Have Oil Changes Become a Commodity?

In the past month or so, I’ve heard a lot of Service Managers and Fixed Operations Directors express that they’ve resigned to the notion that prices dictated by their manufacturers commoditize their routine services – especially oil changes. In other words, their hands are tied – they must now compete on price. To their point, it seems like oil change coupons and promotions are everywhere. I Googled “Oil Change Coupon” and found oil change services starting at $18.95, $10 Off, and even an oil change and tire rotation for $29.95.  Does this suggest that oil changes are indeed a commodity? In the truest sense, a product is a commodity when purchase decisions are made on price alone. As defined by Webster’s: Commoditize to render (a good or service) widely available and interchangeable with one provided by another company Given this definition, oil changes fit the 1st part – they are widely available.  Yet, I don’t quite buy into the notion that oil changes are completely interchangeable from one service provider to another.  Here is why: 188,000,000 oil changes were performed by quick lubes last year – their average sell price for an oil change was over $38. (That’s $20 more than many manufacturer / online promos.) Thus, consumers are not buying on price alone. In an independent study performed by the Quick Lube Industry, consumers indicated that they selected Quick Lubes (in order of importance) for 1) Convenience, 2) Fast Service, and 3) Reputation.  The same study indicated that consumers selected New Car Dealerships (in order of importance) for 1) Trust and 2) Reputation. Thus, consumers are not buying...

What Are Your Customers’ First Impressions of Your Dealership?

As Will Rogers said, “You never get a second chance to make a first impression.” Creating favorable customer impressions may even seem easy when you can show off renovated waiting areas and state-of-the-art amenities. But, let’s not fool ourselves into thinking that multimillion dollar investments are the only way to inspire five-star reviews – or that such investments will guarantee them. The reality is that everything and everyone that your customers come in contact with makes impressions on them. Whether you have a brand new state-of the-art facility or a 50 year old pole barn, it is in your best interest to self-examine whether your facility and people represent the image you desire. Let’s examine some facility and employee checks that may – or may not – reflect the ideal impression: Facility Check Common sense tells us that your dealership should be sparkling clean. But, that goes beyond nightly cleaning and ongoing maintenance. If the coffee counter has spills on it at 9 am, the trash can is overflowing at 3 pm and the bathroom is out of toilet paper at 5 pm, it doesn’t matter how clean your dealership was when you opened your doors at 7 am. If your customers see any or all of these situations, you are not likely to elicit the customer experience or perception of your dealership that you desire. Even worse, your customers may assume that the work performed on their vehicles was just as sloppy. To prevent such situations, we recommend keeping cleaning logs within each area that your customers will see. But, don’t expect the log alone to accomplish anything....

Customer Feedback Should Drive Customer Experience

How are you using Customer Satisfaction Index (CSI) survey results? If you are like most dealerships, you are simply tracking CSI results. Each month you hope to stay “in the green” or above regional and national levels so that you can cash in on manufacturer incentives. Heck, you may even penalize or fire employees that don’t meet these levels. Unfortunately, you are not alone…  Somewhere along the line, the original intent of CSI surveys – to drive customer experience – has been lost. We still believe that the CSI surveys should be used to drive customer experience.  In other words, you should actively gather customer feedback so you can adjust your business model and practices to better meet your customers’ needs.  Here are our tips to achieve this: Gather the right customer feedback Use negative feedback to determine what caused customer dissatisfaction Use positive feedback to praise who exceeded customer expectations Adjust business practices to fix issues and encourage more positive results Gather The Right Customer Feedback There has been a lot of talk recently regarding whether online reviews or manufacturer surveys are better.  The reality is that ALL customer feedback – in any form – is valuable when used correctly.  The great news is that consumers now have lots of ways to express their service experience: social media status updates, website comments, car enthusiast forums, blog posts, Business Development Center (BDC) follow-up calls, email, and even manufacturer CSI surveys.  Make certain that you are gathering this customer feedback.  We recommend setting up Google Alerts to be immediately notified anytime your dealership name or employees are mentioned online.  This...

Increase Customer Retention By 10-12% By Collecting And Communicating With Email

With more service competition than ever before, you must communicate regularly to remain your customers’ preferred service provider.  Staying connected via email gives you regular opportunities to: remind your customers of your top-notch service; the maintenance needs of their car; share information regarding recalls; and stay top-of-mind when it comes to service providers.  Train your service advisors to collect and confirm your customers’ email addresses at each visit.  Here’s why: Email is preferred In the digital age, email communication is ideal.  With most consumers maxed out on time spent with work, hobbies or kids’ activities, they won’t be home to receive phone calls or be likely to open snail mail that looks like an advertisement.  Conversely, when customers receive an email from your dealership with an intriguing subject line such as, “A Friendly Reminder from Acme Dealership for Your CX-7,” they can immediately look at their digitized calendar to find time for a service visit.  If they require an appointment, they have your contact info right in front of them.  With a simple email, you provide a valuable reminder and assist your customers in taking the best care of their vehicle. Email works Krex, Inc. statistics show that when customers provide their email address to the dealership – and are subsequently reminded of their next maintenance needs via email – there is a 10-12% uptick in the round of service visits that follow.  This percentage correlates to real service revenue for your dealership; money that may have likely gone to an aftermarket competitor had the dealership not simply collected email addresses and sent maintenance reminders. Email is easy Once...

Service Advisors Must Sell To Maintain Dealership Profitability

In today’s market, a dealership needs three service customers to create the same amount of revenue from one customer five years ago.   The reason for this is trifold: 1)    Manufacturers have extended recommended service intervals 2)    Fewer operations are recommended by manufacturers meaning each maintenance RO has fewer op codes 3)    Automobiles are simply made better these days requiring less warranty work In order for a dealership to remain profitable, customer pay dollars must increase.  One of the most effective ways to achieve this is through the sound advice given to your customer, over time, by your service advisors.  Let’s face it, your service advisors are the face of your dealership for your customers.  To earn customer confidence in your dealership, it is imperative that your service advisors properly and consistently sell vehicle needs and your dealership’s value at every service.  Read on to learn how your service advisors can get it right every time. Actively Recommend ALL Service Needs There are always four components of a service advisor’s selling opportunity; service advisors should address each one at every visit. Customer concerns (why the customer set an appointment or came in) Vehicle history analysis for routine maintenance and previously declined work Findings from walk-around inspections Findings from technician multi-point inspections For example, let’s say a customer visits your service center for a “squeaking sound” her car is making.  In most cases, your service advisor will address this issue accordingly.  But rarely will your service advisor review the vehicle needs uncovered from each of the other three selling opportunities.  If the multi-point inspection results or vehicle history identifies that the...

Harness the Power of the Sales-to-Service Hand-Off

We hope that you’re starting to see signs of rebounding vehicle sales revenue.  However, are you aware that parts and service revenue is what enabled most dealers to weather the vehicle sales spiral from 2008?  Nationally, parts and service revenue creates 53% of dealers’ gross profit![1] With recent new car sales forecasts questionable, NOW is the best time to put the pedal to the metal on retaining new and used car sales customers in your service department. Lost Revenue Opportunity Manufacturer reports indicate that average dealerships NEVER see half of new and used car customers in their service department.  Furthermore, most dealers lose 10% of their service customers per year. This equates to dramatic lost revenue opportunity for the side of your business that represents over half of your profit.  If you want to maximize your gross profit opportunity, perfecting your sales-to-service hand-off is imperative. Cost-Effective Revenue Opportunity Acquiring new customers is five times more expensive than satisfying your current ones.  “Lost Soul” and “Recapture” advertising campaigns that create a 2-4% response rate are an example of this high cost with minimal return.  Retaining your existing customers is a more cost-effective solution to increasing revenue and profits. Your customers are the most focused and attentive during the vehicle purchasing process, meaning that there’s no better time to attract and maintain service customers.  If you do not effectively execute the sales-to-service hand-off at time of vehicle purchase, be prepared to spend five times more to re-acquire your customers into service down the line. The Introduction Before your salesperson hands over the keys of a new car, your customers should receive...