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Customer Retention in the Service Department (Part Two)

This is the second installment in a two-part series by Steve Hall. To read Part One, click here

Service Advisor 2

This is the second installment in a two-part series by Steve Hall. To read Part One, click here

Now that you understand the importance of custom retention, the next logical question is how do you capitalize on these opportunities? The most common way has been express service. It is probably the single largest retention tool we have available.

Express service is a business we know we need to be in. If we don’t offer, and actively pursue this work, our customers can and will go to the aftermarket competitors. For the most part, we aren’t losing our customers to other dealers, but rather to Jiffy Lube, Goodyear, Pep Boys, Meineke and independent shops. It’s not uncommon for a metro dealership to have a couple hundred of these types of shops within a five mile radius of their dealership. This makes the competition fierce.

The advantage we have, as dealerships, is all of the customers start as ours. Let’s think about this. Every vehicle that is on the road was originally sold by a dealership. It was what we did after that point that allowed us to either retain or lose that customer. In an effort to retain more of these customers, express service became a battle cry.

The Advent of Express Service

Virtually every manufacturer and most dealerships started some sort of express service system. The problem with this was twofold.

The first problem is, because the state of the industry a few years ago, dealers had to accelerate their implementation of express service to try and get more customers, immediately. As vehicle sales plummeted, and due to better quality of vehicles being produced, warranty work continued to decline. Virtually overnight, industry contraction had mandated that we must fight for every customer we have. The years of continual industry growth and a strong economy had ended; a true focus on retention had begun, and thus express service became a mainstay.

This happened so fast that the dealer body didn’t have a chance to really learn how to implement a profitable express service program.  We didn’t have time to start by learning to crawl, then walk, then learning to run. Instead we had to start running immediately, and this caused many to stumble.

The second problem was that the automotive business was so tough, we got really focused on metrics. Unfortunately, traditional service metrics and express service don’t correlate well together; they don’t truly relate how the business is doing. The very acts of becoming more price competitive and pursuing more oil changes and light maintenance work, negatively effects metrics like: hours per repair order, effective labor rate, and gross profit margin. Though there are ways to negate this downward pressure, most dealers didn’t have the time, forethought and information to understand or implement the solutions.

When we start to focus on express service and drive a higher number of low mileage vehicles or light maintenance vehicles to us, these are the circumstances that commonly occur. Drops in hours per repair order and effective labor rate start the cycle of stress and the conversations of “What is happening to our business? Why are our numbers falling?” This is the common. How we react to this can make or break our retention goals.

Doesn’t every vehicle eventually wear out or break down?

Tires, brakes, batteries, air filters, wheel bearing, cv boots, transmissions, head gaskets… the list of items that wear out or break goes on and on. If we have done a great job of retaining our customers, we will get the repair work and that will help keep our overall mix healthy.

It seems many times we take the short term view and give up just before things get good for us. But how do we avoid this? If we follow our processes, give great service, present the items needed, develop a great relationship with the client and know that even if they don’t buy today, we will be the one they contact when the car won’t start, or the tire finally blows out, or the brake squeal gets so bad they must have it repaired. They will do this because we have the relationship with them and we have earned their trust. At that point we are their “go to” place and they are still ours to lose.

Even if the customer decides not to repair anything, they WILL need another vehicle, so keep this in mind. Never forget the CNW Marketing Research study that we talked about earlier. Remember the key results: 86% of regular servicing customers that you originally sold will become repeat vehicle buyers. Yet, it falls all the way down to only 8% of customers you originally sold will become repeat buyers if they never service their vehicle with you.

You can easily see that once we do a great job with retention, by utilizing express service as a retention tool, we will be able to grow not only our service department but also our complete dealership for the long term. Utilizing better metrics will allow you to do that with less stress and more understanding of the real picture of what it takes to build your business.

About the author

Steve Hall

Steve Hall

Steve Hall is a full-time instructor for the NCM Institute and is responsible for the development of its Fixed Operations training curriculum, with an emphasis in express service management, collision management and parts and accessory management. For more than 25 years, Steve’s experiences have encompassed almost every aspect of the retail automotive service, parts and body shop business. He was an equity partner in two dealerships and has held management positions in all areas of auto dealership Fixed Operations, including Service and Parts Director and Vice President of Fixed Operations over 19 stores.

Permanent link to this article: http://blog.ncm20.com/2014/10/customer-retention-in-the-service-department-part-two/

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