Mining for Gold in the Service Department
For many dealerships their fixed operations department makes the difference between profitability and going out of business. With an average of only 20 percent of dealership customers returning to the dealership for service, however, there is a lot of room for improvement. Fortunately, this also means that there is a lot of room to grow dealership profits from that missing 80 percent.
Getting back to the basics of best practices and good customer service are essential to success, but since such a large percentage of customers buy a vehicle and never return to the dealership for service, there is no one single thing that will win these customers back. Service marketing and vehicle inspections, online service scheduling and cross selling, these are just a few of the things that will help dealerships reclaim the business they have lost to the independents and national chains. The good news is that with so much room for improvement, dealers have a lot of different options for how to proceed. The only question is: How to mine the gold from these lost customers?
In order to help answer that question, we spoke with several fixed ops experts: Budd Blackburn, co-founder of Team Velocity, Karen Dillon, president, TimeHighway.com, and Alan Tecmire, senior account manager for ETAS, Inc. Take a look at what they have to say and don’t forget to check out www.dealermarketing.com for more valuable information about growing your fixed operations business.
How can dealers grow their fixed operations profits?
Budd Blackburn—Dealers should use a marketing strategy that combines service and sales messaging across all mediums for all departments to maximize their reach and target the best prospects. It makes sense to communicate with customers and prospects using custom messages that are relevant and timely to them. It only makes sense to communicate with your current customers throughout their entire ownership life cycle. Customer retention is critical for profitability, because you increase the loyalty and frequency—create a customer for life.
1. Increase traffic coming across the service drive
2. Increase sales to service customers
3. Manage expenses
Alan Tecmire—Without fear of overstating the obvious, capture more of the customers’ vehicle service dollar and generate more parts and service revenue per vehicle. New tools and training for the service department that will, if implemented, generate retail parts and service of at least $15,000 per month on average, not to mention driving improvement to customer satisfaction and retention. I am speaking about the newest Integrated Vehicle Inspection Report Card system.
What are the latest advancements in technology for fixed operations and the service lane and how can they help dealers?
Budd Blackburn—Top performing dealers are utilizing automated communications via email, text, and auto calls to attract more customers to their service lane. For example, dealers send automated calls to consumers to advise them of recalls and the auto-call makes it easy for them to schedule an appointment automatically over the phone, appointment confirmations are sent by text.
1. Online service scheduling, allowing customers to create confirmed service appointments from the dealer’s website—statistics reflect that the show rate of customers who schedule online is 14-19 percent higher than the customer who calls in for an appointment.
2. Digital inspections—this process is effective as it doesn’t require a process change on the part of the technician. They still complete the inspection form with a pen (a digital pen) and when the pen is docked, the form is completed in the computer. Inspections are extremely important¸ as they uncovered needed maintenance/repair services, protecting both the dealership and the customer.
3. Web-enabled VIN specific service menus—these allow the service advisors to recommend maintenance tailored to the customer’s specific vehicle and ensure that all advisors quote the same price for the same services. Presenting a menu 100 percent of the time to 100 percent of the customers equates to increased service department revenue.
Alan Tecmire—The Integrated Vehicle Inspection Report Card is a web based software system that is fully integrated into the dealership’s dealer management system by the supplier. ETAS (a Robert Bosch company) will be introducing a Vehicle Inspection Report Card system at the NADA Convention in San Francisco next February, called DART. The DART Report Card will share vehicle and customer information, married with vehicle inspection findings to create a Report Card that is seamlessly shared with the service advisor and the customer to identify additional service sales opportunities.
How can dealers reclaim the business they’ve lost to the independent shops?
Budd Blackburn—Dealerships who have over 80 percent service retention tie their customers to them by giving them a compelling reason to service with them immediately after the purchase so they can establish a habit, because if a customer does not come for their first service they probably won’t come later. Some dealers offer free first oil change and car wash while others offer free oil change and car wash for life. Many dealers offer their customers a vehicle protection programs that are nullified if the customer does not adhere to the vehicles recommended maintenance schedule and this increases loyalty and frequency.
Karen Dillon—There are basically three reasons customers defect and do not return to the dealership for maintenance services.
1. They think the dealership pricing for service is more expensive. Solution: Be certain maintenance services are priced competitively and make the customer aware of it.
2. They feel it is less convenient to make an appointment. Solution: Offer online service scheduling and a back-up system for overflow appointment calls.
3. They think the dealership doesn’t care about their service business. Solution: Establish a process and hold your staff accountable, emphasize your commitment to customer service, and remind them bout your certified technicians and specialize tools and equipment.
Alan Tecmire—First, don’t let them get away. It costs 10 times as much to capture a new customer than it does to keep a current one. Second, have the means of servicing all-makes-all models and don’t keep it a secret. Lastly, most customers are small fleet owners; I have three kids, and I know at one time I had five cars in my driveway, two Fords, a Lincoln, an Oldsmobile, and a Jeep, My ‘preferred’ dealership has openly expressed desire for my competitive brand service business, and as long as they treat me as a preferred customer, they’ll be getting my “fleet” service business.
How can dealers use service to help boost their vehicle sales?
Budd Blackburn—Some dealerships loyalty programs include a $500 certificate towards the purchase of a new vehicle, but the more advanced dealers are prepared to invite in-equity customers who come for service to participate in the dealerships vehicle upgrade program, especially for trade-ins that the dealership needs and is currently paying top dollar for at the auctions.
Karen Dillon—It’s long been known that customers who return to the selling dealership for service are much more likely to purchase their next vehicle from the dealership, so increasing service retention has a very positive effect on sales. Salespeople should be alerted when their customer is on the drive, so they can greet them and maintain the relationship for next sale or referral sale.
Alan Tecmire—1.) Retain customers with a superior service experience. 2.) Incentivize service advisors to consult service customers on when it may be smarter to trade-in a vehicle versus cost of repair. A vehicle inspection may indicate it’s time to trade-in the customer’s vehicle for a newer/lower mileage one.
What are the most common mistakes dealers make when selling service?
Budd Blackburn—One mistake dealers make is they don’t have a communication strategy to contact their customers throughout their entire ownership cycle with custom offers that promote service, sales, finance, accessories, and other profit centers of the dealership. Most dealers spend too much money hiring too many companies that send too many campaigns to their customers that are not integrated with one another or customized to the customer’s particular stage in their ownership cycle. It is more cost effective and impactful to have one holistic communication strategy that sends custom campaigns that promote all the dealerships profit centers that a customer needs in a particular part of their ownership cycle. Another mistake is the quality of the communication dealers sometimes send to their most valuable customers degrades their brand, because it looks cheap and lacks credibility.
1. Selling unneeded services.
2. Not thoroughly explaining the need for and benefit of the recommended service.
3. Different service advisors quoting different prices for the same services.
Alan Tecmire—1.) Selling, but not building value in what dealers are selling. 2.) Not providing the customers with "Why they should have the work done?"; "Why should the customer do it with us?"; and "Why is this important to customers and their vehicles?"
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