By Jim Smith
TIRE REVIEW Magazine
In today’s harsh economic climate, consumers are looking for ways to cut back on expenses, even at the detriment of their vehicles and tires. In fact, the latest from the Bureau of Economic Analysis says that since November 2007, consumers have trimmed car expenses by 1.9%. As oil prices and resulting costs in everything from gasoline to food continue to rise, vehicle and tire care will fall lower on the “to do” list.
Holding the promise of longer tire life and improved fuel economy, this should be a great time for nitrogen inflation and for tire dealers offering such services. But nitrogen inflation has been taking a few hits from the likes of Consumer Reports and other media, questioning the performance/cost value vs. regular air.
While they don’t dispute the science behind nitrogen inflation, or the potential for fuel savings, they do suggest consumers might be better served with free air and regular inflation checks vs. paying for nitrogen. As consumer wallets tighten, one has to wonder if that argument will carry weight.
But even as the purse strings tighten, the time may never be better for tire dealers to sell nitrogen inflation, say industry insiders.
“Consumers are, for the most part, still unaware of nitrogen tire inflation,” says Robin Pearl, president of Purigen98. “Most will rely upon the dealer’s advice to figure out which services they want,” meaning the door remains wide open for dealers who make the effort to educate the customer.
As for any fallout from the stories in Consumer Reports and other media, Pearl hasn’t seen it. “While the Consumer Reports story probably confirmed suspicions by certain potential customers who were not going to purchase anyway, it has not affected our dealers sales at all,” he says. “One point on the online discussions: Bloggers readily agree that if nitrogen were offered for free, they would gladly have it in their tires. So the question becomes one of price/value, not one based upon the science. This is why we need to do a better job educating consumers, and make sure that benefits are promoted correctly and conservatively.”
“I think consumers recognize and appreciate the benefits of nitrogen now more than ever as the overwhelming quantity of the ‘new’ facts and findings regarding nitrogen inflation coming out is quite positive,” says Jay Lighter of NitroFill Inc.
As for the negative media coverage, Lighter says, “The scientific data that is available is irrefutable: nitrogen doesn’t permeate through a tire like the oxygen in compressed air, hence tires last longer and fuel economy and safety are enhanced. Nitrogen also controls oxidation and corrosion. These are not opinions, but well substantiated facts.”
“It would have certainly been easier to convince car owners without the Consumer Reports story, which we feel did not accurately evaluate the benefits of nitrogen,” said Tim Last of Atlas Copco Compressors. “The story did not properly investigate the impact nitrogen has on tire wear, fuel economy, oxidation, vehicle braking and vehicle handling.”
“If a customer points out the CR story, our dealers simply point out the many flaws in the study including low purity and not road testing,” Pearl says. “In addition, there is significant research that does show benefits.”
Consumer Interest Builds
Education has always been the key to selling nitrogen inflation, whether it has been from manufacturer to tire dealers or down to the consuming public. After all, capital equipment is expensive, and the payoff has to be there, and drivers were being asked to pay for something they had received for free since they started driving.
Despite those long sales odds, high-flying gas prices drove the rapid initial growth of the nitrogen industry. Some four years ago, consumers, anxious to offset the effects of what was then an astronomical $1.50 per gallon, reacted to endless news reports about nitrogen and gladly stepped up to pay $5, $10 even $20 per tire. System producers enjoyed meteoric sales as tire dealers saw easy profits and short ROI periods.
As nitrogen inflation became more common, though, the sell in and sell out became tougher. Even during these days of nearly $4 per gallon gas prices, dealers have had to work a little harder at nitrogen sales. Fortunately, suppliers have stayed one step ahead, with most now offering rather comprehensive on-going education and marketing programs to support new and continuing sales. Some of these programs even include consumer e-mail reminders to encourage pressure checks and top offs one of many ways suppliers are trying to bridge that retailer-consumer gap.
Even with the new marketing programs, closing that gap remains the responsibility of the dealer; like any marketing effort, you only get out what you put in. And nitrogen system-makers are seeing varying results.
Most nitrogen system marketers offer POS materials with their systems, and many also add sales pamphlets, bay banners, advertising slicks, wall posters, showroom video and more to help dealers educate their customers about the advantages of nitrogen inflation.
“The bulk of what we have seen has been limited to the utilization of in-store point of sale materials such as posters, flyers, desk easels and the like,” according to NitroFill’s Lighter. “We have seen sporadic, limited radio and cable TV advertising campaigns.”
Industry experts agree that educating customers is the first and, perhaps, most important step to becoming profitable selling nitrogen service. It remains a chicken-egg paradox in which some dealers argue that customers are asking for nitrogen, while others argue that they aren’t asking for it because they simply don’t know about it or don’t understand the potential benefits.
Some, like Atlas Copco’s Last, see a different route to broader market acceptance. “It’s not the average consumer who has the most to gain from using nitrogen,” he says. “It’s the truck, coach and bus fleet owners. These guys use a large number of high cost tires on each vehicle, which typically cover many thousands of miles each year. Since the potential gains are so big, fleets are willing to spend much more time looking into the benefits of using nitrogen and the science on which these benefits are based.
“As a consequence, the challenge is not one of conviction but of providing the necessary equipment needed to convert a large fleet quickly without ruining the economical advantages. Once these large fleets start converting to nitrogen, consumer skepticism will gradually subside and it will become much easier to sell the same concept to the private automobile market,” he says.
Still, consumers are inclined to become a captive audience, Lighter says. “We conducted a survey in numerous new car dealerships and found that, when properly presented, approximately 28% of all customers said ‘yes’ to NitroFill, and almost 90% said ‘yes’ to NitroFill when buying a new set of tires.”
Is there a particular target customer, ripe for nitrogen sales? “Customers with expensive low-profile tires and wheels, or with high-end vehicles or pickup trucks with oversize tires are easy to sell to,” says Atlas Copco’s Last. “With the high cost of these types of tires, it is fairly easy to convince the purchaser to spend a little more to protect their investment. It is a status thing with owners of high-end vehicles. Race fans will put it in their tires just because racing series inflate their tires with nitrogen. The guy who needs nitrogen the most, however, is the one who struggles to pay for new tires and is living paycheck to paycheck.”
When it comes to creating real value in the consumer’s mind, Purigen98’s Pearl suggests “high purity nitrogen offers many small benefits that can add up to significant savings for the consumers. High gas prices and increased tire life are probably most important, although we are seeing increased emphasis on the environmental and safety benefits of nitrogen use.
“When asked if they checked their tire pressure regularly, most consumers admit that they don’t,” he says. “We recommend that consumers check their pressure monthly, but if you’re not going to check your tires, you are much better off having nitrogen in your tires to reduce the chances of driving around with underinflated tires.”
No doubt, some dealers see nitrogen as a revenue source, and others view it as a retention tool. In setting your marketing strategy, perhaps the best way to view nitrogen inflation is as a little of both.
There are many ways to offer nitrogen service. It can be sold as a separate service or bundled in with the price of new tires or provided as a value-added free service. No matter which path you choose, building positive customer loyalty should be paramount.
Notice that quick ROI and fast, easy profits aren’t the keystones they once were. Dealers can still make solid profits by providing nitrogen service, but those dollars are coming more from customer loyalty than straight sales.
And in these belt-tightening days, you have a much broader audience interested in reducing costs and stretching their tire investment.
The following is a list of nitrogen product suppliers:
Air Products & Chemicals Inc.
American Tire Distributors
Ascot Supply Corp.
Atlas Copco Compressors Inc.
Branick Industries Inc.
Coseng Automotive Equipment
D Marsh Co.
Donaldson Co. Inc.
GWR Automotive Products
Hybrid Nitrogen Systems
Myers Tire Supply
Myers Tire Supply Canada Ltd.
NAPA Tools & Equipment
Onsite Gas Systems Inc.
Parker Hannifin Corp.
Rema Tip Top/North America Inc.
RTI Technologies Inc.
Tesco of America Inc.
Tire Service Equipment Mfg. Co.
Tuffy Manufacturing Inc.
Vehicle Inspection Systems Inc.