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Tire Industry Data Challenges We Need to Catch Up

From my perspective, the tire industry is light years behind when it comes to the use of data. But this is expected to rapidly change in the near future. I have been traveling the U.S. for the past 29 months visiting tire dealers, collecting their sell-out data that will be used to measure the independent tire channel.

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From my perspective, the tire industry is light years behind when it comes to the use of data. But this is expected to rapidly change in the near future. I have been traveling the U.S. for the past 29 months visiting tire dealers, collecting their sell-out data that will be used to measure the independent tire channel. One of the trends I see at both the tiremaker and tire dealership level has to do with industry leadership. Many of those executive positions at tire manufacturers are turning over. More and more leaders are coming into the tire space from a consumer packaged goods (CPG) background.   

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It’s an interesting phenomenon. But what happens when those CPG people get there? The first thing they realize is there’s very little market research to size the market and to understand market share by brand. They don’t have the data to know the competitive landscape. They don’t have data that shows consumer trends in rim diameter. They’re basically flying blind. But at the same time, they bring with them from their CPG skills on how to leverage data and be more tactical as a data-driven organization. They’re thirsting for the kind of data they’re used to getting in their CPG past, and the tire industry is just not there yet.

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While the industry as a whole is not data-savvy enough, companies that make fact-based decisions are obviously going to be more successful than those that don’t. In addition to hiring people from outside of the industry, family-owned dealerships will increasingly make better use of data, especially as the next generation gains influence over how the business is managed.

The data that’s available today is an endless supply. There’s project data, customer data, sell-in data, sell-out data, vehicle data, and so much more.

Most of the dealers are doing well when it comes to using financial data. They know where they are from a dollar perspective, what their costs are for labor and goods. The next level is to understand point-of-sale data, like what’s selling and the best-selling sizes, best-selling brands – you want to make sure that you have inventory of the fastest moving stuff.

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The next phase is customer data. If you’re collecting name, address, email at the point-of-sale, and you deliver services to those customers, are you aggressively communicating with them? Are you using the right media and the right message and the right promotion to drive them back into your shop for their next set of tires? 

The next piece is using your causal data, understanding whether or not the $1,000 invested in acquiring a new customer worked or not. Understanding cause and effect means you learn how to spend in places where the money is most effective.

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Make no mistake, the use of data will increase in its level of sophistication. For instance, let’s say you have locations in 10 different trade areas. You need to know everything you possibly can about those 10 trade areas – household composition, demographics, age and type of vehicle, and so on. With that information, you can then append the data into household segments, to identify which of the customer groups are of highest value to you. Once you identify them, you can quantify, locate and target them more efficiently. You’ll learn who your best prospects are by looking at your customer database and analyzing it. Then by appending it by who they are, you can understand how many more of those best prospects you have in each trade area and start to efficiently target them using your POS data to measure results. 

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The future of data is using it strategically and then having the ability to leverage the datasets together to anticipate and influence outcomes.

As tire dealers increasingly manage their business by looking at the data, they’ll be able to make faster, more intelligent decisions. It’s already happening, but it’s not yet widespread across the industry. The more knowledge they have, the more power they have. We’re seeing it more and more, and it’s enlightening. TR

Tire Industry Hall of Fame member John Gamauf, former president of Bridgestone/Firestone North American Tire (BFNAT), has come out of retirement to promote GfK’s point-of-sale retail panel, providing tire sellers with comprehensive data. He can be reached at [email protected]

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