If you look at the data, the expert analysis, and the firsthand accounts of dealers themselves, it’s undeniable we’ve entered an era where “status quo” in the automotive retailing industry means plateauing vehicle sales, rising costs, increased regulation, and stagnating profits.

To continue to thrive amidst the changing dynamics of the automotive industry, the leading dealers are focusing on identifying – even creating – new profit centers inside the four walls of the dealership. One often overlooked profit center is in the service department; overlooked because too many dealers have unintentionally boxed themselves in with an old way of marketing.

During the recession, the service department proved to be a steady and reliable profit center as sales plummeted: people focused on maintaining aging vehicles while holding out for sunnier days, economically-speaking. Even now, the vehicle fleet gets older – averaging 12 years old in 2017 – every year.¹

But, dealers can no longer afford to draw a dividing line in their minds between sales and service. You use your current customer data to bring people in for service, but have you considered how many of these customers might actually be ready to buy a new vehicle?

Imagine if you leveraged that same DMS data to disrupt the buying cycle altogether, bringing service customers into the sales funnel sooner – before even they know they’re in a position to buy. With customer defection post-sale north of 50 percent, retailers need to be in front of service customers to disrupt the buying cycle and minimize defection.

You can achieve this with event-based, targeted marketing.

Event-Based Targeted Marketing

Perhaps no statistic highlights the cost of the gulf between sales and service better than this: 80 percent of new vehicle buyers never make it to the dealership’s service department, and 80 percent of service customers never make it to the sales floor.²

Event-based, targeted marketing allows you to turn the traditional view of how these departments function (sales first, service later) on its head, by revealing the sales leads that were present in your service department all along.

By basing your targeting on specific, predetermined service events, you create a new and greater revenue opportunity: moving customers who have come to the dealership for maintenance on an aging vehicle into a newer one – ideally a similar model at a similar monthly payment.

This might sound like a pipe dream at first, or at least an approach that depends on unusually gifted or aggressive sales people, but consider this: 75 percent of customers would trade vehicles to upgrade if their monthly payments remained the same and, of that number, nearly 50 percent are not even aware that upgrading vehicles is an option.³

Unfortunately, what often plays out in today’s dealership is a different scenario: Dealers perform a costly service job on a vehicle and the customer pays the bill, only for a salesperson to reach out a short time later with an offer on a new vehicle at a lower payment.

Now the customer is annoyed. They may not have even been considering buying a car, but now the dealer has made a compelling offer with really poor timing, and demonstrated a lack of communication between service and sales.

What’s the difference between this fumbling mistake and event-based, targeted marketing? The proper utilization of data from the DMS.

Qualifying that sales opportunity against specific criteria before the service work happened would have prevented a mistake that alienated a customer and may have cost you future loyalty and business. Instead, the sales team could prepare a customized vehicle offer and approach the customer in the Service department.

Having the capability and know-how to hand-pick leads from your customer data is critical to the success of event-based, targeted marketing. There is a whole host of criteria dealers can look at to make sure prospective leads are worth the resources necessary to reach out.

Equity position, transaction type, payment, interest rate, model — these are just some of the ways to sift the data to the best possible leads. The mistake some retailers make is looking at equity position alone which, given rebates, incentives, dealer cash, etcetera, can be misleading.

Besides creating a new potential for sales revenue out of the service department, consider the additional ways in which this approach, employed creatively, could indirectly boost activity on the sales floor itself.

Used cars make up over 40 percent of a dealer’s retail⁴ – how do you move that nagging, aging inventory quickly?

With event-based, targeted marketing, you could create a pre-owned campaign, targeting specific makes and models and matching customers who are eligible for upgrades in similar vehicles.

Now, you’ve not only boosted sales, but you’ve rid yourself of vehicles that have been on the lot for four months and stayed head of your turn – freeing up space for the well-maintained vehicles you want on your pre-owned lot.

Finally, as lead generators go, event-based, targeted marketing is perhaps the most economical, because the leads it provides are already in your dealership. What you’ve done is make them detectable for the first time by matching desired criteria from your data with specific event triggers; in other words, letting preexisting information you already have go to work for you in a profitable new way.

Conclusion

A reliable marker for success has always been an individual’s ability to adapt creatively to changing circumstances and challenges.

In the same way, today’s dealers are adapting to a maturing market by seeking out new ways to generate revenue and boost the bottom line – often by leveraging existing tools and solutions in new ways or to new effect.

One such profit-center is readymade and waiting in every dealership’s service department, its sales leads hiding in plain sight in your customer data.

Disrupt your buying cycle today with event-based, targeted marketing, and start turning missed opportunities in service into better qualified prospects, higher closing ratios, and improved gross profits.

¹ Bloomberg

² Digital Dealer

³ Auto Alert

⁴ Automotive News