Hello, Ma'am? It's Time to Change Your Oil
By John Courtmanche

Fast-lube chains, by their very nature, are in a perfect position for building loyal customer relationships. They know what kind of car someone has. They know about how many miles she drives. And they can estimate, with pretty good accuracy, when she'll need another oil change. While the mechanic has his head under the open hood, there are also numerous opportunities to cross-sell and up-sell other products and services.
Roughly two-thirds of the nearly 70 fast-lube chains - defined as those with more than six centers - maintained customer databases last year, according to an annual survey by National Oil and Lube News. Fast lubes typically store records on each car brought in for service. The best of them merge this information with car manufacturers' recommendations, so both technician and customer can see that the suggested service is based on the owner's manual. "Handing [the report] to them instills trust and confidence that you're providing the services that are really needed," says Rachel King, field-marketing consultant at Denver-based Grease Monkey, which operates 211 locations.

Assessing customer needs
One of the most extensive customer car-management systems in the industry is the one used by Valvoline Instant Oil Change (Lexington, Ky.) for its 633 centers in 34 states. Valvoline customers receive an MVP Program card for each vehicle. Every time the car is brought in for service, Valvoline swipes the card, which brings up the owner's record and the manufacturer's recommendations.
Built by Valvoline's IT department, the proprietary database system maintains records on 8 million cars. It stress the owner's name, address, car license-plate number, mileage and service history, according to Craig Grenko, VP, marketing.
The MVP Program has enabled Valvoline to better assess the needs of its customers' cars, and to develop products to meet those needs. Two years ago, Valvoline saw that U.S. car owners were keeping their cars longer and that half of the cars serviced through VIOC had more than 75,000 miles on them. Older cars were developing certain problems: seals drying up, oil leaks, loss of compression and horsepower, and a drop in gas mileage.
Recognizing these issues as opportunities, in early 2000, Valvoline released MaxLife Motor Oil - a premium product costing $7-$10 more than conventional service - designed to help prevent leaks, reduce oil usage, reduce deposit formation and improve fuel economy n hither-mileage cars. The result: "The percentage of customers that purchase premium oil changes through VIOC has increased by 6 percent in one year," Grenko says, up from 1-2 percent per year previously.
Grease Monkey centers use a similar system, though on a smaller, largely decentralized scale. The chain's centers average about 25,000 customer records each, according to Wil Esh, VP, franchise services, western United States, and are linked only with centers owned by the same person or company.

Targeting behavior
Drawing on these data, most fast-lube chains are able to differentiate between customers' service needs, using individual driving habits to campaign to them at the appropriate time. The industry's most popular method of campaigning to established customers is by postcard. National Oil and Lube News reports that more than three-quarters of chains sent reminder cards in 2000.
Grease Monkey and a number of the other fast-lube chains outsource their campaigns to Mailmark, by many accounts the dominant marketing-services company in the industry. Working on a three-month, 3,000-mile interval, Grease Monkey uses Mailmark's "Reminder Card System" to create a predictive service model for each vehicle. Using time and mileage, the system calculates a driving pattern for the vehicle and schedules reminders when the vehicle is most likely to need service. Two weeks before the recommended oil-change interval, the customer receives a postcard.
"Our existing customer is certainly the power play of any center," says Esh, "and our goal is to mail a reminder to each of them." Seventy percent of Grease Monkey customers return regularly, he says, even though only 25-30 percent bring the postcard with them.
Despite this success, the postcards are not as targeted as they could be. For one thing, not all cars need an oil change every 3,000 miles. Mailmark can target based more closely on manufacturers' service recommendations, but clients are not requesting it, says Mailmark's director marketing, Mark Crary. Regardless, Crary says that the average return on investment for a fast-lube store is $15 for every dollar spent on the reminders.
Valvoline does take into account the 18 percent of cars whose manufacturers stray from the 3,000-mile recommendation, such as Honda and Toyota, which recommend an oil change every 3,750 miles. Linked to direct-marketing-services company Ancor (Detroit), Valvoline's system sends reminder to owners of those cars based on their driving habits and those intervals.
Grenko declined to share Valvoline's retention rate - in part, he says, because the MVP data are not precise. Currently, if a customer buys a new car, the system treats him or her as a new customer. Since the system also can't group customer by household, Valvoline is looking at ways to remember a customer regardless of the car he or she brings in, and to household its data.

Email is less beneficial
Some of the larger chains are testing the Internet as a way to better interact with customer. Two years ago, Valvoline started giving customers the option of going to www.vioc.com to access their car's service history. But the company has had some trouble with the online service, Grenko says, although he wouldn't specify the problems or disclose the number of customer who have used it. Grenko says the company will continue exploring ways to merge its MVP database with its Web site to give customers more control over the way they service their vehicles.
Valvoline is also testing permission-based email reminders in several markets. Yet, "consumer acceptance of that concept has been less than I hoped for," Grenko says. "One concern we have with email is that you have to open it up and remember to do something. With traditional mail, a postcard or letter, it sits on your table and you see the coupon."
Focus-group research has led Grease Monkey away from e-minders, Esh says. "Our customers tell us they really want the card - to 'stick up on the refrigerator' - and that unsolicited emails get deleted without being read," he says. "Email marketing that we've used, or seen used, seems to be as offensive as the Friday-evening telephone solicitation."
At Mailmark, Crary says only 10-15 percent of clients are taking advantage of email reminders. "Some shops have posted point-of-sale signs to promote it, but it's been slow gathering email addresses," he reports.
Despite these false starts, neither Valvoline nor Grease Monkey is giving up on the Internet. Both Grenko and Esh report their marketing departments are actively exploring ways to better use the Web to interact with customers. For smaller chains - those with fewer than 30 centers - the first step is to establish an Internet presence. National Oil and Lube News reports that only 43 percent of them have a Web site.