Tire Dealer Survival Guide: How to Define the Value You Deliver

May 24, 2024

Raise your hand if someone has ever suggested raising your rates because your dealership provides its customers with more value than the competition offers. Someone has! (That’s what I thought.)

This also means someone probably convinced you to do one of any number of things you could have or should have done long before. Yes, the validation and encouragement we get when our colleagues help us take a step forward is awesome. But just because we’ve been told or believe we offer more value than our competitors doesn’t mean that we actually do.

When’s the last time you sat down with others and had a discussion about your value? What does the word “value” mean to you, your customers, your employees and even your competitors? Isn’t delivering value what this is all about?

Do yourself a quick favor. When you’re done reading this entire article, take out a notepad and write “value =.” Take five minutes to jot down some notes as you brainstorm your interpretation of the definition. 

Value is very different for most everyone. And it’s not static. Value changes over time — maybe even minute to minute these days. If at the end of this exercise, we took what’s on your notepad and combined it with how others define value, we’d have a long and likely debatable list.  

Sure, we could word-cloud the list and certain definitions would pop off the page, but we likely wouldn’t have a clear enough definition to capture the true spirit of the word. So if value is likely different for everyone, can we truly define it? And if so, can we quantify it? A formula to quantify your value and compare it to others? That would be a pretty awesome dashboard, wouldn’t it? 

One of my favorite things to do is to solve something by isolating its variables. It's a type of deductive logic that, at least in my mind, levels the playing field for a better understanding. Admittedly though, I’m biased. Conscientiously and logically approaching decisions is something I enjoy, especially in this case since we’re going to try our best to conscientiously apply logic and develop a formula for something that largely involves feeling and emotions. (By the way, we do this constantly in our 20 Group meetings.)

When comparing one business to another, it’s essential to have a level playing field. That means we make sure all involved in a given discussion about value have defined and quantified the variables consistently. We remove the noise so we can have a clear and effective conversation. When we stick to those guidelines time and again, the discussions get a little clearer or more valuable each and every time.  

Setting the stage for productive and effective conversations, like those experienced in 20 Groups, is essential in most everything we do. If you’d like to see a good example of what happens in discussions when that stage hasn’t been set well, just open Facebook and scan the comments from your favorite industry rant chat. How’s that discussion going?

Let’s use productivity as a metric. Productivity is output per hour. There should be zero room for misinterpretation, right? Wrong. You see, our industry hasn't level-set very well on some of the basics. Some shops use labor guides to define the output of jobs, while others use their billable labor rate to define the output. Should that be the case? I’ll leave that up to you to decide.  

My point is the way we define things has a major impact on the discussions we have, especially when it comes to quantifying things that come from — and contribute to — behavior. 

Let's say your billable rate is $150 and you charge the customer $150 for a job that calls for 1.1 hours in your coveted labor guide. If the technician gets that job done in one hour, according to shops that use said labor guides' definition of output, they would be said to be 110% productive.  

In that same example, using dollars charged to define output, a tech having completed a $150 job in one hour when your billable rate is $150 would mean your productivity would be 100%, not 110%. To be 110% productive using this train of thought, we would have charged the customer $165 and completed the job in one hour.  

There's definitely a right and wrong way in these examples, but just imagine how many people in our industry have had endless, exhaustingly enthusiastic productivity discussions without defining key terms. Sadly, without defining the formulas and/or terms discussed, those discussions were less than productive — and less valuable!

Let’s look at your value versus your competitor’s value. How should value be defined and what's the right way to quantify it? Are you actually leveraging value or just talking value? Reality says we all pretty much sell the same stuff and do the same work, right? So if the key difference between you and the tire store down the block is value, shouldn't you have a clear picture of what that means and exactly how much more or less value your shop provides than your competitor’s shop? The answer is yes.

Let’s make some comparisons. Keep in mind, the definition won't be perfect and the formula is likely even less so. Hang in there with me, though. 

Some people define value as a position or a stance. But it’s more than that. It’s the way your stance is arranged and how it shows up in the customer's journey. Our positions are the ones where we package our stance and put it in the market. So if we’re “bringing value to market” wouldn’t it be essential for us to effectively communicate our positions?  

Communication, at its most basic, imparts something to someone. i.e. a deliverable. If we’re on the same page so far ,we take our position, package it well, communicate it effectively and the word spreads.  

For this discussion, let’s say value equals a well-packaged and communicated set of positions that fulfill a customer’s expectations. Let’s also say value equals a stated and consistently delivered business position that fulfills a customer’s expectations.  

Let's trim it back just a bit more. Can we get away with saying that value equals “I can and will deliver something you asked for — or need — on a consistent basis and you’ll come back?” 

Did we just agree that it’s just that simple? I make a promise, you agree to that promise, I deliver that promise and you’ll be satisfied.

So how would you quantify that? Let's discuss the variables first and see where we land.  

The first part of the equation is stated position. I would say that your stated position — or your value proposition, if you will — is a set (or sets) of intentionally designed “things” we think people either do or should value. These intentionally designed things are placed in a certain part of the customer’s journey to make an intended impact. We generally feel like these are the things that make us more valuable. “We offer complimentary lifetime tire rotations with the purchase of one or more tires” is a simple example. 

The second part of the equation is recurring position, which is taking those stated positions and delivering them in an efficient, timely and consistent matter. In the free rotation example, we might expect that stated position to be discussed on the web, on the phone, on the invoice, in the warranty packet and in reminder texts/emails. And we expect that our customers should be seeing and hearing about this position as much as possible. Any less and our recurring position loses some value.

Finally, the next component is fulfilled expectations. If we have a defined and valid set of value positions that are intentionally inserted at fixed points along the customer journey, with consistency, of course, we know we will be fulfilling at least some expectations. When you fulfill expectations, you take a large step toward getting customers back again and again. It’s called your retention rate. Let’s say you have 2,400 customers and you expect to see each of them twice a year. If you see 1,200 of them twice or more, your retention rate is 50%. 

Are your stated position, your recurring position and your fulfilled expectations measurable? Here are some examples. 

Stated position. Can you quantify the number of times you hear your value position stated on the phone? Can you quantify how many people do or don’t see this on your invoices? 

Recurring business position. Is your dealership’s value position driving people to your door as many times as you want? Is your value position driving new customers as readily as you want?

Fulfilled expectations. Internal reviews and Google reviews, which measure customer sentiment, are readily available. You could also simply ask every customer as they cash out, “Is there anything we could have done to improve your experience?” Maybe you have a thumbs up/thumbs down text delivered 15 minutes after service? You can measure this metric in several ways. 

It’s almost time to start that list I mentioned earlier. I think at the end of this, regardless of how you craft this formula, value can be defined and quantified in each its own unique way or ways. And remember that each is unique to you, your business and your customers. So make that list and pinpoint what value means to you.

About the Author

Randy O'Connor

Tire and auto industry veteran Randy O’Connor is the Owner/Principal of D2D Development Group (Dealer to Dealer Development Group.) He can be reached at [email protected]. For more information, please visit www.d2ddevelopmentgroup.com.