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…
In today’s world, there are many standout companies when it comes to customer service; Zappos and Nordstrom being a couple of examples. These companies focus on providing their customers with world-class service and, because of that, people are willing to pay more while maintaining fierce loyalty. Not only do these companies earn the loyalty of their customers through the service experience, they transform many of them into brand advocates. The reason their customers patronize them and recognize this level of customer service is that it is, unfortunately, not the norm in today’s world.
Zappos and Nordstrom are not in business to lose money. In fact, both companies profit through their reputations of providing great customer service that, in turn, increase their customer base by attracting new customers eager to share in the experience.
The Olive Garden restaurant recently sympathized with a patron whose parent’s house had just burned down and decided to comp the party’s entire meal. The patron posted a photo of the comp’d receipt to the Internet in an effort to thank and show appreciation for the Olive Garden’s good deed. Because people aren’t used to acts of kindness and service from companies, many were skeptical and questioned the receipt as a PR stunt even after the patron posted links to news articles reporting the house fire and the Olive Garden’s PR agency denying their involvement. The photo quickly went viral and has not only spread through social media but has also been picked up by prominent news agencies like Yahoo!, The Huffington Post and the Consumerist.
By providing an exceptional customer service experience; your customers will become loyal and share their experiences with others. Even though people may begin with skepticism, by providing a consistent experience of excellent service, word will spread and customers will not only go out of their way to patronize your dealership but also to encourage others to do so.
Through technology, we’re more capable than ever to provide this experience to our customers in an easier, more efficient manner that will lead to increased revenue, loyalty, customer retention and consistently excellent CSI scores while allowing you to maintain an acceptable profit on your services.
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.