I was talking with a dealer recently who told me he was frustrated with his customer pay revenue. He said his service lanes stayed busy, but he just wasn't seeing the results.
This didn't make sense to me.
If you're staying busy on the service end, then shouldn't your customer pay revenue reflect this?
So I did some research.
I found out that the average vehicle owner has it serviced 2.7 times per year and each visit averages around 178 dollars.1
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Unfortunately, only 30 percent of these service visits are conducted at a dealership and only 17 percent of those visits occur at the dealership where the vehicle was purchased.2
But my dealer didn't mention a lack of service traffic - he said his service bay was full!
Here's the Real Problem
I reached out to the dealer and asked this question:
"How many of your service visits are from customers who are still under warranty?"
This was the problem!
As soon as his customers’ warranties ended, they moved on to his competition. They no longer had a reason to visit his dealership - they were more interested in visiting the closest repair shop to them and bought into the idea that these independent shops were more convenient and offered more conservative prices than the dealership.
Upon further study, I noticed that this problem wasn't isolated to one dealership. This is an issue that dealers like you are facing right now!
The truth is, 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.3
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.
What You Can Do About
Maybe you're wondering if it's really worth fighting. I mean, what you can really do about it anyway?
It's worth fighting because the likelihood of a customer purchasing another vehicle at your dealership is dependent on their interactions with your service department.4
Dealerships lose money when they fail to make their service department a part of their sales process!
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.
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 discovered for increasing your service revenue and retention.
- Utilize the Power of Automated Service Reminders
- Focus on the Customer Service Experience
- Make Digital Your Best Friend
1. Utilize the Power of Automated Service Reminders
Your biggest problem is that many of your customers – even the ones under warranty – don't 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 end up realizing their vehicle is in need of service by the time it's already too late and they rush to the nearest and most convenient shop.
Trust me when I say this: 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. Focus on the Customer Service Experience
Automated service reminders and 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. Make Digital Your Best Friend
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!
Drive the Traffic You Need
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 – post-warranty defection 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.