There is a lot of money in fixing cars, and the demand is expected to boom over the coming years.
This should come as no surprise. People are becoming more and more aware of the importance of vehicle maintenance and safety, increasing the number of individuals who opt to schedule preventive service regularly.
Also, more people are buying used cars, particularly in emerging economies.
Additionally, technological advancements mean that cars today can spend more time on the road than their predecessors, making effective maintenance and repair a necessity for many.
In 2018, the size of the automotive repair and maintenance service market was estimated at $516.14 billion, growing at a compound annual rate of 5.6%.
By 2026, it is expected to reach a whopping $810.30 billion.
So, to meet the demands of such a large and burgeoning market, many auto repair shops have sprouted all over the world. In fact, in the U.S. alone, there are more than 162,000 establishments.
Three-quarters of the auto repair business go to independent shops, while the remaining quarter goes to dealerships.
Moreover, car owners have been gravitating towards large franchise auto repair businesses over the past few years, which might be good for the franchises and their partners but makes life difficult for everyone else.
As a result of all of this competition, many repairmen and mechanics have looked for different ways to increase their revenue, including upselling and cross-selling their customers.
Let’s say I walk into a store looking to buy a smartphone. I peruse the existing selection at the store until I find one I like: it’s a simple smartphone with no frills, but it gives me the basics I need.
So, I point it out to the salesman in the store and ask them a few more questions about it.
The salesman answers all my questions, but before I make a final decision, he points out a more expensive version of the same phone.
He explains that this better version is more popular and that it will be better for me.
That’s upselling in a nutshell.
Alternatively, if rather than trying to sell me a more expensive version, the salesman tries to convince me to buy a phone case, a pair of headphones, and other ancillary products to add to my initial purchase of the smartphone, that’s cross-selling.
There are countless benefits to upselling and cross-selling, but let’s focus on the fundamental ones.
If a customer buys more products from you or splurges on a more expensive version of a product, this translates directly to money in your pocket.
What’s more, this extra revenue doesn’t cost you much.
A roundup of small business statistics compiled by Smallbizgenius shows that as many as 82% of companies find that retaining an existing customer is much cheaper than acquiring a new one.
Furthermore, 65% of the business that goes to a company comes from already established customers.
While there’s around 5 to 20% chance of selling to a new customer, the likelihood of selling to an established one is a whopping 60 to 70%.
One of the main benefits of upselling and cross-selling is giving the customer ample choice, increasing their overall satisfaction.
Another benefit is allowing sellers to personalize their offering, hence building a closer relationship with the client. Both of these elements help lower the overall churn rate.
In fact, personalization is so important that more than half of customers are happy to stay with a brand that gets them.
Additionally, three-quarters of all consumers believe that brands should make their lives better, yet half of those also report that brands aren’t meeting their expectations.
That said, the previously cited research also found that a meager 5% increase in customer retention could boost profits by 25-90%.
If done right, upselling and cross-selling signal to your customers that you care about their experience. As a result, they’ll be more inclined to keep giving you business.
Even though upselling and cross-selling are important, they can cause more harm than good if done poorly.
In the automotive repair and maintenance service industry, we can find several examples of how upselling and cross-selling can go awry.
For instance, some service centers will offer their customers unneeded upsells. They’ll recommend flushing the cooling system or fuel injectors when neither one of them needed it.
Other service centers will have customers pay for expensive parts when all they needed was a simple repair job.
For example, rather than resurfacing the rotors, some mechanics will try to sell brand new ones along with calipers.
However, the most unethical practice committed by some shops is creating the problem in the first place.
They might cause a leak or cut a belt, and after that, turn to the customer and charge them to fix it.
All of these practices result in so many customer complaints about auto service that these grievances usually make it to the top of the list of complaints that can be found with the Better Business Bureau and other consumer protection groups.
Thus, car owners may spend their money on unneeded repairs and fraudulent work.
If you are here, you are trying to find the right way to upsell and cross-sell, the way that will win you clients and keep you off the Better Business Bureau’s radar.
So let’s dive in.
As we went through some of the common mistakes that other auto repair shops make, you might have noticed that they all have one thing in common: none of them add value to the customer.
If you want to succeed, you should always be thinking of ways to provide added value.
Generally speaking, there are a few ways marketers use upselling and cross-selling to increase value. These are the ones we will look at:
Offering added value
Maintaining contact with the client
Creating loyalty programs and rewards
Here’s what to do.
There are many ways for an auto repair shop to improve the customers’ experience by adding value.
For example, when selling them spare parts, you could offer installation.
Or, when fixing a dent, you could suggest extra paint, which would come in handy if they ever get into another fender bender.
The bottom line is that you need to find things that will benefit your customer and make their lives better.
And, this added value doesn’t always have to come in the form of a car fix.
If you happen to operate in a town that takes a lot of pride in the community and the local sports team, you can sell products that are either related to the town or the team.
These can include license plate frames, leather mats, antenna balls, and seat covers made in the town’s colors or stamped with the team’s logo.
Alternatively, you can time align the offer in your shop with seasonal events.
For example, many parents like to buy their children cars as graduation presents, so you can capitalize on this by having present bows and other items in stock, especially around May and June.
It is worth remembering that most customers expect brands to make their lives better — and that starts by adding value.
Moreover, a satisfied customer will happily let 11 other people know of their excellent experience with you.
However, the flip side of that coin is that no matter how loyal your customers are to you, almost half of them will be willing to leave you for a competitor that better meets their needs.
Bundling is another form of cross-selling.
Going back to our phone example from earlier, we saw that cross-selling was when the salesman offered me the phone case, the headphones, and so on.
Bundling, on the other hand, is when all these things, the phone, the phone case, are the headphones, are sold together as a single package, as a bundle.
What’s the benefit of bundling over cross-selling?
Usually, things sold in a bundle are cheaper together than if you had to buy each one of them separately. This discount in price makes them more attractive as a collective.
There are two ways of bundling: pure bundling and mixed bundling.
Pure bundling is when the phone, the phone case, and the headphones are all sold together, and you do not have the option of buying any of them separately.
Alternatively, mixed bundling is when you can either buy the package or just purchase individual components of the package on their own.
How does this relate to you?
You can offer bundles in your shop as a way to entice your customers to make more purchases.
For instance, let’s say you offer oil changes for $50 and a standard vehicle inspection for $200.
Try combining the two, so that customers pay you for an oil change and a vehicle inspection, both for the combined price of $225.
In the auto service industry, various car detailing services are often offered in bundles.
The reduced price makes the offer more immediately attractive to the customer, and the services improve their lives in the long run.
You should always share educational material with your customers and try to be available for any questions they might have.
Also, any time you have something new to announce or a new service to offer, share it with your existing customer base.
Put differently, you should be proactive and engage your clients rather than waiting for them to come to you.
Another relevant point is that if you don’t keep your customers up to date with the new services you are offering, they might end up looking for them elsewhere, possibly even going to your competition.
That said, maintaining contact with your clients has another benefit.
It helps you build a good relationship with them, one that is premised on trust.
After all, not only will you be top of mind any time one of your clients has a problem with their cars, but you will also establish yourself as a trusted consultant.
You bank on your expertise.
This is called soft-selling, and it substitutes selling through urgency and fear — i.e., “if you don’t buy this now, your car will never run” — with selling through trust and comfort, i.e., “you should buy this because it will do this, this, and this for you.”
Loyalty and reward programs can be very powerful tools in your arsenal. They can help make sure that customers come back time and again.
For instance, you could create a program where every five oil changes result in the sixth one being free.
You could even print out punch cards and give them to your customers. And who doesn’t love a good punch card?
You can even try to find ways of using gamification to spruce up your program.
You might be thinking that reward and loyalty programs aren’t that big of a deal, but you’d be wrong.
In the Smallbizgenius report cited earlier, three-quarters of customers say that they prefer companies that offer them rewards.
And, a little less than 60% of customers find that when it comes to the shopping experience, earning reward and loyalty points can be one of the most cherished aspects.
If all of this still has you on the fence, then you should know that seven out of ten customers are willing to recommend a brand to someone they know if the brand in question has a good loyalty program.
Upselling and cross-selling are integral parts of everyday business, and most customers enjoy it, especially if the recommendations are personalized.
But, more importantly, they must add value and make the customer’s life better somehow.
So, the next time a customer walks into your shop, listen to them, find out what kind of person they are, and tailor your offerings accordingly.
Are they a sports fan?
Well, lucky for them — you already have floor mats with the logo of their team.
Are they price-conscious?
Then, they will love that bundle that will save them some money.
Are they hesitant and need reassurance before making any decision?
Perhaps you want to invest some time with them and build a healthy relationship filled with trust, in which case soft-selling is the name of the game.
Regardless, as long as you prioritize the customer’s value above your own, you can never go wrong.
Joe Peters is a Baltimore-based freelance writer and an ultimate techie. When he is not working his magic as a marketing consultant, this incurable tech junkie devours the news on the latest gadgets and binge-watches his favorite TV shows. Follow him on @bmorepeters