As a former regional vice president running a group of retail tire and automotive outlets, rarely a week went by that a store manager wasn’t asking me for an equipment upgrade or a new piece of equipment. The manager’s reasoning and promise was usually the same, “If I had this piece of equipment, blah-blah-blah... and we’d make more profit.” Today, I wish I had $10 for every $100 we wasted on equipment that either didn’t perform as promised, required consistent maintenance, or simply never caught on and was pushed into the corner of the shop and abandoned.
Once, while I was contemplating several equipment purchases, I was complaining to Mr. D, a retired Firestone West Coast regional director working three days a week for our company as an advisor, storyteller and voice of reason.
Mr. D said to me, “Make ’em earn it.” At first I thought he meant after the purchase, but he meant before the purchase. Mr. D was talking about generating additional gross profit dollars before the purchase and immediately afterwards.
We operated a 12-bay store in Montclair, Calif., a higher-volume store where the manager was asking for a second alignment machine. He was a determined, smart store manager, and a very profit-motivated individual. Back in the day, the alignment machine he wanted meant we’d have expensive concrete work on top of the cost of the machine.
To “earn it,” (the second alignment machine), we set a goal of generating additional gross profit ahead of our purchase through two means: additional “alignment” dollars, and additional “balancing” dollars.
Though the store did a good job in these categories, we set a goal of generating 20% of the purchase price of the project before we ordered the equipment, and 120 days after installation to pay the remaining 80%. We announced the goals to the sales and service team, and with a great deal of pride, the additional dollars starting flowing immediately.
We instituted a simple counter card program that read:
FREE
Rotation and Balance Check!!
We performed rotation and balance checks on vehicle after vehicle, charging only for rebalancing out-of-balance tires. The store team monitored their results daily, and it became apparent rather quickly that we had better contact a cement contractor and the Hunter alignment sales rep because the dollars were rolling in.
And 120 days after the installation, the entire project was completely funded or had generated enough additional gross profit dollars that we proudly stated we owned the machine free and clear.
The team generated the dollars, made the extra sales effort and achieved its goal; they earned it. As with most organizations, there’s a grapevine; word got around, and it became standard practice for planned equipment purchases to have a plan to “earn it.”
I tell you this story because at the Specialty Equipment Manufacturers Association show in Las Vegas a few months ago, I stopped in to see several equipment manufacturers and check out the new advances in design and technology. I was blown away. The technology, accuracy and ease of use that is built into some of today’s equipment is incredible.
A rep working the Snap-on booth was friendly and knowledgeable (not always a given) about a balancer and walked me through several processes. These machines are built to balance tire and wheel assemblies (and to print money).
I was around when the Chevy Corvette came with original equipment 16-inch tires, size 255/50R16. I remember thinking, “Could they get any bigger?” Today, the Corvette ZR1 comes with size 285/30R19 on the front and 335/25R20 on the rear. You may not be able to rotate them, but balance is more important than ever.
While watching the demonstration by the Snap-on rep, all I could think of was how to sell this service and how to make money with it.
The terminology he was using to explain the service and its benefits was making bells go off in my head. If this service can be effectively communicated to consumers at the sales counter (counter intelligence), there is a tremendous amount of gross profit available (low-hanging gross) on a worthwhile service.
I was thinking I would institute a simple counter card program (check out this counter card easel in the photo).
I’ve learned a lot from some great people in this business. I learned how to make a profit in a retail store and how to make more profit year over year.
I’ve learned how to generate more gross profit with a little focus and a little additional effort. I’ve learned that a little more gross profit every day adds up fast.
I’ve learned you have to “earn it.” Thanks, Mr. D!
Wayne Williams is president of ExSell Marketing Inc., a “counter intelligence” firm based in La Habra, Calif. He can be reached at [email protected].
