicles and habits, from make/model/year to number of vehicles to driving habits.

What can basic demographic research tell us? Perhaps that a growing number of drivers in your market area are under 35. Since marketing to those customers is different than marketing to older customers, you might need to adjust your plans based on that demographic.

A recent study by DMEautomotive, a Florida-based market research company specializing in the automotive field, says that two-thirds of the customers under age 35 are likely to research a tire or automotive service work before buying. So if your target customer is under 35, you better be current on the available information about your business, products and services.

Another example of how customer demographics are important is the increase in female tire and auto service buying decision makers. Today women – single and married – make up the largest share of all tire/service customers, but a lot of tire dealers still don’t recognize this factor and may well be giving up a big chunk of potential business.

For the most part, women tire/service buyers are far different than male buyers; they approach the process differently and have entirely different expectations. AskPatty.com (a partner with Tire Review) and others are there to help dealers understand this unique customer, and how you can convert female buyers into being among your most loyal “promoters.”

Local demographic research can show you how many females vs. males are in your market, what kinds of vehicles they drive and even where they like to shop. And deeper data can uncover even more.

For instance, a study of female purchase decisions and buying habits by Marketplace Insights shows that 30% of women will do some research before buying tires, while the other 70% will either buy them right away or not at all. Brand of tires is only important to 20% of the women, according to the study, while “expertise and convenience” are the most important concerns to women tire/service buyers.

Gathering Info
From the most basic information to highly specific data about your market, there are many tools available to help tire dealers understand changing demographics.

At the ground level, there is information that’s available right in front of you, every day. If you have POS software that can capture customer spec­ifics, you can gather key information about gender, age, occupation, vehicles owned, how much they are driven, past purchases, and even notes about driving habits and likes/dislikes. And let’s not forget key contact information like cell phone numbers and email addresses, invaluable for future promotions.

You might not get the level of detail that those big, robust databases offer, but you can get some interesting and actionable data. Even without computer capability, data can be collected at the point of sale right on the customer’s paperwork.

So far, we’ve been looking at this as a sales and marketing issue, but let’s take a brief detour to consider another use for extensive customer demographic data: Expansion.

There is a lot of site selection software out there with built-in demographic information, but those pro­ducts can offer a lot even if a new store isn’t on the horizon. Available data can help you find your ideal target customers today, as well as help you plan for tomorrow. Some of this software is available through subscriptions, with costs that range from a few hundred to a few thousand dollars per year. A free trial subscription might be all you need to gain enough demographic info in your market area. We’ll get back to that in a minute.

A few years ago when Conrad’s Tire Express & Total Car Care in Cleveland, Ohio, entered a growth phase to add to its 17 locations, the dealership looked at a wide variety of demographic data available internally. By comparing things like number of vehicles, population density, gender percentages, income levels, number of competitors and various other data points, Conrad’s could pinpoint what was successful at its stores and where they were falling short.

The primary goal was to find new locations that would best fit the successful models that they already had. “Sometimes we collect so much in­formation that we confuse ourselves,” jokes Dominic Umek, general manager, but the data collection and analysis paid off. Conrad’s Tire now has 34 stores.

Site selection for ground-up stores is Umek’s most important use of demographic data, but he also uses two other tools to attract potential custo­mers in Conrad’s market areas – those “best customers” who aren’t buying from the dealer.

One is traditional direct mail. Direct mail companies can provide customer segmentation analyses that will help you target important, influential potential customers that fit your “best customer” profile. Umek also uses customer plotting tools, which can help find the best potential customers within a defined geographic radius.

For the most part, Umek doesn’t use tiremaker-supplied information because he’s focused on the “Conrad’s customer” rather than a Michelin, Goodyear or Continental customer. Market research need not be just by brand, though, and some tiremakers are eager to help their customers grow business in various segments.

Providing demographic data and tools to help dealers hit their target customers is the kind of support tiremakers can offer, often at little or no cost. And while dealers should be taking advantage of this, according to Adam Croneis, key account manager at Michelin North America, such help “is being underutilized.”

Part of the reason may be the sheer volume of available information, which makes it hard to encapsulate for a dealer. And where tiremakers once had entire market research departments, today they contract those services to outside marketing/demo­­graphic specialists that may not be attuned to a dealer’s real needs.

That’s not always the case, though. Michelin recently partnered with an outside company to provide market research and customer profiles. Reports can be run for a specific market area or for a specific radius within a Zip code.

Items in the available “base demographics” report include median age, median household income, median house value, population by age groups, ethnicity and projected values for five years in the future.

Tire information includes Top 20 sizes and a report on potential sales by size and category.

To help determine product screens and inventory levels, Croneis has seen dealers look at the number of single parent households in a market, as well as the mix of “premium” vs. “mid-premium” tire fitments in a market. That’s how specific tiremaker-supplied data can get.

Tire Review contributor John Montgomery came out of a large tiremaker’s research department and now runs his own market and consumer research firm, Marketplace Insights. In both roles, he has developed and provided vast amounts of often quite specific consumer data to dealers and companies, large and small.

One of Marketplace Insights’ key offerings is called Metro Scan, which is conducted annually across 26 metropolitan statistical areas (MSA), creating piles of data for tire companies and mega-retailers alike. Metro Scan also is offered to smaller retailers within their trade areas. At the heart of both are questions to determine “tire buyer behavior,” including how they prepare for a tire purchase, where they prefer to buy, how they see tire brands in the market, and much more.

Montgomery says the benefit to dealing with MPI is that he and his team are from the tire industry, understand the dynamics, and can help dealers identify the things that are impor­tant to customers and how well dealers are addressing them.

Brightline Marketing LLC is another company that provides market research information to tire and auto service dealers. Owner Randy Ladd also came out of a tire company market research team and has two decades of experience in marketing and market research.

Brightline’s Tire Market Vision reports are somewhat similar to Marketplace Insights’ Metro Scan. Brightline surveys the top 30 MSAs each year and the results are offered to various tire/service retailers, complete with a summary of results and action recommendations. Ladd says the company has worked with large and small retailers, and can tailor its surveys to specific needs.

You might think your dealership is too small to take advantage, but consider that these studies also include valuable competitive data, so you can learn a lot about how your competition and their products, services and brands stack up against yours.

DIY Data Gathering
For those hard-core demographic data lovers (and for the fun features), take a turn with Google Earth Pro. On the Google Earth website you can learn more about its “Data Layers” feature, which can help you explore “untapped markets, locate your target demographic, and expand your business.”

While Google Earth’s cool satellite imagery and maps are free (check out what your store looks like from outer space), Google Earth Pro costs $399 per year and is truly designed for businesses. The Pro version also can capture specific area demographics and traffic counts.

Employing the U.S. Demographics “layer” lets you access interesting data down to U.S. Census block areas – the smallest census breakdown can include as few as 600 people. You can look at data about age, education, gender, households, income, marital status and vehicle availability. It is possible to display color-coded median age maps for any area that you wish. One nice feature is that all data shows current (2011) values, but also has the option to show five-year projected numbers.

Traffic count information on Google Earth Pro is as simple as finding a location on the interactive map and clicking on the car symbol. You will get average daily traffic count, the distance to the nearest cross street and the year the count was done.

Google Earth is really fun to play with and is easy to use, and the Pro version adds more levels of interesting research capabilities – at a price. But if you are a real data geek, you can always go straight to the U.S. Census website to get some good demographic information.

It is free (but not necessarily easy to use) at census.gov/cbdmap. The census information on this interactive map is supplied on the state or county level, and includes population figures, race, ethnicity, age, gender and housing status. Under the “housing” tab you can find how many homes are owner occupied vs. renter occupied, the number of houses for sale, etc. There also is a comparison feature that allows you to compare the figures to another county.

Large research corporations devote considerable resources to developing business intelligence for sale. Fortunately, many (like Demographics Now and MapInfo) offer free trial packages so you “cut your teeth” on a trial to get started with your demographic research; if you wish to purchase the full program, that is your choice.

Sometimes there are other work-arounds. In the case of MapInfo, we found a free version of its demographic information through a commercial real estate website to which it provides information. By becoming a member of LoopNet.com, you can look at commercial real estate in your area, but also run a demographic report for the Zip code of any specific property.

There is a tab for “demographics” under LoopNet.com’s “Additional Options,” where you will find reports on age, gender, race, housing, income and industry for a specific Zip code. The basic free membership comes with a limited number of inquiries; it is, after all, a paid subscription service for the commercial real estate industry.

Mapping Out Results
Instead of glazing over doing your own online research, you always could have someone do it for you. Direct mail and database marketers can provide valuable demographic information and customer research – even as they try to sell you the services that they provide.

An example is Customerlink, a company that has partnered with several POS software companies and dealer organizations to provide things like demographic segment reporting, Google mapping and a proprietary marketing process – all with the goal of retaining existing or acquiring new customers.

CustomerLink claims that it gathers data “from over 150 sources” and compiles that data into “segments” so that dealers can compare that against data from their shop management software.

Understanding who your customer is will help you retain existing ones and more accurately determine where potential new customers reside. But have you mapped where your customers live or where your competition is? There are lots of free mapping software sites online that can fairly easily let you drop a list of customers or other stores from an Excel spreadsheet onto a map. Your desktop software might even have it already.

It would only take a few minutes to do and the resulting information might be really interesting. Some of the free ones are difficult to maneuver through, but sites like topo.ly are quick and easy to use. All you need is a list and you can drop it into many of these mapping programs yourself.

On the pay side is Microsoft MapPoint, available for $249. It has many demographic features down to the zip code level that could be useful. Unless you have a need for some of the features of a more robust program, the free stuff will work fine.

So why map your customers? Many neighborhoods have distinct market lines. It would be interesting to figure out why some customers drive a further distance to buy from you vs. an alternative. Perhaps a highway or community border exists that impedes people from going in your direction.

A dealer once told me that custo­mers on the other side of the river from his store didn’t typically shop in his neighborhood, even though his was the closest tire store by several miles. But after he specifically marketed to that area, he started to pick up some new customers. A simple mapping of your customers is worth a quick look.

Successful retailers in various industries put demographic information to use with great success. I recently switched back to a dry cleaner that I had used in the past because of $30 worth of coupons that I received in the mail. As it turns out, those coupons weren’t just randomly sent to my house; the dry cleaner hired a marketing company to attract new customers, retain current customers and win back former customers like me.

The agency segmented the cleaner’s database into the three targeted groups and “crafted a custom message for each group.” After establishing a “best customer profile” and using the clean­er’s database, the firm created a targeted direct mail campaign that in­c­luded a series of coupons.

The result was a response rate more the twice the national average for current customers and more than four times the average for “new custo­mers.”

So if you are thinking about a direct mail campaign, there probably is a wealth of demographic information in your existing database from which to draw. Even without a good database of existing customers, an experienced local agency can use other demogra­phic data to develop your target customer profile and market to them. Dry cleaners or tire dealers, the idea is the same.

The two big questions today, according to Randy Ladd at BrightLine Marketing, are:

• Who is your target customer?

• What is your value proposition?  

In order to promote and sell yourself successfully in your market area, you really need to determine both. By making good use of demographic research, you can establish your target customer and then develop a value proposition that is aligned with it. You also can come up with a strategy to change your customer conversations to what is important to them (safety, convenience, service, peace-of-mind, cost, etc.) rather than what is important to you (sales, sales, sales).

Your market area has certainly changed over the years, and it will continue to do so. Using market demographics – becoming a data driven dealer – will help you make good business decisions and help you meet the challenges and stay successful.

The access to good demographic information has grown exponentially, and the cost no longer needs to be a burden on the small tire and auto service dealer. Resources are out there for smart, resourceful tire dealers to get as much information as they can manage.