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Derrick Woolfson

Derrick Woolfson Business Development

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Free. What It Is It Good For?

 

 

 

Is a free oil change the only way of getting customers to return to your dealership? If so, chances are you have other underlying problems. Problems that are costing your dealer thousands of dollars annually.

There is no question that the OEM puts pressure on the dealer to maintain their customers in both sales and service. Keeping your customers loyal in both sales and service is incredibly lucrative for the dealer. Saving thousands of dollars in conquesting costs.

Keeping your customers at a cost, however, is not lucrative, and here’s why

The only time you have to ask yourself what the value of keeping a customer is if you are always giving free oil changes to the same customers. Putting yourself in a situation where it takes a miracle to increase the average RO spend. And you are spending thousands of dollars a month to retain those customers.

Understanding that If everything is always free (in this case the oil change), the customer loses site of its value. In other words, the customer has become immune to the word free oil change. Not expecting to pay a dime otherwise when it comes time to service their vehicle.

If the customers first words upon arrival (or when booking an online appointment) are “I need to schedule my free oil change” their entire trip is revolving around the “free oil change.” Versus the customer saying “I need to schedule my oil change.”

In the second scenario, the dynamic of the conversation completely changes. It offers the Service Advisor a better chance of upselling the customer. Whereas if the appointment is revolving around the “free” oil change, the advisor would possibly lead into “Besides your oil change - will you need anything else today?”  Or the advisor might say “right now we are running a service special for $79.95 - today only.”

To which the customer might say “No, just need the oil change.” The customer has already made up their minds that they will not be spending anything. It is free.

Instead of always offering a free oil change to your current customers. Think about what other brands are doing in regards to coupons and discounts to increase customer retention. The coupon, however, has to be relevant, and reflect instant gratification.

A customer who believes that they are saving a dollar amount off of an RO will leave feeling satisfied. In doing so, it builds value in your pricing. The other benefit besides valuing a “dollar” amount for a discount (such as $20 off of services more than $100) is the dealer's ability to show their competitor's price - slashing it - and offering a “dollar” amount off of the service.

There still is a markup left in the “service” (depending on the services provided) as well room for the advisor to sell other services. If the customer believes that they are getting a good deal, they are more apt to purchasing more.

How does your store retain customers? Have you used Dollar Amounts off Savings?  Do you give free oil changes and have incredible success?

 

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