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Multi-profit Centers

Marketing diversified services

October 11, 2010
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If you have made the decision in recent years to diversify your carwash to include oil change services, you’re not alone. More and more, small businesses everywhere are adding additional revenue streams to better differentiate themselves from their competition, and appeal to an increasing number of consumers who seek all-inclusive “one stop” retail destinations.

Adding an additional profit center like a fast lube, and creating multiple ways to bundle those services with existing carwash services, is a great way to increase per-car ticket averages (especially in this era of flat to declining vehicle counts). More importantly, if the services you offer are timely and relevant to the needs of your current and future customers, you will earn their respect, trust and repeat business.

Above all, successfully bundling and marketing maintenance packages will help you drive home the importance of preventive maintenance to customers. As gas prices rise, consumers trim their discretionary expenditures to the point where regular automotive maintenance, let alone carwashes, are becoming less frequent.

As an operator, it may require you to change perspectives and focus on the preventive maintenance aspects of your business first and the carwash second. Consumers must be taught to realize that OEM-recommended fluid changes are not discretionary choices, they’re vital for total automobile “health.” By doing so, you will help position your business as a trusted partner interested in helping them protect their automotive investment.

If you need help convincing your customers, check out some facts from the U.S. Department of Energy in the sidebar.

Diversification:
A cautionary tale
Business diversification alone is not necessarily a recipe for success. Before considering any plans to expand your operation’s breadth of services, understand that your fast lube must be viewed as a stand-alone profit and loss center. For it to be truly viable, your new operation should generate the return on your money that you require every year. If your projections don’t support the returns you require, you might re-think your plan.

Expanding into the fast lube business will also require a commitment to take on operational issues and costs you may not have encountered as a traditional carwash operator, such as:

The operation will have to offer comparable service options to a traditional fast lube. This is not only makes it more credible in the eyes of the customer, it will make you more competitive against traditional automotive service providers.

Labor costs will rise as you add discipline-specific personnel for the operation, such as greeter/service writers and technicians.

Operational expenses will be higher as you acquire the supplies and equipment inherent with a fast lube (e.g. a wide selection motor oils, fluids, filters, etc.).

This is not to say that a well-conceived fast lube can’t provide a needed boost to your bottom line, because it certainly can — if only for the fact that you will be able to create bundled promotional packages with existing carwash services. Bundling offers also allows you to combine valuable services and provide consumers with graduated savings as the price of the package rises.

Creating a point of difference
Though flat to declining car counts are here to stay, it does not mean you can’t optimize the ticket average during each customer touch-point. Identifying, bundling and marketing the correct blend of services will not only help you accomplish that, it will create a clear point of difference between you and your competition, build traffic, boost ticket averages and increase customer satisfaction.

Your success hinges on you being diligent on three key fronts:
  • Continually adapting your promotions by taking into account industry trends, changing lifestyles and your customers’ needs;
  • Providing timely promotions throughout the day, week, month and year (and altering them regularly to keep customers engaged); and
  • Identifying the services from your fast lube and carwash that carry the highest perceived customer value, and offering graduated savings as the total service cost rises.
One rule of thumb when bundling carwash and fast lube services is to always discount the higher margin service in the package (full-service carwash) and offer the lower margin service (oil and filter service) at full price. The logic behind this is fairly simple; a consumer may place more immediate value on the higher margin service. In their eyes, discounting them only increases the overall value.

Begin the process with an audit of your current carwash, fast lube and convenience store (if you have one) offerings. This is a vital step in that it will help you maximize opportunities you may already have, and reduce the time and expense of creating new services from scratch.

The goal is to have several pre-packaged offerings in place you could activate at any given time, literally at a moment’s notice. If you monitor your sales carefully, having these promotions at the ready will help you increase traffic and boost sales until you achieve the desired daily revenue levels.

Some promotion ideas are available below.

Keep in mind the promotions you create will need to be changed regularly to keep them fresh and relevant to customers’ lifestyles or mindsets. Of course, do not offer packages that you are not staffed to accommodate (e.g. radiator service). If you do add staff, be prepared to continually train them on the details of each program, making sure to do this long before any of the promotions are activated.

Marketing your point of difference
All your efforts to build appealing bundled packages will be wasted unless you can follow through on creating memorable customer experiences around the purchase. Put yourself in the place of the customer and take note of the following:
  • The overall presentation of the exterior and interior of the building;
  • The cleanliness of the waiting area and restrooms (e.g. up-to-date magazines, fresh coffee, comfortable chairs);
  • The location and appearance and location of signage and point-of-purchase (POP) materials;
  • Friendliness of greeter/service writers and their ability to articulate the features and benefits of services (and the value of bundled packages); and
  • Other possible areas to enhance the customer experience (e.g. free Internet access, a customer-only phone line, an outside waiting area).
The “environmental” impressions you make with customers are only part of the equation in marketing bundled services. Take an honest look at your current operation and make sure you are maximizing the benefit you could realize by simply utilizing your customer database.

Capture enough information from each customer transaction to slowly build a profile of their preferences. In the long term, having a robust profile of current and prospective customers will help you generate mailers and other tools to remind them of promotions like seasonal maintenance packages.

And then keep going…
Analyze your POP materials, taking note of their condition and relevance to the time of the month or season. Are they near the check-out area, on the walls, in the restrooms, or in other high-traffic areas? Invest in completely separate sets of POP materials to help you better merchandise each of your bundled packages.

The possibilities are limitless when it comes to the size and scope of services you can offer your customers. Be creative. Better yet, involve your staff in a brainstorming session and award a prize for the winning idea. Get creative with the ways you promote those packages as well. The sky’s the limit in the battle for customer loyalty.

Bundling and merchandizing fast lube, carwash and c-store services are a great way to build traffic and increase ticket averages. But the effort is only worthwhile if you make sure those revenue streams are profitable, and that your staff is trained to adequately sell and deliver the value of those services to the customer.


David Kunkel is manager, Marketing & Direct Sales CITGO Petroleum Corporation. He is responsible for development of CITGO’s Fast Lube centers throughout the U.S. He can be reached at 800-331-5483 ext. 4106 or dkunkel@citgo.com.

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