Every dealership has “foot-traffic” and “increased conversions” on their top ten list of goals for 2018, but the service department might be the missing ingredient to accomplishing those goals.
One study revealed that 85% of its respondents’ experiences at a service department influenced their likelihood to purchase from the dealership.1
Because of this, customers who consistently get their car serviced at a dealership are more likely to purchase their next vehicle from the same dealership. This data seems to indicate that a dealership with a busy service department will not only see consistent revenue from that department, but also an increase in the dealership’s overall revenue. Unfortunately, this is not entirely true.
Currently, studies show that customers are leaning more and more towards third-party service shops. These “corner shop” mechanics are drawing customers away from dealership service departments through convenience of location, customer service, price, and (most of all) trust. The study showed that 72% of service customers are opting for third-party mechanics.
Dealership service departments are viewed as more efficient, better in quality, and more knowledgeable about specific brand needs, but customers are caught up on something else. The study showed that 58% of customers indicated that they don’t go back to dealerships for service work because they are concerned they will be overcharged.
As soon as a customer’s warranty runs out, they move on from their dealership’s service department to their local third-party mechanic. A dealership might have a busy service department, but it doesn't matter if the majority of that work is on vehicles that are still under warranty.
Low billable hours and decreased repair orders are a red flag that something needs to change - before it's too late.
But, if your post-warranty customers have been lost, how can your service department win back (or acquire new) customers who are already “regulars” at their favorite local service shop?
Earn your customer’s trust.
Conquest, inactive, and defective customers won’t be easily impressed. Forbes recommends adhering to “best-practice” service department techniques, like focusing on employee management and prioritizing customer retention.2
While these are excellent practices and key to gaining and retaining repeat customers, dealerships still face customer defection. To build current, former, and potential customers’ trust and respect, you must exceed their expectations. Your customers need quality time spent inside your dealership, experiencing first-hand every reason you have for why they should continue to have their vehicle serviced at your department.
Address their service pain-points by making their experience at your service department the opposite of their expectations. Take time to prove to your customers that your mechanics know more about their vehicle than third-party mechanics. Show them how you can provide quality service with speed. Prove to your customers that your mechanics can be trusted and that your prices are competitive. Make their visit convenient, efficient, and 100% satisfactory.
All this might seem obvious to you. But there’s one issue. You can’t do any of this if they aren’t there.
[bctt tweet="How to Retain Customers in a World Full of Third-Party Mechanics" username="JandLMarketing"]
Understand that marketing isn’t always the solution.
Well-designed and well-placed marketing can certainly provide exposure and help build customer awareness, but the highest percentage of service department defectors occur after the warranty expires.
That means dealers had at least three years to demonstrate competitive pricing and quality service. In addition, almost every dealer is committed to an owner loyalty or service reminder program.
So, if a dealer’s price is competitive, the quality of service is good and the customer has received three years worth of service reminders… why did they leave?
A better question might be - if they still left after three years of service offers why would another discount coupon repair the relationship?
At some point we have to face the facts and realize that the people who defect are not influenced by your current service reminder program. They might return to your dealership for their discounted oil change, but that’s just one visit.
Your current service reminder program is focusing on one 20-minute oil change to sway a customer who has already had three years’ worth of interactions with your service department. If they were able to be convinced by an oil change and service reminder, they would not have left in the first place.
Customers who defected or are about to or have never visited your dealership require a new approach – a different marketing strategy.
Host Private Service Events to increase customer loyalty.
At J&L Marketing, we’ve seen Private Service Events have a significant impact on winning back lost customers, gaining new customers, and increasing service and parts revenue. A Private Service Event is your chance to create an event specifically designed to overwhelm your current, inactive, defective, and prospective customers with your service and expertise.
By offering a carefully targeted audience a complimentary 60-minute multi-point inspection at your service department, you’re offering a valuable incentive for those customers to visit your dealership, be on location for a significant amount of time, and experience the quality of care and service you are able to provide. You’re setting yourself up for success because you’re giving your service department all the time they need to walk through each step of your process with the customer in order to build or regain their trust in your mechanics and earn their respect.
Customers who understand that dealerships have more knowledge of their specific vehicle, quicker turnaround times, and competitive prices are less likely to return to the third-party shops they mistakenly turned to in the first place. In fact, customers who visit our events have over a 90% satisfaction rate.
In addition, these events can have benefits beyond the service department. They lead to increases in showroom traffic, repeat buyers and even vehicle sales. Whether your dealership has a successful service department or not, hosting a Private Service Event for previous and conquest customers can increase brand awareness and develop positive customer/dealership relationships which, as I stated earlier, can lead to sales. By hosting an event, you can attract your past, current, and prospective customers and you will benefit from an effective customer retention method that will drive traffic to your dealership.
Private Service Events aren’t just about hitting your repair order goals for the month or increasing your overall dealership profit, though they have those effects.
The true purpose of a service clinic is to gain and retain long-term customers. It’s the ultimate customer-retention plan.
Forbes’ study showed that top-performing dealerships focused on the total profit opportunity of a customer – ranging well beyond the purchase of a vehicle and into profits from parts and service. But I would argue that it goes even further. If customers who visit service departments are more likely to buy from that dealership, than gaining and retaining customers can only increase your overall sales.
Profits from a loyal customer can go beyond one purchase and a few repairs. If your customers are convinced that you have the best service, the most knowledgeable technicians, and the most competitive prices, your customers will return time and time again, service after service, purchase after purchase.
By encouraging customers to attend a Private Service Event at your dealerships, you’ll gain loyal customers who will contribute consistently to your bottom line.