Profit Expert - Higher Profits through Front End Margin and Back End Benefits Optimization

Profit Expert helps you determine the most profitable brands to align your sales strategy with based on front end margin and back end benefits. Once we have determined what you should do based on your previous sales, we recommend changes from one brand to another where equivalent tires exist. By maximizing the efficiency of each of your brand programs, Torqata produces a sales strategy that will lead you to additional profit without selling a single additional tire.

What is happening today?

You have a certain sales mix that sells well, and you align yourself with those brands because they are the programs that you can achieve. It is likely that your sales strategy includes selling program tires wherever and whenever possible, all in service of hitting the benefit program thresholds.

Selling tires has two components to profit:

  • Front end margin, or the profit margin you make based on the cost of the tire and your sales price
  • Back end benefits, or the manufacturer rewards programs that kick in when you sell a certain quantity of tire.
  • Back end profits are only paid on on a quarterly or yearly basis, and are not certain, so it can be hard to properly compare brands with each other from a full margin perspective. That makes choosing the right brands to align yourself with difficult, as it is unclear which ones will be more profitable at the end of the year.

    How can Profit Expert Help Me?

    Torqata Data and Analytics uses Profit Expert to recommend which tires you should switch from one brand to another to get you a higher overall profit. Some tires are worth more with front end margin, while others might be worth more when it comes to back end benefits. By looking at your sales history and understanding what programs you currently participate on and which you are willing to consider, Profit Expert will recommend a technically equivalent but more profitable tire for you to sell. The tool will tell you which products you should substitute for the tires that you currently sell (if there is a more profitable option) and detail how many of each tire should be sold to contribute to a potential profit that is often 25% higher.

    How does Profit Expert know which tires it should recommend?

    Profit Expert runs on Torqata’s Product Equivalence Engine. When the tool sees that you have sold a tire, it also produces a list of tires that are equivalent to the tire that you sold. For a tire to be considered equivalent, it must meet two criteria:

  • Technical capabilities of a tire (Size code, speed and load ratings, category, etc)
  • Market Perception of a tire (tier, price, etc)
  • If a tire is considered equivalent, it is populated on a list of tires that you might be able to switch to. That’s where the program calculations come in.

    During the recommendation process, you select which brand programs you are currently participating on, as well as those programs you would consider joining if you could sell enough tires to meet the requirements. If a tire belongs to one of the programs that you are willing to consider, or if the tire has a higher front end margin than another tire such that in the same sales quantity it would produce a higher profit overall than the tire you currently sell, the tool will recommend a change.

    So how does it know what programs to contribute to?

    Profit Expert has a recommendation logic that understands the programs it is recommending on. Often times these programs adhere to a formula that says, “if you sell x number of tires, you will get $2 extra for each tire you sell”.

    In understanding those thresholds, Profit Expert will contribute your sales towards a brand program until it hits a target number, and then it will look to see if there is a more profitable alternative out there.

    For example:

  • You are selling Cooper and Michelin tires. Both programs are profitable, but the Michelin tires have a slightly higher front-end margin because of their higher sales price.
  • Profit Expert will contribute sales to both programs so that you achieve the first tiers of each, meaning that you will get the payout that the programs promise when you achieve your goal.
  • With the remaining sales that you have, Profit Expert will recommend that you put those into Michelin tires as they are the more profitable choice, leading to the highest profit possible.
  • During the recommendation process, you decide which programs you are willing to consider, and which tires you would like to sell more or less of, then let Profit Expert do the work of distributing your sales in the best strategy for you.

    Does that mean I am going to sell fewer brands of tires?

    Often when the recommendation is completed, the tool will have consolidated the brands so that you can hit program thresholds. This not only helps you focus your efforts on certain brands, but also gives you the opportunity to consolidate some inventory to help make your store more profitable as well.

    I have multiple stores and they all work together to achieve brand program numbers, can I produce a recommendation for my organization?

    Yes! When selecting which store you would like to produce a recommendation for, you can select the option All Stores. This will perform the same exercise, but it will pool the sales together from all of the stores in your organization and see which brand programs you should contribute to on a more global scale.


    Profit Expert will run a calculation on your sales history, taking into accountwhat brands you want to align yourself with and whether you want to grow or shrinkthose brands. The result is a strategy that makes the best, or optimized, combination of your sales to get you a higher profit on the front-end and back-end.Profit Expert will run a calculation on your trailing 12 months of sales history as a baseline, taking into account what brands you want to align yourself with and whether you want to grow or shrink those brands. The result is a strategy that makes the best, or optimized, combination of your sales to get you a higher profit on the front-end and back-end.
    Torqata can still deploy the analytics solutions for you with as little as 4 months of historical data. Just know that in this case your historical baseline will be less than the trailing 12 months.
    Profit Expert can not only take into account your brand preferences, but it can also advise you generally which brands you might want to consider stocking to consider your profit potential.
    Based on your cost and sale prices, we calculate the average margin for each style of tire you sell, and roll that up to the brand level to get you an average margin percentage and average margin dollar by brand.
    You can export in a PDF and an excel file by clicking Save this Report, or in excel only by clicking Export Data Only.