When searching for profit centers to complement core marketing and retail operations, lube service is a traditional offering that goes back to the industry's earliest days. Lube service has existed as a stand-alone profit center since at least the 1920s and 1930s in the form of the "lubritorium," which is comparable to today's stand-alone quick lube operation and has been a standard offering associated with the service station dealer since that trend arose. Both opportunities exist for today's marketers and retailers in the form of the stand-alone quick-lube shop that may or may not be co-located with the gasoline islands and convenience store and is part of the shrunken, but still solid service station dealer market.
Houston-based ConocoPhillips has been involved in the quick lube business for many years and launched a comprehensive quick lube program called Lube Shop™ in March 2005. The program has gained popularity and features a comprehensive image program, a national credit card and a wide selection of high quality lubricant products to assist operators in their efforts to maximize profitability.
"The economy today is tough, but in the lube and automotive areas a large opportunity exists today,” said Phil Sontag, the director of marketing, Automotive Products for ConocoPhillips. “ People have to have places to get their cars maintained, oil changed, and research indicates that people right now are putting off the purchase of a new automobile with the average age of the current car on road being, about 9.4 years, which places them outside of warrantee. So people are looking for places to get this work done and, of course, oil changes."
From a brand image standpoint, the ConocoPhillips Lube Shop offering ties into the company’s nationally recognized Oasis Image program that features a sleek, modern design. ConocoPhillips Lube Shops carry a signature, national marquis that will spotlight one of the company’s motor oil brands. To help attract new and repeat customers, a custom sign package is offered featuring lighted street signs, exterior building signs and framed interior point of sale, along with quality support materials for the waiting area.
Lube Shops can be branded in any one of the company’s recognized brands, such as Kendall, 76, Phillips 66 and Conoco. All four of those brands offer passenger car motor oil and lubricants, with Kendall and 76 leading the way in penetration and popularity. With four brands available for Lube Shop branding, a person is able to open a Lube Shop and capitalize on the company’s brand that is most highly recognized in the local market. "Although the extent of the portfolio of lubricants offered differs by brand, they all begin with our tremendous synthetic blend products that meet all of the GF4 specifications. We have a wide array of quality products to meet consumer needs right up through a full synthetic product. We even have a product called Kendall Ultimate, which is a full synthetic product that carries with it the strict General Motors 4718 credentials. This is something a lot of companies strive to attain," Sontag said. "We offer have niche motor oil in the high mileage category that also carries the GF4 specifications, which many high mileage products do not meet."
Sontag noted that offering an entry-level high quality synthetic blend product can be an advantage to Lube Shop operators in the marketplace. “It is a better product than a conventional product and usually offered by operators at the same price, so our operators have a distinct marketing advantage as most of our competition offers a conventional product. And even better, in these challenging times, customers appreciate it as they get a higher valued product for typically the same price,” he said.
Not a franchise
"One element that sets our lube shop operation apart from many others is that ours is not a franchise," Sontag said. "It's a program that is made available to those looking to have a lube shop or operate a lube facility through a connection with one of our marketer/distributors. It allows them to have a branded image, the opportunity to offer a proprietary personal and business credit card or program with a variety of advantages as well as a choice of carrying one of our four brands of lubricants and without requirements of the typical franchise program.”
As part of the Lube Shop program, operators have access to a wide array of support mechanisms to enhance their success in the marketplace. Company recommended consultants offer business assistance from the very beginning with program set up to cover site selection; building design; training and brand support. ConocoPhillips also offers a complete line of collateral materials to support the brand such as brochures.
Although the program doesn't operate under the typical franchise constraints, there are conditions for operation. An operator has to commit to a minimum of 5,000 gallons of lubricant yearly. The location has to be new or at least recently remodeled and included a dedicated waiting area with a customer restroom; there has to be drive-through bays with a basement; they have to use the specific fast lube industry point of sale software; the guidelines for ConocoPhillips branded trademarked logos must be followed, and the operator has to maintain a clean, safe and professional environment at all times. "The requirements help to ensure a quality, professional and consistent appearance, all of which are highly regarded by consumers," Sontag said.
Proprietary credit card
One feature of the ConocoPhillips Lube Shop operation is access to the company’s proprietary credit card program. The card program uses the proprietary ConocoPhillips gasoline credit card, and it offers both consumer and business card options. Cardholders can use their cards at over 8,000 locations nationally under any of the brands supported by the company. The card features no annual fee, multiple payment options and online account management. The operator benefits from a very attractive fee structure when the credit card is used.
The program is, of course, open to ConocoPhillips' petroleum marketers from both the supply and operations standpoint. "We're looking for those operators that want to capitalize on our excellent slate of quality products, value customer service and are looking for a quality brand to promote in their business," Sontag said. "It's designed for someone who really wants to be in the lube shop business featuring quality branded products with a highly regarded branded image and a variety of other enhancements. Yes, we are a large company, yet small and nimble enough to provide a high degree of service."
ConocoPhillips also offers a less robust program for station dealers with service bay operations that are somewhat less expansive than the lube shop operation, but that still fills the needs and requirements of a full automotive service bay.