While the automotive retail industry proved to be incredibly resilient amid unprecedented industry challenges and rapidly evolving consumer buying behaviors, one critical department continues to present itself as an area of opportunity: the service drive.
With a growing work-from-home culture and consumers driving less, major dealer groups are reporting decreased demand for vehicle service with previous commuters putting less wear and tear on their vehicles. At the same time, consumers are hanging onto their vehicles longer. According to IHS Markit, the average age of light vehicles in the operation in the U.S. rose to 11.9 years old in 2020 – 3 years older than the average just two decades ago.
Proactive dealers are recognizing the potential opportunity this combination of factors offers.
As consumer trends evolve and buyers wait longer than ever before between vehicle purchases, refining your dealership’s process to generate and engage sales leads from the service drive can make a critical difference in your dealership’s bottom line.
As a follow-up to our previous Part 1, in this blog post we share how dealerships can increase service drive profitability by:
- Working the service drive for sales leads
- Promoting long-term customer loyalty
- Acquiring in-demand trades to build a profitable used vehicle inventory
- Capitalizing on incoming recalls to deliver an excellent customer experience
How To Work the Service Drive for Sales Leads
When done effectively, working the service drive is a tremendously powerful and efficient method of sales prospect generation. In fact, one industry survey finds 46% of customers plan to buy their next vehicle from the dealership servicing their current one.
However, the efficacy of this service-to-sales approach depends on both your service team providing an excellent customer experience and having the right people and processes in place to seamlessly connect that service experience to the sales experience.
Consider dedicating a team member or a small team, depending on your goals and size of your dealership, to identify and engage potential serviced-not-sold leads. Utilize someone who has been with the dealership for a while or who has clout or rapport with customers. As part of their daily responsibilities, task them to connect with prospective serviced-not-sold customers using advanced tools and personalized messaging tailored to each prospect.
Your sales and service departments should constantly collaborate to develop automotive sales processes that work and to ensure no opportunities slip through the cracks. Every dealership should develop their own methods that speaks to their core values and objectives, but there are a few service-to-sales best practices every dealership should follow:
- Ensure each department is aware of which vehicles are in-demand and would be best to acquire.
- Standardize reconditioning estimates to ensure costs are accurately accounted for before acquisition.
- Utilize advanced tools that combine with the dealership’s CRM, DMS and active inventories to predict which customers are most likely to respond to a trade-in offer.
Promote Long-term Customer Loyalty
Great service performance supports great sales performance, and service loyalty drives sales loyalty. In fact, Mastermind data finds customers who service their vehicle at the dealership are about 2.5 times more likely to purchase their next vehicle at that dealership vs. those who did not.
Of course, not all your service customers will be ready to buy right away. This means dealers need to ensure they’re maintaining consistent communication with their service customers throughout the lifetime of their vehicle to prevent automotive customer defection. For this reason, automated service alerts are critical.
Proactive dealerships have taken this approach one step further by utilizing advanced behavior prediction tools to personalize their service alerts for each customer, sending notifications at the exact right time and in the right format to maximize customer engagement in the service drive.
Many consumers believe independent mechanics or specialized franchise tire, lube, air conditioning or brake shops are much quicker than dealership service drives for standard maintenance services or state safety inspections. To keep your existing customers and effectively conquest that business back from those competitors, you need to address the speed/convenience concern head-on by reducing or eliminating their advantage.
Review how those kinds of orders are handled within your dealership service department process. Also, consider setting up a dedicated service drive or repair bay for those kinds of repairs and marketing it directly against local competitors on speed, cost and competence.
Acquire In-Demand Trades to Build a More Profitable Pre-Owned Inventory
Leveraging advanced marketing tools to identify prospective buyers not only supports service conversions, it also empowers dealers to tackle one of the most profitable dealership inventory strategies for acquiring in-demand pre-owned vehicles: building a homegrown inventory.
Vehicles in your homegrown inventory are those that were first purchased new at your dealership, are regularly serviced by your team, are eventually traded back in to be reconditioned and eventually sold as a pre-owned sale. Committing energy and resources to the development of a robust homegrown inventory equates to adding revenue and profitability to each department at your dealership.
Dealership tools powered by behavior prediction technology like Market EyeQ enable dealers to automate this process, both identifying and engaging owners of in-demand makes, models and trim-packages, as well as analyzing factors like a vehicle’s maintenance history, accident report and past sales of similar models to maximize profitability at every step.
Capitalize on Incoming Recalls to Deliver Excellent CX
Recalls offer a natural opportunity for dealers to leverage the above best practices in the dealership service department with audiences who may not otherwise engage. With service departments being reimbursed for every manufacturer recall – and the law being pretty clear about getting them done for customers – this no-cost opportunity allows dealerships to reach new customers in regards to required maintenance and connect in a meaningful way when they reach the service department.
With 28 million recalls issued in 2019 alone, opportunities to engage new audiences via your service drive are plentiful. These opportunities don’t just include upselling relevant vehicle repairs or asking a customer when they’re going to be ready to buy again. Instead, these interactions offer dealerships the opportunity to connect with customers by delivering a customer experience tailored to their unique needs.
Ask yourself: What tools have you provided your service department to identify the best sales prospects, and how much do they know about the people who will be showing up in your service drive that day? Do they have the right resources and authority to structure an offer and close a sale? If the prospect isn’t quite ready to close but still worth keeping as a prospect, how is that relationship handled and who is responsible for keeping it active and working it toward closure?
Dealerships that are doing the best at converting service customers into vehicle sales have answered those questions.
Want to learn more about how Mastermind can help you maximize your dealership’s service drive profitability? Contact us for a free Market EyeQ demo.