How to Drive Dealership Sales Revenue by Working the Service Drive

March 7, 2022

automotiveMastermind

In today’s uncertain marketplace, one thing has become certain: Customers are more likely than ever to hold onto their current vehicles. Amid ongoing inventory shortages, IHS Markit reported the average age of light vehicles on the road has risen to a new high of 12.1 years old in 2021.

As shortages continue on and new and used vehicle prices reach historic highs, OEM incentives have dwindled. According to TrueCar in January 2022, year-over-year incentive spending plummeted by 57%.

Today’s buyers are faced with few options: Shop around until they find the vehicle they like (potentially at another dealership) or maintain their current vehicle until the market normalizes or their pre-order or reserved sale arrives.

To meet these growing customer needs and make the most of their available opportunities, many dealers are looking to their service departments.

In this blog post, we share how to drive dealership sales revenue by working the service drive by:

· Building a data-driven service-to-sales strategy that works for your dealership

· Strengthening inventory acquisition efforts through the service drive

· Leveraging the service drive to support customer retention

How to Build a Data-Driven Service-to-Sales Strategy

With increased competition between dealers to capture and retain service customers, it’s important dealers remember what worked in the past won’t necessarily work today. This doesn’t mean developing an entirely new approach. Instead, assessing your current service-to-sales process to identify any areas of opportunities is a critical first step to dealership success.

Audit Your Existing Service-to-Sales Process

There is no one-size-fits-all approach to developing a perfect service conquest strategy at every dealership. Start by analyzing how your current process is performing, asking questions such as:

. How many service drive RO’s are you doing per month?

· How many people are needed to support selling in the drive?

· What is your current market share?

· What service conquest marketing are you doing today?

· What is your service conquest marketing ROI goal?

· What are your YoY dealer and brand loyalty sales growth goals?

A well-managed service-to-sales process starts from the top-down and is best supported by an informed team. When retooling your service-to-sales strategy, it’s important to ask dealership leaders: Can your team currently identify a great sales prospect in the service drive? Can they clearly outline the process for finding out?

To support your service-to-sales efforts, set clear expectations and objectives for your service and sales teams, including specific, actionable goals surrounding service conquest activations and offers presented. Ensure service sales are included in every sales meeting and your management team is regularly reviewing offer sheets, emails and phone calls to maintain expectations and results.

How to Strengthen Pre-Owned Inventory Acquisition Efforts

It’s not just dealership transaction prices that are on the rise amid inventory shortages. According to the Manheim Used Vehicle Index, wholesale used vehicle prices in February 2022 remained 37.6% higher than 2021, emphasizing the importance of buy-backs and trades to auto dealers maintaining a profitable pre-owned inventory.

With detailed customer and vehicle insights, the service drive provides the perfect opportunity for dealers to acquire in-demand, high-quality trades. Additionally, it allows dealers to maximize revenue by selling that customer a replacement vehicle.

To support this, service teams need to prioritize proactively identifying vehicle acquisition opportunities by mining your upcoming service appointments for opportunities. This is key to engaging customers before they start shopping around, as well as mapping prospective customers to potential replacement vehicles already available in your inventory.

Build a Pre-Owned Acquisition Strategy

To develop this sort of proactive process, dealers need to break down the barriers between service and sales teams. Together, the two teams can create collaborative strategies that reflect their dealership’s brand promise, support sales efforts and build a profitable, pre-owned inventory.

Started by assessing your local market to identify areas of opportunity and customer trends. Analyze:

· Which vehicles have you sold the most – and the least – in the last 30, 60, 90 days? What was the average gross of those sales?

· What is the make/model/trim availability in your market?

· What inventory is already on its way – and how can your team supplement those vehicles?

Acquire Pre-Owned Vehicles Through the Service Drive

From here, task your service team or a well-connected member of your BDC to mine your upcoming service appointments for pre-owned acquisition opportunities. While this process will look a bit different at every dealership, the basic strategy consists of three steps:

Review all service appointments for the next three days and identify the best prospects, such as:

● Out of warranty

● Over lease mileage

● New product design

● Payment decrease opportunity

● Desired used car lot product

Make personalized outreach to those customers, starting with a phone call and proceeding to an email follow-up that includes their unique offer.
Attempt to get in front of all target customers who have appointments for the current day with an offer. If you miss them, leave a worksheet with a hand-written note in the vehicle or with their service advisor.

How to Support Customer Retention Through the Service Drive

While for some dealers, customer loyalty may have once been considered a guarantee, no dealership is safe from customer defection in 2022. Inventory shortages, aggressive buy-back offers from competitors and expanded online retailing options are prompting even the most loyal buyers to consider shopping around and switching brands.

According to IHS Markit, brand loyalty recently dropped to a six-year low in 2021, while during the same period, body style loyalty increased slightly. This means customers are more willing to swap dealerships or even brands to purchase the body style of their choice. To proactively defend their customer base from competitors’ conquest efforts, dealers need to stay in consistent communication with their loyalty audience to stay top-of-mind with buyers.

Thankfully the service drive offers the perfect opportunity to engage customers long after the initial sale, presenting an invaluable opportunity to promote customer retention. In fact, according to Mastermind data, customers who service their vehicles at the same dealership are 2.5x more likely to buy from those same dealers.

Proactively Protect Your Loyalty Customer Base

Similar to your sales and acquisition strategies, to leverage the service drive to promote customer retention and eventually maximize future sales revenue requires a data-driven approach to engage customers at the right time.

Start by tasking a member of your team or dealership’s BDC to serve as a service loyalty liaison. In this role, this person’s responsibility is to analyze the data in your dealership’s CRM, DMS and sales platform to identify which loyalty customers pose the most significant risk of defection.

From here, task your team to begin engaging buyers to build customer loyalty and goodwill before they re-enter the market, prioritizing those most likely to defect, such as those:

● Out of warranty

● Over lease mileage

● Who could lower their APR or payment

● Approaching end of lease or finance term

Take a Personalized Approach to Customer Outreach

When engaging loyal customers, it’s critical your team take a personalized approach, tailoring their outreach based on each customer’s unique wants and needs. Avoid any “bait-and-switch” offers and include actionable messaging offers that account for your dealership’s available inventory, as well as any pre-selling options.

Finally, task your sales-to-service team to communicate regularly with loyal buyers at consistent intervals throughout their vehicle ownership – not just as a prospect is preparing to re-enter the market. By doing so, your team will pave the way for customers to return to your dealership for their next vehicle purchase – whenever that may be.

While the service drive has always been important, recent years have emphasized its importance to dealership profitability. Serving as a main point of customer contact between dealers and buyers throughout their vehicle’s now-average 12.1-year lifespan, a well-connected service department can drive revenue dealership-wide by supporting sales efforts, pre-owned acquisitions, customer retention and more.