- Investment sought:
- Equity offered:
Dipstix was launched in December 2013 with the primary aim to become the ‘go to’ place for motorists looking to compare quotes for maintaining their vehicle.
Dipstix allows motorists to compare quotes and book online, potentially saving both time and money on looking after their vehicle. The product currently focuses on three core areas:
• Booking MOTs;
• Servicing; and
• Fixing a problem.
By entering the car’s registration number and a few details about the maintenance required, a customer can find quotes for the work, book it and pay.
One of the key challenges for Dipstix is to educate the market about the options available to them when they need to maintain their vehicle. We believe that the three most common misconceptions are:
1. 'I have to service my car with the dealer because of my warranty'
Fact: Since 2002, this is no longer the case – as long as ‘OE’ parts are used by a qualified mechanic, your warranty is protected.
2. “I won’t get any guarantees from an independent garage”
Fact: All parts and labour involved in work booked through Dipstix are covered by a 12 month guarantee.
3. “I don’t know what service my car needs”
Solution: We have all the data from manufacturer recommended service schedules based on age and mileage of the car, so with a couple of simple details we can give the answer!
Our Manifesto is therefore: "We believe it is a car owner's right to an easy, straightforward and less confusing process when it comes to owning and maintaining a car."
By giving us a few simple details, we can:
- Advise on which service is due on the car
- Remind when the next service/MOT is due
- In the event of something going wrong, offer a consultation and diagnosis from one of our trusted Dipstix garages
- Protect the warranty by allowing searches for the service centres that ensure work is carried out to the manufacturer's service schedules and records
- Provide a range of instant quotes and consumer feedback from a range of local service centres so that an informed decision can be made on where to book
- Provide a simple online booking process to save time and hassle
Overall, our goal is for customers to be able to receive total honesty, transparency and confidence from our network of trusted garages.
Substantial accomplishments to date
The business launched in December 2013 with a MVP (Minimum Viable Product) in the Manchester region with 80 garages. During the first three months the key milestones that we aimed and reached were:
• Generate traffic & interest in the product
• Prove the technology worked
• Convert traffic to bookings
• Validate that customers would book and pay on line
• Trial a number of formats and approaches to determine the most effective strategies
In April the business signed a number of partnership agreements that allowed it to effectively have national garage coverage & provide a base from which to take the business beyond Manchester. Ideally, however, we would like the footprint of garages to be denser and one of the ongoing strategies is to infill across the network so that customers receive a number of quotes from garages within a 3 mile radius. Today there are over 1,000 garages signed up to the platform.
With the proven track record of the management team at Dipstix, we’ve gained the backing of strong investors including David Buttress (CEO, JUST EAT) and Tom Singh (Founder, New Look).
The business model is very similar to other online aggregators in that we aim to charge a sign on fee and take a percentage of the booking fee as an introductory commission.
Where we believe Dipstix differs from other aggregator models is that there are a number of other revenue channels that will mean that we expect revenues from bookings could account for only 50% of its revenues as the business model matures. We are working with the garages in the network to allow them to provide additional services to their customers and by aggregating their buying power we hope to be able to offer products to the garages for them to resell to their customers.
As the business grows, we expect that the balance of incurring the marketing costs to acquire customers will start to be offset by the repeat revenues earned from that customer. A key strand of the strategy is therefore for Dipstix to be integral to the management and maintenance of a customer's vehicle. By creating a digital service record and providing prompting and reminder services, Dipstix hopes to become part of a customer's vehicle maintenance programme.
Use of proceeds
We plan to use the proceeds across 3 key areas:
1. Investing in people
Currently the business employs 4 people and has outsourced certain functions to provide greater flexibility in the cost base during the initial concept launch. To fully exploit the opportunity we need to recruit in the following areas and fund these costs ahead of generating revenues:
- Head of Product
- Head of Marketing
- Building the sales team
- Customer care team
2. Improving and developing the technology
The business launched with an MVP and there are a number of enhancement required but most importantly we believe that we need to deploy an app in both iOS and Android format with an aim of achieving v.1.0 in early 2015.
3. Developing the marketing
Continued communication with our customers is paramount to ensuring repeat business. The marketing function therefore needs to build partnerships with other vendors interested in our customer base and continued production of relevant material.
Dipstix’s target audience is now accustomed to making bookings online across many sectors and verticals. Dipstix allows motorists to benefit from the convenience and comparison that booking car maintenance online can provide.
Any consumer with a car and access to the Internet is a potential customer, however Dipstix’s primary target audience covers:
• cars that are 3-9 years old; and
• owners that are 17-45.
Given the target audience criteria, the key metrics to give an indication of the market potential is as follows:
• 42% (15.8m) of car owners aged 17-40 – students, young professionals and busy families using the internet in their everyday lives
• 43% (13.2m) cars in UK are aged 3-9 years old
While the two demographics may not perfectly align, we estimate that there are over 10 million potential customers for Dipstix. The service centres Dipstix is focused on working with are the independent garages rather than main dealer networks. The size of this market varies but according to Motor Trader the current number of independent garages is 35,000. We are hoping to reach a target of 3,000 on the platform by 2017, just under 10% of the total market.
Characteristics of target market
Recent estimates give a total of approximately 31.5 million cars on UK roads and a spend on private automotive services worth around £14bn, equating to an average spend of c.£450 per year on each vehicle.
From our early interactions with consumers we can see that this roughly breaks down into the following areas:
Type of booking % of bookings Average order value
Servicing 60% £117
MOT 15% £35
Repairs 20% £200
Diagnostics 5% £40
Dipstix has three target audiences within the market that it intends to reach.
- Consumers; and
Each category feeds off each other and drives growth in the others so can be seen as both separate and linked strategies for growth.
We are aiming to have close to 10% of the potential market on our platform in the next three years. We plan to increase the sales team to focus on working with garages in key areas where we see demand and require additional capacity.
In part this has already been achieved through a number of partnerships with parts suppliers.
Currently the key source of customers has come from online advertising and attracting customers searching online for information about their car maintenance queries. While this gains some initial traction we expect the reliance on this to reduce as we develop other marketing initiatives.
As one of the key sources of business for garages comes from being rated by consumers, we expect the promotion of the online booking and guaranteed payment will be promoted by garages to their current customers.
Partnerships have already driven the number of garages within the Dipstix network. Further partnerships are being discussed with a number of parties who will promote Dipstix to a wider base of consumers.
Further partnerships we hope could allow garages to promote Dipstix branded products to their customers.
By combining the efforts in these three areas we expect to see a continuous and virtuous self promotion of Dipstix as a recognised brand.
We believe that the market for booking online is embryonic and there are a number of competitors seeking to do similar although not with exactly the same proposition as Dipstix.
Against traditional methods we are competing with those who use word of mouth recommendations and general advertising in mediums such as yellow pages. However as these methods are moving online, garages need a new approach to attract customers and many do not have the expertise for online marketing or the budget to fully exploit the potential. Dipstix allows garage owners access to expertise on a variable and cost effective basis.
Dipstix has been successful in working with a number of established networks to build a national base of around 800 garages already. This not only allowed us to expand nationally ahead of schedule but also ensures that the quality of the network meets Dipstix's expectations. Being national has also allowed the marketing to become wider and more effective as well as providing an early mover advantage against competitors.
Key to the continued growth is adding both garages to infill and increase coverage and building the number of Dipstix customers. We have a number of strategies that we believe will allow the Dipstix name to become more prominent with both garages and consumers to increase brand awareness that will drive them both to want to become part of Dipstix.