“Ask Jim” is an ongoing question-and-answer series with Jim Roche, Xtime’s vice president of marketing and managed services, on the pressing topics and issues within the fixed operations world.
Question: How much should I be investing in my service advertising?
Answer: Dealerships have historically allocated the lion’s share of their advertising budget to the front-end of the store — vehicle sales. In fact, a whopping 80 percent of dealership advertising spend is attributed to new and used vehicle sales and another 15 percent on the overall dealer group brand. Now juxtapose that with the service department, which currently only receives a mere five percent of all advertising spend, and you have yourself quite the enigma — why is fixed ops, which comprises 49 percent of a dealership’s gross profit, allotted such a small portion of the overall advertising budget?
Upping the ante further, the service department is also a key driver of customer loyalty and retention. According to Cox Automotive Inc.’s 2018 Service Industry Study, 74 percent of customers who visited the dealership in the last 12 months for service are likely to return to purchase their next vehicle, compared to only 35 percent of customers who did not visit for service.
It’s time for dealerships to address this imbalance to maximize profitability and secure lifelong customers. This means using advertising dollars across traditional, online and social channels to promote your service offerings as well as highlight expanded hours and fair and competitive pricing that can help attract customers. It also means following up with individuals who declined services and leveraging technology that enhances the customer experience, such as online cost estimates, text updates and online scheduling. This is particularly important considering that 45 percent of consumers not scheduling online did not know it was an option, even though 56 percent of consumers are more likely to service their vehicle at a dealership that offers this service.
At the end of the day, it’s about reallocating dollars to ensure that your advertising and marketing efforts align with your overall objective — to provide a superior, technology-enhanced customer experience. Whether a current or potential customer, it is the experience and convenience that you offer inside and out of the dealership that will drive long-term loyalty and overall dealership profitability.