Business Essentials: Foursquare advice will help Black Circles burn rubber and pull away from its rivals

A company that lets customers buy tyres and find a fitter online is looking to roll out across the UK without sacrificing quality of service. Kate Hilpern reports

Since Black Circles was founded in September 2001, it has quickly established itself as one of the UK's fastest-growing tyre-purchasing and fitting services, and one that is helping to transform the sector.

The success of the business environment is proved by the company's numerous accolades. Its founder, Michael Welch, won the Shell LiveWIRE Young Entrepreneur of the Year award for 2003, and Black Circles itself was shortlisted in HSBC's latest round-up of the top 10 new businesses in the UK.

"Black Circles is an easy way to buy tyres over the internet or by phone," explains Mr Welch. "Customers order the tyres they want, then make an appointment to have them fitted at one of our centres."

The business came about when Mr Welch realised that a large proportion of the UK's 22,000 independent garages were offering a high-quality service yet at the same time were under-utilised. "With some experience in the car tyre industry behind me, I saw an opportunity to build a quality chain of independent garages, which we remunerate for fitting our tyres," he says.

"Garages like working with us because they don't have to put their hands in their pockets or commit to a franchise obligation. All they have to do is meet the vetting standards, which we set across our network. And another reason that customers like working with us is that our product is high quality, low cost and can be purchased with ease. This is reflected in our turnover, which currently stands at £3.5m to £4m."

But Mr Welch now finds himself at a developmental crossroads. He does not own the Black Circles network, which is made up of around 1,000 garages; instead, he outsources the customer-facing element of his business - ie, the fitting of tyres to vehicles.

"I want to know how I can make sure that Black Circles' reputation with our customers is maintained at the highest level down the line," he explains.

In the company's early days, he admits the focus was more on increasing the number of garages in its network than on controlling quality. "So we have had to backtrack and change the way we work, employing someone solely to handle this side of the business," he continues. "We now have a six-week vetting process, which means that when garages apply to come on board, our guys go in and vet everything, from the equipment to the waiting-room facilities to the manner of the staff."

In addition, Mr Welch has introduced a call centre facility, which he outsources, to get feedback from customers. "From that, we can ascertain the quality of service and even score the garages," he explains. "But it's not a Big Brother-type situation. In fact, it enables us to reward the depots that offer the best service. Our incentive scheme gives away vouchers right through to holidays."

Mr Welch wants to know what more he can do to increase customer satisfaction. "Should we introduce a whole branding profile? Should we consider offering franchises? Should we provide even more incentives to the garages? We want to do whatever it takes to make sure that customers are treated really well."

The issue has become pressing, because by the end of this year Black Circle is aiming to provide nationwide coverage, working with 2,000 garages.

www.blackcircles.com

WHAT THE EXPERTS SAY

Paul Cooper, business development director, Institute of Customer Service

"The original vetting process for new garages is crucial and, just as for individuals, the maxim 'recruit for attitude, train for skills' is important.

"Having a set of service standards that garages sign up to is essential. This should focus not just on changing tyres but on garages' attitude to customers. Regular, honest feedback from the customer is important, as you want people to feel they are Black Circle customers. A feedback facility on your website is worthwhile, as long as you take the time to analyse the emails you receive.

"Don't just ask the questions you want answers to - let customers tell you the things they want to. There are benefits in a small but regular programme of mystery shopping, hitting the garages perhaps annually and making this a measure for bonuses.

"Branding is good, franchising perhaps better, although it might face resistance. These measures would foster a consistent approach among the garages. Listen especially to your staff, and to your regular customers."

Vanessa Robinson, adviser (strategy and organisation), Chartered Institute of Personnel and Development

"First, Mr Welch needs to review why he initially chose to outsource his customer-facing business and call centre. Will these decisions remain appropriate when the business doubles its capacity?

"Outsourcing objectives can be wide, including improving quality, which is what Mr Welch now seeks. He did not previously see franchising as appropriate, so it is likely outsourcing is still a valid option. He has introduced vetting procedures, but as he seeks to expand the business he should supplement these with service-level agreements, including clearly communicated criteria for customer service.

"These will enable the call centre to provide feedback that can inform decisions about the allocation of incentives. Mr Welch should ensure incentives continue to be perceived as valuable by staff. Finally, his policies must be re-enforced through the consistent actions of line management."

Bryony Whiteley, England director, Shell LiveWIRE

"A true entrepreneur, Mr Welch is at the helm of a high-growth business, fuelled by an innovative and dynamic sales strategy.

"His good relationship with the garages is a clear strength. However, to enhance customer service, he could explore alternative strategies and consolidate his market before embarking on further rapid growth such as franchising.

"With a wide customer base, Mr Welch is ideally positioned to identify potential market sectors where his branding and quality of service can be focused and sustained. Owners of sports and specialist cars are easily accessible, for example, and the high-fashion, high-spend 'max power' culture could provide some loyal cash cows.

"Mr Welch reveals one of the secrets of his success in his willingness to do whatever it takes to treat his customers well. In knowing his customers, he can listen to them and, of course, welcome them into the Black Circles circle."