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June 19, 2017 01:00 AM

Why customers stray, and what your dealership's service department can do about it

Richard Truett
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    Richard Truett, Fixed Ops Journal

    If new-vehicle sales have peaked and are leveling off, as many industry analysts believe, the pressure to generate profits from fixed operations is likely to increase.

    But given the U.S. industry's seven straight years of year-over-year sales growth, the future holds great potential for your shop to boost the number of repair tickets you write, as cars age and maintenance needs increase.

    Most seasoned service managers, I'd bet, instinctively know what it takes to attract and retain customers and grow their businesses in good times and bad. But it is reassuring to have hard data to fortify these beliefs.

    Last year, Cox Automotive, surveyed more than 4,400 consumers about the factors that shape their decisions on where to go for maintenance and repairs. (You can see the whole survey here: autonews.com/repairstudy.)

    These are the survey's high points.

    Service departments have a big role in new-vehicle sales: Nearly half of the respondents said their experience in the service department "greatly influenced" their likelihood of buying another vehicle from the dealership.

    Another 36 percent said they were "somewhat influenced" by their service experience with the service department. Bottom line: Make sure your customers are happy when they leave your shop.

    Franchised dealers are snagging fewer than one-third of repair orders: The average vehicle makes 2.7 service visits a year. Quick-lube shops, tire stores and independent repair outlets account for about half of these visits; dealers take 30 percent, and the rest go elsewhere — body shops, retail stores and specialist businesses.

    Bottom line: With an average bill of $178 per service visit, dealerships are missing out on as much as $99 billion in annual revenue. It's unrealistic to think that franchised new-vehicle service departments could fix every car on the road. But does your shop have capacity for more tickets?

    Independent shops are strong in several profitable niches: Dealerships do not dominate in state safety inspections, brake repairs, engine repairs, air-conditioning service, suspension repair and tire sales. Bottom line: Maybe it's time to consider setting up specific repair bays for these types of repairs, promising your customers fast service at competitive rates.

    A visit to the service department during vehicle delivery builds business: Only 41 percent of buyers of new and used cars were introduced to the service department when they purchased their vehicle. Of these customers, 53 percent said that introduction was a factor when they decided where to take their vehicle for service.

    Customers who were shown the service department were 1.5 times more likely to return to the dealership for service in the 12 months after purchase. Bottom line: Every delivery must include a visit to the service department and a quick tutorial on how to make an online appointment.

    Half of new-vehicle customers leave the dealership's service department after their warranty coverage ends. Only 3 in 10 dealership​ service visits are for out-of-warranty vehicles.

    One of the best ways to raise revenue is to improve service retention among customers with out-of-warranty vehicles. Bottom line: Instead of investing in marketing initiatives to try to get customers back, don't lose them in the first place.

    Value — or its perceived absence — is the main reason customers don't bring out-of-warranty vehicles back to the dealership for service. Customers believe that they will be overcharged, that labor costs are too high and that they won't get an accurate estimate of the total cost up front.

    Most dealerships are competitive with independent shops on the costs of such things as oil changes and tire sales. Bottom line: Maybe it is time to compete on price with specialty shops for muffler replacements, air-conditioning repairs and other common repairs.

    Eighty-one percent of customers said it is critically important to find repair price information on the dealer's website when they are shopping. Transparent pricing, linked with coupons and special offers, resonates with consumers.

    Consumer experiences in other industries are influencing the expectations of automotive customers, says Jim Roche, senior vice president for marketing and managed service of Cox Automotive's Xtime, the appointment-setting platform used by 29 vehicle brands in 8,000 dealerships.

    "Uber. Amazon. Dollar Shave Club. Open Table," Roche says. "All of these fantastic experiences we have as consumers that are technology-enabled shape what we expect to happen inside of automotive.

    "If you're working off dated assumptions of what your customers want, you are not going to be driven to try and emulate those."

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