Category: Service Advisor

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.”

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.”