Who’s doing the oil change on YOUR customer’s car?

[Joe Marconi]

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[JustTheBest]

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[AndersonAuto]

We just surveyed April's repair orders, and found we do an oil change on 67.7% of our RO's. That seems about right for the way I market my business. 

I have the cheapest full synthetic oil change around, and market the crap out of it. I do a full synthetic oil change cheaper than Jiffy Lube will do a regular oil change, then I discount it further with a coupon. I do full synthetic so cheap, I don't even offer dino oil any more. I hear all the time that only cheapskates will come to my shop with that sort of marketing, and will bleed me dry. If that's so, how do I have a $513 ARO at 60% GP? 

Our customers (and yours too) see an oil change as a commodity. As far as they know, an oil change is an oil change. It's a lot like gasoline to them. Sure, there are some people who will only put a specific name brand gasoline in their car, but that's not most people. If two gas stations sat side by side, and one had gas priced at 25% more, which one would do a better business? Which gas station would sell more Coke and Potato chips?

Be the service center that sells the commodity for less than the guys down the street, sell more Coke and Potato Chips (and brake jobs) as a result.

[Dan Reichow]

How cheap is cheap

[AndersonAuto]

3 hours ago, Dan Reichow said:

How cheap is cheap

$47.50 regular price, but most people show up with the $29.95 mailer coupon. If not the mailer, they at least will want the $34.95 coupon from my web site. I rarely sell the oil change at full price.

[danker]

what are paying for your oil? Are you losing $ on the oil change? To make $ on the upsells?

 

[AndersonAuto]

I'll have to look at my oil cost tomorrow, but I do know that it's only 53 cents a quart more than the blend I was buying. That makes the synthetic oil change cost about $2.50 more than the blend oil change was, and I raised the coupon price by ten bucks. I make more money on the coupon oil change, and it's a smoking deal for the customer.

[AndersonAuto]

10 hours ago, AndersonAuto said:

I'll have to look at my oil cost tomorrow, but I do know that it's only 53 cents a quart more than the blend I was buying. That makes the synthetic oil change cost about $2.50 more than the blend oil change was, and I raised the coupon price by ten bucks. I make more money on the coupon oil change, and it's a smoking deal for the customer.

Straight costs (parts and direct labor only) are $19.40 assuming my lube dude is doing the oil change. GP is then 35% if they're using the coupon with the cheapest price. But GP on the LOF isn't the point. The point is getting the car in to do the inspection and talk about what the car needs besides the oil change.

[HarrytheCarGeek]

16 minutes ago, AndersonAuto said:

Straight costs (parts and direct labor only) are $19.40 assuming my lube dude is doing the oil change. GP is then 35% if they're using the coupon with the cheapest price. But GP on the LOF isn't the point. The point is getting the car in to do the inspection and talk about what the car needs besides the oil change.

IDK, that seem very low to me. How much are you paying your lube tech, and what is his average hourly production. Not being an ass, but your number seems too low for my area and the ongoing costs to do business here.

[AndersonAuto]

Oil costs 2.58 a quart. 5 quarts is $12.90. Filters average a couple bucks. Lube dude costs $15 an hour. Figure .3 to do the oil change, that's $4.50.  12.90+2+4.50=19.40  

The lube dude's hourly production is good, but he's new so I don't have great tracking on him yet.

Again, I don't really care if I make a dime on oil changes. I'd do them for free if I had to. Making money on oil changes is not the point of the oil change.

[HarrytheCarGeek]

3 hours ago, AndersonAuto said:

Oil costs 2.58 a quart. 5 quarts is $12.90. Filters average a couple bucks. Lube dude costs $15 an hour. Figure .3 to do the oil change, that's $4.50.  12.90+2+4.50=19.40  

The lube dude's hourly production is good, but he's new so I don't have great tracking on him yet.

Again, I don't really care if I make a dime on oil changes. I'd do them for free if I had to. Making money on oil changes is not the point of the oil change.

Let's agree to disagree. The game is truly simple, if all you did were oil changes at your current practices, how long could you stay in business? I have no more to say.

[CAZM]

So your new lube tech is changing the oil and doing a thorough inspection in a little over 15 min.

[AndersonAuto]

On 6/2/2017 at 3:50 PM, HarrytheCarGeek said:

Let's agree to disagree. The game is truly simple, if all you did were oil changes at your current practices, how long could you stay in business? I have no more to say.

If all I did were oil changes, I'd be in the oil change business. I'm not.

The game truly is simple. Get the customer in the door by just about any means possible, do a quality inspection, and present them with the findings. You can't do that if you aren't getting the car in the door, and the easiest way to get the car in the door is by enticing them with a great deal on the most basic of maintenance needs. 
 

[jfuhrmad]

So, for those of you not using cheap oil changes, how do you get new customers?  Are you on busy streets?  Do you have strong SEO?  What other options are out there for systematically growing your auto repair business?  Just from a pure numbers perspective it seems like AndersonAuto is making the cheap oil changes work.

[Joe Marconi]

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[xrac]

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[jfuhrmad]

So, the root of my question relates to a system for gathering new customers.  Starbucks has one advantage we don't: addictive caffeine.  You either have a system that you know about, have a system you don't know about or you don't have a system.  So back to my question, what other systems are out there that are effective?  I suspect that being on a very busy street could qualify for this but I'm on the back side of town, so drive by traffic hasn't really worked for me.

[Wheelingauto]

2 hours ago, jfuhrmad said:

 Starbucks has one advantage we don't: addictive caffeine.

But that's not what gets the customer thru the front door the first time or what gets them to try coffee in the first place.

Discounting IMO is a fairly unimaginative way to attract new customers. It is easy, it is effective but comes with baggage that I dont wish to deal with. That being said, I would ask the following:

What are your shops unique competitive advantages?

If you were in Anderson's market, what would you claim to do or do that would make you a better choice? ( I pick on Anderson because he states cheap oil changes is the way to bring in new customers)

If It were me, a first class web site with customer reviews is a must. People need to look you up and "see" you online. What they see online needs to directly correlate with what they get in person.

For me, we have all ASE certified Master Technicians, we use factory scan tools and factory information systems to service your car. We are the experts who can fix what others cant. We have a fleet of 26 loaner cars we freely offer for any type of service. We back all of that up with a nationwide 36 month 36,000 mile warranty. We have a sparkling clean waiting room for your convenience (if waiting). We take care of factory warranty and recalls for our customers. We do whatever we can to make it convenient to do business with us.

Now, how to get the message out? Website #1. Optimize it and set up a pay per click campaign but dont compete for the common searches (oil change, alignment and tires come to mind). Join the local chamber and get out there and kiss babies and shake hands. Get involved in community events, donate time and effort, it will get the best results. Direct mail is quickly loosing it's effect here in the city but I would try it in the smaller markets. In everything you do talk about quality, convenience and expertise. In all polls those are the things that matter to people. When you make price the most compelling thing it becomes the most important which tends to commodify what we do. (oil changes). We wash every car we service, makes people feel good about their car.

Put all the focus on what you do well, better than anyone else (then do it!)

Hope this at least gives you somewhere to start.

 

 

 

[JustTheBest]

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[AndersonAuto]

I recently started doing a better job with contacting the customer after the sale. We used to call everyone about 3 days out, but as we grew it got to be a burden placing 400+ phone calls a month for follow up. Our goal in these calls was to be as unobtrusive as possible, so we made an effort to call the home phone number during the day and leaving a message. Unfortunately most people now use cell phones only, so that plan doesn't work anymore.

The latest fix to that is to send text messages. We use an automated service for this. Customers seem to appreciate the follow up, and appreciate that we didn't interrupt them doing it. Unlike an email, no one ignores the text message. We get replies to most text messages within a few minutes of sending them, so it's something we do have to actively manage. If someone asks a question or has a problem, they expect a response fairly fast. Fortunately, I've got Patrick to help manage the near constant stream of text messages.

[Wheelingauto]

3 hours ago, JustTheBest said:

I felt compelled to "chime in" on this topic again because of where the discussion is going. It seems to me that in a lot of ways, shop owners "miss the point". 

What's the point? The point is that no matter how good you are - how honest a shop you run - or how much you've spent on tools, equipment and scanners - you still can NOT do anything to a car unless it's in your shop. 

This was actually stated above by Anderson Automotive when he said... "The game truly is simple. Get the customer in the door by just about any means possible, do a quality inspection, and present them with the findings. "

BINGO! Get the customer in. 

 

I feel compelled to chime in as well.......

There are a lot of different people out there. You state GET THE CUSTOMER THRU THE DOOR......how do you keep the consumer out? As the self proclaimed car count fixer getting car count as you have learned is fairly easy. Getting quality car count not so much. While you appear to be an advisor, I have run a repair shop for the last 30 years. In my early days I spent a lot of time and energy sorting thru consumers with unreasonable expectations. While easy for you to say get cars thru the door, when you spend a lot of time and energy for someone who does not appreciate it or value it it reduces GREATLY the time and energy needed to deal with customers properly.

So imagine if you will a batting cage. Each ball represents a customer/car. a large % of them are off target but if you dont swing you can "hit" them. So you spend all day swinging at balls and occasionally one crosses the plate. It catches you off guard and you cant focus on it quickly enough or completely enough and you foul it off. Sure, you may occasionally hit a single or double but I would bet more than not you foul it off because you were trained by all the ones that did not cross the plate, but you swung at them anyhow. If you were to slow things down, dial in the machine to only pitch over the plate how many home runs would you hit?

 

Now, understand the example you use above states we are all large retail corporations whos value lies in pricing (walmart, costco, and Target) and the reality is we are mostly small, individually owned automotive SERVICE centers. Our true value is in TRUST, EXPERTISE and CONVENIENCE. Price is not a primary concern for our CUSTOMERS, yes we need to be competitive but we should focus on value, not price. We dont need a ton of opportunity, just enough over the plate to hit home runs.

All the other things you've suggested are retention items that do not get cars in the door the first time. Each suggestion you have made is critical in keeping in touch with you customer and showing them you care about THEM. Once you have made this connection you can stop trying to get them in with price...it no longer matters. They will then chirp loudly about how wonderful you are and the friends they send in are coming in for the same treatment, not a cheap oil change. This approach vs the suggested one is much easier to manage and far less stressful IMO.

Just another viewpoint of the game.

[AndersonAuto]

33 minutes ago, Wheelingauto said:

we should focus on value

A full synthetic oil change for under $30 is a heck of a value. 😉

There are a lot of different business models that can work. Your method is effective for you, and mine is effective for me. Nothing wrong with either.

A lot of it depends on your demographic. I happen to have a really good demographic that most shops would envy. The local demo has money, but not so much that they buy new cars on a whim. There are a lot of stay at home moms that actively look for bargains so they can make a single income stretch a little further, but at the same time they know that they can't trust their vehicle to just anyone. This is where being super competitive on the commodities like an oil change come in. Lure them in with the oil change, then impress them with the great facility and staff. Steady car count and good ARO have been the result. Because of my demographics and the kind of operation we run, we get very few of the "problem" customers that most people associate with bargain hunters.

Like I said in another thread, who cares if you get rich by serving people looking for a discount oil change? You're still rich, right?

[Wheelingauto]

I have always argued there is more than one successful business model and thats why I chirp about mine as much as you do yours. We both run successful operations and large ones. I just dont want someone who runs a smaller operation who might be struggling to think the only way out is discounting and maximizing car count. Too many shops think car count is the answer and most of the time it is not. But its the easiest thing to fix.

[JustTheBest]

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[Wheelingauto]

8 hours ago, JustTheBest said:

When I used the example of Walmart, Target and Costco, the intention was only to show that you probably "split" your business too - so why would you expect your customers don't? I'm sure you can provide all the services - but they still "shop" at other shops. It's a fact. 

 

Simply put, I and others may split our retail commodity purchases between different stores for whatever reasons, I do not split up my "purchases" from service providers such as my landscaper, painter, dentist, contractors etc. We are in the automotive SERVICE business. We need to realize this is the position we are capable of being in (USP, Unique selling point) and should focus on this position rather than attempt to compete on commodity.

[HarrytheCarGeek]

I haven't found a single system that works. I have tried so many things, one of them was cheap oil changes that brought me more grief than a curse upon my head. The value I received from the bottom feeders that cheap oil changes brought me was developing a thick skin.

What are we doing now, that works? Social media, paper mail newsletters, billboards, email-newsletter articles, clinics, and participation on local events. Word of mouth comes through excellent customer service, and customized pricing. Without taking rents into account, our marketing budget runs between 6 to 8% of gross sales for the average six bay/lift shop.

Could I spend less on marketing? Yes, but then I would go back to the seesaw of feast or famine work flow.

[JustTheBest]

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[JustTheBest]

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[HarrytheCarGeek]

I think every serious shop owner knows that marketing the business is an essential thing to do and requires work in it self. What most would like to avoid is the learning curve and the waste money on things that do not work or produce a sustainable result.

 

[xrac]

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[HarrytheCarGeek]

4 hours ago, xrac said:

What a great thread this has become. Definitely conversation and ideas that all shop owners should read. 

Because this is exactly what business owners should be talking about the business side of the trade.

Also, this is the side that mechanics that become business owners need to know, yet they shy away from it because it's perceived as superfluous.

Case in point, and to illustrate, most don't understand numbers.   If you ask them how much is a million, they would look at you puzzled. Instead of saying 1,000 x 1,000 or 100 x 10,000, etc. Or if you ask them what's half of 3/8 they couldn't tell you it's 3/16.

So, what is so important about the numbers? Well, how would you know what is the maximum possible output of your shop if you have no baseline knowledge, how could you quantify your efficiency rate? What would be the point of investing another 2% of of gross revenue into marketing when you couldn't take care of the additional customers.

I agree with you, great thread indeed.

[Dan Reichow]

Like Matthew Lee Stated - Costco / and Others lock you into a Club pre purchase to have the ability to shop and or use their services , We went to all Synthetic oils - no conventional or Semisynthetic  oils .

With This said we offer Two ways for oil changes - We give Client a buy four get fifth Free - Or Prepaid Card --    5 For  ?. You do your math where it needs to be. Guess what You will see them Five Times and have extra Revenue ahead of time.    

[JustTheBest]

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[AndersonAuto]

There was once a guy who ran a Honda shop in Nebraska who put out an auto shop marketing booklet. I'll never forget the first 3 steps to auto shop marketing in that booklet.

1. Soap
2. Paint
3. Light