WHAT WE HAVE HERE IS A FAILURE TO COMMUNICATE
While U.S. vehicle sales have been breaking records over the past couple of years, signs point to a coming slowdown. Many of these sales (by some counts, up to 30 percent) have been driven by leases. In fact, 800,000 lease maturities are expected to hit the market in 2016, resulting in a potential glut of prime used vehicle inventory.
Regardless of the source, a prepared dealer will have plans to take advantage of the next phase of this unprecedented influx of vehicles on domestic roadways. Whether your customers are purchasing or leasing vehicles, industry data continues to underscore a secondary marketing and revenue opportunity for dealerships that is too often overlooked: vehicle servicing.
DEALERSHIPS ARE MISSING THE MARK
According to DealerSocket’s 2015 Dealer Action Report (DAR), 66 percent of dealerships list customer retention as their top goal, and 57 percent name revenue growth. Taken together, these stats should reflect an obvious service marketing opportunity, particularly considering the most compelling statistic of all: 60 percent of the average dealer’s net profit comes from fixed ops.
Many are selling the vehicles and stopping there. Unfortunately, dealerships across the board are missing the mark on winning over repeat business, which begins with encouraging ongoing utilization of the service department. Only 30 percent of these already acquired customers come in for their service needs in the first year of vehicle ownership, with service visits steadily declining to almost none through year five. But why?
TECHNOLOGY IS KEY
To increase retention rates, dealerships should take advantage of the information already available to them in their CRM and DMS, and proactively communicate service opportunities to their customers. Even though the data demonstrates most customers do not return for service after purchasing a vehicle, there are some simple steps that can be taken to increase first year service visits.
After the sale is complete, walk the new buyer to the service department and introduce them to the service manager. Customers are more likely to do business with people they already know and trust.
Be proactive and encourage them to schedule their first appointment for a basic oil change a few months down the road. An overwhelming 88 percent of customers will schedule a service appointment if they are simply asked.
Increase show rates by sending confirmation and reminder emails or texts. Your CRM will give both you and your customer the cues when service is due and provide you with the ability to set up automated messaging.
Utilizing your CRM to track customer behaviors and monitor vehicle service cycles allows dealerships to communicate to customers when service is due on their vehicle. But it goes beyond just service appointments; dealerships can leverage their technology to stay top-of-mind with customers and capture this increasingly large percentage of the market that is leaving for small, outside shops.
CHANGING CUSTOMER PERCEPTIONS
According to the DAR, 28 percent of dealerships believe the single most important problem facing their service departments is the customer perception that outside shops are less expensive.
Even if these shops can claim a price advantage, dealerships must market and leverage the many advantages they do have over the competition, including items such as:
- Complimentary services (free car washes, WiFi access, shuttles)
- Warranty protection
- High quality OEM parts
- Faster and higher quality service
- Easier appointment scheduling due to greater availability
- More insight and capabilities, including software updates and access to OEM information
- Highly specialized technical staff for your customers’ specific vehicles
Communicating your service advantages and simply connecting with customers when they need an oil change or tire rotation—within the first year when they’re most likely to come in for service—will help build customer awareness, and in turn, increase loyalty, retention, and revenue for your Fixed Ops group.
ONCE THEY’RE IN FOR SERVICE
Once the customer comes in for service, the opportunities don’t stop there. Secondary to fixed ops marketing and promotion, focusing on loyal customers can also turn into more sales for your dealership down the road. Servicing allows dealership employees direct face-to-face contact to follow-up on other opportunities identified by your CRM:
- Ask if they’d like to see a new vehicle if their current lease is close to ending
- Consult with a salesperson for a test drive on that car they’ve been researching (by flagging VDP views from your dealer website)
A PRIME EXAMPLE
One dealership in New York is a perfect example of how DealerSocket’s integrated technology helped increase customer loyalty and retention through service opportunities. The dealership achieved a 44 percent customer retention rate–much higher than the industry average—by integrating their sales process within the service drive, leading to repeat business. They established a two-step process of introducing customers who purchased a vehicle to the service department to immediately schedule the first oil change. Once the customer came in for their scheduled appointment, they were informed that 15 percent of service dollars spent would go toward the purchase of their next vehicle. This solution has proven to increase retention in both service and sales.
Utilizing tools like DealerSocket’s integrated platform to analyze data provides dealerships with insight into the easiest to reach and most likely to buy customer base: current customers. Fixed Ops accounts for only 12 percent of a dealer’s revenue on average, but it makes up 60 percent of net profit.
With the millions of cars recently sold or leased hitting the road, the smart dealer will now turn their eye to the next logical phase of vehicle ownership: service. The goals of customer retention and increasing revenue are high on every dealer’s list. Both goals are more easily attained when dealers leverage the tools that are already on hand to reach customers and boost service bay visits.