Breaking Down Quick Service for Car Dealers: Introduction to the Business Model, Part 1

Each positive interaction with the dealership stands to improve customer retention, but how do you profit-center quick service?

When Jon Lancaster sold his Toyota dealership to Penske Automotive Group (PAG) in 2012, the store’s Express Service (quick lube) was consistently performing over 100 oil changes per day. Jon Lancaster Toyota was in the top five Toyota dealers in the nation for customer service retention.

Before the dealership’s success in quick service, Lancaster recalls an OEM study that exposed some surprising findings about the traditional service department in the eyes of the customer. According to the research, dealerships were losing 75 percent of customers due to convenience and satisfaction. Convenience issues uncovered two major problems: quick lubes were more convenient and customers want service on Saturdays. The findings went on to outline how repurchase rate improves with each service visit.

Incorporating a quick service department seemed like the natural solution. But how do you turn a profit on inexpensive oil changes? Independents and branded quick lubes were gaining traction with consumers, so Lancaster and Joe St. Marie, the store’s general manager, became experts on a new business model.

“For traditional dealers and service managers that have been taught dollars per RO or hours per RO are the key metrics to measuring fixed ops success, the quick lube is counterintuitive,” said Lancaster. “Even though early returns may be less than a shop that up-sells everything the long-term returns through customer retention (quick lube plus traditional service at the correct time in the ownership cycle) have much greater returns.”

Lancaster and St. Marie were keenly aware of an overall marketplace shift in customer’s expectations of service and convenience, so the value proposition was very specific. The quick service facility needed 15 minutes and $39.99 to change oil and filter, rotate tires, and perform a 21-point safety inspection (no appointment necessary). The added bonus: a free car wash. Saturday was treated exactly like a weekday with unabbreviated service hours.

St. Marie bleeds guest experience and executed a variety of tactics to cement a reputation of excellence with consumers:

• Immaculate (but not over the top) facilities
• Team members constantly upheld to a clean and professional presence
• Unbranded or all-makes express service to not discourage any potential customer
• Quality trumps time – never ram a car through quick service
• Consistent inspections and responsible reporting – offering relevant services and allowing the customer to decide as an effort to build trust
• New owner events that introduced customers to quick service and established confidence in the level of service they would receive
• Free “superior” car wash (under chassis clean, wax, and windshield water repellent was a 53 cent incremental cost over a standard car wash) was a huge value-add in the eyes of the customer

“Instead of allowing my database to erode, I was sustaining and growing my owner base without spending a million dollars in advertising,” St. Marie said. “Because people will come back to someone they have a relationship with.”

St. Marie attests that you cannot “hang a new concept on an old store.” The volume-driven quick lube business would not function under traditional shop structures and mentalities.

“Are you familiar with the miracle on ice?” St. Marie asked. He continued to share his kick-off with his quick service team entailed taking the afternoon to project the movie “Miracle” on the shop wall. The underlying message: teamwork, speed, and practicing the fundamentals to perfection. St. Marie fondly shared his motivation to beat the local competitor, “I told my team if we achieved everyday greatness, we could beat the Russians.”

Sports references did not quit after day one. St. Marie would “review game film,” or analyze daily operations to shave time off the process, pinpoint inaccuracies, and drive high performance from technicians. One form of “practice” was asking each team member to fill out a 21-point inspection on the same vehicle to establish consistency. St. Marie truly encompassed the role of coach at the facility and independently coaches numerous dealerships to profitability today.

St. Marie and Lancaster recruited from local technical colleges. “We created a winning environment and treated each entry level team member with respect,” said St. Marie. “We gave them a career path and some went from quick lube tech to certified technician or service adviser.”

Pay plans included volume and quality bonuses for advisors and incremental increases for technicians with certification-dependent income bumps.

Putting the model and team into action required a dedicated facility that was strategically designed to maximize volume. Stay tuned for future stories from this dealership: Executing the Construction of a Quick Lube: Finance and Operational Design and Quick Lube Daily Processes: Maximizing ROI of Your Quick Lube.