How to Solve the Problem of Fixed Operations
The average owner takes their vehicle for service 2.7 times per year, with each visit averaging around 178 dollars.1
But, only 30 percent of these service visits are conducted at a dealership level.2 And, only 17 percent of those visits occur at the dealership where the vehicle was purchased.How to Solve the Problem of Fixed Operations Click To Tweet
Do the math. Automotive News reports that dealerships are missing out on as much as 99 billion dollars’ worth of revenue.
The fact is, more sales and revenue exist in your service department than anywhere else in your dealership. You just have to keep selling the customer from the moment you make the first sale.
Still Don’t See a Problem?
Maybe all this seems a bit far-fetched. I mean, 99 billion dollars of revenue seems like an exaggeration!
Perhaps you feel your dealership’s service bay is plenty busy. There’s nothing lacking at your dealership – maybe everyone else is the problem and you’re profiting from it.
Let me ask one clarifying question:
How many of your fixed ops appointments are from customers who are still under warranty?
The Data Doesn’t Lie
As soon as your customers’ warranties end, they move on to the competition. They no longer have a reason to visit your dealership – unless you’ve given them one.
And, unlike sales, your service department’s greatest competitors aren’t the dealers across the street. The greatest competitors you have are the third-party mechanics that vehicle owners turn to for cheaper, faster, and more convenient service.
Notice I didn’t say high quality service. That’s because, according to a maintenance and repair study by Cox Automotive, customers believe dealerships offer the highest quality parts and service.4
Unfortunately, that’s not enough to drive customers to your service department.
Customers don’t trust dealerships to charge fairly. They don’t go to dealerships because they believe they will be charged more for the same service they can get at a third-party mechanic.
In fact, four out of the five top reasons why service customers don’t go to the dealer are related to price.
Why Does It Matter?
It matters because the likelihood of a customer purchasing another vehicle at your dealership is dependent on their interactions with your service department.3
And, because service interactions directly relate to a customer’s future buying behavior, dealerships lose even more money when they fail to include a visit to the service department before, during, or after purchase.
In fact, customers who are shown the service department when they make a purchase are 1.5 times more likely to return to the dealership for service within the year.
There’s Hope for Change
As I mentioned before, service customers believe dealers can offer higher quality parts and service.
Your technicians are more highly qualified, have access to higher quality parts, and an intimate knowledge of the vehicles you work on.
Even introducing customers to your service department during the purchase process has an effect and draws more customers back to your dealership – and the more they’re in your dealership, the more likely they are to purchase from you in the future.
There’s three key tactics that I recommend for increasing your service revenue and retention.
- Send Automated Service Reminders
- Create the Ultimate Customer Service Experience
- Go Digital
1. Send Automated Service Reminders
Your biggest problem is that many of your customers – even the ones under warranty – do not track service schedules and recalls.
They don’t take their vehicle for maintenance until there’s a problem. One-third of customers are unaware that their vehicle requires service and more than half depend on you to remind them!
They want your reminders! This is a rare time when marketing is not only necessary for business – it’s appreciated.
Take full advantage of this with your customers, while you can.
2. Creating the Ultimate Customer Service Experience
Automated service reminders and even offers can certainly provide exposure for your dealership and build customer awareness, but even these reminders are ignored because of negative bias against dealerships.
You need the opportunity to demonstrate competitive pricing and quality service to customers who are no longer under warranty, or never have been.
Offer vehicle owners a no-obligation invitation to your service department. You need them to come visit and they need a reason to. Invite current, former, and prospective customers (yes, you can conquest customers with your service department!) to your dealership for a free one-hour multi-point inspection. Offer them answers to their vehicle maintenance questions and needs in a comfortable, no-pressure environment.
Vehicle owners often avoid taking their vehicle for service because they don’t know how much it will cost or how long it will take – and they don’t want to deal with shady up-charges that aren’t necessary.
Many of them are continually driving around with warning lights and they don’t know what the lights mean! They don’t have the time, the money, or the patience to visit your dealership and figure out what the problem is.
This is why you need to give them a reason to visit! They’re not being influenced by your current marketing and they weren’t influenced by their previous interactions with your dealership. You need to influence them with time, information, and quality of service, in a cost-free environment. If they choose to have the vehicle serviced while at your dealership, then you need to make sure the service is priced competitively and reasonably. This is your chance to prove that their preconceived notions about dealership pricing are inaccurate!
Consider this your chance to earn their trust and respect, their business, and hopefully their loyalty – the next time they need to purchase a vehicle. Plus, you’ll gain some service business in the process.
3. Go Digital
Digital influences nearly 60 percent of vehicle purchases at dealerships and this influence is even strong for post-purchase service.5
Today, nearly 25 percent of ALL automotive searches are parts, services, and maintenance related. How are you taking advantage of this market?
If vehicle owners are most concerned with the price of service at dealership service departments, then you can use digital marketing to change this perspective! This is your chance to defend your dealership against third-party mechanics.
By being up front and transparent with your prices online and using digital marketing to reach the incredible percentage of vehicle owners who are online, you can drastically increase the number of consumers who visit your service bay!
Solving the Problem
One article stated that “if all dealers were to implement existing best practices in operations alone, the average performance of the entire auto retail industry could increase”.6
There’s a problem to solve, but the good news is, it’s easy to solve. Simply by following best practices and focusing on positive customer/dealer interactions, we can solve the problem of fixed operations – we can solve the problem of retention and the misunderstanding of dealership pricing.
By providing marketing that consumers both want and need, you can drive more vehicle owners to your service department, and, ultimately, to your showroom.