By Denise Rondini
As your customers closely scrutinize non-core operations to shed costs where they can, it creates an opportunity for you to offer services that they are better off outsourcing.
One of those opportunities, says Dave Kunkel, marketing and direct sales manager, Citgo Petroleum Products, is expedited preventive maintenance, such as lube, oil and filter services. If your company can demonstrate it can do LOFs cost effectively and meet or exceed quality expectations, it creates revenue for you while eliminating a cost center for customers.
It is also one more way to strengthen the bond with customers and grow loyalty.
According to William Beyerle, of Chevron Commercial Lubricants’ national accounts group, offering quick-lube services, “keeps existing customers from wandering to other service providers to get work done, and provides an opportunity to sell additional services like coolant flush and DOT inspections, to upsell to better parts and to make recommendations for other necessary repair work.”
If you already offer oil-change services, dedicating a bay to it and “doing lubrication work in a systemized manner will allow you to be more efficient and to maximize your profits,” says Mike Reed, global brand manager, Shell Rotella, Shell Lubricants.
GETTING STARTED
If you are considering quick-lube service for the first time, you will want to start with an evaluation of your market.
Begin by looking at your existing customer base: For how many of your customers are you already performing oil changes? Are there other customers to whom you sell parts but for whom you do not perform oil changes? What prevents them from using you as their oil-change source?
For commercial quick-lube operations, you typically can draw customers in from a 10-mile radius, so your next step is to look at vehicles registered around your facility. Kunkel says that companies like paint contractors, produce delivery services and other small to mid-size fleets are good candidates for your quick-lube operation.
Once you have determined that your market can support a quick-lube operation, dedicate a space to it and make sure that space is easily accessible to incoming trucks. If you are building a new bay, you may want to consider one that is long enough to accommodate the tractor and the trailer, Reed says. This will allow trucks to pull right into the bay and is the concept Speedco uses at its chain of truck quick lubes. This may not be practical for many distributors and repair garages, and it is not necessary to ensure success in the quick-lube arena. A bay that accommodates the tractor only can work as long as it is easy to get into and out of.
You should consider menu pricing for your quick-lube operation. This allows you to spell out exactly what is covered at a certain price. Reed suggests using a good, better, best concept in your pricing strategy with good being a basic oil change and the better and best including either additional services or synthetic oil and lube products.
EQUIPPING AND STAFFING THE BAY
Setting aside a bay is the first step to speeding up your oil-change operation. Another key component is making sure it is equipped and staffed properly. The best practice is to select a bay with a pit in it, but you can operate in a bay that does not have a pit. You will need to have one tank for new oil, one for used, metered guns for dispensing oil and the proper drains in the bay.
Reed suggests carrying one oil in bulk because it is easier to dispense and also to carry “a certain amount of packaged brands.” You also will need to carry an inventory of filters including oil, fuel, water and air filters, he adds. An assortment of greases and lubes also are needed to lubricate the chassis and bearings.
Your staffing requirements will depend on the level of service you are going to provide, according to Kunkel. “You don’t necessarily need an ASE-certified or factory-trained technician to perform basic oil changes. However if you are going to offer a broader range of services, you will need someone with a higher skill level.”
You will want to make sure that the technicians staffing the quick-lube bay have a customer service mentality and are prepared to deal with customers who are looking for quick turnaround, according to Beyerle.
COSTS AND ROI
It is difficult to pinpoint the exact cost of setting up a quick-lube operation because there are so many variables involved. “It can range from a few thousand dollars to a million dollars and upward for a standalone facility,” Beyerle says.
“The spectrum is very broad and costs will depend on the individual facility,” Reed adds.
Your return on investment will depend on your initial investment and the number of trucks that flow through the bay. Using a quick “back of the envelope” analysis, Reed figures if you were doing six oil changes a day at an average price of $175 each, you would be generating $1050 in revenue. “If you could double the number because of the efficiency of having a dedicated bay, you are going to drive pretty good profitability,” he says.
Beyerle adds that for many business owners ROI is not the focus of the quick-lube operation. “They look at quick lubes as a general service offering that prevents their customers from going to other locations. If that is the case, there is no need to determine an expected return. However, if done correctly, the quick-lube bay should be able to provide the same ROI as other types of service.”
Most quick-lube operations are set up to offer more than just an oil change. For many, the oil change is coupled with a vehicle inspection and the replacement of simple things like windshield wipers and lights. The vehicle inspection is a good way to generate additional service work for your operation. “If during the inspection the technician finds a problem with a critical suspension part, for example, he can try to schedule the customer to bring the vehicle back in a day or two to get the problem fixed,” Reed says.
