Make the Switch to Synthetic Oil and Drive Service Revenue
Life’s getting tough in the service lane.
The service interval increased yet again in 2013 to 2014, this time by an average of 4.2 days, costing dealers an average $85,650 annually in service revenue, or about $20,400 in revenue per store, for each day added to the interval.
This also means the interval for oil changes continues to increase, whether the consumer is using synthetic or conventional oil. Oil changes are one of the most common and frequent maintenance services, offering customers a great reason to come back into the dealership—but there is tremendous competition from other aftermarket service providers, who are bleeding customers away from dealership service centers.
With this background, DMEa investigated whether the increasing preference by consumers for synthetic oil impacted the length of their service intervals. Consumers appreciate the increased performance—better gas mileage and superior level of fluid-film protection against grinding—and extended use of synthetic, which begs the question: Does the switch to synthetic oil cause an increase in the service interval?
Well . . . not exactly.
A recent DMEautomotive analysis of 400,000 customer records showed that regardless of oil type, intervals increased 5% between the first and third oil drain, averaging an increase of 273 miles additional miles driven between intervals.
Customers who came in for repeat conventional oil changes had the lowest service interval increase of 249 miles, and those with consistent synthetic oil changes had the highest growth of an additional 405 miles between drains.
Although the interval for customers who switched from conventional to synthetic increased, the interval was still shorter than that of repeat users of synthetic oil. Therefore, the introduction of synthetic does not necessarily mean consumers will convert to a longer interval, nor will dealers lose money in the process.
Additionally, though both dealers and aftermarket providers feel the impact of synthetic oil on their respective service intervals, dealers are ahead of the race, averaging only a 4.8% increase of 261 miles, compared to 7.2% and 427 miles, respectively, for the aftermarket.
Despite the increase in the service interval, the conversion of service consumers from conventional to synthetic can be a positive change for dealers. When a customer switches from conventional to synthetic, dealers experience an average service revenue increase of $35 per visit, which is significantly more than the lost revenue of $11.75 per year due to the increased service interval associated with the switch from conventional to synthetic.
Combined with the relatively low impact on intervals for vehicles transitioning from conventional oil, service providers have a great opportunity to increase service revenue through the opportunity to upsell synthetic oil.
If your dealership is ready to begin converting your conventional service customers into the new world of synthetics, here are a few suggestions:
- Ensure that your communications (direct mail, email, mobile app push notifications, and even point-of-purchase materials) include synthetic-specific offers.
- If you have customers who responded to a synthetic oil special offer during their last service visit, include synthetic oil discounts in future offers to encourage them to continue purchasing premium oil changes. We often see dealer success with discounts applied to synthetic offers on reminder communications.
- Service-drive personnel should be well versed on and ready to explain the benefits of synthetic oil to customers when they come in for service. This will help drive the conversation toward value rather than cost.
- Target customers who usually ask for conventional oil changes with special, first-time user synthetic oil offers. Test the waters. Send a communication offering a synthetic trial period through a low-cost channel like email. This keeps costs down while driving consumer consideration for synthetic oil.
Remember: Although the transition from conventional to synthetic oil may not be the driving force behind significantly longer service intervals, the intervals are lengthening nonetheless. By focusing their efforts on the value of customers who switch to synthetic oil, dealers can make up for the difference in their respective bottom lines.
Mike Martinez is chief marketing officer of DMEautomotive, the industry leader in science-based, results-driven automotive marketing that provides a range of marketing services to the biggest and most innovative automotive organizations in the industry. For more information, email email@example.com.