Not too long after the first auto dealer sold a new car to a customer, the dealership service department became “Ol’ Reliable” as a source of revenue and return business.In the history of automotive retail, dealers have gone through many up and down cycles of new-vehicle sales because of the economy, world and national events, fuel shortages, shifting consumer confidence levels, and more. But the need to service the vehicles already on the road is a constant that, if anything, increases during the times when fewer new vehicles are being sold.Of course, dealers have a lot of competition when it comes to automotive service — there’s no guarantee their own buyers will ever come back to them for maintenance and repairs.More than ever, in this online age, consumers will seek out sources (competing dealerships of the same make or independent garages) other than the dealerships they bought from — unless those dealerships give them a reason to return by specifically targeting them with consistent and compelling marketing.What does it take to best market your dealership service department in today’s world of well-informed buyers, who have many options? We asked industry authorities with extensive automotive marketing and fixed operations knowledge to share the five steps they recommend for a dealership to optimize and fine-tune its service marketing efforts.One final thought on dealership service departments before we get to the advice from our experts: Stellar service marketing is a must for dealerships to maximize their revenue potential and weather sales slumps caused by the economy and other factors — but it alone isn’t a guarantee of success.Dealers need to ensure — and constantly monitor — that the quality of the service work being done on customers’ vehicles is first-rate, and that their service advisors and technicians are providing a consistently excellent customer experience.Remember, the best marketing in the world won’t overcome the harm done in the customer’s mind by service that is performed incorrectly or sloppily, or that results in cosmetic or mechanical damage to a vehicle.
Eisenfelder: The key to successful service marketing lies in customer data. Blanketing your primary market area (PMA) with oil change coupons is ineffective and does nothing to differentiate your dealership from independent repair shops. With the right data, you can identify profitable customers and what their needs are, then deliver them the right offer at the right time.Your customer database is the most valuable strategic asset you own, more than your inventory or real estate. Set a goal to know a means of contact for every single household in your PMA. Invest in your database the same way you invest in your people and in your stores.Seek every opportunity to grow the breadth and depth of your data with vigorous data collection efforts: participate in local events, buy third-party leads, and hold staff accountable for collecting customer data.With good data, you can dominate your PMA.
Eisenfelder: Service is responsible for 47% of dealership gross profits, but in most dealerships, service marketing comprises less than 10% of the marketing budget.This is a huge misalignment. Dealers believe this is justified because vehicle marketing indirectly drives service profits by setting up future warranty and customer pay opportunities. In today’s climate, this argument doesn’t hold water.The average franchise dealership captures just 20% to 25% of revenue potential from its units in operations (UIO). That’s a 75% to 80% leakage rate to the competition, which means only 20% to 25% of service customers come from sales. At the very least, business flows equally in both directions. Loyal service customers are prime candidates for sales.Additionally, conquesting sales customers is expensive, ranging from $1,200 to $1,600 per customer. Service conquest campaigns are 20 times more cost effective, ranging from $40 to $80 per new service customer.
Eisenfelder: Multichannel marketing pushes messages out across multiple channels to increase audience reach. But reach is just one part of the marketing equation — you must also have frequency to make an impact. Unfortunately, increasing frequency across many channels can be prohibitively expensive.One way to address this is to ask the customer what their preferred method of communication is, but the problem is they might give you a junk email address, or their preferred channel might not be where they actually spend their time.When it comes to information, we are omnivores, processing messages on different channels at different times. For this reason, an omnichannel strategy delivers a more cost-effective ROI.Omnichannel marketing leverages predictive analytics to know where your customers’ attention is at any given time. Instead of pushing messages out at random times, messages are delivered to the customer at a time and place convenient for them.
Eisenfelder: If you still believe the main reason your dealership needs to be on social media is to increase “likes,” think again. Social media marketing has evolved in leaps and bounds in recent years.Currently Facebook has 207 million users in the U.S., and the average session is 20 minutes. Instagram has 96 million users and 80% of users follow at least one business. The reason your dealership needs to have a presence on these platforms is because that’s where your customers and prospects are spending their time.Advances in marketing automation make it possible to match the customers in your DMS with their social media profiles. It’s now possible to deliver service reminders, overdue maintenance reminders, appointment reminders, and relevant coupons right into your customers’ news feeds.When you cross-reference Facebook and Instagram users with your own customer data, these two platforms become highly influential channels that deliver incredible results.
Eisenfelder: Service absorption is a frequently cited fixed ops metric, but it’s very outdated. The problem with service absorption is that it’s composed of two unrelated measures.Service profits are not driven by store fixed costs; in fact, you can have 100% service absorption yet be losing market share.Today’s dealers capture just 20% to 25% of the revenue potential from their UIO. The focus on service absorption contributes to these results because dealers are only focused on covering fixed costs, rather than competing on each revenue opportunity.A better metric to measure service marketing success is dollars per UIO ($/UIO). This metric better represents a store’s true service potential. With only 25% service revenue capture, dealers have the opportunity to dramatically expand store profitability, no matter what happens to new vehicle profits, but only if they are willing to look beyond service absorption.
McGinn: When customers go through the sales process with a dealership salesperson, they are also evaluating the personality of the dealership itself.If your store sells 100 used cars a month, most of those buyers are potential new service customers. By using mobile apps that alert sales staff where cars are in their reconditioning process on their way to being show-ready, the sales presentation can begin about the vehicle, and not the buyer.This approach builds trust, which reflects positively on service.Of course, a correct and professional service handoff is critical here too, but [it’s] a process that begins in recon, flows to sales, and gives service marketing a qualified new customer opportunity.
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