oil change, fixed ops, dealership service, customer retention

Article written by Bill Springer.

Perhaps the most commonly performed procedure in the new car dealership service department is the oil change.  Getting customers to return several times a year for this preventive maintenance service is perhaps the most telling indicator of how the customer views the dealership’s service department.  In today’s environment of fierce competition, rising costs, and declining warranty income, having the right strategy in place to attract and retain oil change customers is more important than ever before.  Convenience, a clean and welcoming facility and good service are the minimum standards that virtually all customers expect.  Beyond those basics, the reasons that customers choose to return to the dealership or go elsewhere for oil changes may be less apparent.  Being aware of these reasons is crucial to crafting the appropriate strategy to attract and retain oil change customers.

The Cost of Customer Defection

Studies have shown that the average new car dealership in the U.S. loses more than half of their new car customer’s maintenance business by the end of the first year of ownership, and by the end of the warranty period the vast majority of the customers maintenance dollars are being spent with someone else.  For an average size dealership, this translates to well over $1 million per year being spent by customers who purchased their vehicle at the dealership, but are spending their service dollars at quick lubes, tire stores, national chains, and independent shops.

Recent studies have shown that customers, even those who indicate that they are “Very Satisfied” with their dealership service experience, often go to non-dealers for oil changes not because of lower price, but because they don’t perceive a significant difference between oil change providers, and they aren’t aware that their dealership sells tires.

Perception, Not Price

All too often, customers don’t perceive a difference between an oil change service offered by the dealership, and an oil change service offered by anyone else.  Many dealerships unintentionally reinforce this perception by promoting and pricing their oil change service as a commodity, or even offering free oil changes to get the customer in the door (a practice becoming increasingly more costly in this time of rapidly rising petroleum prices).  Just getting the customer in the door to perform, as one service manager put it “a Cashectomy” on the customer will more times than not damage the dealerships credibility with the customer, and drive them directly into the arms of the competition.  This low price strategy almost always backfires in the long run because it also conveys to the customer that the dealerships oil change is in fact the same as everyone else.  Yet, recent studies show that less than 5% of oil change customers say price is the most important factor in choosing where they take their vehicle for oil changes.  “Trust and Confidence in Service Provider” and “Quality of Service” are the two leading reasons chosen by well over 80% of survey respondents.  These are the factors that dealerships must stress in effectively marketing oil change services.  Fortunately, dealerships have several advantages that can directly appeal to the customer’s desire for quality, service, and confidence in their oil change provider.   Leveraging these advantages is the key to differentiating your oil change service from all others, and in turn increasing customer retention and dealer profits.

Factory parts designed specifically for the customer’s vehicle, quality oil, highly trained personnel, and state of the art equipment and service facilities are just some of the advantages that dealerships have over aftermarket service providers.  Another advantage for the dealership is the ability to check for outstanding recall notices.  Although most dealerships already do this when the customer comes in for service, unless the customer is made aware of the results there is little or no recognition given to the dealership for this unique service.  Washing the exterior of the vehicle and vacuuming the interior is another great service that in most cases can’t be done by quick lubes and independent garages due to their limited resources.  Finally, providing other unique valued added services such as nationwide emergency roadside assistance that is automatically renewed by returning back to the dealership for the next oil change is another great way to differentiate the dealerships oil change from the competition.  Communicating these unique benefits and value added services that are exclusive to dealership service departments is essential to successfully building customer retention rates and increasing dealership profits.  Service menus, oil change menus, signage, service reminders, and other communication tools that reinforce these benefits all contribute to building a loyal base of service customers.

Can I buy tires here?

The statistics speak for themselves:  15% of vehicles in the service drive need tires.  75% of consumers purchase tires from the first person who recommends them.  78% of consumers maintain their vehicles at the place where they purchase tires.  Yet surveys show that despite promotional efforts and tire displays, only 40% of service department customers are aware that their dealership sells tires.  The good news is that over 80% of these same customers indicate they would be “likely” to purchase tires from the dealership.  In other words, there is lots of opportunity to both sell tires to customers, as well as keep them coming back for service rather than seeing them defect to the tire retailer down the street.  More and more often, successful service departments are using their oil change service to help sell more tires, and using their tire business to help sell more oil changes.

Performing a thorough tire inspection with every oil change is crucial to customer retention, with the added bonus that it helps differentiate the oil change service from the local quick lube.  Bruce Brissie, Parts and Service Director at Walt Sweeney Ford in Cincinnati, Ohio takes it a step further.  Every oil change his dealership performs not only gets a complete tire inspection and 120 days of complimentary Nationwide Emergency Roadside Assistance, but oil change customers whose tires pass inspection also get 120 days of road hazard tire protection, a value of up to $150.  “This strategy has helped us increase our oil change business by almost 40% over the past 18 months, plus the customers are ‘wowed’ by the value they get from us” says Brissie.  Because the customer must return to Walt Sweeney Ford for the tire replacement, the dealerships tire business has also increased substantially, as customers who return to replace one damaged tire at no charge often purchase the remaining three tires at the same time.  To renew their coverage the customer simply returns to the dealership for their regularly scheduled oil change service.

Attracting and retaining oil change customers will continue to be crucial to dealership profits and maintaining a long lasting relationship with the customer.  Crafting an effective marketing strategy for your oil change services that focuses on what the customer wants, leveraging the dealerships strengths with value added benefits, and integrating a comprehensive tire inspection as part of every oil change service will help protect not only the customers investment in their vehicle, but will protect your dealerships relationship with your customer.

 

Bill Springer is president of Krex, Inc., a provider of customer retention solutions to new car dealership service departments based in Northbrook, Ill.  He can be reached at 800-323-KREX or wgs@krexinc.com.