Up-selling in the auto repair and tire retail business whereby a customer is offered more expensive items or other add on items in an attempt to make a more profitable sale is a common practice. The pervasive philosophy is to get the maximum value from each vehicle the shop services. When practiced with the correct objectives up-selling can bring positive results for both the customer and the shop.
Offering a more expensive alternative
The most important factor in up-selling is to know the customer’s budget. This isn’t always possible in a new relationship and possibly the best way to gauge this is to offer the customer a more expensive alternative. Of course the more expensive alternative must make sense to the vehicle owner. For example, a more expensive tire may be safer, offer a better ride or come with a longer warranty. In this case a bigger upfront investment will offer greater value to both the customer and the shop.
Add on items
Offering add on items is a very widely used method of up-selling in the tire and auto repair industry. The most common practice is the safety inspection which can identify areas where services are required or will be required at some future date. This benefits the vehicle owner in that preventive maintenance will make their vehicle safer and prolong its life. The shop benefits from additional sales.
Loss Leaders
Offering a loss leader is a common practice in retail sales. It involves offering an item at a loss with the intention of up-selling the customer once they’re in the store. This technique is used sometimes in tire and auto repair with the most commonly offered services being oil changes and tire rotations. This practice involves taking a risk that additional repairs will actually be needed on at least enough of the vehicles that overall the offering will result in earning a profit. Or it can be viewed as a method to establish new relationships that will result in additional future business. If the shop can absorb the impact of the losses incurred, loss leaders can be an effective way of growing business.
Overselling
Overselling can have strong negative long term effects on a business. Up-selling when there’s a mutual benefit to both the customer and the shop is a good thing. Up-selling solely for the sake of increasing profits can leave the customer feeling that the shop is not trustworthy and they will not return. The practice of setting a sale target for each vehicle and up-selling with that target as a goal will eventually cause the customer base to diminish to the point that the shop will not be able to continue to operate. Over-selling may result in short term monetary gains but long term it is self defeating.
Conclusion
Up-selling can be beneficial to both the customer and the shop when the right objectives are pursued. When practiced with the goal of providing additional value to the customer the result is a win-win situation.
