GRO Your Service Retention and Revenue

Gross revenue optimization: A better way to measure the value potential across the customer life cycle

Are you wasting tons of marketing spend targeting the wrong customers at the wrong times? If your service retention increases while your service revenue weakens, you just might be.



Retention rates have long been the standard for assessing success in service departments. But the information dealers get from traditional metrics is misleading and incomplete, which paints an inaccurate picture of customer behavior. Through traditional metrics, dealers miss crucial behavioral data, like customers’ spend per service visit, visit frequency, or a customer’s place in the ownership life cycle.

So, we spent a year developing a better way for dealers to measure the value potential created across the customer life cycle. What we created was a scientific-based method called gross revenue optimization, or GRO.

Your GRO score, the measure of how much lifetime value from each customer your store is capturing, is calculated by dividing the actual revenue (the revenue received per vehicle over five years or ten service visits) by the potential revenue (the total revenue available during their vehicle life cycle).

Once you know your GRO score, it’s time to put plans in place to increase it. But how?

DMEa analyzed more than 70 performance metrics and created a statistical model to identify the key metrics that had the largest impact on improving GRO. Of all these metrics, DMEa identified the six strongest predictors of GRO:

  1. Purchase-to-service retention
  2. Percent of new service VINs with a prior household purchase
  3. First-to-second service visit conversion
  4. Retention of existing customers
  5. 12-month retained visits
  6. Average days between visits

In order to move the needle on these crucial metrics, dealers should focus on acquisition, conversion, retention, and nurture.

Acquisition: Demonstrate your value

Stores with the highest performance on purchase-to-service retention and new service VINs with a prior household purchase are more likely to be perceived by consumers as friendly, flexible, reliable, and as having various maintenance offerings. As such, staff members need to demonstrate the value of coming for service, offering a variety of maintenance plan packages, and providing diverse price options.

Provide enhanced offerings, promotions, same-day service completion, prices for parts and services on your website, declined service reminders and quotes, and have rental vehicles available to demonstrate your value.

Conversion: Deliver on expectations

Stores with the highest conversion numbers exceed customer expectations on speed, accuracy, expertise, and providing complete and correct services. These stores are also highly accessible, allowing customers to reach them after hours, online, or through a mobile app.

Top-performing stores incentivize customers to come back with loyalty programs, seasonal promotions, same-day service, and loaner vehicles to drive first-to-second conversion.

Retention: Relate to customers

Stores with the highest retention rates develop a relationship with the consumer, communicate with the customer at their desired frequency and channel, and resolve problems to the customer’s satisfaction.

To drive these perceptions, successful stores stay connected with customers through an enhanced website, call services, and social media.

Nurture: Strengthen the relationship

Stores with the highest nurture metrics create confidence and build trust with existing customers by being transparent on pricing, not appearing to upsell unneeded services, and rewarding customers for their loyalty.

To do so, communicate how much services will cost before customers arrive, provide printed quotes and prices for common services on your website, assign a service advisor to a customer, and offer loyalty programs help to drive nurture metrics. Maintenance plans, promotions, coupons, and enhanced digital connectivity strengthens customer relationships and motivates additional service visits.

Once you understand how to improve your GRO score, you have the power to markedly improve your revenue and retention, as well as accurately predict the future of your fixed ops performance.

All that’s left to ask is: What’s your GRO score?

Mike Martinez, chief marketing officer, leads the global marketing, product management, and strategy & analytics efforts for AutoPoint, a Solera Holdings company. For more information, please contact sales@autopoint.com.

Mike Martinez

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