Service & PartsResearch & Analysis

Service & Parts
car spare part
The Power of Return Parts Buyers

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You probably know the age-old business adage that it’s cheaper to sell to an existing customer than it is to acquire a new one. In fact, it’s about 5x more expensive to acquire a new customer than it is to sell to an existing customer. It’s been reported that increasing customer retention by 5% can yield a 25 - 95% increase in profit for your business. Furthermore, the average success rate of selling to an existing customer is 60-70%, while that of a new customer is just 5-20%.  All customers are important, but not all of those customers are created. Although every vehicle owner is a valued potential parts customer, the difference is between new and returning shoppers. RevolutionParts recently looked at a year’s worth of data consisting of over 100 million unique users. Based on the data, here is why return parts customers are so important: They lead to more purchases They spend more money They bring in additional business Return Parts Buyers Make Up More Than Half of RevolutionParts Web Store Visitors RevolutionParts shopper behavior data shows that return shoppers account for 54.9% of visits, where new shoppers account for a lesser 45.1%. Source: RevolutionParts eCommerce Shopper Behavior Report More than half of web store visitors are return customers; this emphasizes the importance of nurturing customer loyalty through marketing and outreach after the initial point-of-sale.  Return Part Buyers Spend More Money It’s no secret that you want customers to spend more in your parts department, and that is exactly what return customers do. Return shoppers to RevolutionParts web stores spend $65 more per order on average. Once someone makes a purchase from your web store, they are likely to spend more money the next time they purchase a part from you.  Return Part Buyers Convert at a Higher Rate Getting someone to come to your web store costs ad dollars. Once someone lands on your website, your job is to convert them into customers. The higher your conversion rate, the less money each conversion costs you. Return parts shoppers convert at 2X the rate of new visitors, meaning they will take less money to acquire. Return Part Buyers Bring The Customers to You Word-of-mouth is a blessing to your marketing budget. After all, it’s free advertising. Generally, research has shown that return customers refer 50% more people than one-time buyers. When you give customers an affordable, convenient, and reliable shopping experience, not only will they come back for future needs, they’ll tell their friends and family to shop with you too. That means you stand to gain new customers at absolutely no cost. RevolutionParts found that over 5% of gross sales came from referrals. Get the Full eCommerce Shopper Behavior Report The RevolutionParts eCommerce Shopper Behavior Report gives insight into the behavior of new and returning customers, including demographics, the devices your customers are using to purchase their items, and customer traffic sources. To view the full report, visit: https://www.revolutionparts.com/
Auto Parts & Accessories eCommerce: Amazon and eBay

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It's no surprise to anyone, let alone anyone working in or around a dealership, that the automobile industry is a powerhouse — generating almost a trillion dollars each year in the United States. At about 3.5% of the U.S. GDP, there's no denying the importance it plays, even with online sales alone. The same is true for the parts and accessories portion of this behemoth industry.  Specific to online sales for auto parts and accessories, the year-over-year (YOY) growth is unmistakable. According to the  RevolutionParts 2020 Parts eCommerce Year in Review,  sales through just RevolutionParts have grown 117% over the last three years — and they aren't stopping. Even more impressive, when you look at the totality of aftermarket eCommerce, the growth rate for 2021 is expected to be over 30%, with an estimated $390 billion in sales according to Hedges & Company, a research firm specializing in the automotive aftermarket industry. And when it comes to eCommerce, are there any bigger players than Amazon and eBay? That's an easy no.  Not only are they huge players, but their sales are soaring more than ever, especially during our current era of COVID-19 . During the pandemic, many people have been spending most, if not all, of their time at home which gives car enthusiasts ample time to tinker on hobby cars. Or, many people just aren't in the position to purchase a new car, which means an increase in making whatever vehicle they have last longer through repairs and the purchase of parts or accessories. For 2020, that resulted in a dramatic increase in parts and accessory sales. And it's expected to keep climbing.  Big Business of Amazon and eBay Among the many surprises of 2020, one of them was an unbelievable $861 billion in online sales and a YOY increase of 44% for the year, according to the estimates by Digital Commerce 360. Given the stay-at-home directives during the pandemic, people obviously did more shopping online, which gave way to the highest U.S. eCommerce growth jump in two decades — nearly tripling the growth rate in 2019. Even more stunning, Amazon alone accounted for almost a third of all U.S. eCommerce in 2020.  Likewise, eBay's U.S. marketplace had stellar growth rates, with gross-value sales increasing 22% to $37.53 billion throughout 2020. This growth was, in part, due to the addition of 11 million new customers last year, as reported by Digital Commerce 360. Also, it happened to be their highest annual sales growth since at least 2013. Tapping into the Successes of Amazon and eBay  According to Hedges & Company, Amazon is aggressively going after the auto parts market at a claim of nearly $7 billion in sales for aftermarket and OEM replacement parts. With more than 300 million consumers on Amazon, and 46.7% of U.S. online shoppers using it as a platform to start product searches, it's one of the ideal places to find buyers looking to do exactly that, buy. Similar to its counterpart, eBay continues to have impressive sales in the auto parts market. Every minute of everyday buyers is tapping eBay for their auto parts and accessories needs. And the numbers are there to prove it, with eBay itself reporting that throughout 2018 and into the first half of 2019, there were approximately 90 million live auto parts listings. That means, for every second those listings existed, three auto parts sales took place. For the category of wheels and tires, a sale took place every six seconds. That's a lot of parts sold in just the time it took you to get to this point in the article, even for the quickest of readers. eBay also claims that auto parts have been among the top 20 best-selling products to date since June of 2020.  When it comes to dealers looking to increase revenue, the growth of auto parts and accessories eCommerce is a huge opportunity for them to capture consumers online. Dealers selling on Amazon with RevolutionParts alone generated $11,014,300 in revenue in 2020. And for dealerships selling on eBay through RevolutionParts, it was an incredible $38,133,774. As a great complement to their own online store, dealerships are quickly and affordably gaining access to a growing market on Amazon and eBay while successfully increasing their sales volume and revenue. Summary Although both are fantastic platforms for parts and accessory sales, each has its differences and unique challenges to consider. Whether it's   the incredibly high standards for accuracy and customer service , optimizing to get the right traffic, or navigating the tricky balance of pricing and free vs. charged shipping. It often takes more time than many dealerships have available and consideration should therefore be given to enlisting the help of third-party specialists. 
Maintain Your Service Department's Effective Labor Rate With Prepaid Maintenance

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A franchised car dealership’s service operation is like a factory whose products are labor and part sales. Service managers are charged with maximizing the output and the ROI for both products. Discounting services may keep techs busy, but it does little to hold the effective labor rate (ELR). Service operations consultant Mike Volkman of Service Department Solutions says service managers struggling to keep bays busy and maintain their set effective labor rate may benefit from a review of how a dealership’s “factory” needs to work to be most successful. Bay utilization at ELR begins by managing the correct inputs — advisors selling 40 hours of work a week at the standard door rate, and technicians available to execute that action. If you have a tech out that day with no suitable replacement possible, some of that sold time doesn’t get sold. How customers experience your service also contributes to bay utilization. A recent J.D. Power Automotive Analyst report indicated how: Customers with a satisfaction index score of 901 or higher made an average of 2.5 service visits to a dealer. Customers with a satisfaction index score of 600 and lower made an average of just 2.2 visits. At an average spend of $192, the difference between 2.5 and 2.2 visits per year for a dealer with 4,000 service customers is nearly $250,000 in lost revenue. Each bay should generate eight hours of labor time per day. Ten-bay operations, therefore, should be producing 400 hours of labor time per five-day work week. Based on the prevailing rule of thumb that every dollar of labor sales should generate 85 cents in parts sales revenue, keeping bays active and producing add up to a tidy sum, of which 60% to 65% should be profit to the dealership, notes Volkman. Service managers have several ways to improve scheduling, tech efficiency, parts sales, and other factors to drive more revenue through service operations — more than I have room to discuss here. The basic way to make these improvements, however, is by using scheduling tools in your dealership management system (DMS), or third-party software tools. Before that, though, first you should create a master plan for your shop. Second, Volkman advises, forecast monthly bay opportunity and tracked utilization daily. Finally, base pay plans on advisor success at book hours at a specific labor rate. “If you’re generating more hours but giving away the ELR, it’s a wash,” Volkman stresses. One proven way dealers are finding to generate more hours while holding their effective labor rate is by selling new and used car buyers prepaid maintenance (PPM) services. An example is the Lester Glenn Group in Toms River, New Jersey, which operates eight franchises at seven locations. “It’s always a challenge to keep everyone 110% productive every day, so this dealer-branded preventive maintenance service helps me fill my bays immediately, and creates opportunities for us to sell additional services,” says Kerry Monica, vice president of fixed operations. “When we schedule customers owning this plan, I have a guideline for the average hours per RO [repair order] per car coming in that day” The J.D. Power report also noted that customers who either prepaid for a maintenance package or bought a vehicle that included complimentary maintenance in 2015 made 88% of their service visits to dealerships in 2017. Those who had no prepaid or complimentary maintenance when they made their purchase in 2015, however, made just 75% of their service visits to dealers in 2017. Monica schedules as much volume as a technician can handle in eight hours, but as many PPMs are lube, oil, and filter (LOF) and tire rotation services, PPM work is scheduled with the express staff: five C-level technicians, who handle 12 appointments per day per team member. Any more severe work identified typically is additional business that flows to the main shop. Volkman says that’s smart. “There is no reason to bring PPM-driven work into the house if you cannot handle it, but if you can pass oil changes and other light work to less-experienced technicians to free up your main techs for production work, they can really turn time.” “For the 60 customers we’ll see in our Hyundai store today with a PPM plan, half will buy another service up and beyond what they initially came in for,” Monica says. He notes these percentages are similar to all other Lester Glenn stores selling PPMs. About 70% of that upsell work is mostly additional customer-pay business, while 30% is warranty repairs, such as oil leaks and other non-maintenance-related business. Although some dealers give away PPMs to stimulate retention, Lester Glenn charges for its plan, rightly believing that price connotes value, which encourages consistent plan usage. At Lester Glenn dealerships, plan holders return for three visits per year. The three-year plan includes five LOF services, and the five-year plan includes nine. “We sell 1,100 cars a month here at Lester Glenn Hyundai, with 15% of buyers also purchasing our PPM. That is 165 PPM contracts a month — 2,000 contracts a year — and the rate is growing. With these plans we’re creating extra traffic to this service department — and that’s driving additional service sales, which equals extra hours for technicians,” notes Monica. He says Lester Glenn Hyundai upgrades approximately 60 customers per month coming in for basic maintenance off the service drive into new and used replacement vehicles. “These are buyers we’ve retained through their commitment to use of our prepaid maintenance program,” Monica says. Ryan Williams is president of Fidelis PPM , and is a 20-plus year veteran of the auto industry, having served in multiple dealerships as sales manager, F&I manager, and GM. You can reach him at ryan@getfidelis.com .
service line
Improved Service Lines Improve Bottom Lines

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Since the auto industry’s recent financial crisis, dealerships have been slow in rebuilding business. Although sales were good for 2011, they fell slightly short of the 13 million forecast initially predicted. While the industry is hopeful that last year’s sales momentum has carried into this year (promising a profitable year-end for 2012), those dealerships that weren’t forced to close their doors in the wake of 2009’s bankruptcies and bailouts are still looking for creative ways to bolster their bottom lines in order to take the pressure off of auto sales. For most, the answer lies in the service department. A crucial revenue stream for any dealership is an in-house service department. There, dealers can profit from the automotive parts and labor involved in regular maintenance and repair performed on vehicles, increasing profitability through additional sales without having to move inventory off the lot. Recently, dealership service departments across the nation have ramped up their efforts to compete with stand-alone mechanics and quick-lube centers by offering competitive pricing, newer facilities, and increased service hours; and their efforts are definitely paying off. According to this year’s National Auto Dealers Association State-of-the-Industry Report, franchised dealership service, parts, and body shop sales in 2011 reached more than $80 billion, up 4.7 percent from 2010. This is a continued trend from 2010, which showed an increase in sales of approximately five percent from 2009, and the industry is positive revenue will continue to grow as dealers improve service levels. As it stands, almost 90 percent of new dealerships currently offer evening and/or weekend service hours, averaging a total of 56 hours of availability each week nationwide. Dealerships make this investment in service in order to boost sales and customer convenience while providing full use of their service facilities, but there’s still room for growth. Dealerships can continue to increase sales margins by taking advantage of services that are either outsourced or not offered at all; namely, auto glass repair. Typically, dealers contract technicians to install or repair new auto glass on-site. This drives up cost for the dealer, and ultimately the customer, because it includes the price of the glass, the third-party technician’s labor, and the markup. Eliminating the middle man is Economics 101 when it comes to business ownership and it’s a way auto dealers can position themselves more competitively against independent body shops and auto glass repair companies. By having their own technicians install and repair auto glass, dealerships can increase sales through reduced costs while continuing to provide a wealth of on-site services to its customers. The same goes for body repair. Although statistics in the 2012 NADA report show an increase in dealers offering on-site body shops (up four percent from 2010), the number is due only to a reduction in the total number of dealerships in business that year. Still, overall sales for 2011 topped $6 billion and showed minimal decrease from the prior year. With national sales averages this high, it’s a wonder why most dealers are trending toward eliminating body repair altogether. Whether for collision repair or minor paint touch-ups, body shops are constantly in demand. Dealers who take advantage of this need without sub-contracting the work to authorized shops will realize higher profit levels each quarter. But a new car dealer isn’t the first destination that comes to mind for consumers considering body repair. That’s why some dealers are finding inventive ways to advertise the little-known services they provide. For example, Joe Rizza Ford in Chicago features an informative video on its website on why buying tires at a dealer (a service most consumers don’t think of when they imagine dealerships) may be more beneficial than purchasing them from an independent tire shop. It’s important for auto dealers to evolve to the needs of consumers. Although the auto industry has rebounded greatly since 2010, sales indicate that car owners are increasing the lives of their vehicles by purchasing fewer cars annually. Those dealerships that have adapted to this trend are finding maintained profitability through revenue generated in the service department. And those dealers who continue to provide more service options for customers will continue to improved financial growth. Jared Diamond is a contributor with WindshieldX, which specializes in windshield replacement and repair. JD enjoys writing on topics ranging from business to automotive.