Maintaining a fleet of loaner vehicles for customers to use while their cars and trucks are in the shop is an increasingly vital feature of dealership service departments. How efficiently a dealership runs its loaner fleet can have a big impact on both service customers' satisfaction and the bottom line.
Russell Lemmer is an executive vice president at Dealerware, which offers a software package that enables dealerships to manage their loaner fleets digitally. Since the platform launched last year, Lemmer says, it has attracted "hundreds" of dealership customers that pay $400 a month for access to it, with added charges for such things as connectivity features and toll management.
Some of these customers, Lemmer adds, already are saving hundreds of thousands of dollars a year. The product reduces the amount of time needed to process a typical loaner transaction from nearly a half-hour to barely a minute, he says.
Lemmer will take part in a panel discussion about the future of service loaners at a forum sponsored by Fixed Ops Journal in Atlanta in August. He discussed loaner fleet management with Fixed Ops Journal Editor David Kushma.
Q: How does a dealership benefit from operating an efficiently managed fleet of loaner vehicles?
A: It's about profitability, and that manifests itself in three ways. The first is that dealerships don't get nickeled-and-dimed on typical operating expenses. The second is to make sure that the money that they have invested in this operation, in the form of people and assets like vehicles, are most effectively utilized, where they're getting the highest return on investment. The third is about elevating the customer experience so that you can get a customer who is willing to spend more, more often, and come back as a loyal repeat customer to your service business.
If you have a bloated, poorly functioning loaner fleet, you're bleeding money, you're not getting the most out of your cars or your people, and your customers are typically disappointed.
With a high-performing fleet and a well-run operation, you're minimizing that expense, you're getting the highest ROI and productivity out of your staff, and your customers are having a great time. You take a paper-based process that typically requires 28 minutes to get a car and turn it into something that's less than 100 seconds, fully digitalized, and allows customers to communicate by text messaging and get on their way.
How does a good loaner fleet make a service department run better?
It's a streamlined operation. Typically, dealerships are good at selling and servicing cars, but managing a loaner fleet is not a core competency. Loaners used to be a luxury-brand expectation, and now they've moved more into the mass market — part of the customer-centric experience.
So service isn't just about getting my car fixed at the best price. Service is about that experience, and a high-performing loaner fleet allows service departments to elevate that experience for their customers while minimizing the amount of bandwidth and resources it takes to deliver on that experience.
What advice would you give dealers and fixed ops directors about creating an in-house loaner fleet?
Start with your customer satisfaction scores. If you're getting punishing scores, why is that? We've seen a lot of customers who come in expecting loaner cars to be available, only to find out they have to wait for four hours and there is no alternative mobility solution.
Not having that fleet is superdamaging to the dealership. If I'm considering a loaner fleet, I would say, do I need it, and are my customers expecting it? And more importantly, am I losing business to a competitor by not having one?
And what should dealerships with loaner fleets do to improve them?
Focus on the key performance indicators. What's the size of my fleet; how much does that cost me; what is my length of loan? Maybe more importantly, once I've completed the repairs on a customer vehicle, how long does it take me to get the loaner vehicle back? How much fuel am I spending per contract per vehicle per month? Am I spending more time managing tolls than I am managing great customer experience? It's everything that would lead into that profitability equation: What is the money flowing out the door spent on these loaner fleets, and what is the money flowing in the door spent by customers? And looking at, hopefully, the surplus.