Service: How much do you make when they go somewhere else?

Almost every day on my way to the office, I stop by a neighborhood convenient store called Wawa for a latte. Wawa – kind of a weird name, but it’s a cool place. They make good lattes there – better in my opinion than Starbucks, and I don’t have to wait in a huge, slow moving line. If you know me at all, you know that I hate lines. That’s why I always said I hate cashiers in service departments, they create lines and lines piss people off, so I hate lines; everybody hates lines.

Anyway, this article isn’t about cashiers or long lines, it’s about something much more important. It’s about service advertising and traffic and opportunities and profits. Now, when I go to Wawa, I always get the same thing. A 16 oz hot latte, whole milk, no flavor and I like it “not stirred.” I’ve done this for a long time and the workers there kind of know me. They call me James Bond, because I like it, “shaken not stirred,” referring to the way he likes a cocktail, except I don’t like it shaken, I just like it “not stirred,” but they think it’s funny, so I laugh and go along with them. That’s right I tell them, I’m 007, Bond, James Bond.

So anyway, here is the deal. The lattes at Wawa have always been $2.99, but the other day, I noticed that the price was now $2.00, not $2.99. While the guy was making my latte, I call him “Goldfinger,” I told him that I noticed that the price had dropped and that it seemed like they were just giving money away. I mean I would have bought it anyway at $2.99 like I had always done, I told him. Now this is the good part and the part that really blew me away.

He told me (this is the guy that makes lattes at a convenient store), that when the company decided to drop the price by 99 cents, it really hurt their margins, but at the same time it increased traffic and overall up sales enough to make even more with the volume – plus, now get this, he said it also worked as a great way to say thank you to their loyal customers like me. The goal for that, he said, was to attract more customers and keep people like me coming back over and over instead of going to the competition. Wow! Margins, upsells, traffic, volume, retention…this is from the guy that makes lattes for a living- I was impressed!

So, if you were wondering where my story about lattes is going, I will land the plane. i talk to service managers all the time and what amazes me more than anything is how many of them don’t understand what the “latte guy” at Wawa obviously gets. That being competitive and driving traffic and boosting retention and creating opportunities always equals sales and gross and profits, it just does. That isn’t rocket science, it is common sense.

But believe it or not, when we talk to lots of service managers about being really competitive on just 2 services (oil changes and tire rotations), they get hung up on trying to make a bigger profit, instead of looking at the opportunities those basic “in-demand” services create. Those guys, (I hope you aren’t one of them) are literally stepping over dollars to pick up pennies. Think about it this way. Most dealers, depending on the carline, average anywhere from $150-$350 per repair order. You should know your average CP repair order sales number for parts and labor, if you don’t, find out, find out now. Then after you see how much it is, it will be obvious, that the more customers you can get in, the more money you will make. Please don't get me wrong. I am not saying to be too cheap or have give-a-way loser offers, you need to make something on these services, but you don't need to hit a home run on them.

And think about this. Customers know what an oil change is, they know when they need it and they know what a good deal is…they just do. So why not take advantage of those facts, be super competitive on oil changes and tire rotations to get them in so your advisors and techs have a car and a customer in front of them to sell to. And here is something else to consider. I think you need a low priced conventional or semi-synthetic oil & filter change offer to entice customers with older cars in. The average age of a vehicle on the road is 11.7 years, so every car is not a “new car” like some guys want to believe. The dealers we do business with have an average age of 5 years old and 75,000 miles on them. They are not new cars! And besides, every car doesn’t need or use full synthetic oil, so if you only advertise full synthetic, even if it is a good deal, you are alienating a ton of vehicle owners out there, and those cars, the older ones are the most likely to need service and repairs or they maybe will need a new car! Those prime, potential customers don’t visit you, they end up at Pep Boys, or Firestone or Goodyear and they spend a ton of money at those places.

So, here is the closer. It’s an old phrase, but it fits, “think outside the box.” Make sure you have oil change offers that entice older and new cars in for service. Don’t worry about making a big profit on oil changes and tire rotations…make the money on the upsells. Make sure you have a $10 tire rotation or even free (a lot of your gross comes from around the wheel) so all you want to do is get the wheels off. Make sure you advertise, don’t be the best kept secret in town and make sure you answer the phone when it rings. 85% of service customers call first, they want to know how much, how long it will take, if you have the parts and if they need to make an appointment. You have to give customers real reasons to do business with you and you have to say thank you to your loyal service customers with “everyday low prices” on the services they need most so you can get the other work.

And last, but not least, think like the Wawa guy. He gets it. He knows traffic is what makes the world go around and that price, whether you want to believe it or not, drives customers to your store. You may not be a coupon clipper and a few bucks might not get you to do business somewhere, but most of your customers are driven by coupons and great deals and saving a dollar. Come on, I know and you know that you are much smarter than the latte guy is. ?Just don’t over think it, remember nothing happens until you have a customer in front of you, right? Answer this question, “How much do you make when they go somewhere else?” You don’t need a calculator to figure that one out, right?

Car People Marketing. Want more service opportunities or more retained customers? Call us. We’ll meet with you online, on the phone or in-person. We will show you how we’re helping 450 other service managers grow their business and we will see if what we do is right for you. What have you got to lose?