I rely on some form of a "mileage countdown" system when tracking the time to change the oil in my car. Whether it's an electronic display on my dashboard or a sticker in the upper lefthand corner of my windshield, I'm regularly comparing my current mileage against the target that commands a visit to my local lube/oil shop. Unfortunately, it's kind of like waiting for your alarm clock to hit the magical point when the buzzer goes off early in the morning. You know it's coming, but you really dread its arrival. And hitting "snooze" on your car's alerting system for an oil change is never a good choice. Anyone ever pay for new headgaskets or blown valve seals? You know what I'm talking about.
So when I do go in for an oil change, two things typically happen:
- I get the oil changed. Imagine that.
- I'm presented with other "needs" that should be addressed by the friendly service technician doing their best to keep my car optimally running. It might be the "need" for a new in-cabin air filter (I never knew these existed until one trip to a Valvoline store kindly revealed to me that I'm breathing dirty air and that I should really, really change it - I laughed and declined). Or it might be a fuel injection cleaning system for $69.95 so I can hopefully get two more MPGs. In either case, I have to consider whether paying a few more (unplanned) dollars is worth it and whether I'm harming the longevity of my set of wheels should I ignore the friendly recommendations. Given the convenience of having someone already under my hood accessing tight-fitting spots, it's a tempting value proposition if I know the added services should be done anyway.
And my service provider (typically not the dealer) knows it. This is called "The Upsell." In other words, incremental (and very profitable) revenue for the aftermarket repair shop doing the work. Yet given the iconic, competitive battle between the automotive aftermarket and dealers belonging to an OEM, the fight for the driver's attention for repair work is getting fiercer. How?
In-vehicle technology enabling an OEM or dealer to communicate directly with the driver. These systems give us a personal reminder that our vehicle needs attention. This is nothing new. In 2009, ATX announced technology giving dealers and OEMs the ability to keep in direct contact with their customers. Other providers do this as well.
Uh-oh! The upsell by my independent oil and lube center just got intercepted.
Take a look at the chart below. In so many words, it tells you that a higher percentage of newer year model vehicles are equipped with service light indicators that help get the driver's attention. At the beginning of 2011, at least 47 percent of 2008 or newer model year vehicles in the U.S. have this visual alert equipped inside their vehicle. The trend is similar in Canada. Now, factor in that automakers such as Ford, via its Sync technology, also know who I am and how to run a remote, automatic diagnostics report on my car. That's a pretty impressive way to keep my attention AWAY from automotive aftermarket service providers. And a pretty clever way to re-train the customer to think of the dealer and less so of the independent repair shop. It's basically one tactic to strengthen the customer relationship at the cost of the aftermarket.
As I stated in an earlier post, "follow the money," and in this case, service work is profitable work. No matter who gets the business.
There are plently of other automotive industry challenges in addition to this one. Take a look at our new white paper titled, "Strategic Questions for Automotive Business Planners." It's an easy read with helpful "Q&A" based on current research, market data and a clear view on how Polk sees the auto industry progressing in the near-term. I'd love to hear your thoughts on this body of research.
Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis, Polk (12.19.2012)