Service lane can be a great place to talk vehicle trade-ins

June 18, 2018 01:00 AM

Alysha Webb

Dealer Bill McDaniels says he avoids "pouncing" on service customers to discuss trade-ins.

When customers enter the service lane at one of Bill McDaniels' six dealerships, a service adviser greets them, walks around their vehicle, reviews the work to be done, and shows them to the waiting area.

Then the "concierge service" takes over: A salesperson offers a bottle of water, presents a business card and discusses the customer's transportation needs. The salesperson checks back in 15 minutes to see whether the guest needs anything.

And he or she may casually ask: "If we could get you into a new car for what you're paying now, would you be interested?"

"It's a very soft approach," says McDaniels, owner of McDaniels Auto Group in South Carolina. "We don't want [customers] to get out of the car and start pouncing."

As new-vehicle buyers increasingly shop online, dealerships are relying more on their existing customer base to boost sales. Service visits offer a great opportunity to get to know these customers, and plenty of sales tools identify likely candidates to purchase a new car or truck.

But selling out of the service lane requires an approach tailored individually to each customer, dealers and analysts say.

So-called equity mining in the service lane is "a great idea," says Lee Harkins, president of M5 Management Services Inc., a dealership consultancy in Pelham, Ala., that specializes in fixed operations. But a hard-sell pitch isn't the best way to approach service customers, he warns.

Service departments "are trying to fight for customer retention, to get them to come back," Harkins told Fixed Ops Journal. Rather than put the pressure on, he advises, "just bring [the possibility of buying a new vehicle] to the customer's attention with a comment in passing. Then you have to follow up."

At the McDaniels dealerships, the initial concierge contact is followed by a note left in the service customer's vehicle saying the group would like to buy it.

The service lane has become a crucial source of business beyond repairs, McDaniels says, because walk-in dealership traffic has vanished. He estimates that 85 percent of his vehicle sales emerge from appointments made online. Only in the service lane, he says, can a dealership really talk to any customer.

"We are working the service lane really hard to get as many customers back as possible," says McDaniels. He says he sells as many as a dozen new vehicles each month out of the service lane.

Sales and service

How dealerships can encourage vehicle sales among service customers

Get the service department's cooperation in talking with customers about trade-ins.

Create a dedicated position for these sales and select the right person to fill it.

Avoid the hard sell.

Don't wing it; follow a set process.

Brandon Honda in Tampa, Fla., relies on its service lane for about 35 percent of its new- and used-vehicle sales volume, says Grant Hocking, the dealership's quality assurance manager.

"My No. 1 focus is to sell cars out of [the service department]," he says. "I want people to stay at the dealership, be happy, and be taken care of. From that comes car sales."

Hocking regularly visits the dealership's service lounge to tell waiting customers that his job is to help them. He asks about them and their vehicles.

Then he turns to equity-mining software called Dealer Wizard, produced by a company of the same name in Austin, Texas. Using artificial intelligence, the product assesses a customer's credit history and equity position in his or her vehicle. It even recommends specific models at the dealership that the customer could buy.

Hocking uses this information to tailor an offer for a customer. He produces a printout showing how much the customer's trade-in is worth and suggesting some new models of interest.

"Did you know your vehicle is one of the most desirable in the market?" he asks. "Can I show you a buy bid?"

To make sure the service department buys into the process, Brandon Honda pays a service adviser a $50 bonus if one of his or her customers with an open repair order buys a new or used vehicle from the dealership within three days.

In the past year, Brandon Honda has consistently sold 150 new vehicles a month out of the service lane, Hocking says.

Todd Stewart, chief sales officer at Dealer Wizard, says his company's software "helps dealers retain their owner base." More than 1,000 dealerships pay $1,695 a month for the software, with no set-up fee, he adds. Dealerships also can use Dealer Wizard to contact customers before their service appointments to let them know they are eligible to trade in their vehicles.

"One thing we don't want is to impede the service process," Stewart says. "We believe in a respectful approach."

Exchange rate

A service department that is writing 50 or more repair orders a day needs an exchange specialist, says Mark Queen, a partner at ELEAD1ONE, a dealership software provider in Valdosta, Ga. The company's Xchange Trade Up Program software lets a service department know which customers have vehicles that are good candidates to be traded in based on their model year and mileage.

The service department can print out the information and hand it to the customer, or "softly leave it on the dashboard," Queen says. He recommends that a dealership exchange specialist be "diplomatic enough to do this with kid gloves but still consistent enough to convert people into test drives."

ELEAD1ONE will send a trainer to a dealership to teach the process, he adds. "Stores have realized that face to face is still the best opportunity to sell to a customer," he says.

About 2,000 dealerships used the trade-up software. ELEAD1ONE declined to disclose its price.

At Ray Catena Lexus in Freehold, N.J., a porter scans the vehicle identification numbers of customers entering the service drive. The porter prints out each vehicle's estimated trade-in value, using Vin-UP, a new product that the dealership is pilot-testing. The porter hands that information to the service adviser, who passes it along to the customer.

"We tell them, this is a rough idea of what your vehicle would be worth if you have any interest in trading it in," service manager Eric Cohen says.

Cohen adds that he likes the instant valuation. "I don't have to pull my sales manager away from another deal" to appraise the vehicle, he says.

Vin-UP aims to enable service customers to explore a trade-in while avoiding the "enormous amount of negative feeling" from having a salesperson approach a customer in the waiting area, says Bruno Lucarelli, who, with his wife and business partner Rochelle, created Vin-UP.

They distribute Vin-UP in the United States, where the software provides both Kelley Blue Book and Black Book values, and in Canada, where Vin-UP relies exclusively on Black Book, Lucarelli says. Since the company is only a few months old, Lucarelli says, it hasn't settled on pricing for the product.

Cohen can't yet say whether Vin-UP is generating more vehicle sales in his dealership's service lane. But it's a great way to start the conversation, he adds.

"Say the repair bill is $2,000 to $3,000," Cohen says. "We say, why don't you put that money into a new vehicle?"