When it comes to automotive dealerships there are two areas of note: the front and the back. The front is what’s often referred to as the sales area. It is here where customers go to buy their cars. Simply put it is where the business gets its sales from.
That said, there’s also another sales department that’s also part of the business. But rather than being in the front it is often, figuratively and literally found in the back. That is the service department and for many it’s the hidden world behind the glamour of the showroom.
Sadly, there are those owners who simply see the service department as a mere add-on. For them the main source of revenue is the showroom and the service department is nothing more than an afterthought to sooth customers. That can’t be further than the truth.
Yes, while service departments only account for a small percentage of the dealer’s revenue (some estimates put it at between 10% and 15%) it does account for a large percentage of the profits. Some estimates see it at over 50%. Then there’s another thing you should know as well – half of the customers that use service departments didn’t buy their cars from the same dealer.
Based on these numbers you really need to focus on making sure your service department, known as fixed operations, gets the support it needs from you. This way it can continue to make money for your business so that you succeed in the long run.
- Service personnel. They are the ones that are taking care of the customers. They are the ones who handle the servicing of the vehicles and also the ones who will recommend what needs to be done or what needs to be taken cared of soon.
The longer these service personnel can talk with the customer the higher the chance they can get more in terms of sales. When the customer is there the chances that they will say yes to any of the recommendations of the service personnel tends to be higher.
The reasoning is pretty simple. Since their vehicle is already there then then there’s really no reason for them not too. This compared to when you are talking to them on the phone where they have a much bigger chance of saying no.
But, this will only work if they feel that they are being taken care of. If your service personnel has to deal with a lot of customers they will be forced to spend less time with each one. This may alienate the customer such that they won’t be receptive to any ‘sales’ suggestions.
In order to keep this from happening you should have extra service personnel available during peak times. This is so even if you have 50 customers waiting they will all be attended to in a reasonably short amount of time.
- Customers. Whether it’s in the showroom and especially in the service department, customers are very important. Without customers you won’t be getting any revenue. New customers are always welcome but old customers must be retained as much as possible.
In order to do this you need to give your customers a reason to return. This means giving them incentives that not only helps them but also builds trust between you and them. This way they will remain loyal and keep coming back.
- Connect with them. This can be done either by direct mail, emails or whatever communication channels the customer wants. This is a way to let customers know of any specials or offers that they can avail of.
That said, the shotgun approach may not be a good idea in this regard. Sure, you will be able to get them all but then after you give them the promotion what next?
Using a more directed approach allows you to target specific customers at one time. This could be dependent on the year of their vehicle and the model. Since each vehicle will have different servicing needs you can send out communications to those that, say, need the 20,000 checkup or something like that.
This is much better since you are able to target the specific needs of the customer based on their vehicle. At the same time you don’t run out of marketing ideas since you can use the same tactic on the next batch that needs that same kind of service as the one you just sent.
Connecting with them doesn’t just happen when the customer is away. It also happens when they are in the building. When they are in your service area talk to them about their vehicles and get them to talk about their experiences with it. By doing this it will often lead you to being able to sell them on ‘legitimately needed repairs’ that their vehicle needs.
- Incentives. Who doesn’t want them? If a business gives you an incentive to come to their store wouldn’t you be more willing to do so. It’s human nature after all. That being the case you should also try and give your customers incentives so they are more than likely to come back and spend more at your dealership.
- Loyalty rewards. Airlines do this a lot. So do hotels and restaurants. It’s basically a reward for the continued patronage of their business. There are a variety of ways to do this. Airlines mostly use points which can then be converted to tickets.
For your business you can do something like every 5th service visit is free. This means that after the 4th visit their 5th one is free of charge then the cycle starts all over again.
- Pre-paid maintenance service plans. Give your customers the option to lock in the price for a set number of service visits. This way they don’t have to worry about footing the bill other than those not covered by the plan.
This will keep them from having to worry if the price for the service goes up. Because they don’t have to worry about it, they tend to come in more often than those who don’t have plans.
- Coupons and specials. Most of us cut coupons or use special flyers for one thing – to save money. This is true of any customer whether they are buying groceries or bringing their car in for servicing.
Sending your customers savings coupons or specials that they can use gives them an incentive to come in and avail of it. This is highly effective if you combine it with reminders that their vehicle is up for servicing. Not only will you let them know that they need to bring their car in you’re also giving them savings when they do.
- Convenience. If you’re customers work from 9 to 5 then give them the option to drop their vehicles off before they go to work. If this means you have to be open earlier then so be it. Also, you can offer them rides to their place of work as well as pick-up option so they don’t have to worry about how to get back since their vehicle is in your business.
Also, make it easy for them to get a hold of your service department. Whether it’s via phone or your website don’t make it hard for them to get through to you. If you do so they may go somewhere else and you will lose their patronage.
- Marketing. It doesn’t matter if you have a top notch service department or a top notch dealership. If no one knows of your existence or what you have to offer then it’s all for naught. Marketing can get you name recognition.
At the same time it also keeps your business fresh in the minds of your old customers. It also reminds them of the services that you offer and whether they need to come down for a visit.
- Training. This is something that all your service personnel need to have on a regular basis. With training they get added experience and know-how that they can apply to their work.
This gives them better expertise that they can use not just to service customer’s vehicles but also to answer customer queries. Doing so let’s customers know that their vehicles are in good hands and at the same time builds trust between your business and your customers so they keep coming back.
Of course, what’s also needed is the integration between your front end showroom and your back end service center. It’s not a competition – rather both are important ‘sales’ departments that just happen to have different functions.
But, is the fixed ops service department more important than the variable ops showroom. Do you even need the latter? Should you focus more on the former? Comment below.