Making Magic in the Service Department
Fixed operations can be one of the most profitable parts of an auto dealership. In fact during this recession, many dealerships were kept afloat by their service departments.
It has definitely been a difficult few years for the auto industry, but things are turning around now and vehicle sales are increasing. Profit margins, however, are still thin and sales are not back to prerecession levels, so a strong fixed operations department will continue to be an essential profit center for many dealerships for the foreseeable future. Increased competition and longer maintenance periods, however, mean that dealers cannot neglect this vital department.
Across the country, almost 175,000 businesses are classified as mechanical automotive repair shops. With that many competitors, the struggle for service business is fierce, but it’s not the dealership across the street that you need to worry about—Jiffy Lube, Firestone, Pep Boys, and a host of independent local service stations are all trying to steal your service customers. Don’t believe me? Search Google for auto repair in your area and compare the number of dealerships listed to the number of independent shops.
In order to grow your service business you need to convince customers not only to come to your dealership to buy a car, but to return for all their auto service needs instead of taking it to one of the independent shops. To do that, dealerships need to use a combination of consumer friendly pricing, social media, and good old fashioned customer service.
Consumer friendly pricing
On the sales floor customers worry about cost, but their trepidations about money are tempered by their excitement about buying a new car. A customer who has brought their vehicle in for service, however, is just hoping that they can get their car back to its previous condition without breaking the bank. This is a big hurdle for service managers and service salespeople to overcome. To help move past these objections, you need to get customers in the habit of using your dealership for all their repair needs, not just the major ones. That way they become used to your service department and think of you first when it comes time to repair their vehicles.
If you want your customers to come in for their oil changes, tire rotations, and other regular maintenance, you need to ask. Whenever you sell a car, the salesperson should ask for an appointment for the first oil change. I would even recommend offering the first oil change for free as an extra incentive to have the customer come back for service. You want your service department to become a habit for these customers and if you can bring them in for their first service, they’ll be back for their second, third, and beyond.
If you do decide to offer free or discounted oil changes to your new customers, don’t keep it to yourself; mention it in your marketing. Customers want to know that you will care about them after the sale. By offering them their first oil change for free, you indicate that you will not forget about them the minute they drive off the lot—an essential part of creating repeat business.
The more of your new and used car customers that you can get to return to your dealership for their service and repair needs the better it is for your business. You cannot limit your pool of customers to only those who have bought vehicles from you, however. You also need to find new customers who have never been to your dealership before. In order to do this, you need to set your regular oil change price low, really low—$24.95 is what I recommend. Many of you are probably thinking that $24.95 is impossible: it barely covers cost. And that’s true, but let me ask you: If that customer has their oil changed at the independent shop around the corner, where do you think they is going to go when her timing belt needs to be replaced?
If you don’t convince customers to use your dealership for the inexpensive repairs, they will never come in for the expensive (and profitable) ones. You need to make your service bays a habit for customers and you don’t do that by having a great profit margin on oil changes and tire rotations. You do it by offering very affordable regular maintenance and creating value in your service department, so that when an expensive repair comes along they head straight to your dealership.
Social media for the service lane
Social media can be a great way for auto dealerships to grow their sales, but where it really shines is in the service department. Social media is most beneficial to businesses that have regular contact with their customers. Businesses that sell items that consumers buy only every few years, such as a televisions, washing machines, or furniture, have difficulty keeping consumers interested in their social media offerings, because they don’t have anything new to offer the customer. All they can do is give advice about the products they already own and try and stay in touch so that when the customer is ready to buy another $1000 couch, they will think of their business first.
Businesses that have regular contact with customers, restaurants, hair salons, butchers, or auto dealership service departments for example, have a much easier time staying in touch with customers on social media. The customers of these businesses know that they will be back soon for another hair cut or their 3,000 mile oil change, so they don’t mind connecting with these businesses, as long as they receive something in exchange, such as a coupon or special online only offer. You don’t need to offer them the moon, but there has to be an incentive for them to “friend” you. Modern, savvy consumers know that when they give you their information they’re increasing the value of your marketing, you need to give them something in exchange.
Good old fashioned customer service
The service bay at an auto dealership can be an intimidating place for many consumers, which means auto dealership service personnel have a higher bar to climb to earn customers’ trust. That doesn’t change the fact that the most important aspect of a successful auto dealership service department is the same as it has always been: customer service. Price is an important aspect of bringing customers into your service bay, but you cannot lower your price enough to make up for treating a customer poorly and, with the ubiquity of social media, you can’t keep it a secret either.
Excellent customer service not only keep customers happy, but grows your bottom line. Here are a few basic steps that every dealership fixed operations should be doing:
- Call the customer a day prior to their appointment. We’re all busy these days and it’s easy to forget an appointment; customers will appreciate the reminders and it will help keep your service bay running on schedule.
- Say “Hi” when the customer arrives. Smile and greet customers when they pull up. Small gestures can make a big difference with customers.
- Explain the repair and answer any questions. Don’t be impatient with customer questions or use too much industry jargon. Customers don’t want to feel rushed and they want to understand the problem. They need an auto service advisor; fill that role for them.
- Ask for the next service appointment. If the customer already has an appointment, they won’t search for somewhere else to go when their next service is due.
Customer service is not rocket science, but it does require commitment from every member of your dealership, starting with management. The return on investment makes it worth the effort however. If every customer feels welcome when they bring their vehicle to your dealership for service, your fixed operations department is destined for profits and growth.
Running a profitable auto dealership service department is not really magic. If you have the right prices, communicate the value of your service department to your customers, and provide excellent customer service your service lanes will be full. Do not neglect this department however. There are independent repair shops looking to steal your business right around the corner. Don’t give them the chance—make your dealership a destination for service.