February 16, 2015
Getting Rid of the Upsell
As a 23-year industry veteran, I have found that the thing consumers hate most in the automotive industry is the UPSELL. It’s synonymous with pressuring someone into buying something they don’t want or need to buy. Wikipedia defines upselling as: “a sales technique whereby a seller induces the customer to purchase more expensive items, upgrades, or other add-ons in an attempt to make a more profitable sale.” No wonder people hate it. That sounds awful!
In my experience working in this industry for over two decades, the “art” of the upsell is something that is taught, encouraged, and in many cases required. It is something you must excel at to make a living. However, this term and technique have given the industry its black eye. It has created an environment of mistrust and an “us vs. them” environment. It’s the thing people hate the most but it’s the thing that keeps some businesses afloat.
You bring a car into an auto shop for an oil service. Generally an oil service includes a basic inspection. Technicians and service advisors are often paid commissions or “spiffed” on their ability to recommend, and ultimately sell, more items during these services. The shop that is offering a low cost oil service is very likely underselling their product. Depending on the area and type of products used, the oil service can cost the shop approximately $22-$40. If they offer the oil service for $29.95 or less, the shop is losing money on every service. Who is really at fault here? Consumers want low cost oil changes and car services, and the industry has responded to this demand by offering low cost oil changes and “discounted” repairs. The result is a loss every time a car rolls in the door. Without the “upsell” the shop might as well hand you $’s and send you on your way.
Air filters, fluid changes, belts, hoses, and brakes are some of the most profitable items to sell and as a result the most oversold items. They have high profit margins, consumers understand what they are, and they are quick and easy to change. By selling one of these items, the shop can make back some of the money it lost on the oil change. As a result, the customer leaves feeling he or she has been upsold. They feel that they came for just one thing, but were upsold a bunch of other things. They wanted the best deal (low cost oil change), the shop gave them a deal, but then the shop needed to sell something to survive, and the customer bought it because the shop said they needed it, and the cycle repeats. It doesn’t matter whether the customer needed the service or repair or not; they still leave with a bad taste in their mouth, having been upsold!
How about we kill the term upsell? How about we kill the $29.95 oil change? How about creating a system of fairness and transparency? Consumers want deals, shops want and need to make money. How about a fair exchange? Consumers need to be educated and to be willing to accept the fact that it takes money to operate a good quality shop. Trained staff, insurance, benefits, taxes, parts, and basic overhead all need to be figured into the total cost of doing business. What is fair? Fair for both parties?
In order for the upsell to die, consumers need to be educated and to accept these two facts:
1. A car is the second biggest purchase most people will pay for in their lifetime after a house, and for some people – it is the biggest purchase. Taking care of that car, just like getting insurance on it, is a fact of life: maintaining and repairing their vehicle is necessary to protect their investment.
2. Cars are expensive and auto repair can also be expensive. Car owners need to understand that a shop needs to charge a price that covers its costs plus a reasonable profit. Cheaper is not better. You don’t want the low cost leader in auto repair. That’s why RepairPal’s RepairPrice Estimator is an important tool for both car owners and shops: it’s about showing a fair price for good quality work and quality parts.
In order for the upsell to die, shops need to be willing to do two things:
1. Shops need to charge fairly. Shops need to establish a labor rate that covers all costs plus a reasonable amount of profit. Auto repair is hard work and shops are entitled to make a reasonable profit. Establishing fair labor rates alleviates some of the pressure to sell more. If a job isn’t profitable and you are going to lose money doing it, don’t do it or price it fairly (by fairly I mean fair for the consumer and for the shop).
2. Perform a comprehensive inspection on every vehicle. This inspection of every vehicle will produce items that are in need of attention. It will establish consistency and consumers will know what to expect every time they come in for service. It will result in more legitimate service and repair sales and it will provide your customer will greater peace of mind.
3 simple items:
1. Great inspections produce a more reliable vehicle and give the shop the opportunity to repair things that need repair, thus the opportunity to make money. Win Win.
2. Consumers need to understand that shopping for a labor rate is like comparing an apple to an orange. Eventually they may find someone who tells them what they want to hear, but this might not be the person who will take pride in doing good work on their vehicle. Consumers need to understand that going with someone they trust is paramount. And this is likely the person who knows what the total cost of doing business is, runs a great shop with great technicians, and prices things accordingly.
3. There are no deals. In the end someone pays.
If you would like to learn about becoming a RepairPal certified shop, simply fill out the short form in the upper right of this page, or you can call or email us directly.
(800) 969-9204 ext. 2