Quick Lube Q&A: Justin Rae

Even for the most well-run quick lube shop, loyal customers can become lapsed or even lost entirely. The reasons for these departures are wide-ranging.

How do you win these customers back? And at what point does it no longer become practical to try to do so?

Recently, NOLN caught up with Justin Rae, founder of Cinch, a customer data experience platform for B2C marketing teams. Rae explained the differences between lapsed and lost customers, what can cause customers to fall into one of these categories, and how quick lube operators can reconnect with them.

Editor’s note: This interview has been edited for length and clarity.

NOLN: How do you define the differences between a lapsed customer versus a lost customer?

Justin Rae: A lapsed customer is a customer who has missed a service with you. So, if you're thinking about the oil change cycle, the customer comes in, they get their oil change, they're going to come back in 3,000 to 8,000 miles and get their next oil change. If we look at that, we can predict when they're due for their next oil change based on either the oil type that they purchased or based on some of their own behaviors. Then we have a better idea of when they're going to return. … A lapsed customer is essentially that customer who has lapsed in one service with you. They've missed that service and now we're assuming because they've lapsed here, there's an increased chance every single day that they've actually gone somewhere else for an oil change than coming back to your service center. We eventually get to the point where we know that lapsed customer is definitely not going to be coming. The confidence level is they're not coming back to you for that oil change. Now, it's time to start looking for the next one.

NOLN: What can lead to an actively engaged customer becoming a lapsed or lost customer?

Justin Rae: There's a wide range of reasons why that might be based on really the customer. This goes back to what we're doing and identifying the customer, who they are, the value, the relationship that they have with the business. And so, when it comes down to it, what their relationship is or their perceived relationship with the business really is what that is. You're going to have your very most loyal customers. And those customers, they're always coming to you. If one of those customers misses (a visit), well, there could be other circumstances at hand. A good example: I’ve got one of those Hyundai vehicles that had an engine issue, and I had to get a brand new engine. I got that brand new engine about 300 miles before my next oil change. So, it made me look like I was a lapsed customer. But really, I got a whole new engine and obviously didn't need an oil change at the same cadence.

But you might have customers where maybe they have other reasons. They take it to the dealer, or maybe they're out of town and they end up taking it someplace else. There are these scenarios that are harder to come by, but when you know it's your loyal customer and they miss that oil change, there's a little different reason of why you might communicate to them.

Basically, you can break your customers down into (three categories). You've got loyal customers, average customers, and not loyal customers. And then, are they on time or are they past due? With your loyal customers, if they're past due, you really need to make sure at that point you're spending a lot more of your money trying to secure your top customer to make sure you don't lose your next visit. Even if it's because they got a new engine or because they were out of town and they got their oil changed somewhere else. You’ve got to make sure that you capture and keep that customer coming back if they're past due.

Then if you move down into the next group—our average customer—well, the reasons that they might be late are a little bit more broad. Maybe they shopped some pricing and they went somewhere else. Maybe they came in and pulled up to your bay, and it was busy or the wait time was going to be this, and so they just went somewhere else because they needed to get it done. With those customers, you actually want to be spending most of your marketing budget trying to get your average customer back in for that next oil change. And if they're past due, you can kind of keep a status quo on that and trying to keep them coming back in.

Then, there are your lowest value customers. These are customers you might be willing to lose. … They're definitely pricing sensitive. They are not loyal to you. They are just looking to get the job done either as fast as they can or as cheap as they can. And they don't really have any preference or any other reason that compels them to think there's a relationship there. Is it because you have better service? Is it because you have a better price on average? They don't have any relationship. And so, in these customers, if they are due, you typically spend a little bit less maybe than your average customer with that, unless they're a newer customer. That's a little carve out, a different scenario But if they're past due, don't spend a lot of money trying to market to those people a lot more.

NOLN: Do you reach a point with customers in that third category where they are truly lost and there is a point of no return? Or do you find that it’s always possible to win a lost customer back, but in some cases, it reaches a point where the juice isn’t worth the squeeze?

Justin Rae: There are certainly scenarios where a customer is 100% lost. If somebody moves out of an area and they're totally, totally gone, for example. I live in Utah now. I used to always think I'd move back to Florida, which is where I'm from. And at this point in my life, I don't know that I'm ever moving back to Florida. So, I'm probably never going to be a customer of the places I went to in years past.

But then you have scenarios where people come into new socioeconomic circles. And as they reach those levels, maybe they decide they're going to focus on dealerships or they're having new cars or they're leasing. Things that are going to change in scenarios within people's lives that, as they get older, might become the case. And so those customers, definitely they come into a realm where they end up 100% lost, not likely to come back. It becomes very difficult, though, to start to assess and understand which of your loss customers meet that criteria.

And so, it is effective to try to get that communication from the customer. Reach out to them. Send a survey. “How come we haven't heard from you? Just let us know.” Put a quickie link in an e-mail, (where they can say) “I moved out of town,” or whatever it might be.

But there's also a good number of customers that you are able to win back after they've been a lost customer. To us, that lost customer is after you've missed two or more cycles within an oil change or a specific service or a group of services. With those customers, yeah, there's definitely a chance to win them back. And so that's where spending some marketing dollars just consistently focused on what I can do every month to try to either get communication from my customer on what their status is and let them tell me, or be able to try to win their business back.

NOLN: Are there any particular mistakes you see quick lubes making with regards to how they're handling their lost and lapsed customers?

Justin Rae: I think that often some of the biggest mistakes end up being that they either spend too much time or too little time on it. One of the things that I especially appreciate that we've built into our product is the ability to just have always on campaigns that are constantly running as far as that goes. As soon as that customer misses their second oil change and we're starting to predict that, OK, the likelihood of them being a truly lost customer now…we can start to put them into different type of ad cycles. They can be getting digital ads at a different cadence. One of our recommended processes for that is to run an ad campaign to them maybe every three months they're on, every three months they're off, three months on. You cycle your customers through in a way like that. You don't necessarily have all your lost customers into these ad campaigns where you're trying to market to them, but you're able to do that. You can follow some similar aspects with your e-mail cadences or especially mail.

You want to reach out to them, probably trying to hit those time periods when they would be due. But the further it goes out from them coming to you, the further we get away from our accuracy on predicting when they're actually due for an oil change. Putting into some of these cadences and buckets where you just cycle them through an on and an off time period is quite effective at being able to win it back. Going back to the question of what is the most common mistake, it's either spending too much, so somebody decides, hey, you know what, what's my marketing going to be this month? Well, let's go hit all my lost customers. And then we don't do that again for another four months. And we just do the same thing over. But in this case, or they just don't do anything. And when they do, they maybe do, their customers just fall into a new customer acquisition campaign instead. And they look at it from that aspect. It's still cheaper to try to bring back that customer than it is to get a brand new customer. And so that's where, yeah, just finding that common ground within. There's a few mathematical ways that I've approached that before to try to figure out what that budget should be. But helping them understand, “OK, well, when we do run this, let's run it for a certain period of time, see what our return rate is, and use that to help us start to balance. what our regular cadence should be.” And that helps you put together your ratios.

NOLN: Is there anything else that you wanted to bring up that we haven't covered yet?

Justin Rae: If a quick lube is providing services beyond just oil changes—the “quick lube plus” type locations—those could be really great services to try to get somebody back in. If you're looking at win-backs, you know, state inspections or emissions inspections can be really good ways to win somebody back. That gives you the ability to capture their odometer again, which gives you the ability to start to see how many miles they were from the last oil change, and we can start to get more accurate on predictions again in the future. Again, if you have those multiple services, right, just trying to get somebody back in for some other service. One of the... Things that makes a customer really sticky is when a customer has actually purchased more than one type of service from you. If you're able to provide two or more services to that customer, you're starting to move into the space where you're building loyalty with that customer.