Oil changes keep customers in the pipeline
There’s always more business to be had. Getting it requires a stronger offensive in a sputtering economy. An offensive strategy that makes the most of the humdrum oil change keeps customers in the pipeline for sales and services down the road.
Teasing price-conscious customers into the shop for routine maintenance plays to a dealer’s strengths. Consumers know the tactic well: Discount the price of an essential service or product to attract customers, ideally laying the groundwork for future transactions while selling higher-margin items or services along with the discounted one. But when it comes to their vehicles, not all drivers are looking for bottom-feeder pricing.
Knowing the job is done correctly and with the right materials trumps price for motorists bringing their vehicles to the dealerships owned by the Slagle family of Phoenix, Ariz., and Ross Blankenship of Akron, Ohio.
“Some competitors offer low prices. Each of our stores is near a retirement community. Price is important to those retirees. But reliability and performance is important, too.
“Our niche is doing a good job for them. If we do that, they come back for other services,” says Bob Slagle, founder and president of S&S Tire and Auto Service Center, which has three stores on the west side of Phoenix in Goodyear, Peoria and Surprise, Ariz.
Slagle’s customers drive past a shop offering oil changes for just $9.98. “We don’t want that kind of business. He can’t make a profit, and I don’t want to compete with him.”
Not a humdrum decision
Price is not the only market pressure. S&S Tire, like other independent tire dealerships, might charge less for an oil change than the local Walmart, quick-change oil places such as Jiffy Lube, and car dealerships. But, “It’s a different type of market,” says Slagle. “They don’t advertise price as much as they do convenience.”
Convenience is important to customers squeezing an oil change into their busy lives. But they are also looking for speed and high-quality service.
Once a customer brings in a vehicle for an oil change, S&S Tire technicians perform a safety inspection and point out any items needing attention. “They are primarily a traffic builder into our stores,” says Slagle.
The number of oil changes performed each day ranges from 12 at the Goodyear location, which has two dedicated bays, to six at the Peoria store. The S&S Tire stores in Peoria and Surprise each have one bay reserved for oil changes. Margins on oil changes are about the same at all three locations. S&S Tire uses and markets a semi-synthetic Kendall oil which costs a little more but is better for the engine and environment.
“Our society places so many demands on people’s time. If a customer has an appointment, you need to start on time. I feel as long as our price is competitive, if we do a good job and get it done on time, a customer will think of us when they need other services or tires,” says Slagle.
From alignments to engine diagnostics, about any type of vehicle repair can be performed by the 40 employees of the three S&S Tire stores. Customers find an extensive range of tires for automobiles, light trucks, and SUVs as well as tires for farming equipment, mowers and golf carts, heavy-duty trucks, construction equipment, trailers and RVs. S&S Tire is also one of the region’s largest retailers of custom wheels. Slagle and his wife, Joanne, established S&S Tire in 1976. Their sons work in the business today. Rob is general manager and Dan manages the Goodyear store.
Coupons drive business
To reach customers, S&S Tire encourages one-on-one contact through exhibits at car clubs and RV shows. “It’s inexpensive to do and easy to quantify returns,” says Slagle. Radio advertising consists mainly of spots on a local long-running Saturday morning talk show program. The company does little newspaper advertising. Instead, S&S Tire offers coupons for services and tires through its Web site. A customer with a coupon is charged $19.95 for an oil change. “We get a lot of coupon response. A customer needs to get an oil change more often than a brake job,” says Slagle.
Seventeen hundred miles away in Akron, Ohio, coupons and word-of-mouth advertising are the only marketing tools used by Ross Blankenship. He is the owner of State Street Tire, which operates out of two locations just a half-mile apart.
Blankenship credits over 100 new customers every month to coupons mailed direct to existing and potential customers and downloadable from his Web site. He relies solely on direct mail and the Web site for coupon distribution. He does not advertise through radio, television or other channels.
“If you spend $2,000 a month on advertisements, why not spend $1,500 on advertisements and take the leftover $500 and discount your oil changes to get the people in the door?” Blankenship asks.
The discount formula is a winner for State Street Tire. “We send out coupons and our reputation for quality work keeps us busy. We do 20 oil changes a day between the two stores.”
Keep it in the middle
His tip for dealers trying to increase their oil change business? Consider charging $10 less in order to draw in 50 new customers. “But don’t go too cheap,” he cautions. “Then you get the coupon-only shoppers who won’t buy anything else. So you need to keep it in the middle. We charge $19.95 to $24.95 for an oil, lube and filter, 40-point safety inspection, and a free tire rotation.”
The free tire rotation creates opportunities to boost revenue. “Customers frown when you take tires off when they came in just for an oil change. We solved that problem by offering the free rotation. We sell a lot of brakes off of that.”
Like Slagle at S&S Tire in Phoenix, Blankenship is sensitive to a customer’s time pressures. But it’s not an area where he competes head-to-head with quick-change oil providers: “An oil change place down the street called O’Neil Lube does a great job and runs a good business. They are twice the price on the same oil change we offer. Their benefits are doing the job faster and not needing an appointment.
“If we had a larger facility we would be able to compete on the convenience issues, but our six bays are usually full every hour we are open,” says Blankenship.
It’s the experience
If extreme convenience is not bringing customers to State Street Tire, what is? For one, high-quality service delivered in pleasant surroundings.
“We have a 42-inch, high-definition TV, a very clean showroom and, most important, an arcade machine with some popular ’80s video games customers seem to love. Of course it’s on free play, and the gourmet coffee is always hot and fresh.” It’s a friendly environment that customers won’t find at Walmart, quick-change places, and other competitors.
Outside the showroom, customers find a full-service operation. “We tell our customers we will cut your car in half and weld it back together if you want us to,” Blankenship says. The reputation of his shops is built on friendly service and doing the job right the first time.
Blankenship opened his second store in January 2008, which turned out to be the eve of the Great Recession. Even so, business levels generally trended upwards.
“It has been great since day one. We have good suppliers and great personnel. We took a hard hit and fell a little, but I am proud to say we bounced right back and are doing well. We have over 12 employees at two locations. Our first store is a two-bay shop that pumps out a million plus every year. The second store is a half-mile away, and it has six bays that stay jam-packed all the time.”
Two better than one
Why are the two stores so close together? It’s a question everyone asks. “I planned on shutting down the small store once the big store was up and running. But the numbers for the small store only dropped around 20% in the beginning and continue to grow every year. It’s nice having them so close; we share product and employees if needed.”
The two stores generate some nice numbers, too, with around $2 million in annual sales. About 50% of revenue comes from tire sales, which total about 12,000 a year. Oil changes represent about 15% of revenue, and the rest is other services.
For Blankenship, sharing ideas, techniques and strategies for overcoming the day-to-day challenges of tire store operations positions all independent owners to better compete in a crowded marketplace.
“Some people may ask why I would give away so much information. I have an easy answer,” he says. “Within five miles of my shops are 67,000 registered cars and trucks. I cannot work on them all, nor do I even want to try, so there is enough business to go around for all to reap the rewards. Instead of working against one another, more shop owners need to work together. I really think we benefit each other,” he explains.
Free can be good business
First-time customers drawn in by a coupon discover a meaningful perk that comes with every tire purchase: free flat repairs. “We offer free flat repairs when others will not. If we can repair it to get them on the road and save them from buying a tire, we do it.”
The tactic works “unbelievably” well, according to Blankenship. “We simply tell our customers no charge, just remember me when you need tires.” Free flat repairs are responsible for the sale of 20 sets of tires a month, he says.
When viewed as a strategy for introducing customers to the blend of convenience, speed and high-quality service available only from an independent tire dealer, oil changes are not so humdrum after all.
Ann Neal is a freelance writer with more than two decades of experience managing employee, financial and marketing communications and Web content in the commercial trucking industry.