Today, American consumers are hanging onto their vehicles longer. The average vehicle on the road today is 11.9 years old. Incredibly, that’s up from 10.3 years, reported more than a decade ago. If your customers aren’t buying new vehicles, they’re instead repairing old ones. So, refining your dealership’s service drive can make a critical difference in your profitability and customer loyalty.
Utilize your decrease in vehicle sales to increase service drive profitability.
As vehicles get older, they require more maintenance. That’s why dealership service revenues across the industry have been growing strongly in recent years. Revenues have increased from more than $80 billion in 2011 to $116 billion in the last year. According to the National Automobile Dealers Association (NADA), last year the average new-car dealership netted 16.2 percent of its profit from service parts and labor. They wrote 18,544 orders per year with an average staff of 16 technicians (including body shop).
But service revenue is not the only crucial contribution to a dealership’s overall revenue. Service loyalty plays a key part in a dealership’s complete loyalty, as well. Below are simple data-driven suggestions for running a dealership service department in today’s competitive landscape.
Don’t be afraid of competitive pricing.
It’s no secret that consumers believe dealerships are the most expensive place to get their vehicle serviced. That’s why why many customers stop visiting the dealership service drive once their warranty expires. Dealerships that have hesitated when putting pricing online due to fear of being compared to lower-cost independents must meet this consumer concern head-on.
While industry data does show a price differential, it’s usually less than customers expect. For instance, dealers have long promoted the benefits of dealership service and genuine parts. But with aging vehicles on the road, marketing campaigns need to connect to the customers’ desire to have their vehicle performing perfectly. Consumers who hope to drive their existing vehicle after their warranty has expired will be more open to quality messaging praising the quality of your service lane. They are more impressionable when they hear they are sacrificing quality and long-term dependability by entrusting their vehicle to the low-cost competitors.
Locality can benefit your business.
Research finds that consumers are unlikely to travel more than 20 miles for a car service. Almost three-quarters of vehicle service visits take place within 10 miles of a customer’s home. Focus on marketing to your existing local customers with proximity and convenience messaging. You want to keep as much business as possible out of the grasp of local independents, tire stores, quick lubes, etc.
Today’s digital advertising platforms have powerful capabilities, and your service drive marketing campaigns should be taking advantage of them. Ensure the team managing your service department campaigns focus tightly on consumers who regularly visit your service drive.
Dedicate a service lane to time sensitive services.
Many consumers believe independent mechanics are quicker and more affordable than dealership service drives. Keep your existing customers, and conquest that business back from those competitors by addressing concerns head-on and reducing or eliminating their advantage. Review how orders are handled with your dealership service department and consider setting up a dedicated service drive or repair bay for high-priority repairs. Market it directly against local competitors on speed, cost, and competence, and watch your revenue and customer loyalty increase.
Integrate the service drive into your sales.
Great service performance supports exceptional sales performance, as well as customer loyalty. In fact, industry data suggests that after five service visits at your location, a customer is three times more likely to purchase their next vehicle from you. Service conversion is a tremendously powerful method of sales prospect generation. It depends not only on ensuring that your service drive is providing an excellent customer experience, but also on whether you have the right processes in place to connect your service to your sales department.
Does your dealership have someone dedicated to converting service customers into sales prospects – reaching out with service appointments? What tools do you provide that employee to identify the best prospects? Are they knowledgeable about the people who will be showing up in your service drive daily? Ensure they have the right resources and authority to structure an offer and close a sale. If the prospect isn’t quite ready to close, assign someone to handle keeping the relationship active and working towards closure.
Dealerships who successfully convert service customers into vehicle sales customers have answered have considered the previously mentioned points, and use tools available through third parties.