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How to Profitably Offer Discounts

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For over 20 years of his time as a shop owner, Aaron Clements was completely against offering discounts at his shop.

He thought it would cheapen his service.

And worse, he thought it would make his Augusta, Ga.-based shop, C&C Automotive, look like a discount store.

However, roughly five years ago, as part of the 20 Group Turnaround Tour, Clements got to talking with other shop owners, discussing ways to bring more customers through the door. After speaking with industry experts like Greg Sands and learning how he successfully implemented discounts at his shop, he learned that discounting wasn’t necessarily what he thought it was.

At that time, Clements was mainly focused on improving his average repair order, and eventually realized that his car count was not what it should be. Clements had two locations, and wanted to implement a major change to kick off faster growth to reach his expansion goals. He started looking at different ways to increase car count and bring in new customers, and realized that, in following the footsteps of other successful shop owners, he could bring in new customers in his shop through discounts without sacrificing quality.

Not only did he want to get new customers through the door, Clements also knew he had to go above and beyond to turn those initial discounts into long-term customers.

 

The Backstory

C&C Automotive started in 1977, and Clements joined the shop, owned by his father, in 1991. After continual expansion, the shop progressed from a four-bay shop when Clements joined, to his current main location, which has 35 bays and 25 lifts, designed to give his technicians ample space to work on vehicles. Even as his shop grew throughout that time period, he held firm on the fact that he didn’t want to offer discounts, believing he’d get customers seeking the lowest price on their services.

But Clements began to notice that other shops in the area offered discounted services successfully, and Clements wanted to obtain some of that market share while accelerating his growth and reaching out to new customers.

“We thought about it a long time,” Clements says. “In my opinion, discounts and coupons that you advertise, in a lot of ways, are a way of telling your customer you care for them, and it’s like an invitation to come in.”

 

The Problem

The goal for Clements was to implement discounts that would give customers incentives to make that initial stop at C&C Automotive and increase the car count in his shop. However, he wanted to make sure they were high-quality customers that would be loyal down the road, not bottom feeders and that he could still make money off those discounted repairs.

Therefore with his discounts, Clements needed a way to target the high-quality customers he wanted to come in. Clements didn’t want them to stop by for just one discounted service; he wanted them get to know him and the services C&C Automotive provides to turn them into long-term, loyal customers.

“It’s all about putting your name, your trust, that good feeling they have about you, in front of them,” Clements says. “Then when they do need something, they’ll call you before anyone else.”

 

The Solution

Clements implemented a coupon page on his website, offering discounts like a free check engine light scan and a $19.95 seasonal maintenance inspection. Additionally, he offered many of these same discounts through a specialized direct mail campaign. He had two main tactics to successfully implement discounts in his shop:

 

Target your ideal customers.

In coming up with his direct mail campaign, Clements looked at his database to see what types of customers tend to be the best at maintaining their vehicles. He also looked at areas with a certain level of household income, and certain zip codes where his best customers came from, and sent direct mail to their houses.

Social media advertising was an important aspect to this, as well, as C&C Automotive advertised its discounts and specials on its Facebook and Twitter pages. Clements also came up with letters generated for his existing customer base. Clements and his staff personally sign each of the letters with these discounts, and they include the shop’s logo.

With the oil change specials on his mail coupons, Clements says that at $24.95, it’s a little higher than what he’s seen in other shops but it’s still a good deal. He says this price was decided as a way to still provide a good deal to customers while avoiding those simply looking for the lowest price.

 

Don’t pressure customers.

When it comes time to sell customers additional work from a full-service oil change or check engine light scan, Clements makes sure to give them a clear idea of what’s going on with their vehicle, while not pressuring them to make a purchase.

Though he doesn’t want to pressure sell, Clements stresses the importance of making sure the customer knows everything that’s going on. That means mentioning everything that has to do with the vehicle’s immediate safety.

“If we see a tire that has a cord hanging out, brakes are metal to metal—things like that—we let them know immediately,” Clements says.

If it’s something they can look at on the rack, service advisors will show the customer techs continue to do the oil change, so as to not hold them up. The shop sends digital inspections on all of these services, and these are emphasized especially for safety items. But Clements makes sure the customer knows customer’s can leave at any time.

“If they feel trapped, that won’t build up trust,” Clements says. “They have to know that they’re in control and they can leave at any time.”

 

The Aftermath

After implementing the discounts, Clements says he saw an immediate impact in both car count, and yearly revenue. Just this year, Clements says the shop is up 20 percent in revenue, and he has seen a boost in car count around 5-10 percent per year per store. He attributes most of this to new customers he’s gained through specials, getting loyal business from many of these customers over the past five years.

He still sees some customers who simply come in, use the discounts for a cheap service, and leave. But, he says, the loyal customers he’s gained more than make up for it.

Just this year, C&C Automotive opened its third location, in the Augusta area, on a new road. To bring those additional customers in, the shop sent out direct mail for discounted oil changes, and an introductory offer. Clements says this shop is already on pace to achieve over $1 million in sales in its first year.

 

The Takeaway

Clements believes it’s a judgement call for a shop owner to implement discounts in their shop, but believes it is at least something worth looking into for most shops.

“A lot of people are worried that they might be getting people seeking the lowest price on things. I haven’t found that,” Clements says. “The better customers tend to be the ones that come in using the coupons.”

It’s sometimes a slow process, Clements says, as some customers will come in three, four or even five times using their coupons.

“You think they’re a customer that won’t spend a penny on you,” Clements says. “But even after four, five times they’ll say, ‘let’s do that tune up.’”

Expert Advice: Maximizing Value with Discounts

Bill Haas is the owner of Haas Performance Consulting LLC, with 40 years of experience in the automotive service and repair industry. Haas goes over how shops should pay for discounts, and how they can use them to offer value to their customer base.

The only time I’m using discounts is as an element to my marketing. The discounts should be an invitation for people to come in and try us, to open the door a little bit wider. You can’t give away the farm. It all comes back to looking at those discounts as part of a marketing budget. Those are funds I’m allotting toward my marketing and brand awareness.

The most important thing to that is to make sure that the emphasis and focus is on your value. What is it that you do to make it valuable? Pricing for that particular service, make that secondary to value proposition. We use the discount to get the door a bit bigger for people to try us, and then we make sure to retain our customer.

SHOP STATS: C&C Automotive  Location: Augusta, Ga.  Operator: Aaron Clements Average Monthly Car Count: 600 Staff Size: 12  Shop Size: 35,000 square feet Annual Revenue: $2.4 million

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