As fixed operations make up half of a dealership's gross profit, there is an opportunity to improve dealership services retention and profitability through a trust-building customer experience.
Research shows more than 43% of car owners choose to use third-party servicing centers, rather than return to an original equipment manufacturer dealer service department for their servicing needs. Car owners are more likely (73%) to use dealership service departments with cars up to three years old, the typical length of most warranties. As cars age, owners are much more likely (55%) to use an independent mechanic or repair shop, even for regular service according to the manufacturer's instructions.
What’s driving this trend? According to the same research, many customers stop doing business with their original dealership due to poor customer service. Often, this is caused by poor data organization, preventing dealers from curating a better, more personalized customer service experience.
However, with the cost of acquiring and servicing new customers rising all the time, retention of existing customers has never been more important. As the base of loyal customers declines amid inventory challenges, dealership service departments must engage existing customers with the right messaging, at the right time and in the proper format. However, in a sea of offers from competitors and a growing number of online-only retailers, dealers need to look at all their opportunities to build trust with new and existing customers.
Many service departments are leaving significant recurring revenue on the table simply because they aren’t focusing enough on customer retention strategies. Despite common misconceptions, the top factor for consumers isn’t always the price. Instead, the overall dealership service department experience also plays a key role in deciding where motorists take their vehicles for service appointments. Think of it like a restaurant—if you have poor service, you’re not likely to go there again, no matter how much you like the food.
Pricing anxiety is a symptom of a larger problem—lack of transparency. Consumers are afraid they will have to pay more money at dealership service departments, and they also feel like they never know how long routine maintenance or an unscheduled repair will take. Of course, most service departments provide estimates of costs and wait times. But the anxiety is still there.
Fortunately, there are proven customer retention strategies that can help bolster retention for dealership service departments, using intelligent tools to address consumers’ concerns and increase shop productivity
Dealerships already collect a lot of data, but they don’t always know how to make the best use of it. Some data may be on paper, while some may be stuck in disparate digital systems that don’t talk to each other. A comprehensive dealer intelligent planning solution can integrate with dealership and customer relationship management systems to deliver on the value proposition of these often-under-utilized systems. The dealership service facility can then combine customer and vehicle histories and preferences to improve transparency and create a more curated customer experience.
For example, one luxury automotive dealership knew upgrading its existing systems was critical to expansion plans. Automation was the key to scaling its processes, making them more accessible and efficient for everyone. The service department also needed a solution that automated repetitive administrative tasks for each service advisor and technician, freeing them up to focus on the customer experience.
The answer was intelligent planning software, using artificial intelligence solutions to facilitate setting customer appointments and vehicle delivery processes. Once in place, the workshop team was also able to spend more time on productivity, with tangible results that boosted the bottom line.
Are you ready to learn more about what to look for in automotive intelligent planning software and hardware? Click on the download below.
Many dealerships continue to operate service departments using paper cards, spreadsheets, and other manual processes. However, such an approach makes it difficult for the service manager to quickly get an up-to-the-minute view of ongoing jobs and scheduling in the workshop. Consequently, they may not be able to route parts to the correct service bay or give customers a status update on their vehicles. It also makes conducting audits and tracking service performance extremely time-consuming.
Conversely, an integrated, intelligent automotive solution deployed on rugged tablets can deliver a streamlined view of all ongoing activity, in real-time, for managers, service advisors, and factory-trained technicians. Using this approach, managers can save several minutes from each job while the centralized data flow gives them powerful new tools to better understand their workflows and profitability.
The top cause for customer dissatisfaction isn’t high prices. It’s a perceived lack of transparency about pricing and the length of service visits. Customers value getting an estimate of the time it will take to do a brake job or the next oil change when they set the service appointment. Pricing information may reside in multiple systems, so there’s no consistent basis for calculating service costs. Different technicians may also provide different estimates for the same work.
With a comprehensive automated solution, customers can receive rock-solid cost and timing estimates communicated via their preferred channels. This kind of consistent, reliable information helps build the trust needed to improve customer retention rates.
Automate customer outreach for scheduled services and offer discounts or incentives through customers’ preferred communication channels (SMS, email, etc). Customers will often respond to oil change and service prompts based on estimated mileage or calendar days since the last visit. It's convenient to have the dealership keep track of the laundry list of services a car needs. Even if people are driving less than they used to, it’s productive to provide timely reminders about servicing their cars.
An automated system can deliver personalized messaging at scale, depending on regulations in your geography. You can address communications by name or by vehicle make and model. Mention any service records to remind them of impeding recommended services based on mileage intervals in the owner's manual when they make a new appointment. The service advisor knowing the existing customer’s name and vehicle history when they walk into the service department makes a strong impression.
Customers today are keeping their vehicles longer than ever, so reach out to owners of your brands that may be out of warranty coverage. Many owners are more comfortable using a dealer service department with deep product knowledge and genuine OEM parts availability for unexpected repairs and maintenance. Aftermarket parts are another opportunity for older cars for budget-minded owners. Involve your sales team when dealing with owners of older vehicles — there may be opportunities for new car revenues.
Consider initial pre-paid maintenance policies on new and used vehicles to build loyalty with the servicing team. As customers keep their cars longer, the cost of an oil change every six months over the first year or two can pay off over the long term. For dealer groups with multiple brands and locations, make the maintenance offers good at all dealerships to keep used car service within the group.
Customers appreciate predictions on parts and labor costs and turnaround time based on parts availability and service department volume. With intelligent automation, your servicing team will be able to provide estimates based on history rather than optimistic guesses.
Customers don’t like to wait, no matter how many amenities you stock in your service waiting area! Equipping service advisors and technicians with rugged tablets and an intelligent automation solution is a great way to improve workshop productivity. Not only does it give technicians the information they need, like technical publications and instructional videos, at their fingertips, but they can also use Tablet-based diagnostic tools to perform tasks faster and ensure time/costs are tracked accurately. Service advisors can begin the appointment as soon as the vehicle enters the service drive.
Service bay utilization is at an all-time high at the moment due to increased service visits, vehicle recalls, and ongoing labor challenges. At many dealerships, low-visibility manual planning systems don’t give service advisors the necessary information to reduce bottlenecks that delay services. Conversely, digitized workflows can greatly improve scheduling efficiency, helping managers better utilize available technicians on any given day or week. Getting more productivity from existing resources is also much more cost-effective than trying to add additional workshop space or hiring additional factory-trained mechanics on a temporary basis.
With global vehicle sales down due to a combination of ongoing economic uncertainty and inventory shortages, it’s never been more important for dealerships to maximize their customer retention in key areas like after-sales servicing. Pairing rugged mobile solutions with intelligent, seamless software can help reduce workshop inefficiencies and curate better customer experiences both now and in the future. Doing so will ultimately drive customer loyalty, leading to higher recurring revenues at this critical time.
Find out how dealerships are changing the game in aftersales. Download our white paper Intelligent Planning: The Magic Sauce for Building Customer Loyalty in the Automotive After Sales Service Market.
Russell Younghusband has been involved in supporting industry with mobile IT projects for over two decades. For the last 10 years, he has specialized in automotive business change and efficiency programs to support the OEMs and their franchised networks with customer retention and aftersales strategies.
Subscribe below to be kept up to date on the latest industry and technology trends. We will send you a monthly blog round-up direct to your inbox.
