The Truth Behind Loss Leader Services

Loss leader services are discounts, specials, and cheap services which attract the customer to a mechanic shop (Oil changes are a common example). The shop knows up front that the service is a loss to the business – they make little to no profit.

The idea behind loss leader services is that the price appeals to the customer, which leads them to the shop for a service. If they like the service they received from the shop, they may return for more services later.

Also, shops commonly use these services to attract customers in hopes of selling additional work while the car is in the shop. Don’t assume that you’re saving money through these supposed bargains. The shop might be incorporating that missing income in the price of other services.

Most shop owners will tell you that cheap service brings in cheap customers – customers who do not want to pay for quality service when they return. This is not just deceptive to the customer and a loss for the business, it’s a loss for the technician, as well. Because the customer expects cheap service, the shop has to bring down the price somewhere – usually the labor rate. Therefore, the tech does not get paid well to do these jobs, so you can imagine their joy and motivation to do them well.

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