Corp. is using technology, such as OnStar and Dealer PulsePro, to help its dealers drive more customers into their service departments in an effort to increase profitability at the store level.
Peter Lord, executive director-GM’s Service Operations, says only three out of 10 GM customers return to the dealership for service after the vehicle purchase.
Just moving the needle a little bit by retaining four out of 10 customers for service, dealers can increase profits about 10%-15% over the course of three to five years.
That translates to a cumulative total of about 360,000 more new-vehicle sales for GM’s U.S. dealers; approximately $160 million more in accessories sold and $1.3 billion in additional maintenance and repairs.
“There are big numbers here, and it’s important to us and to our dealers,” Lord says. “If we can sell more vehicles, we can sell more accessories and get more customers coming back to GM dealers for maintenance and repairs.
GM’s OnStar Vehicle Diagnostics also is encouraging customers to the service department by sending emails updating them about diagnostic checks of their vehicle’s four key operating systems.
OnStar’s Vehicle Diagnostics sends more than 3 million emails a month, GM says. And 18% of those customers receiving e-mails require some type of maintenance on their vehicle.
“Quite frankly, the manufacturers have lost control over maintenance schedules,” Lord says. “We are really now trying to implement a common maintenance schedule, driven by the technology in the vehicle.”
GM says its Dealer PulsePro technology also helps dealers keep track of service schedules.
Dealer PulsePro is a website-based tool that measures customer retention, providing details on which buyers are returning for service, how often they are returning and for what types of services. It also reports on lost customers or potential defectors.
Additionally, Dealer PulsePro is used as a dealership employee-development tool, as well as a targeted marketing tool.
GM says more than 1,000 of its dealers currently have subscriptions. The auto maker is beginning to amass critical data provided by Dealer PulsePro
“It’s a tool we use to measure customer loyalty in a dealership, on a customer to customer basis,” Lord says. “They (dealerships) can offer service appointments, but they’ve got to respond to the service lead. And they need the ability to offer an appointment.”
Industry data shows that customers who have a good service experience at their local dealership are nine times more likely to buy another vehicle of the same make.
So, while the sales experience during a new-vehicle purchase is important, it’s becoming increasingly more evident that the service experience following a big-ticket buy plays an important role in the next vehicle consumers consider.
“Our dealers that do a really good job, at the time of delivering the vehicle, of explaining the maintenance requirements and introducing the customer to their service department so they (customers) will know where to go … start building the relationship,” Lord says. “It’s a critical point.”
GM says that increasing customer service retention in its dealerships across the U.S. is a part of the its North American Market growth plan..
“It’s a question of building long-term relationships that are built on trust,” Lord says. “As we get more and more dealers to understand that, we can get more and more dealers to benefit, and all of those other benefits start growing as well.
“There are reductions in warranty, as a result of improved vehicle quality,” he adds. “If you go back a few years, after a customer took delivery of a vehicle, the first time they’d come back to a dealer was because they had some warranty repair. Now, the likelihood is the first thing that vehicles will require is some form of routine maintenance. The warranty totally is not the trigger any more.”
Dealers need to realize their customers are visiting the service department less and, as a result, they have to work to make visits more comprehensive.
GM dealers that have bought into and understand the automaker’s simplified maintenance program are the ones that are improving customer-service retention, Lord says.
He emphasizes that higher customer-retention rates are good both for dealers and the auto maker.
“Customers don’t have to come in as often as they may have with their previous vehicles,” Lord says. “But when they do, we’ll take care of everything they want (such as oil changes and tire rotations) in one visit. Dealers who have got good at that really are making progress.”
In contrast, dealers who haven’t changed from the old business model, insisting customers come in for oil changes every 3,000 miles (4,828) and trying to sell them a flush or a coolant change every 12,000 miles (19,311 km) along with aggressively up-selling non-recommended services, are struggling.
“People can see through that,” Lord says. “Today, information is too readily available on the Internet. You can’t pull the wool over customers’ eyes on a consistent basis and expect them to comeback.”