By Anthony Monteiro, Chief Operating Officer, DRAIVER
It’s easy to say, “You should focus on delivering a knock-out customer experience in service.” Every dealer aspires to do exactly that, because we know a great experience can translate into greater loyalty, new customer referrals, and improved retention rates.
However, saying a thing and actually doing it are two totally different beasts. And, while there are a lot of areas in the service department you can improve via digital tools and automation, one improvement that most dealers are probably overlooking is in vehicle pickup and delivery logistics.
In fact, creating new efficiencies through vehicle logistics can create brand new profit centers, all while improving your customers’ experience. Well-managed vehicle logistics create at least five potential profit areas:
1. Service Valet
4. Service equity
5. Service memberships
Let’s do a deeper dive into each of these areas to see how creating efficiencies with a well-designed vehicle logistics program could deliver an unexpected windfall for your dealership, and set you up for a happier, more loyal customer base.
First, what is your service department doing that caters to customers’ desire for a convenient experience? How are you showing customers you value their time and recognize their hectic schedules?
Nothing captures this reality more concretely than Service Valet, meaning at the time of service appointment booking you provide the option to pick up and drop off their vehicle. This means more service profit for you, and less hassle and time wasted for them. DRAIVER found that approximately 60 percent of service customers will pay an additional $50-$100 for Service Valet when given the option. Why? Because you’ve greatly reduced the stress, effort, and time they’ve sunk into getting their vehicle serviced.
In fact, it is estimated that adding this service alone can translate to 30 to 40 percent increases in gross profits and a double-digit increase in retention rates. To really get this service right, dealers should implement a Service Valet solution that offers a real-time tracking link similar to Uber or DoorDash. That will put both customers’ and dealers’ minds at ease while vehicles are in transit and promote transparency and accountability.
Another profit booster that’s often overlooked is ridesharing services like Uber. A vehicle logistics program that incorporates ridesharing can benefit both your customers and your employees.
For your customers, the benefit ties back to convenience: Those that have declined Service Valet can take advantage of ridesharing to travel to or from the dealership while their vehicle is being worked on. That means they’re not stuck in your waiting room for hours on end, and are more likely to approve recommended services since you’ve given them a flexible mobility solution.
For your staff, the ridesharing option can simplify vehicle moves that normally waste a lot of time and effort by eliminating the need for “chase” drivers. This solution also provides a dynamic alternative to adding another dealership shuttle van, potentially reducing costs while providing a more effective solution – a win-win.
We already know that the typical vehicle reconditioning process takes nearly two weeks. When demand is outpacing supply to the extent it currently is, dealers simply can’t afford that kind of frontline ready (FLR) time. While there are other ways to improve recon cycle times – such as digitizing and automating the stages of reconditioning – it’s also true that dealers can shave days off vehicle transportation time.
How? By leveraging a solution that eliminates the need to hire or find a porter to move a vehicle from the dealership or auction to the recon facility and then the frontline. Expediting average recon cycle times, reducing the total number of trips needed to prep a vehicle for the lot, and getting vehicles on the lot sooner all translate to increased profit opportunity via greater monthly throughput.
Even better, if you market the vehicle effectively from the moment you acquire it all the way through the reconditioning process, it’s possible to make a sale and go straight from acquisition to the customer’s driveway without the vehicle ever even going to the lot. If you can do that at scale, you’re looking at a potentially massive profit increase.
Think back on the value of the Service Valet. It turns out, there’s a way to take that profit opportunity even further by proactively offering customers in equity a deal on a newer vehicle. Consider the following scenario: You travel to pick up a vehicle for scheduled service, but you also offer that customer a loaner vehicle to drive for the day – and to appraise their vehicle while it’s at the dealership.
You’ve now built an attractive sales pitch into an already convenient process for the customer. You’ve also set yourself up to potentially acquire new inventory while reducing the size of your loaner fleet and improving your CSI scores in service. Wins across the board.
In a way, service memberships are the culmination of all the improvements we’ve discussed up to this point. Customers like memberships. They like knowing what value they’re getting for a fixed amount, month after month.
By implementing the previously mentioned solutions in your service department, you position yourself to offer regular service with a loaner car and/or ridesharing service on a membership basis. If you can secure buy-in, you can lock down customers for the long term, going beyond mere loyalty. Increased retention leads to a more predictable and scalable service approach over time, improving profitability and stability.
There’s never a wrong time to reevaluate your service department and consider where you might be able to cut costs or drive some additional revenue. However, implementing the vehicle logistics solutions I’ve described here goes well beyond that – it points the way to entirely new profit centers within the dealership.
Are you ready to seize these profit opportunities that are hiding in plain sight?
About the Author
Anthony Monteiro is the Chief Operations Officer for DRAIVER, the nation’s top On-Demand Driver network powered by an AI logistics platform.