Category: Fixed Operations Service

Vehicle Recalls: Why Consumers Don’t Take Action and What Dealerships Can Do about It 

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We all know how important vehicle recalls are for consumers. Correcting faults ranging from software problems that can cause a car to stall unexpectedly, to leaks that can cause a fire, to general safety concerns, you would think vehicle owners would be lined up the minute a recall was issued. 

However, despite the huge number of recalled vehicles on our roads in the US, only a relatively small percentage of consumers actually bring their vehicles in to get the recall work completed and car repaired.  

Some recalls include millions of vehicles, while others include only a dozen or so, but every recall should be considered equally as important to both vehicle owners and your dealership’s service center.   

Why should it be equally as important? Because every recall also offers opportunities for your dealership and service center. Opportunities like optimizing revenue possibilities, improved customer satisfaction, attracting new customers, and loyalty retention for life-time value clients.   

The reasons why most consumers don’t jump on vehicle recall work 

Due to the vast array of recalls, and the large spectrum of minor (recommended to have repaired) to major (do not drive), consumers are left with many questions.  And these questions and concerns can, and do, stand in the way of them taking quick action. 

Questions such as: 

  • Can I still drive the car? 
  • Is the recall issue really dangerous, or is this a small thing I can have fixed in the future? 
  • Will it cost me money to fix it? 
  • How long will it take to fix it, and will I have to wait for hours or days? 
  • Will I get a loaner car? 
  • What happens if they break something while completing the work? 
  • Will there be another recall after I get it fixed? 
  • Will they try to sell me on other repair work while I’m there? 

And so on… Recall work has proven to be a confusing process to most consumers.  

But as a trusted service center that’s focused on educating existing and prospective clients, you can make it very clear in your messaging that your dealership is here to help vehicle owners. Here are a few suggestions to not only capture recall work and help consumers understand what is involved, but ways to give them the nudge to have it fixed sooner than later: 

  • Be specific on how long the repair will take.  
  • Highlight the experience that they should expect to have by choosing your dealership and/or service center, such as a free vacuum and wash. 
  • Ensure the consumer that your service department is set up to swiftly handle this recall work, as well as their unique needs, when they do come in. 

Opportunities for your service center 

Although it is ultimately a consumer’s responsibility to bring the car into a service center for the recall work, you can do your part by making sure you have a strategy in place for your fixed operations and service department to drive the recall and warranty work straight into your service lane. 

There are many opportunities that recalls present your dealership, fixed operations department and / or service center. So, with a strategic focus on steering both the consumer and the work to your dealership and/or service center, here are some of the benefits you might be able to capture: 

Warranty Work 

Recall work connects to warranty work, and both can help dealerships and service departments when it comes to building a pipeline, increased revenue opportunities, and retention.   

  • Building a pipeline – recall and warranty work drive in new, existing and previous clients. Not only does it pose an opportunity to build a pipeline in your fixed ops department, but it also extends into your sales departments. Additionally, it gives you a reason to reach back out to a previous sales or service client to bring them back to and show them why they should be using your dealership again to recapture their business. 
  • Increased revenue opportunities – stats show that 65% of warranty work is accompanied by customer pay work. Once a recall or warranty work consumer uses you, show them every reason why you want and deserve their business, and that you understand and offer the experience they want. Most customers in need of service are also likely to return to the same dealership to purchase their next vehicle: in fact, recent data shows a whopping 74% do so. 
  • Help with retention – In just five years, more than 70% of your customers will switch to an independent service mechanic when their vehicle needs work. Now sprinkle in recent inventory fluctuations and brand defection, which currently is at an all-time high. Both recall and warranty work can help keep that lifetime value customer at your dealership, by keeping you top of mind as their go-to and as a business that is looking out for their best interests, not just in the short term but for the long run. 

Increased Customer Loyalty  

Today’s successful dealers know they need to diversify how they engage and attract consumers that they’ve sold to and serviced over the years. And although each silo might warrant and have a different strategy on how to connect with them tied to the goal of continued loyalty, recall and warranty work poses an excellent opportunity to reach out or re-connect. 

Ways to engage with current and previous customers during recall or warranty work include: 

  • Provide great service – show them why they chose you over the others and how you are committed to providing an extraordinary experience each and every time they use you. 
  • Supply pro-active maintenance updates – informing customers ahead of time helps them feel more informed and gives them the ability to plan ahead, which includes keeping your service center top of mind. 
  • Give rewards for repeat or timely visits – by doing this you incentivize them for their loyalty. Those small discounts go a long way when it comes to them staying with you. 

Shifted Perspective  

Most consumers have the belief that a dealership’s service center charges more for service work. Not just more… much more. Kelley Blue Book has tools and widgets that are working hard to increase transparency and dispel this old way of thinking.  

Recall and warranty work poses the perfect opportunity for you to show the new, existing, or previously defected customer that you do excellent work and are transparent in not only how you complete repairs, but also in your pricing. While they are there, ask them what they typically pay for an oil change or other work their vehicle might need in the near future. Then show them how much you charge, and they’ll most likely be surprised to see that the price difference in what they are paying now is not as big as they thought it would be. 

Turn your service center into a profit center 

Did you know that KBB.com has a “recalls” button on its consumer site? This allows the consumer to not only check to see if there is an existing recall issued on their vehicle’s make and model, but sign up for future notifications if a recall does happen on their vehicle.  

From acquiring inventory to generating new service and sales opportunities, let the #1 most trusted third-party automotive brand help you grow your business. At Kelley Blue Book we drive trust, so that you can drive more revenue. 

Kelley Blue Book’s service and vehicle advertising solutions help dealers reach and influence new service and vehicle customers, including recalls. Now, you can drive more revenue into service lanes by reaching recall and service-ready consumers, as well as reach in-market car shoppers at every stage of the buying and ownership experience. 

How a Multipronged Approach in Your Service Center Can Drive Profits

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Whether times in the auto industry are complicated like the last few years, or humming along smoothly, successful dealers and service centers know that they must take a multipronged approach. What’s a multipronged approach? It’s a plan and strategy that ties both your marketing department and your fixed ops initiatives together in order to maximize lifetime customer value and drive profits.

With recent studies showing that your service center is most likely responsible for 50% of your dealership’s profits, it’s time to take a closer look at some examples of a multiprong approach in action that can help turn your service center into an even bigger profit center.

Connecting the dots for your service customer

When thinking of a multiprong approach, it’s important to look at your customers that are regularly coming into your dealership or center for service. The majority of these customers are considered high value lifetime clients, and drive profits well after their initial purchase or service appointment. Additionally, you will likely have many chances to interact with this customer, in many different ways, among several team members.

It’s important to make sure your dealership is connected from the top down on how to approach potential needs that might arise for your service customer, in order to match that to some of the key initiatives at your dealerships.

Example of an Expensive Repair:

When service customers have an expensive repair, what are they thinking, considering and asking their service advisor or tech for advice on? They’re typically thinking about should they, or should they not, hold onto the vehicle longer.  

They’re also probably communicating with not only the service department, but also the new or used sales department, on several items such as:

  • Are there new cars available and what do they cost?
  • If there are limited new cars available, can a new one be pre-ordered for them?
  • What does the new car pre-order process look like?
  • What is their car’s current value new and are their incentives?
  • What would their trade-in be valued at? 

Keeping the car and getting it serviced– or purchasing a new car -those are essentially the two different ways the customer conducts business at your dealership. Not only do dealerships have a big interest in keeping this customer for service, but also for their next trade-in and vehicle purchase! And it calls for a multiprong approach across every department and staff member in your dealership to make sure this happens.

Take a closer look at the importance of efficiencies

Because many of those conversations with lifetime value customers, especially service customers, both start and end in the service drive, another multiprong approach should be to focus on efficiencies. What type of efficiencies?  Ones that can and should positively impact employee satisfaction which then leads to increased customer satisfaction!

Having seen almost twice the usual traffic on Kelley Blue Book over the last year or so, it’s no secret that customers are looking at that vehicle sitting in their garage. And they’re wondering if it’s the right time to trade in.

They know there’s a demand for vehicles with chip and inventory shortages and they know their car is probably worth more because of these micro-economic circumstances. Tools like Instant Cash Offer have been very successful in engaging with your customers, giving you the ability to connect with transaction-ready customers, to improve efficiencies by having the ability to acquire the inventory you need, while also lowering acquisition costs.

That same customer on Kelley Blue Book is probably also wondering if it’s the right time to start looking for a new car.

Other tools like iRecon and xTime are all about making jobs that have to be done at the dealership to service and sell cars more seamless, efficient, and manageable. Keeping you stocked with the inventory you need, when you need it, driving efficiencies. When you lift your service, you have the ability to raise your revenues.

The bigger picture

Customers’ preferences and priorities have shifted over the last few years, and instead of viewing these as challenges, with the top tips we shared, as well as multiprong approach, there is a wide-open road for opportunity and further innovation.

When you incorporate new ways to maximize your efficiency, increase loyalty, and drive revenue through your service drive, then connect them to the other departments and priorities within your dealership, you’ll not only have a bigger picture of how to increase profits, but you’ll also gain lifetime value clients along the way. 

Times have changed, and so must some of the ways as an industry we conduct business. A multiprong approach in your fixed ops departments is where the strategy and focus should shift within your dealership and service center.

Want access to our on-demand webinar outlining the multiprong approach further as well as several other solutions on how to gain lifetime clients and increase your service revenue? View the full replay of “Service After the Sale – Lifetime Value of Customers”

The revenue importance of service after the sale

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Whether you’re a Dealer, GM, Principle / Owner, Service Department Leader, Technician, New or Used Car Sales Specialist, or Acquisition / Appraisal Manager; it’s a consistent conversation, and an ever shifting one lately, on the difference and value of how to maximize new consumer opportunities vs an existing one. Especially when it comes to your service center. 

More specifically, how to get more new clients, retain them, as well as how to retain the existing clients you have in order to gain and keep a lifetime value client. When you are able to decode this, it can pave the way to a more profitable future when it comes to revenue at your dealership. 

Times have changed, and so must some of the ways we conduct business and where the strategy and focus lies within your dealership.  

Changed Consumer Behaviors Calls for Changed Dealer Focus 

We all know there is a big focus at dealerships around the initial sale of a vehicle… But what about after the sale? Especially in today’s times with inventory shortages?  

With recent studies showing that over 50% of a dealership’s profits are coming from their service centers, focus should also be on service after the sale at dealerships. It’s just as big of an importance to revenue, if not bigger, especially with so many macro-trends and challenges dealerships face, as well as navigating changed consumer behaviors.  

Consumer behaviors have not only evolved over the last few years, but show a shifted level of expectations as well as set of preferences. Preferences that all point to convenience and ease. If dealers don’t change behaviors to match that of today’s consumer demands, not only is a current or future sale at risk, but there’s a risk for their service departments as well as profits. The lifetime value of a customer extends well beyond the initial sale and drives straight into the service lane, and that is also where dealers should be looking for revenue opportunities. 

Stability in the Service Drive 

Data we have from a recent 2021 Cox Automotive Study really speaks for itself when it comes to the important role that service after the sale plays.  

  • 71% of consumers have defected from dealership service by the 5th year of vehicle ownership.?

That’s a staggering number and it’s important to look at the “why” behind it. With the supply and demand imbalance and consumers pushing purchases out, consumers purchasing further from home creating less direct loyalty to their purchase location, and the extended wait times to get into the service lanes where they have been before, opportunity is wide open. The strong possibility exists to gain new clients, and now is the time to ensure you are doing everything you can to retain your existing ones. 

By increasing the overall dealer focus and strategy, marketing, and training within your service center, you’ll help keep and convert the consumers who move through your service drive into a lifetime client and not end up as part of that 71% statistic.  

Next, let’s look at another promising statistic when it comes to opportunities for revenue at your dealership.  

  • 74% of consumers are likely to purchase their next vehicle from the same dealer if they returned for service.?  

This is an equally staggering number. When it comes to revenue, this statistic demonstrates there is a large amount of opportunity in the service drive. It’s important to re-evaluate how your service leaders, techs, and staff are taking advantage of those opportunities when they present themselves. Do you have a protocol for when a repair is higher than expected and the customer asks if they are better off buying new? What experiences and advantages are you offering at your dealership if someone has their car serviced with you to stand out from the competition? How easy is it to book a service appointment with your dealership and do you connect with customers in their preferred method; ex. text, apps? Are you outsourcing some common services when your appointment availability is stretched thin or offering pick-up and delivery services? 

These are just a few of the important things to look at so that your dealership can begin to laser in on just how important service is to revenue. 

 

We mentioned this before, but now let’s take a deeper look at the most important statistic of them all we uncovered in a recent Cox Automotive study.  

  • Dealers depend on service for 50% or more of their overall profit.?  

It probably is no surprise to dealers that fixed ops profitability is over half of their gross profit. However, it generally only represents a small percentage of their spend, and is an even smaller area of focus when it comes to ROI and optimization of consumer acquisition cost and market share.  

It’s time to take the actions required to turn your service center into a profit center. A fixed ops focus in your service department at your dealership offers stability in revenue as the automotive industry experiences challenges on the sale side. Additionally, with a strategy of acquiring and retaining lifetime customers through your service drive, no matter what bumps happen within the industry, you will have planted seeds that will continue to grow. 

Now that we know service contributes quite a bit to the dealership’s overall revenue, we highly suggest you closely examine those different types of service revenue streams.  

Retention Drives Revenue 

There’s a big difference between acquiring a new customer vs. retaining an existing one, especially in and for your service center.  

Retaining your service customer can result in many positive things for your dealership. It can lead to not only increased service profit, but also to the best and most accessible inventory you can acquire.  

You know these customers and you know their cars. By maintaining that relationship, it keeps your dealership top of mind not only when making service appointments, but they will also always be your best advertisement when asked for a recommendation or discussing their most recent experience.   

A new customer is more expensive and harder to acquire than retaining an existing one and involves a great many more people in the process.   

The top two reasons consumers take their car to dealerships for service is because the dealer knows their car and they have had prior experiences at the dealership – highlighting the need to focus on existing customer relationships and ensuring you provide the best possible experience when you acquire a new customer. The goal is and should be to keep them coming back.   

The Road Ahead 

Even with today’s challenges in the industry on the sales side, your service center offers many possibilities to gain and retain lifetime clients. Now that we know the difference in acquiring a new customer vs. retaining an existing customer, as well as decoding the importance of service after the sale, you understand the impact it has, and could have, on your dealership’s revenue for a more secure road ahead. 

Want access to our on-demand webinar outlining these findings as well as several other solutions on how to gain lifetime clients and increase your service revenue? Get the replay of “Service After the sale – Lifetime Value of Customers.”

Maximize Your Efficiency, Increase Service Customer Loyalty and Drive Revenue

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We all know that there is a big difference in acquiring a new customer vs. retaining an existing customer. But once you have that ideal customer, a lifetime value customer either in or headed to your service drive, most dealers wonder what are best practices to keep that customer coming back? 

That is the big question in today’s times, especially with shifted customer expectations and behaviors. And when you put some of the best practices outlined below that are working in today’s times to use, you’ll gain the three things we hear time and time again that all dealerships and service departments place as a priority: efficiency, loyalty and revenue. 

But in order to maximize efficiency, increase loyalty (both externally with clients and internally with your team) and drive revenue, it’s important to look at some of the problems dealerships and service departments are currently facing and dive into some solutions to help drive your business forward. 

Problem #1: Location 

One of the top five problems Cox Automotive’s 2021 Service Industry study showed is that dealerships get push back on location – in fact it was the #1 reason why customers who buy a car don’t return to that dealership for service.  

Now, we know right now because of chip and inventory shortages, car buyers are willing to travel a little further out than previous years. But, for the majority of purchasers who’ve bought from you, your dealership is typically close enough that the customer could make the decision to service their car with you, if you can offer time savings and conveniences so that they don’t look at location as a hurdle. 

Solution #1: Vehicle pickup and delivery 

What is an easy and popular solution that we’re seeing more and more of at dealerships and service departments? They’re offering pickup and delivery! This is a wide-open lane currently, as fewer than 60% of dealers currently offer pickup and delivery. 

However, 89% of customers said they are more likely to choose one dealership over another based on having pickup and delivery available*! That’s a big number – revealing it’s not so much the location – but the conveniences the service department offers them.  

It gets even more interesting when you look at this statistic uncovered by a recent Cox Automotive study… 87% of those that have access to and used a pickup and delivery service when offered by the service department , said they were highly satisfied with the service they received*. This shows an increased satisfaction rating compared to customers who bring their cars to your dealership to have them serviced.  

It’s also important to share that 51% of those that took advantage of a service like pickup and delivery, also had more services completed than they would have if they’d taken in their vehicle themselves.? Talk about efficiency, increased customer loyalty as well as additional revenue opportunities!  

So, if you offer service pickup and delivery – wonderful! Think about ways to enhance it even further. But for those of you that only minimally offer, or don’t yet offer vehicle pickup and delivery, the numbers speak for themselves. It’s time to take a closer look at how you can start offering it at your dealership and service department.  

Problem #2: Pricing 

Another problem almost every dealership faces, not just in today’s changed times, but really for quite a while, are general perceptions or beliefs related to pricing – specifically when servicing their car at the dealership. 

Some of those perceptions and beliefs are: 

  • They will be overcharged.
  • The charge for parts and labor at the dealership isn’t or won’t be reasonable.
  • They are being charged a premium to service their car at a dealership.  

And although many of you are probably not surprised by these beliefs we uncovered in our study, there is a way to blast past those outdated misconceptions and beliefs. 

Solution #2: Increased service pricing transparency 

One of the advantages to today’s mostly online world is increased transparency. And that increased transparency is leading the customer to see that they don’t always have to pay more for service from a dealership. 

The Kelley Blue Book Fair Repair Range TM is an example of how at Cox Automotive we’ve taken our vision and commitment of transforming transparency in the auto industry. We took 200 million repair orders and provided transparency in service pricing for each make, model, and market- specific location.  

When potential service customers see the side by side with tools like the Kelley Blue Book Fair Repair Range TM, and see your transparent pricing for services, it becomes very clear the difference is typically not as much as they thought.  

Being transparent in your pricing is not only helping change old, often untrue beliefs, but it’s giving customers the ability to make choices based on real information, not just best guesses.  

Additionally, it’s helping increase service customer loyalty, trust, and ultimately fixed ops revenue, and it highlights the advantages of having your service performed with highly trained technicians and factory parts. 

Problem #3: Shifted customer preferences 

Now let’s look at something that probably all of us are feeling, both from the customer and most likely feeling ourselves as well. Customers in our recent Cox Automotive Buyer Study* have shifted preferences in how they want to communicate and book services… especially after the last 2 years!  

Customers have different preferences, and dealerships, especially service departments, have some shifting to do in how they communicate with customers both before, during and after the service. Gone are the days of preferring face-to-face, phone calls and email as the only ways of communicating and booking services. 

Solution #3: Increased digital interactions 

So, what do customers prefer? Digital interactions! 

Based on the most recent Cox Automotive Car Buyer Journey their expectations and preferences have shifted, and we’re seeing the digital interactions replacing personal touchpoints around service visits—phone calls, face-to-face, and emails are all declining —– while text message, apps, and dealership website communication are all increasing.  

The following digital interactions give you the ability to not only quickly and conveniently connect with your customer, but give you the increased visibility to stay top of mind. 

Text messages: A quick and easy way to keep your customer aware before, during and after they have service completed – especially when it comes to need to know information and reminders.  

Apps: Allows customers to easily book and see what upcoming maintenance schedules are due, or what warranty recalls they have. Whether you just have a basic app, or a super sophisticated one, it allows the customer to communicate and stay in touch with you, and you with them.  

Website: It’s important to take another look at your dealership’s website and make sure your service offerings and promotions are accurate and what your dealership and service department do to stand out is front and center. They can also handle several things such as bookings to reminders, which will increase the chances your client will keep coming back to you. 

The road ahead 

From looking at just how important service is to a dealership, especially since it contributes to about 50% of a dealership’s overall profit*, to examining the top trends and problems dealership service departments face, it all points to one thing.  

Customers’ preferences and priorities have shifted over the last few years, and instead of viewing these as strictly problems or challenges, with the top tips we shared, we truly believe you now have solutions that provide an opportunity for further innovation and business for your dealership and service department’s road ahead.  

Want access to our on-demand webinar outlining these tips and several other solutions on how to gain lifetime clients? Get the replay of “Service After the sale – Lifetime Value of Customers.”