By Debbie Kirlew
In a highly-competitive market where oil companies are largely dependent on dealers to reach the end user, the efforts from suppliers to attract patronage from the franchised network are extensive and with resources under pressure, dealers can make these top-up services pay off.
With so much profit in oil for supplier and dealer, as well as encouraging more visits from customers to the dealership even if it is just a quick oil level check, the stakes are high in ensuring the motorist’s oil consumption takes place in the confines of the workshop.
While many dealers will automatically use the manufacturer-approved oil supplier, the provision of add-ons can still be a lure.
Marketing support, aftersales training and tools such as the electronic vehicle health check (EVHC) all form part of the oil suppliers’ armoury.
Castrol marketing manager for UK and Ireland, Nigel Head summed up the importance of supporting dealers: “As a proportion of buy-in cost, premium lubricants are among the most profitable retail items that a dealership can stock, but many franchised dealers find it difficult to promote these oils to customers.
“While the onus is ultimately on the dealership to turn their oil investment into profit, the lubricant supplier, as the category expert, should provide the insight, tools and support that enable a dealer to unlock this profit opportunity.
“Engine oil can represent a substantial proportion of the total invoice value presented to the customer, and many motorists may baulk initially at the thought of paying for what they perceive as an unnecessary expense.
It’s therefore down to the oil supplier to provide adequate training to service reception staff – those members of the dealership that will be tasked with closing a deal and overcoming any customer objections.”
Castrol supplies its own EVHC system as part of its additional dealership services programme – Castrol Professional – to many of its dealer partners with one, according to Head, recording more than £175,000 in additional aftersales revenue in the last six months of 2012 – an increase of 92% on the first six months of January 2011.
Frank Fisher, aftersales director at Volvo Cars London which as the UK’s largest Volvo group operates eight dealerships in and around London, opts for Castrol, Volvo’s preferred oil supplier, and also utilises the EVHC system.
“The EVHC system is undoubtedly a benefit,” said Fisher.
“It ensures we have a process in place to resolicit future work and help manage the perceived cost of ownership, which we did not control to the best of our ability in the past.”
Ian Dow, aftersales director at Knights BMW in North Staffordshire, has used Castrol’s (also BMW’s official oil partner) EVHC system, but has since switched to a specialist supplier.
He said: “If a dealership or a group does not have an EVHC in place, taking the oil supplier’s product is much better than having nothing at all.”
Forming ‘official’ partnerships with manufacturers and developing oils for specific makes and models has proved its worth judging by the results from a YouGov survey commissioned by Castrol in 2011* which found 60% of UK drivers visiting a franchised workshop consider their car manufacturer’s recommendation as one of their first criteria when it comes to selecting a brand of oil.
Staff training is key
Mobil 1 offers its dealers its Performance Programme, an information portal incorporating digital marketing.
It includes optimised websites, online product selectors and recommendation tools and digital assets to aid dealers’ oil communications to its customers, as well as sales and training resources.
Dealerships featured on its new Dealer Locator, an interactive, map-based tool to help potential customers find dealerships stocking Mobil 1, have had more than 4,000 hits and seen a significant increase in both Mobil 1 sales and margin, according to the company.
“Staff training is a key part of the programme, equipping dealership employees with the knowledge and confidence to sell high quality synthetic lubricants and the importance of topping-up with the correct grade of lubricant, to their customers”, said Danny McGoldrick, field marketing UK, Benelux and Nordics.
Shell Lubricants UK sees its partnership as a three-pronged approach consisting of the Shell Helix product portfolio; an extended commercial offer such as discounts on oil extraction equipment and free collection of used oil and waste; and dealership support like service adviser training.
Additional products include LubeMatch, an online tool and free mobile app which marries the correct specification engine oil to any vehicle.
Key account manager Lee Standish said: “At Shell, we see our role not just as a supplier, but as a business partner.”
Total Hub from Total Lubricants incorporates business lead generation, retention strategies, margin improvement and marketing techniques to exploit the new offers it is bringing to their markets. In addition,
Total is endeavouring to benefit dealer partners with many of the advantages associated with large corporate companies operating in the same sector.
Waste management, client identification, service staff training and funding methods can all provide cost savings and Total believes the overall effect can increase the average profit-per-site by £100,000 per year.