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Do Coupons Really Work to Increase Profits at Auto Repair Shops?

By Anna Ruby On July 23, 2019
 

Car maintenance can be expensive, which is why many car owners shop around for the best deal. As a savvy auto repair shop owner, you want their business. But the question is: will they choose your auto repair shop? 

If you find that more cars are speeding past your shop than pulling into it, it might be time to consider offering some special discounts through coupon advertising. Did you notice we said coupon advertising? That’s right. Whether you think of it this way or not, a coupon is actually an ad for your auto repair shop with an incentive attached. And that can help you meet your ultimate goal: increasing profits.

As an auto repair shop owner, you might be hesitant to offer coupons. On one hand, sales can increase from new visitors and repeat customers. But on the other hand, just like with any type of advertising, there are associated costs. So how do you know if coupons are a good idea for boosting your profitability?

Advantages of Offering Coupons for an Auto Shop

Coupons have the unique ability to appeal to both new customers and previous customers. Not all types of marketing can say the same thing. They can also set you apart from your competitors. 

 

1. Coupons help bring in new customers

You could be on the busiest street in town, but because your services aren’t needed every day, people who drive past all the time may not even realize you’re there! That alone is a good reason to run a coupon. The reality is that many auto shops are off the beaten path and literally out of sight. That makes it even more important to run coupons that will increase your visibility in your area.

In addition to being a great first introduction to your auto repair services, you’re likely to bring in others who have heard of you, but simply haven’t used your services yet. People tend to be creatures of habit when it comes to where they get their car maintenanced. But a good coupon offer can be enough incentive to switch to your service bays, resulting in new revenue opportunities for you. 

2. Coupons can bring back cars of visits past 

When there are multiple auto repair shops for customers to choose from, it’s easy to get overlooked. It’s not that your service isn’t great, it’s just that, ya know, there are usually a number of options. The good news is that a coupon can be just the right thing to bring in those drivers who haven’t been by for a while. Not only does a coupon remind them that you’re still in business and where you’re located, but it can give them a reason to visit in the near future even if their car only needs preventative maintenance. 

3. Coupons can make you the most popular pitstop around 

Cars eventually require maintenance. But will they choose your shop when that time comes – or your competitor’s? A coupon for your auto repair shop can be the difference between choosing you over another one nearby, even if the competitor is more conveniently located.  

The Cost of Offering Coupons & How to Know if They’re Worth It for Your Auto Repair Shop

Surprise! The cost of offering a coupon isn’t nearly as much as it may seem. Sure, nothing comes for free, but when coupon advertising is done right each redemption will generate more revenue than if the customer had come in without it. Here are some tips to make sure your coupon offer is profitable: 

  1. Make a goal. How much additional revenue do you need to make your desired profit? 
  2. Determine giveaway cost. There is a slight difference between what the customer perceives as the giveaway value and what you’re actually discounting. For example, $15 off a repair of $150 comes out to 10% off the total price. If you know that your average repair ticket is $200, the $15 discount for the customer equates to only a 7.5% discount for your shop.  .
  3. Have a plan for tracking results. Whether it be part of your POS system or a simple spreadsheet, make sure you have a way to track redemptions so that you can associate new sales with your advertising investment. 
  4. Get the best distribution possible. If your ad is never seen, ignored, or thrown away, you definitely won’t get an ROI.  Who you target and how you get the coupon in their hands will make all the difference in your campaign’s success. 

The cost of the actual offer

Coupon offers should never give away more than you can afford. It should at least cover your wholesale cost. While a coupon will reduce your profit margin by a small percentage, at the end of the day coupons will increase your overall profit by increasing all those extra wheels pulling into the service bays.

 To measure the success of your coupon ad campaign, here is a simple coupon profit formula for $15 off a repair service:

Average Ticket x Total Coupons Redeemed

= Sales Revenue generated from promotions

Average Ticket $200 x 500 Coupon Redemptions $100,000 Sales Revenue generated from promotions

Cost of Goods Sold

(This is the wholesale cost of goods)

Cost of repair service $100 x 500 coupon redemptions -$50,000

Cost of Giveaway

(This is the wholesale cost of the discount)

Discount on the Coupon $15 x 500 coupon redemptions -$7,500

Cost of the Ad

(Amount paid for coupon distribution)

Cost of Ad -$4,000
= Profit generated from your coupon promotion $38,500

 

The cost associated with distribution

If you’ve chosen to offer a coupon, or several, you have to decide where to have them distributed. There are several options we will review below. But they are not all priced equally, and they do not all have the same amount of distribution or results. Consider how many people will see your coupon advertisement AND where they see it. Some formats will make it more likely for someone to take action than other options.

How to Setup Your Auto Shop’s Coupon Offer

Step One: Pick Your Platform(s)

You can probably think of 10 different advertising options in your community just off the top of your head. But that doesn’t mean they’re all equally good.

Pick the right one or two to help you improve both your profits and your visibility in the community without breaking the bank. No matter which ones you choose, be sure you have a system in place to track them. Tracking lets you know which ones are helping you meet your goals we talked about earlier, and which ones you should kick to the curb.

Social Media: Not everyone needs auto shop services every day. But when they do your ad on Facebook will be perfectly timed. You can have thousands of people who live in your immediate area see your ad, and more than once, so that as needs arise for auto repair services your coupon will be easily remembered! 

Learn more about our Facebook advertising program for auto repair shops.

Grocery Store Receipts: Placing a coupon on the back of your local supermarket receipt allows you to precisely target those who live closest to your shop. Plus, since we offer category exclusivity we only allow two auto shops for each grocery store location. 

Receipt ads can reach lots of customers for a fairly low cost. Participating in a register receipt program is one of the most effective methods for getting coupons in your customers' hands repeatedly.

People are also more likely to hold on to their grocery receipts by putting them in their purse or car. This gives them another look at your shop later, which may remind them about that annoying check engine light or that they’re quickly approaching those 3,000 miles and you have a good deal. The result: more customers for your auto repair shop.

Contact us to learn more about grocery store coupon advertising for your auto  repair shop.

Direct Mail: Direct mail advertising can be in the form of a postcard you have sent out to residents in your area, or you can be included in a packaged-set of coupons sent to homes by companies such as ValPak. This is typically a more expensive option that only appears in front of potential customers once if it’s a one-time postcard, and once a month if you’re in the coupon envelopes.  Compare this to the 1.5 times per week that the average grocery store shopper will receive your coupon on the back of the grocery store receipt.

Email Coupons: The actual cost is low for sending coupons via email. You’ll just have to take a look at your email list, format a coupon, and send it out. The coupon is right there, in your customer's hand, encouraging them to remember various auto maintenance services. The problem here is that it’s only being sent to existing customers. Repeat business is important, so be sure you have an email marketing plan. But don’t rely on that as the primary way to grow your business. 

Helpful tip: Don’t sweat it if a customer forwards your coupon to someone who isn’t in your database. If someone new comes in with a coupon offer meant for customers, be sure to honor it and make them a happy, new customer!

Coupon Websites:  Groupon is the big player in web-based coupons. The problem with this type of coupon is that you not only have to offer a rather significant discount to meet their requirements, you also have to pay Groupon a large percentage of each sale. This eats more of the profits than you might like. Be sure to do the math carefully if you are considering this type of coupon offer. 

Step Two: Choose Your Coupon Type

There are many types of offers you can make to draw in new customers for your auto shop. Also, some types of coupons work better for auto shops than others. 

Talk to an advertising specialist today, to see what type of coupon is best for  you.

Here are some coupon offers you could consider: 

  • Half-off oil change
  • Free/reduced oil change with purchase of an emission/safety test
  • Free/reduced oil change with any repair of more than a certain dollar amount
  • Free tire rotation with the purchase of another service
  • A certain dollar amount off a specific service (e.g., $25 off a tuneup)
  • A certain percentage off the cost of an overall bill
  • Free estimate/evaluation

Try not to make the offer for something that is a standard complimentary service. Things like a “free check on your fluids” isn’t a monetary savings on a service they really need, and probably wouldn’t be enough to get someone to come in just for that.

Step Three: Set Your Conditions

We’re talking cars here, and even though it’s not a vehicle purchase, there might still be some haggling. So have an idea of what you’re cool with, and what you’re not, so that you can be clear on your coupon.

  • Be sure to note if you have a minimum dollar value or a specific service that has to be done in order for the offer to be valid.
  • If you have multiple locations, or you are part of a franchise, indicate which shops will accept this offer.
  • Set an expiration date to create a sense of urgency.
  • Allow the coupons to be shared. It’s up to you to decide whether you need to just have a code to get the offer, a funny catchphrase, the physical coupon, an email forwarded from a friend, etc. But try to reduce as much friction as possible so that your potential customer will get the special they came in for. Making a happy customer on the first trip can go a long way in retaining them for many return visits.

So, are you ready? Do you want to have more cars rolling into your service bays? Coupon advertising is a proven auto repair shop marketing tactic that increases your profit. Contact us and we can help you decide which offer will be most profitable for your auto repair shop.

coupon-

Finding the best ways to advertise in your local area is key to driving new customers to your shop. Learn more about some of the top auto shop marketing tactics and how to apply them to your auto shop.

Tags: Automotive Advertising

 

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