Making Profits & Happy Customers in the Service Department
A lot has changed in the auto dealership industry in the last few decades, but one fact is still true: the service department can and should be one of the best sources of revenue a dealer has. Like many other aspects of the dealership industry, the service department has changed significantly over the years.
Warranty work used to represent 70 percent of a dealership’s service business. That meant there was little need to market a dealership’s service department: the business just came in automatically. Today, however, warranty work is closer to 20 percent a dealer’s service business. So, where are dealers going to make up that business? The obvious answer is to bring in new customers. That, however, is not as easy as it sounds, because car owners (except perhaps first-time buyers) are already having their vehicle serviced somewhere, many of them at independent service shops, and most consumers are reluctant to change without a compelling reason. To earn their business, you’ll need to find that reason.
It won’t be easy. Convincing consumers who may have been going to the same independent service station since they bought their first car that they need to change is difficult. But if you’re going to turn the service department into the profit center that it can and should be, you need to find a way to do it. Unfortunately, there is no silver bullet, the only way to bring those customers in is to be better than the independent shops and then be sure that they know it.
This means both improving the customer experience and marketing to those customers to let them know about it. The question is: How do you do that? To help you with that question we spoke to two experts in dealership service departments and service marketing: Jim Roche, president of Auto Point and Rich Holland, president of MPi. They helped us understand what it takes to bring customers in and turn the dealership service department into the dependable revenue stream it should be.
Dealer Marketing Magazine: How can dealers increase customer satisfaction in the service lanes?
Rich Holland: Creating a positive customer experience in the service lanes starts with your team being well prepared as well as recognizing every customer as a VIP. Through proper team training every guest can experience the VIP experience with some simple, yet effective steps, such as making eye contact and greeting every guest who enters your service drive or the waiting area. For a slightly more sophisticated approach, use mobile technology that enables you to quickly scan the VIN number, pull up the customer history, and quickly write up the RO. In addition, have your customer’s vehicle recommendation history readily available so you may discuss previous declined work with the customer. Being prepared in this manner enables your service advisors to possibly gain this maintenance/repair opportunity. Being prepared, acknowledging your customer and treating everyone as a VIP are great steps to increasing customer satisfaction.
Jim Roche: Promptly greet customers as they enter the service drive and have processes that highlight convenience and excellent service. Provide highly detailed vehicle inspections and take the time to review the results of the inspection with your customers. Make sure the customer fully understands the recommendations and the condition of their vehicle. Not only will this improve customer satisfaction but you will also get additional customer pay sales with this consultative approach.
If you can create a nonintrusive way to get instant or near instant feedback from the customer this will enable you to identify the occasional upset person, this enhances your ability to increase customer satisfaction.
Finally follow-up via email, print, or voice with a relevant message to their visit, whether it’s just thanking them for their visit and offering a chance for them to provide feedback or to answer any questions they may have. The important element is that you are reaching back out to your customer in a timely fashion.
DMM: What can dealerships do to bring younger/millennial customers to their service lanes?
JR: We have done a lot of research on the younger demographic, creating and maintaining loyalty with today’s younger customers is more of a challenge than ever before. Today’s dealer needs to be on top of emerging technologies in order to capture the attention and loyalty of the younger audience. Utilize all forms of direct marketing, including video emails, mobile app downloads and text messaging to stay in touch with your younger customers and distribute service specials. Younger buyers are very cost conscious and they want to ensure they are getting a good price. Make sure the communications that you send are relevant to their ownership experience; service reminders should be accurate, unsold recommendation follow-up should be concise and informative in an easy to read/understand format.
Again, don’t forget convenience; convenience is one of the great drivers for younger clientele, so be sure to highlight all conveniences your dealership offers, express service, shuttle service, loaner cars, discounted rentals, free WiFi and nearby activities.
RH: Digital communication—plain and simple. Today’s younger/millennial customers live and breathe by their accessing information instantly, either through their smartphones, tablets, or computers. Think about it, young adults today are more conditioned to have a meaningful conversation using text messaging and social media than picking up the phone and engaging in [the] same conversation.
Incorporate a personalized approach in your service department by deploying personalized websites that customers can use to quickly view their vehicle status in real-time; access their estimates online; authorize and pay for services online; view videos that quickly educate the customer on services being recommended. Also use these personalized websites to offer coupons and showcase monthly specials and ensure that the site is designed to be accessible for smartphones, tablets, and laptop computers. Create a meaningful experience that quickly feeds their choice for receiving information.
DMM: What kind of marketing is best to reach customers who are using independent repair shops?
RH: You can follow the traditional direct mail or adverting approach to capture the hearts and minds of the aftermarket customer or you can get creative. Thinking outside the box can set your service department apart from the independent repair shops. For example, offering a mobile vehicle maintenance service is a great way to target customers who may use their local aftermarket shops simply because they view them as more convenient. By combining a mobile vehicle maintenance service and certified technicians, you can perform routine oil changes, tire rotations, and simple vehicle maintenance at the customer’s home or office. Another option to consider is offering customer concierge vehicle pick-up and delivery services. This VIP treatment is ideal for either busy professionals or individuals who can’t seem to find the extra 30-40 minutes in their day to drive and wait for their vehicles to be service. If you come to them…they will come to you.
JR: First, it is always best to market to vehicle owners in their chosen method of communication, so have a process in place that allows your customers to specify a preference, then honor their request. These days more vehicle owners are opting for advanced digital methods of communicating, so ensure that you can satisfy requests for mobile and/or social media communications in addition to the more traditional methods.
Additionally, vehicle owners who defect to independents usually do so for the perception of convenience or pricing. Highlight convenience features not available at most independent repair shops such as loaner or rental vehicles, extended hours, and a comfortable and work friendly facility Provide insight into your dealerships expertise on particular makes and models and that you have the tools, training and expertise to more quickly and thoroughly service the vehicle.
DMM: How can dealerships convince service customers to become new car buyers?
JR: Dealerships can convert service customers into vehicle purchasers first and foremost by providing them an exceptional service experience. Satisfied customers are much more likely to consider a major purchase. Second, market all positive aspects of your purchase process such as size of selection, convenience of sales hours, and expertise of sales staff. If you have a vehicle inspection program in your service department, offer to pay a trade in premium to those customers who have had their vehicle inspected and kept in top condition.
Finally, consider creating a vehicle sales process utilizing your service department. By inspecting the customer vehicle at time of service, you know the exact condition of the vehicle and therefore it value. Taking the vehicle in trade presents a vehicle sales opportunity and keeps your pre-owned vehicle inventory in excellent shape.
RH: For many, selling vehicles in the service drive is done accidentally, either because a salesperson might possibly be engaged in a conversation with a waiting customer, or the waiting customer finds themselves wandering the showroom while their vehicle is being serviced. It doesn’t have to be this way.
Creating an organized strategy and developing a process can lead to an average of three to five percent increase in service customers buying and selling new vehicles in your service drive. Offer customers the opportunity to receive a free vehicle appraisal while they wait for service. Have a designated team member create a detailed and easy to understand appraisal report that you can share with the customer and present options for them to consider, such as upgrading to the newest model with little or no additional cost or invest in a more fuel efficient model. This approach should be soft and unthreatening. Listen to their needs and present options that make sense to their lifestyle; and don’t forget to let them know that you pay top dollar for high demand vehicles. Use this strategy as an approach to be in control of your used car inventory—by encouraging service customers to reinvest in your dealership inventory, you have the ability to control the type of vehicles you recondition and sell. You [also] have an insight into the vehicle maintenance history and condition, as you’ve been servicing it; rather than taking your chances at auction.
DMM: What mistakes do you see dealers make in marketing their service lanes?
RH: The simple and painful answer is they don’t market their service department. Hopefully, dealers have learned a valuable lesson as a result of the recent recession…you can’t put all your marketing dollars into one basket (the front end). Your service department should be considered the heart of your business operation. Every day your service team interacts with customers, creates ongoing customer satisfaction, encourages new business, and encourages reoccurring business. Fixing cars is not their business…retention is! Create a marketing strategy where your service department is the central focus of your business operations. This can start at the beginning of the vehicle purchase. While the customers are waiting for the F&I department, make a point to take your new owners to meet the service team. Introduce them to your service director and advisors. Give them a glimpse into your service bays, make a point to highlight the waiting room luxuries that you provide all your VIP customers (that’s everyone!) free Wi-Fi, free coffee, snack center, TV, child play area, free car washes etc. Offer every VIP customer a service packet that has first time visit discounts, possibly a team bio that demonstrates the quality professionals you have on staff. Don’t just limit your marketing to direct mail offers; make your service team an important factor in the vehicle sale process.
JR: Focusing too heavily on new customers and ignoring their best opportunity within their database of customers. A lot of dealers rely on a factory follow-up program that is only focused on customers that purchased new and primarily those in the warranty period. A successful marketing strategy will have as much if not more focus on the customers in their database and should market to on-make and off-make vehicle owners.
Also, some dealers also rely too heavily on discounting. Keep in mind there are vehicle owners who love other aspects of your business: convenience, competence, excellent staff. Target discounts and coupons on those customers who are not motivated by any other aspect of your service package; keep your powder dry for those vehicle owners who don’t need the coupon
Many businesses use multiple marketing companies: a CRM for sales, a factory program, a guerilla marketing campaign. Fragmented marketing is unnecessarily costly and results in communications being sent to the same customer multiple time and worst of all, at the wrong time. Dealers need to consolidate vendors to use one voice to deliver the appropriate message to the right customer at the right time.
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