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Upselling and internet at heart of oil sales contest

Motor oils are much the same…choose the right viscosity approved by a car manufacturer…then find the cheapest possible pack for top-ups (if you ever remember to use the dipstick)...

That’s a fair portrait of how many car owners see it, but it is far from the whole picture.

And it needs to be, too, because dealers are seeking to max-imise aftersales revenues when most drivers are keen to cut costs.

Aftersales executives say upselling is both possible and profitable.

Many owners (especially of higher-priced cars) are receptive to reality: the right quality oil looks after their cars.

And when a car is running efficiently, miles per gallon rise and emissions are cut.

Dealers are cutting the best deals they can with oil companies that are locked in a battle for market share.

Rising crude oil prices have led to a succession of increases in the cost of refined motor oil – maintaining or increasing retail profitability is essential but requires effort.

In sourcing lubricants for workshops, or to sell retail, dealers can go for the lowest price or enter into more complex agreements.

These can include training programmes, technical assistance and other incentives.

But, broadly, the more extras an oil company offers, the higher the price paid will be.

The internet is playing an increasingly significant role in how oil companies help dealers to strengthen customers’ loyalty.

It can be by offering practical assistance, but also by plugging into the growing interest in online games to build a brand.

Dan McGoldrick, Mobil UK marketing manager, sees online games as a key area for promoting Mobil 1

Anyone who visits a website to ‘race’ against F1 drivers Jenson Button and Lewis Hamilton has to give their email address to log in – a familiar device to help build a database.

Mobil is developing a relationship with Different Aspect, a digital communications company.

Its Glovebox product for Mobil customers, trialled by dealers, manages every aspect of the relationship between motor retailers and customers online.

“An increasing number of car owners prefer online contact with a dealer rather than receiving pieces of paper,” said McGoldrick.

The software provides an individual website for every customer on a dealer’s database to store, alter and view their personal data.

“All dealership communications, including reminders can be channelled through Glovebox, including services, MoTs, vehicle health checks, deferred work, finance, PCPs, GAP and warranty renewals,” he said.

“There is also an online booking system and live chat is an option.

The management function provides reporting for the dealership and
the group.”

Mobil is committed to long-term relationships with dealers and Sytner Group has been a customer for more than 15 years.

Jardine, another major dealer group, became one last year.

“You don’t walk in and convert a dealer group to you instantly,” said McGoldrick.

“You have to make a structured proposal to the management.

“Then we work to build a dealer staff’s knowledge of motor oils because they can’t hope to sell our oil against a competitor’s unless they fully understand our products and the advantages to customers.

"They need to be trained to upsell products, too.”

The training starts with an explanation where oil comes from, through its different viscosities, the way to achieve fuel efficiency, different kinds of syn-thetics and now low-ash synthetics.

“Car owners tend to trust dealers’ advice on what goes into their cars,” said McGoldrick.

Competition is intensifying in the sector. Q8 Oils UK views 2011 as an important year for its marketing push into the automotive sector.

Bob Stoker, commercial manager, said: “We will be relaunching our ‘check it or wreck it’ campaign, which quickly and simply advises consumers on what oil they need for their car.

“Most oil purchases are made on impulse and most people buy the wrong specification,” he said.

“We are investing a great deal into an educational campaign for dealers and consumers alike.”

 

Stoker said the prices of additives, steel and plastics as well as crude oil had increased, pushing up overall costs.

Vehicle manufacturers are dem-anding more complex specifications.

“We need to invest a great deal of time and money into complex chemistry to achieve the specification.” he said.

“Our advice to dealers who ask about pricing is to put it in perspective and think of alternative ways to share the cost among other services.”

Stoker said a challenge for the sector was keeping up with the ever-changing demands of vehicle manufacturers.

A couple of decades ago there were perhaps only two specifications of oil. Now there are more than 20.

“Fuel efficiency has been a key influencer driving these changes,” said Stoker.

“So for us it’s about managing the complexity of satisfying such diverse demands from the vehicle makers and from the European Automobile Manufacturers’ Association.”

Stoker said the USA and Japan were now leaning towards lower-ash lubricants, which has a major effect on the complex base stock used by Q8.

The Total oil company is working with dealers to try to offset lower workshop throughput that started in 2010 because of reduced sales of new cars during
the recession.

Dealers are using the Total Insight service to provide the name, address, phone and email details of specific drivers, aiming at the three- to six-year old car parc.

A Total UK spokesman said: “We are designing marketing plans to encourage these owners back to dealers for their car’s annual service.

"The lower volume of driver visits to dealerships also means that service teams must generate as much profit from each vehicle as possible.”

Total’s answer to this problem is its AutoVHC vehicle healthcheck pro-gramme.

The company said this has improved completion rates, average work identified and work sold, significantly increasing the profitability per job for each dealership.

Total’s new initiative to support motor retailers this year is Business Builder, which is due for release soon to the trade.

The company calls it “an unrivalled, imaginative, practical and comprehensive partnership scheme”.

The spokeswoman said: “Business Builder has been created with one major objective in mind – to help a dealer to grow their business and allow them to enjoy greater profitability.”

Total’s approach is to ask dealers: “Is your customer retention poor after three years??Are your new car sales declining?”

If so its answer is Total Insight, which is supported by GMAP, a company that uses DVLA car owner statistics.

“Total Insight can provide named targets with addresses and contact details of owners of specific car marques,” said the spokeswoman.

“The information can be tailored to parameters such as postcode areas or ages of vehicles.”

She said the system helps dealers to maintain pro-active contact with lapsed customers owning cars aged up to three years old.

“It can also devise a marketing campaign specific to, say, the three- to six-year old car parc,” she said.

“Total Insight can be used to identify 10-year-old plus vehicles to launch a campaign or target specific manufacturers for all-make servicing.”

Total gives examples of how Insight works, saying 22 postcode areas were analysed for a Citroën dealer-ship in Ayrshire; 3,417 names and addresses of Citroën owners were found at a cost of £1,350 or 40p per record.

 

“If all these received a mailshot and only 1% responded that would equate to 34 new customer opportunities,” said Total’s spokeswoman.

“If each of these were to spend only £40 the dealer’s costs would be recouped, but, just as important, 34 new or lapsed customers would now be in contact with the dealer.”

“We have seen a notable increase in the percentage penetration of fully synthetic oils into the UK automotive dealership market,” said the spokeswoman.

“Total values regular contact with customers and uses this opportunity to encourage dealers towards the profit opportunity of using fully synthetic oils.

“New technical issues mean dealers must stock more products to meet requirements.

"Total encourages pro-duct rationalisation and works with the service team at site level to train the staff in how to sell premium quality, fully synthetic oil and maximise the profit stream from lubricants.”

Total was named best automotive lubricants range 2010 and 2011 by the Institute of Transport Management because, the company said, its expansion of a range of high-performance lubricants.

Fuchs Lubricants UK, formed from the amalgamation of Silkolene Lubricants and Century Oils, is winning contracts with large franchised dealer groups, said UK marketing manager Richard Barrett.

“We are doing it by offering approved products at competitive prices with exceptional customer service and technical support,” he said.

“Also, our Titan Race range has been well received within motorsport.”

Fuchs, in motorsport for 30 years, has teams in F3, BTCC and rallying, which Barrett said gaves the com-pany’s R&D teams a platform to develop future products.

Barrett said Fuchs’ Titan XTL and Titan GT1 PRO ranges launched over the past 18 months give improved start-up, reduced wear and improved fuel economy.

“We offer dealers a lubricant waste collection service and are confident that our full package offering is superior to anything on the market,” he said.

In the face of rising oil costs Fuchs has managed to minimise the impact wherever possible, said Barrett.

Fuchs regarded upselling as essential. “Merely selling 10W40 is not enough to ensure dealer profitability,” said Barrett.

“It is also highly likely that a 10W40 is not the correct product technically.

“Engine designs have advanced exponentially over the years and our sales team works closely with dealers to ensure they have all the tools they need to upsell to higher-margin fully synthetic grades. This kind of product diversity is the only way lubricant profitability can be maintained.”

Barrett said: “Advanced engine oils that meet the demands of car engine manufacturers already offer high performance levels.

"But the stresses on engine oils are increasing, partly as a result of downsized engine designs.

"And the climatic conditions in which engines must perform reliably are getting more extreme.”

He said fuel-saving technologies such as stop-start systems make additional demands on the starting characteristics and lubrication reliability of the engine oil.

“The load on the engine oil increases noticeably over a manufacturer’s recommended oil change interval,” said Barrett.

“It is increasingly important that oil circulates rapidly to the areas where it is needed.”

In extreme temperature performance testing Fuchs compared an engine oil with conventional SAE 5W-30 technology against lubricant of the same viscosity, but based on the XTL-technology, in a refrigerated chamber at –27C.

The objective was to examine the corresponding start-up behaviour of each oil.

“All-in-all, the tests confirmed the significant benefits of XTL technology compared to the conventional,” said Fuchs.

This was how XTL scored: cold start-ups (up to 55% faster oil circulation, up to 35% faster start-ups), fuel consumption (up to 1.7% additional reductions in fuel consumption), oil consumption (up to 18% lower) and ageing stability (38% lower viscosity increase).

Barrett believes oil is potentially becoming an “even greater proportion of franchised dealers’ service invoices because lubricant prices and associated costs have both increased.

“I suspect that the percentage expenditure within dealerships has remained mainly unchanged as far as lubricant sales go,” he said.

“Fuchs’ customers will not see margin reductions as our range is diverse and enables other profit streams to compensate.

"We assist our customers by running regular consumer promotions aimed at
developing sales in the higher margin sectors.”

 

Research looks at smoothing way to new fuels

Within a decade or so dealers could be selling a new type of engine oil if research by engineers at the University of Leeds is successful.

They are co-ordinating a £5 million attempt by European universities and companies to make greener engine oils while meeting EU targets for CO2 emissions and fuel economy.

Engine oils rely on chemical additives to protect against wear and reduce friction to extend the life of moving parts and minimise fuel consumption.

Many of these additives poison catalytic converters, hence the hunt for greener lubricants.

At the core of their work is an attempt to look at the lubricant and the surfaces it coats at the same time, not separately.

The objective is to design a totally new lubrication system.

Professor Anne Neville, the project co-ordinator, said: “Work in this area has focused either on the relatively good design of the lubricant or the development of functional coatings – not the relationship between them.”

She said relatively good progress has been made, but a major improvement in efficiency is needed.

The Leeds team will investigate how the use of advanced diamond-like carbon (DLC) surfaces can help optimise engine performance. 

Engineers will study how binding a lubricant and DLC surfaces can be controlled by altering the design of the surface.

The researchers will use the latest lubricant additive technology and try to avoid sulphur or phosphorus – chemical additives that may be further restricted in future.

Mystery shop to help Marshall become the best

More than 200 Marshall Motor Group aftersales staff will this year be given training by Castrol Professional.

One objective is for them to meet Marshall’s commitment to deliver the industry’s highest standards of customer service and employee satisfaction.

The other is to simultaneously target an increase in aftersales profitability.

Marshall has nearly doubled its turnover during the past two years.

Now the group wants to develop the practical skills of frontline aftersales staff, focusing on both sales and customer service.

Castrol Professional lubricant suppliers’ Red Carpet training course advisers will work with Marshall staff at individual dealerships – trainers will spend additional time at some of the group’s outlets.

The course now includes phone mystery shopping to identify aftersales practices across its network most in need of improvement.

Neil Tonks, Marshall Motor Group aftersales director, said: “This is the latest and most advanced initiative in a programme of training and development for our aftersales staff.

“We see these investments as crucial in attracting and retaining the best staff and to maximising employee satisfaction across the group.

"We are also acutely aware that to give better than excellent service, there must be continuous improvement for our colleagues through personal development.”

Marshall Motor Group is a major user of motor oils, servicing more than 350,000 vehicles a year. It sells more than 40,000 cars a year.

The company is one of the UK’s largest dealer groups and the second largest that is family-owned and privately funded.

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