Put on your consumer hat and let’s go shopping at Kroger, Walgreen’s, Target, Wal-Mart or Macy’s. Stroll the aisles and you’ll see what they all have in common: plenty of brand and line extension choices for customers.
There’s a lesson here for dealership fixed-operations department.
On the product-supplier side, companies like Procter & Gamble have long figured out that we want options, even within the same product category.
That’s why they don’t just market Tide. Instead, you have your choice of Tide HE, Tide with Bleach, Tide Coldwater, Tide to Go and more.
Why offer so many options? Retailers and their supplier partners want to empower consumers to choose the products or services that best fit their wants and needs. Choice is what drives the free market economy. Yet, most dealerships seem content with offering only factory parts and service.
Consider these facts:
- Dealership service customer retention is low. Industry retention numbers for customers coming back for non-warranty work range from 30% to 40%.
- Returning customers buy more cars. If a customer returns to the dealership for service on a regular basis, there is an 85% chance of another vehicle purchase from the store.
- No service loyalty means lost profits. You can try to recapture the attention of these past customers, but with the current average cost of advertising per vehicle at $621, it’s a hefty price tag.
Dealerships obviously have plenty of motivation to improve retention rates, and there are no shortages of tools available. One of the simplest is to offer your customers a choice when they enter your service drive.
Choice allows your service advisor to move away from asking a closed-ended question that forces either a yes or no response, to an opened-ended question.
How would the following improve your retention rate and bottom line?
“Here at XYZ Motors we like to provide our customers choices when it comes to preventive maintenance needs. We believe this approach provides you with the information you need to make an informed decision, based on what you want and what you’re able to afford at this time.
“As you can see from this service menu, we offer three different choices when it comes to servicing your brakes. For your driving habits I would recommend option B. Which option package are you interested in?”
This allows customers to feel more in charge and confident of their buying decision and helps them understand the value of their decision. Offer choices, but add recommendations. Because your service advisor is considered an expert, the customer usually will follow his or her advice.
One turnkey way of expanding your service business is through integration of an additional parts source that complements your existing factory program and inventory.
The benefits can include a larger share of the overall available service and parts market in your area, including customers who left for quick service centers and other competitors.
A growing number of dealers are doing that, such as Balise Auto Group, one of the largest retailers of new and used automobiles in New England. “Offering our customer a choice has improved our retention, customer satisfaction and our bottom line,” says Dan Elmer, fixed-operations director.
Rothrock Motor Sales in Allentown, PA, wasn’t retaining enough out-of-warranty customers and pre-owned buyers, so the service department expanded its offerings and marketed that it services all makes and models.
“Once we did that, we’ve been watching our customer-pay and retention numbers rise consistently every month,” Ron Carl, director-operations, says.
Service-customer retention and expansion into non-primary brands strengthen the bottom line all around.
Dave Raphael is director of marketing and dealership Sales at Mighty Auto Parts, an aftermarket franchisor.