Tireless. Kim Lorenz
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of the business, and additional office staff was hired to handle the paperwork, billing, HR, and accounting.
Everything seemed to be running successfully.
One of the key success drivers and part of the original vision shared by both John and I was that our competition was simply selling tires. We were focused on educating our customers on the total cost of their operations and how we could reduce that cost with them. We taught our sales and service personnel to understand the customers’ business well and act as their consultant, or even an inside employee.
Though it was true that every customer needed tires in their business, that was not all they needed or wanted. In an effort to save money across the board, our customers (much like any customers of any business) wanted to make sure they were getting the best price. We all love a good deal, don’t we? So, what if you could educate the customer that proper management of their tires—managing the retreading and inventories better—would save them thousands of dollars a year? We wanted to show the customer how to reduce the needs for different sized tires by standardizing the size used, reduced inventory, spares, and space. We also wanted to show the customer that they did not need to have a tire employee on staff with all the associated wages, insurance, taxes, and liabilities because we could do it for far less overall cost. What if we could educate them about the whole process regarding how a company buys tires and retreading and also save them a huge amount of money every year?
There are a couple of humorous stories that relate to how decision-makers view salespeople, especially when those salespeople can save the company money. Saving money does not involve just buying a product for less. There is much more to be saved through improving efficiency, productivity, and long-term change improvements. It is the salesperson’s job to help buyers understand that.
One comic that comes to mind is an infantry field General fighting the enemy with swords and arrows shown above. A salesperson stands before the general with the clear solution to his problem, but the general cannot be bothered with “solutions,” as he has a battle to win (he is super busy). The salesperson clearly has not demonstrated his ability to solve the general’s problem and create efficiency through improvements!
The other anecdote relates to quality, and goes like this: when a customer buys a low-grade product, they feel pleased when they pay for it because they believe they have saved money. However, they are then displeased every time they use it because it is of a low-grade. But when a customer buys a well-made article, they feel extravagant when they pay for it but well-pleased every time they use it because of its quality.
In the business of selling commercial tires, it is the same. In fact, it is the same in almost any business today, including high tech. Think about this: in past years, companies continually added and upgraded their data and computer servers in order to maintain their systems, accounting software, data storage, and manage growth in their business. Today, it’s as easy as opening a cloud drive that exists across platforms, which can be used as needed without the massive investments in space, equipment, and maintenance. “The cloud” represents a way to outsource data storage at significant savings, as well as adding flexibility for growth and needed changes in operations. When we started our company, trucking firms had been employing people to take care of the tires on their trucks. If managed properly, we could reduce their daily needs, and the customer could eliminate the position and its related expenses.
The “old way” of doing business is constantly changing in every industry. In the case of our new venture partnership, at the time we started, many of the tires were about the same and price was the main selling point. Every company sold essentially the same product; the only difference was who made it. Many buying decisions, as today, were based on personal relationships with the salesperson. People deal with people. Often, purchasing decisions were based more on personalities than what made better sense for the customer.
But what if you could shift this paradigm?
We see today that everyone, to some degree, operates in the paradigm they know and understand. If you can introduce a new knowledge base that changes this perception—granted, you are dealing with a reasonable individual or company owner—an opportunity emerges. Put another way, if you can show a company owner or manager a better way to do what they want done, the customer can save money, increasing your sales and customer base.
Many large companies have staff operating in an old paradigm, as change might negatively affect their job stability, such as in IT departments. They are reluctant to support a change. Change is often not easy for most people, and unless you can clearly present a better way to do what needs to be done, it tends to be a very slow process.
As mentioned with Boeing and elaborated on later in this book, they spent $500,000 a year on tires for their fleet of vehicles (not airplane tires). In addition to that expense, they had a warehouse and several staff members managing it. They also had drivers delivering the tires from their warehouse to the various plants around the Seattle area. This is how they “always did it.” Boeing really did not need a warehouse. Our company had a warehouse full of tires already. We could supply them as needed, and we could just as easily deliver to their various locations at about the same cost as delivering to their warehouse. So, by eliminating their warehouse and all the related rent and labor expenses, they could save $600,000 in additional costs annually!
Understanding this, in order for our new venture to succeed, we would need well-trained service people and sales professionals who were not afraid to do things differently, having the ability to consult, educate, and be a true partner to a customer, not just a salesperson.
As you may or may not be aware, salespeople generally do not garner a lot of respect, and for good reasons. I remember a paper I read when first starting in this industry that stated 95% of salespeople do not know their product well enough to defend or properly respond to a complaint or criticism. The paper also went on to say that it takes an average of five to seven calls to win over a new customer, and the average salesperson makes an average of two calls or less on a lead for a new account. There were several other less-than-flattering statistics in that paper on why salespeople fail. Statistics like those contribute to the less-than-stellar reputation salespeople have earned. Of course, there are great salespeople in every industry, but they are the exception. When a company finds a good one, they do everything they can to keep them.
In our situation, our service people—the truck drivers—were the most critical part of the vision. When properly trained on the management of the customer’s fleet, that person could be an extension of the customer’s company and act as an employee of that customer. Besides, who does the customer see more often anyway, the salesperson or the service person?
Companies with these larger fleets had hired their own tire people for many years, dating back to a time when tires did not last long, failed often, had dangerous, multiple-piece tube-type rims, and required almost full-time work to keep the fleet rolling. At the time our new business was starting, fleets had the option to change to tubeless rims, just like regular cars. They could also run radial tires that would last twice as long and rarely failed.
Most tire failures are a result of flat tires, and radials reduce the number of flats by 90%! If they were wise enough to understand and make the switch, the fleets could outsource the tire work to a vendor such as our company, who could do all the work for them in a fraction of the time, saving the customer thousands every year. The opportunity here was that most of these customers did not realize this huge step in tire technology and the resulting opportunity to decrease costs. It turns out that the competition did not see this opportunity either. They wanted to keep selling what they were selling and were resistant to change. Unfortunately for them (and fortunately for us), this meant that they were missing out on an opportunity the customer didn’t recognize they needed yet.
Customer by customer, big and small, we started gaining market share. The ball was in our court, and the shot was wide open. But we still needed to execute and make the shot.
The same education and training were needed for the sales team as the company expanded. Much like our competitors’ way of thinking, most salespeople