Commodity Branding

Lessons from Bruce: Part Four

(My fifth book is now on bookstore shelves and this series of notes draws on some of the key business insights in that text. Six Tires, No Plan is the biography of Bruce Halle, who founded a commodity business (Discount Tire Company) in a saturated market and ended up 96^th on the Forbes 400 list. The lessons Halle learned on the way to the top offer important insights—and questions—for the rest of us.)

I was chiding a friend of mine, an attorney, for billing a client the minimum 15 minutes for a phone call that took about 27 seconds. He stared at me like I had penguins growing out of my head and asked, “What do you think we sell around here?”

I found the response challenging, because the thing he absolutely doesn’t sell is time. He might account for his work in 15-minute increments, but what he sells is security, insight, peace of mind, confidence, risk management…all types of services that come under the umbrella of legal practice.

In every business, one of the most critical and unaddressed questions is: what specifically do we sell around here? For a company seeking to identify a competitive advantage, the answer to this question is almost never a product or product feature.

Consider the case of Discount Tire Company. When Bruce Halle opened his first store, customers could buy tires at two stores within 300 feet of his tiny shop. Product selection or features offered no competitive edge and, fifty years later, the situation hasn’t changed.

When customers can choose from hundreds of vendors to buy essentially the same product at approximately the same price, price and product offer no competitive advantage. As he built Discount Tire, Halle focused on the customer experience, rather than the product, as a means of differentiation. Clean bathrooms and friendly staff are minor features, at first glance, but became true strengths for Halle’s company. Free replacement of snow tires and, later, free flat repairs became small investments that yielded strong customer retention.

Proof of that insight is reflected in the company’s growth, but it’s also affirmed by our own reactions, as consumers, when we cite a specific vendor as preferred. Whenever we wonder about what it is we’re selling, the answer is almost invariably not listed on the product receipt.