Nobody needs to make the case for the importance of fixed operations in your dealership’s overall revenue scheme. Depending on which industry source you refer to, the combination of service and parts revenue makes up 40% to 45% of a typical dealer’s gross profits. And although modern cars and trucks are more reliable and low-maintenance than ever, vehicle service and repair are constants that won’t be going away any time soon.
But it’s harder work than ever for dealerships to secure and grow the sizable share of the total revenue pie that comes with fixed ops. The same online revolution that’s changed the way people shop for new vehicles has affected how they service them. You’re not just competing for business against the quick lubes or independent garages down the street—you’re competing with anyone your potential service customers can discover and research via the Internet.
Besides the increase in competition that comes with consumers’ online comparison shopping and research, there’s the risk that comes with review sites and social media: If, rightly or wrongly, customers decide a particular dealership’s service department did them wrong, there’s the chance they’ll go beyond their friends and family to spread the bad word to a wider audience—one that probably won’t take the trouble to get both sides of the story.
In such a consumer-driven climate, there’s not a lot of room for error when it comes to your service department and its customers. The stakes are high. You may only get one chance to make the positive impression necessary to turn buyers—as well as first-time visitors who discovered your service department online—into loyal customers who return regularly to get maintenance and repairs done on their vehicle, and don’t think twice about coming to your dealership when they’re ready to buy a new vehicle.
Your customers really want you to get it right the first time. They want the service experience you provide to be a no-brainer they can count on. They want to believe in your service department as a place that will treat them with respect, do high-quality work, and make the overall experience as pleasant and painless as possible. They want to know that the next time they need maintenance or a repair, they can bring their vehicle to you with no worries.
Give them these basics wants the first time they bring their car into your service bay, and most times, they’ll be back.
Of course, this is a very simple take on a hugely complex subject. It’s easy to say, “just make your service department great,” but the steps to get there are a bit more involved. To dig deeper, we discussed the current state of dealership fixed operations with Jim Roche, senior vice president of marketing and managed services, Xtime Inc., and Mike Martinez, chief marketing officer of AutoPoint, TitleTec, and DMEautomotive.
Dealer Marketing Magazine: What are the most important things service departments must do to help their dealerships build loyalty and create lifetime customers?
Jim Roche: Giving vehicle owners a completely satisfying customer experience is at the core of building loyalty. Identify each touch point within your major processes—marketing, appointment scheduling, service lane, customer interaction, and vehicle completion/delivery—to ensure that you are emphasizing value, convenience, and trust.
Mike Martinez: Secure and improve your customer retention by putting a complete target marketing program in place, with coordinated marketing messages and offers across multiple channels. Your service customers are individuals, with their own unique needs and behavior. If your marketing program is not treating them as individuals, then you run the risk that [it] is misfiring, and you are losing service dollars. A modern, behaviorally targeted multichannel retention marketing program can lift your response rates by as much as 30%.
Improve your customer loyalty by offering a service (and sales) loyalty program. Customers know their business is valuable, and they reward dealers who offer a loyalty program in return for their business. Dealers using DMEautomotive’s loyalty program enjoy a service-retention rates increase of 500 basis points, and increased vehicle repurchase rates of 300 basis points. This translates into more cars sold per year, and as much as $110,000 in incremental service revenue per year per dealership.
Embrace digital in your service marketing. Direct mail will always be a part of your service marketing strategy, but digital is increasingly where your marketing should be focused. This isn’t just because digital and mobile are all the rage, but because they can dramatically increase your marketing ROI.
For example, incorporating mobile apps into a multichannel marketing strategy adds an average of half an additional service visit per customer per year, which translates into $145,000 in new service revenue to the average dealer. Incorporating targeted direct display advertising for service into a multichannel campaign can generate incremental active service customer response rates of 18.4%.
DMM: To build trust with existing customers and attract new ones, what best practices should service departments employ to get the most out of social media and online reviews?
JR: Mobile technologies coupled with social media have changed the way people choose and interact with service providers. Convenience is a major component, so meeting the customers in their preferred platforms—on mobile phones, for example—is a great start.
Millennials, who account for a large number of avid social media users, are starting to buy vehicles again after a hiatus, but many don’t know to go to the dealership for service. Using social media and online reviews as a way to highlight the benefits of going to the dealership for service is a great way to build a relationship with this customer base.
For example, giving customers a reason to follow your dealership on the various social media channels can boost visibility into the benefits of your service department. You can also use these channels to share promotions and discounts for underutilized service days and hours, ask for reviews, and more.
MM: Be relevant. Service content in social media should be about how to keep and maintain a vehicle. Teach! Put your techs in front of the camera and have them explain what the “check engine” light really means, [describe the] differences between synthetic or nonsynthetic oil, and why they should care, or other questions customers have about their cars. [A good example is] what Apple Autos is doing on YouTube: www.youtube.com/user/appleautos.
Be promotional. Online service customers know what they want, and what they want from your digital content are opportunities to save. Start putting your best service coupons on your social pages and in your mobile app. Leverage your good reviews everywhere. Encourage customers to post reviews—and provide links to your review site to make it easy—in all of your post-service satisfaction marketing, and make sure your positive review results and comments are included in your service marketing.
Be aware and responsive. Respond quickly and appropriately to all comments, messages, and other communications posted in social media. If a customer posts a complaint or anything less than a spectacular review about you, take that opportunity to remedy what went wrong and, hopefully, regain a loyal customer. Monitor your social account activity regularly and ensure that the conversation remains positive, driving positive perceptions of your dealership.
DMM: What, if any, pain points in consumers’ dealership service experiences have not been sufficiently addressed or rectified by the industry?
JR: Today’s vehicle owners have high expectations based on their experiences with companies outside of the automotive industry. Think Amazon, Uber . . . even Domino’s Pizza has an excellent customer experience, and that’s for a $10 pizza! This is because these service providers have completely integrated their technology with the customer experience.
Historically, dealerships have been hampered by silo technologies that only address narrow parts of the customer experience. The dealership has to invest in multivendor solutions, and this fragmented approach versus an integrated approach not only provides an inferior experience, it is three to four times more expensive than an integrated single-vendor solution.
MM: The service drive experience in many stores is still hugely disconnected from the retail experience almost everywhere else. Dealerships are still relying upon humans behind desks in the store with manual processes to manage the greeting process. Go visit a Verizon store and see how they use technology to make the welcome experience, well . . . welcoming.
The dealership service experience is managed through a bunch of disconnected systems. [Every process], from marketing, scheduling, couponing, loyalty programs, the greeting process, to the day-of-service communication, is disconnected. Force your vendors to play nice with each other, and shift the service communication experience to a fully featured mobile app or text messaging to give the consumer the in-the-moment experience they want.
Paying for service is still way too painful. Stop forcing your customers to pay when they arrive. Instead, automatically notify them via their mobile device when the car is ready to pick up, and let them pay for their service in real time on their smartphone. That way, they show up, sign for their car, and are on their way with a minimum of fuss or bother. And if nothing else, mobile payments are way more secure than a credit card swiper, and far, far easier to track for your controller.
DMM: Are dealerships doing enough in terms of utilizing their service departments as a source for future sales leads and high-quality trade-ins, and if not, why?
JR: Some do, many do not. There are many reasons, [including] lack of technology, not having dealership departments more tightly integrated, and a lack of pay plans that encourage cross-departmental cooperation. Why would service advisors hand over a customer to the sales team if they stand to lose from the transaction? Hint: They won’t.
Retention is still the main problem that dealerships face today, and studies show that a great service experience doubles repurchase loyalty. A great customer experience from start to finish is key to service retention—essentially, caring for the customer and vehicle over the vehicle’s life cycle—and service retention is key to brand loyalty and revenue.
MM: Absolutely not! According to our research, not even half of all vehicles sold from the dealership come back to it for service. One in every two customers who purchased from a given dealer is going elsewhere for service, and they’re not likely to return when they’re ready to start looking for their next vehicle.
And it’s really the fault of our industry and not the dealer. Frankly, we’ve taught dealers to measure the wrong thing—service retention metrics—which has often resulted in dealers making the wrong investments. These metrics provide an incomplete picture of dealership customers, and, as such, are incapable of telling the fixed op director the true impact of improved service performance on vehicle sales.
DMEautomotive has introduced a new fixed ops measurement and planning technique that’s really very exciting called gross revenue optimization, or GRO for short. GRO is a powerful statistical model for measuring and predicting fixed ops performance. It does the hard work to keep the math out of the way and make it easy for dealers by providing a single, easy-to-understand metric for fixed ops performance by identifying the key actions they can take that have a statistically proven ability to improve performance, predicting the additional fixed ops revenue generated through improved performance, and understanding the incremental vehicle sales generated through improved fixed ops customer retention and loyalty.
We’ve applied GRO to hundreds of dealers and created a highly predictive model of success. Now we need to educate the industry on GRO.
DMM: Have dealerships changed the way they staff and equip their service departments to better cater to the needs and demands of millennial and Internet research–oriented consumers?
JR: Dealerships now have robust Internet departments to handle sales leads and social media. Unfortunately, most dealerships still focus these departments on sales and neglect the service side of this equation. This needs to change because, as mentioned earlier, there are more options now to meet customers where they are: online, mobile, and so on.
Today’s technology enables dealerships to deliver the same type of rich online retail experience that companies such as Uber and Amazon successfully provide, with customer service touch points throughout the transaction. For dealerships, this includes online appointment scheduling, discounted time slots, email campaigns, and so much more.
MM: Some have, through their embrace of the “always-on” consumer—the 64% of American adults who now own a smartphone—and they’re starting to reap the rewards. Most haven’t, and the aftermarket is leaving them behind. Dealerships must embrace digital in service marketing and delivery, or they are missing out on a lot of business. Try searching for “new tires” (or oil change, or brake job, etc.) and you’ll likely find that the aftermarket is winning the search war.
DMEautomotive’s 2014 National Consumer Study revealed that digital search is the most influential factor when first-time service customers pick a preferred service provider—even more influential than the dealership they purchased the car from, convenient location, or prior purchase history.
[More than] 85% of a consumer’s time on a smartphone is spent using a mobile app, yet only about 25% of dealers offer their mobile-savvy customers a dealer-branded app. Certainly seems like an appalling waste when you consider that mobile app customers are more loyal and are more-frequent service visitors—plus, customers who receive a mobile app notification, on top of an email or direct mail communication, are over 50% more likely to respond to a service reminder communication.
Even something as simple as creating and maintaining dealership social media accounts can make a difference. Encourage customers to check in when they arrive at the dealership. After all, according to Google Analytics, 66% of millennials will look up a store if a friend checks in there.
DMM: What are the most important technological breakthroughs on the horizon for dealership service departments?
JR: Telematics is the coming revolution in the auto industry. When done correctly, telematics connects the vehicle, driver, dealership, and OEM in a seamless and intuitive way for managing the customer experience, including maintenance and repair needs.
The OEM and dealership utilize this information to drive incremental business by streamlining processes and having information at their fingertips before a customer even arrives at the dealership. Some of the telematics services that are planned will vault those OEMs ahead of the competition for a superior customer experience.
MM: There are a number of new technologies that are either in market, or are making their way to market, that have the potential to change the service experience. Some examples include mobile point-of-presence technology like Apple’s iBeacon, Google’s BLE Beacon, RFID [radio-frequency identification], and the resurgence of OBD II devices, [plus] marketing and operations integration that brings the marketing promise together with operations reality to create an uncommon service experience, increasing service retention and customer satisfaction.
Also, virtualization technology like Facebook’s Oculus Rift or Microsoft’s HoloLens offer immersive training to techs and service advisors, and the promise of transportation networks like Uber and Lyft [makes] the necessity of a loaner vehicle a thing of the past.
What’s important is not the pace of technological change, but a dealer’s willingness to invest and reinvent the approach to fixed operations, bringing it in line with—or even lead—what’s happening in the rest of the retail world. Otherwise, all this is just cool technology lying around gathering dust.
What’s your take on the current state of fixed operations at dealerships? Dealer Marketing Magazine wants to hear about aspects of service department operations and marketing you’d like to read more about. Please share your thoughts, comments, and questions with us via our Twitter account (@DealerMarketing) or by email to [email protected].
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