As front-end margins continue their decline, dealers are more reliant than ever on fixed ops revenue. Fortunately, the opportunity to maximize service revenue has never been greater for dealerships.
In the last decade auto sales have boomed. Factory maintenance programs are driving more initial service visits. Increased CPO sales are creating more reconditioning and used vehicle service business. High recall rates are driving many customers back to franchise dealers.
So why do dealerships capture less than half of all potential service revenue from the vehicles in their service lanes? It comes down to inconsistent processes and the inability to meet customer expectations.
In a mobile-first world, customers want pricing transparency for standard services and they want to schedule appointments online. The drop-off, communications and pick-up processes are inconsistent at most dealerships. Why is it that a customer can order and track a pizza being made and delivered to them on their phone, but they have to call your dealership several times to check on the status of their vehicle—and then wait in line to pay at a cashier?
To maximize revenue potential, focus on improving these five key service processes with technology and best practices.
According to the 2017 JD Power CSI survey, only 13 percent of customers scheduled their vehicle service online. This is despite the fact that nearly all dealerships have an online scheduler and most service reminders are digital.
One issue with online scheduling is that many dealers are afraid of competitive shopping, so they don’t post prices online. It’s unrealistic to expect a customer to schedule an appointment for a 30,000-mile maintenance when they don’t know the price.
A service scheduling platform should be transparent, easy and convenient. Look for a platform that integrates with your DMS so that all customer information, vehicle history and other data is available, whether the customer schedules online, with a BDC or direct with a service advisor.
An efficient, mobile write-up process increases repair order (RO) revenue and improves the customer experience. Start with in-lane tablets to assist with customer reception and conduct a thorough and effective vehicle walk-around.
Look for a system that integrates with both your DMS and your manufacturer, so recall information and other data is easily accessible. Also look for integrations with your other third-party vendors; such as loaner program or tire program partners.
An electronic multi-point inspection (MPI) process uncovers new vehicle needs and drives more RO lines. Additionally, it creates a professional and consistent customer presentation. An effective MPI process has four steps:
- Identify all the work that needs to be done
- Have a quality conversation with the customer about the recommended services
- If the customer declines, identify the reason. Is it trust, timing or affordability?
- Offer a solution for the reason. If it’s trust, show visual proof of the repair with photos or videos, if at all possible. If it’s timing, offer a free loaner car. If it’s affordability, offer a payment solution.
One of the most important reasons to capture MPI data with an electronic tablet is so that you can use that data effectively downstream. This allows you to follow-up with the customer so you can re-capture unsold service recommendations, and also to market to customers shortly after their visits.
The ability to text customers and keep track of conversations is critical if you want to keep customers informed. Look for a compliant texting platform that offers the ability to text throughout the customer’s appointment.
Also, make sure your texting platform has a management dashboard that allows you to view all text messages between your employees and customers. To add convenience for the customer, introduce flexible online invoicing and payment options that can be accessed via embedded links within the texts.
To drive more second and third service appointments, use customer data and technology to build loyalty. Leverage your manufacturer’s owner retention program (ORP) and explore options to enhance it with digital marketing.
Adding display ads, search engine marketing (SEM) and social media campaigns to your service marketing program will significantly increase reach, frequency and response rates.
If current trends continue, fixed operations revenue will continue to grow as a percentage of dealership gross profits. Many dealers underinvest in service lane technology and marketing, compared to what they spend in sales. Improving these processes will increase efficiencies and drive more revenue.