Cover Story: Marketing Overdrive
In the early days of 2008, when financial experts were just starting to argue about whether the U.S. was in a recession, Michelin North America rolled out a sales program that would provide exactly the kind of support its network of dealers and distributors would desperately need by year's end.
A designer, manufacturer and seller of tires for a variety of markets—including consumer, agriculture, aircraft and heavy truck—Greenville, S.C.-based Michelin N.A. sells tires directly and via a partnership with distributors and independent dealers. The main source of support for this three-party business union is the company's Alliance Associate Dealer (AAD) program, a sales incentive program that offers premiums to participants who hit sales goals.
"We sell tires to lots of different companies and lots of different kinds of companies. Our independent dealers are the most important to us in many ways," says Bob Schaffner, Michelin N.A.'s manager of distribution development-wholesale. "First of all, they're the ones who've helped us build our business for the last 50 years. They still represent 60 percent of the market in terms of consumer choice. … If we're going to be successful, we have to be successful with our independent tire dealer organizations."
According to trade publication Modern Tire Dealer, more than two-thirds of the 29,000 independent tire dealers in the U.S. are single stores, and a little fewer than half of them are family-run. These retail operations are the most vulnerable to economic and competitive influences, says Schaffner, and require unique approaches that fit their particular businesses. Through the AAD program, "we have to give them the tools in order to be successful. And we can spend the money. But if the money is not translated into a program that they can participate in, it's going to be wasted," he emphasizes.