Building More Profits in Fixed Operations

There is no denying that the last year has been a tough one for auto dealers. Sales are down and consumers are keeping their vehicles longer. That trend of customers retaining their vehicles longer, however, has led to one of the few bright spots for dealers during the recession: fixed operations. With customers holding on to their vehicles longer, there has been an increased concentration on vehicle maintenance and repair. After all there’s no point holding on to a vehicle that doesn’t work. With that in mind we spoke to some experts in the fixed operations field to find out how dealers can squeeze more profit out of their service lanes.

Boosting fixed ops profits

The first question we put to our experts was the obvious one: How can dealers boost the profits from their fixed operations departments?

One obvious option that many dealers have used is to send direct mail of email offers to customers who have bought cars from them in the past. Gary Nixon, president and CEO of CIMA Systems, warns, however, that “Many dealerships attempt to do this with “blast” direct mail or emails offering a single service special, such as a LOF [Lube, Oil, and Filter] discount. These blasts then leave the dealership wondering, “What do we offer next?”

Nixon advices that you use “focused ‘drip’ marketing,” instead of blast emails. With a “drip” marketing focus instead of a “blast” marketing focus, dealers should be “continuously communicating specials and promotions specific to the customer and to his or her vehicle, model and mileage…in a way the customer prefers, whether phone, email (with video), text, blog or hosted live chat,” adds Nixon.

Sending out a continuous “drip” of relevant email offers is more effective than traditional blast emails or bulk mailer for two reasons. First, when you target your offers to your customers’ needs, your odds of winning their business goes way up, because you aren’t sending out emails that people will just delete, or worse, cause them to block all of your emails. The second benefit is that you don’t have to continuously come up with better and better offers, because every month you’ll have a new group of customers for whom the offer will be new. This will free you up and increase your returns, because you won’t have to use ever increasing discounts to get the same level of business.

Another option for increasing your service business is to sell more to your customers when they are in the service lane. David Boyle, president and COO of Mobile Productivity, Inc. (MPi), believes “there really is only one way [to grow your service business] in today’s business climate and that is through a robust vehicle inspection process…Our data shows that when performing a vehicle inspection more needed work is not sold than what gets done. This leaves a huge revenue opportunity for every dealer if they just recognize the importance of this process and capitalized on these legitimately needed repairs.”

The key here is “legitimately needed repairs.” Thanks to the Internet, today’s customers are well informed and they don’t want the runaround. They also are keeping their vehicles longer, however, and if you can show them how the repairs will extend the life of their vehicle, you have almost made the sale already. “Part of a dealers brand promise should be an environment where the dealership is the customers, ‘friend in the car business.’ What does it mean when someone says they have a ‘friend in the car business?’ It means that they have someone they trust implicitly to take care of them. If every customer felt that way, retention would never be an issue,” continues Mr. Boyle.

These two approaches are not mutually exclusive, one is meant to bring more customers in and the other is meant to increase sales once they’re at the store. Both can boost your bottom line, but you will get the best results through a combination of both techniques. The wonderful thing about both these techniques is that neither is prohibitively expensive. The main requirements are time and effort.

Using fixed ops to boost vehicle sales

Besides the profits that the service lane can bring directly to you dealership, it can also grow your revenue by boosting your vehicle sales. Those customers in your service lane represent an opportunity to “get in front of the ball” and be there when the customer is ready to buy. If you treat your customers well and build a relationship based on trust, they won’t feel the need to look anywhere else; they’ll come to you when it’s time to purchase a new vehicle.

David Boyle, of Mobile Productivity Inc. (MPi), says, “Dealers can use service to boost their vehicle sales by having processes in service that promote a ‘customers for life’ philosophy. If a customer’s bond to the service department is very strong they will go nowhere else to buy but that dealership when a customer is ready for their next vehicle purchase.”

Of course, if you want to sell new vehicles to your service customers, it is essential to know when they’re in the market for a new car. You shouldn’t try and sell them a vehicle every time they come through your service lane. If you do, your message will just blend in to all the “white noise” of advertising that consumers see every day and erode the trust that you have built up with that customer. You need to engage customers at the moment they begin to think about purchasing a new vehicle. One of the easiest ways to do this is to track the mileage on the vehicles you service. “Tracking vehicle customers’ mileage…helps dealers identify when customers’ vehicles may have aged sufficiently so they’ll be back in the market soon,” explains Gary Nixon of CIMA Systems.

Winning customers back from the independents

There are other dealerships that service vehicles, but your real competition is the independent service stations. They are the ones stealing your customers with offers of cheap service. It doesn’t matter if your service is superior and a better deal in the long run that is not the perception of many consumers.

“The aftermarket does a masterful job of telling consumers why they should choose them over the dealer; the dealers need to do the same. We should never be ashamed of what we charge and in fact should remember the adage, ‘We are not concerned with what other shops charge for they know best what their services are worth’,” advises David Boyle. To do this “will require our service advisors to actually spend time informing and talking to their customers from the very first visit while the vehicle is still under warranty and educate them all the way up to the time they have the decision of staying with the dealer or going elsewhere,” he adds. “This is something we are not very good at in this industry.”

In order to communicate the value of dealer service to consumers it is vital to “talk” to them in the way they prefer. This means both the method they prefer (i.e. phone, email etc.) and the manner in which you converse with them. “Every service customer is different and, to get their attention and earn their business, they must be interacted with so [that your] communication matches their preference. ‘A-type’ personalities want direct, succinct answers without out a lot of detail—simply what’s in it for me? Others like long explanations and details,” imparts Gary Nixon. “Service advisors good at reading people and able to be flexible in their communications styles to match the particular customer’s do a better job at connecting with customers and earning their trust.” And we all know, when you earn a customer’s trust, you earn their business.

source: Dealer Marketing Magazine, by Michael Bowen   

Wednesday, 02 September 2009