Dealerships are typically slow to embrace technology. In some cases, it’s for budgetary reasons and for others it’s out of a lack of a sense of need. A recent article in WardsAuto.com reinforced the need for dealerships to streamline their processes. The article explains how as car manufacturing improves and service intervals grow, the only way for a dealership to increase or maintain its current service revenue is through the ability to service more vehicles.
This is increasingly being done through the digitization of repair orders; more streamlined processes during the write-up involving iPads or mobile devices that contain all the customer’s service history at a glance. This is similar to systems that many hospitals have adopted.
WardsAuto.com advises that dealerships should “expect a different breed of car buyer who want a more hands-off, yet transparent, way to engage the dealership.” At the same time that manufacturers are creating onboard computers that will wirelessly relay vehicle data to the dealership, customers are adopting mobile device apps and expect businesses they patronize to as well.
Improving workflow between departments is key to increasing efficiency. At the same time, dealers don’t want to miss opportunities that they could have upselling a repair order. Just as dealerships have adopted CRMs to control sales processes, technology can be used in the same way. It can help to control service processes and ensure that shortcuts aren’t taken while writing repair orders. It can also ensure that the dealership successfully captures all revenue opportunities by correctly presenting them to the customer.
WardsAuto.com explains that many dealerships are embracing paper-free systems that allow them to decrease paper and storage fees as well as employee error, while also reducing warranty chargeback costs.
Service advisors of the future will need less expertise because all of the technical information will be at their fingertips. Qualities that make a good service advisor will change from auto technical knowledge to customer service and sales skills. Dealerships will always need human interaction, however. Most consumers don’t want to deal with push-button robots in the nature of gas-station car washes (press 1 for 85,000 mile service, etc.) What they want is more transparency and efficiency in the processes involved in getting their cars serviced.
Dealerships that adopt technology, streamline their processes and make a more pleasant customer-centric service experience will position themselves well to compete with the independent auto shops for the extra service business that they’ll need to acquire to maintain and grow fixed ops revenue for their stores.
Hotel chains across the country have long had problems with customer loyalty due to an inconsistent customer experience. In researching the problem it was found that the prime reason for the disparity in customer experience was due to the growth of each major brand. Hotel chains were acquiring new properties and, in many cases, simply slapping their corporate branding on the building to attract customers.
Despite the fact that each hotel within the chain shared the same name, the quality and amenities at each varied. Some were luxurious and offered all the amenities that a business traveler could want; and some were below the standards that their loyal customers had come to expect. In 2004, the hotel brand, Hyatt decided to tackle the problem and do something different.
Hyatt created the “Hyatt Place” addition to their brand offerings. Their strategy was to create a brand in which, no matter where it was located, a business traveler would have the exact same experience. Everything is exactly the same. The lobby has the same floor plan, the bar/eating area is in the same place, the fitness center is in the same place and offers the same equipment, and each and every room at all 160 locations is exactly the same. Business travelers fell in love almost immediately. They knew exactly what they would be getting no matter which location they stayed in. Hyatt Place has won 7 awards over the last 6 years, and recently became the highest-rated mid-priced hotel chain in the country.
Consistent customer experiences generate trust. Trust generates loyalty. Trust, however, is a fragile thing. It is hard to earn but easy to lose.
How does customer experience translate to loyalty in your dealership’s service department?
It starts with consistency. Your technicians inspect customer vehicles and recommend repairs to your advisors who advise your customers. How consistent are your recommendations? Do you know how to find out?
An exercise that I recommend to dealerships is as follows:
- Find a car that none of your service techs have ever looked at.
- Put it on a hoist and have each of your technicians independently (and by themselves) inspect the vehicle, just as they would a customer’s car, and record their observations and make their recommendations.
- After all of the techs have inspected the vehicle, compare the findings.
This is an actual example of the results of this exercise:
As you can see, the results are all over the place. Imagine if a customer visited the dealership and the advisor told them they needed service on both the left and right front brake linings. The customer declines on this occasion. On their next visit maybe they ask the service advisor about those brake linings. Based on the inspection from that visit, where a different tech does the inspection, the customer is told that the tech marked them as fine. This would certainly raise red flags to the customer. It could also destroy the trust that’s been built with them.
I challenge you to perform this exercise on a regular basis. It will help create a more consistent customer experience with each visit reinforcing the declined recommendations given previously. And it will also help point out errors to any techs that need additional training due to recommending unnecessary repairs and/or failing to see needed repairs. Set a consistency goal in relation to this exercise and, when it’s achieved, have a pizza party to reward your techs.
Customer experiences are of course important in all areas of your dealership. The service drive accounts for almost half your dealership’s revenue and sees more traffic in a day than your showroom may see in a week. Make your service experience one that builds trust in your customer and loyalty will follow.
There was a fascinating article in Automotive News which discussed a new trend that many dealers are adopting: placing their service departments at the front of their dealerships.
In the article, it showcased Bill Underriner of Underriner Motors who was also the President of NADA in 2012, explaining why this concept was a wise strategy. With the service, parts and body shop accounting for, on average, 43% of a dealership’s annual gross profits, it made no sense to hide it as is the case with most dealership’s building design. Although costly, he expects that it will pay for itself within 2-1/2 to 4 years due to an expected 14% increase in revenue from those departments.
Many dealers focus too much of their marketing on building showroom traffic and car sales. It’s certainly an area in which they need to excel as well as sate their OEMs through branding. In some cases, OEMs are even subsidizing building redesigns to conform dealerships to a single look and feel. Given the high percentage of revenue generated by these fixed ops departments, however, why would you want to hide them in the back of your building?
The facts are that there is a transformation occurring within the automotive landscape. While the number of vehicle on the road has increased to 249 million, the number of vehicles on the road under warranty has decreased by 10%. The length of ownership has also increased from 34 months in 2001 to 58 months in 2012 – an increase of 170%. The trend of length of ownership increasing, in combination with the decrease in cars under warranty, means that there has never been a better opportunity to increase your fixed ops revenue.
By putting your service department front and center, implementing processes and technology that facilitate easier communications amongst departments while making information available that will encourage and increase up-sells to service clients, the opportunity to increase revenue has never been better.
To be continued…
I always feel very fortunate to participate in the Digital Dealer Conferences. Helping dealers and their management staff gain new insights and techniques to increase revenue is something that’s very rewarding.
On Tuesday, I was happy to be one of the first speakers at the three day conference. I presented to a full room on the strategies service management can use to transform their service drive into a sales drive. I spoke about using mobile technology and taking a new approach to customer retention with new vehicle acquisitions in the service drive — We’re leaving money on the table, folks!
In today’s automotive world, no dealer wants to lose business and the service drive is filled with potential sales opportunity. And I’m not just talking about up-sells on ROs. The audience was very receptive and inquisitive to the ideas I shared concerning increasing revenue and analyzing fixed operations to identify areas which can be improved. With so many quality speakers and sessions to choose from, I am grateful so many dealers chose to hear what I had to say. It’s always rewarding to have an intimate discussion with dozens of individuals at one time about how we can move our industry forward and think outside-the-box.
On the exhibit hall floor, our staff showcased MPi’s newest accelerator, EDGE SmartTech. Our team was inundated with dealerships interested in learning how our unique data can help technicians perform vehicle inspections at a higher caliber and present legitimate vehicle recommendations. It certainly proves that dealers are starting to recognize the revenue they are failing to take advantage of that’s presenting itself to them daily.
To the conference staff and all of the attendees of the 14th Digital Dealer Conference & Exposition, thank you for another great conference and for the privilege of assisting dealers.
Customer: “Is my car ready?”
Advisor: “Let me check…. I’m not showing that its ready yet, ma’am.”
Customer: “Do you know when it will be?”
Advisor: “I’ll have to check with the technicians. We’ll be sure to call you when it is, however. It should be done by the end of the day.”
Is this a conversation your service advisors or cashiers are having with customers? Wouldn’t it be nice to be able to have this conversation instead?
Customer: “Is my car ready?”
Advisor: “Hi Mrs. Smith, the oil change has been completed. The tech saw that the fluids were low in a couple of areas so he went ahead and topped them off. Your car is in the service bay currently getting the tires rotated and balanced. ETA on completion is about 30 minutes. Is there anything else I can answer for you?”
Not only would a customer be impressed, it would probably save your employee from having that same conversation with the same customer 3 hours later. Not to mention the time it would take them to track down and get the information from the various people involved to deliver it to the customer.
In today’s world filled with instant access to order statuses, tracking numbers and information, consumers are now used to getting immediate answers. With all the available technology at our disposal, and with that technology decreasing in price while becoming more powerful than ever, there’s no reason why a dealership can’t implement a similar tracking feature into their operations.
Having a system like this in place not only puts the power of information at your disposal for the purposes of customer service; it makes your operations more efficient. Gone are the days of the service advisor having to track down the tech to find out what’s going on with the customer’s vehicle. The tech doesn’t have to go to the parts counter to request parts for an RO, and the parts counter no longer has to track down the tech to deliver the parts.
Even at the most basic level, a system like this is worth its weight in gold. Of course, MPi takes this philosophy and multiplies it by a hundred but whether you go with a full-featured system like ours, or implement one of your own, the fact remains that customers want information. The more effort it takes to get them that information, the less time that service advisor has to write new ROs or upsell existing ROs on recommended repairs.
Businesses across the world are embracing and integrating technology into their operations to increase both efficiency and customer service. It’s time for your dealership to embrace technology and use it to create a more efficient and customer-friendly operation.
Transforming your Service Drive into a Sales Drive
In this presentation Holland will address how to empower the service department with tools that build connections with customers and drive owner retention. Although the obstacles can appear formidable, your service department can flourish in today’s rapidly changing automotive landscape. How auto dealer service departments will remain profitable and viable contributors to the business with fewer units in operation, longer maintenance intervals, and higher vehicle quality is a challenge. The subsequent reduction in vehicle volumes means that every visit, no matter how small, needs to be viewed as a vital opportunity. Many service directors are leveraging technology to be more efficient and profitable.
Technology in the service lane helps dealerships:
- Turn service customers into new vehicle sales customers
- Inspect every vehicle thoroughly to boost per-repair-order parts and labor profitability
- Hone customer-engagement processes to improve customer retention
- Conquest the service business from customers’ families and friends
New technologies in the service department have helped dealerships:
- Increase annual service revenues 21% and more
- Boost revenue per repair order $55 and higher
- Double the volume of vehicles inspected
- Increase fixed absorption rates 20%and more
- Sell up to 6 times as many vehicles out of their service drive
The ideas Holland will share are to help your service department create a plan for profitability despite today’s challenges in automotive services and repairs.
Attendees will learn five key actionable points:
1) How to develop a client retention strategy that builds trust between the dealership and the customer
2) How to develop processes that turn service customers into new vehicle sales customers
3) How to create follow up marketing strategies that engage customers who’ve declined recommendations
4) How to create a personalized service experience utilizing mobile technology
5) How to identify new opportunities and metrics to use to identify and remedy inefficiencies in service work flow.