Dealer Tom Gill believes in tracking data. In doing so, he learned one part of his store's operation was way off track.
“If you track it, you can manage it; otherwise you're dealing with perceptions, not facts, and then it's just a guess, really, “says the owner of Tom Gill Chevrolet in Florence, KY.
Data told him his dealership failed to keep many service department customers long term.
“Because I track customer retention, I know that on the service department side I lose up to 80% of my customers after five years of their car ownership,” he says. “The best I've done is to lose 65%. Some people say that's good. Geez, losing 65% is good?”
#8220;The best I've done is to lose 65%. Some people say that's good. Geez, losing 65% is good?”
— Tom Gill Tom Gill Chevrolet
He's not alone. Most dealerships experience the same thing — as customers' vehicles age, the owners are more likely to go to an independent shop for routine repairs and maintenance. The independents take in $264 billion a year.
To some people in the industry, that's the way it goes. To Mr. Gill, it was a problem in search of a solution. He thinks he found one. It's a Goodwrench Service Center he just opened. The $1.1 million facility is a few miles from his dealership.
It's the third stand-alone Goodwrench Service Center to open sinceService Parts Operation (SPO) launched the program two years ago. Dealers build, own and operate the satellites. Others are in Houston, TX and Grand Rapids, MI. A fourth is to open in Madison, WI.
GM had hoped more of them would be open by now. But SPO executives expect the pace will pick up as they recruit more dealers — especially those such as Mr. Gill, who's thinking big. He envisions building six to eight of them in northern Kentucky.
He says most people will drive out of the way to buy a car. But they won't go far get service on a car that's out of warranty. Mr. Gill foresees a big boost in business if he locates satellite service centers so that they're conveniently close to potential customers.
He wants to capture business from both GM and non-GM vehicle owners.
“The Goodwrench brand name draws a lot of GM customers, but I'm surprised at the number of non-GM customers I'm getting,” he says. We've worked on more non-GM vehicles than GM so far.”
Part of GM SPO's business strategy is to snag those non-GM owners in need of light repairs and maintenance work such as tune-ups, tire rotations, alignments and shock replacements.
“By serving all makes and models, we have every expectation that this (Mr. Gill's) Goodwrench Service Center will prove to be a big hit with customers,” says John Smith SPO's vice president and general manager. He and several SPO colleagues attended the facility's grand opening.
The service centers target owners of four- to 10-year-old vehicles. Dealerships will continue to handle new and used vehicle warranty work.
But the service centers offer a decidedly different customer experience in many ways.
“It's a different way to treat the customer,” says Mr. Gill. “That's what intrigued me.”
For one thing, there are no separate service advisors and cashiers. The service technician who works on a vehicle also writes up the order and cashes the customer out.
Customers are encouraged to visit the 11-bay work area to see what work needs to be done, to see how the work is progressing and to see the finished job.
“They are able to talk to the tech at any time,” says Mr. Gill. “That automatically makes the customer feel welcome.
A menu board tells not only the center's prices — but also competitors' such as Pep Boys, Midas and Goodyear. For instance, Good-wrench's $69.95 price for a tune-up beats Pep Boys' by about $10, but Pep Boys' $69.99 charge for front brake pads is $10 less than Goodwrench's.
Mr. Gill did some old-fashioned research to get the competitors' prices. “I picked up the phone and called them,” he says.
His service center is located next to a strip shopping mall. Vacant land nearby is zoned for retail use. Putting the service center in such a spot was no accident, says the facility's manager, George Funk.
“The idea is to get close to a mall or a movie theater so the customers have something to do if they don't want to hang out in the waiting room,” says Mr. Funk. “You don't want them feeling stranded.”
The goal is to get customers in and out within two hours. Mr. Gill says that's important because today's convenience-oriented customers value their time.
Mr. Funk oversees a staff of 15. The technicians are paid hourly versus a flat rate. There's no commission on parts.
“It's a pay structure I never had the guts to try at the dealership, but people at the service center seem comfortable with it,” says Mr. Gill.
Mr. Funk says, “Our goal is to service four vehicles per bay, per day. That's 44 a day. Three days out of the gate we did 19.”
Mr. Gill says a seven-bay floor plan was only $65,000 less than an 11-bay plan. So he went with the extra bays, figuring they'd quickly pay for themselves.
He's currently using direct mailings to advertise his new business. He says he may expand to radio, TV and newspaper advertising, but he finds direct mailings more cost effective.
GM SPO executives envision about 2,000 dealer-owned Goodwrench centers in the U.S.
“It's too much of an opportunity not to do it,” says John Putnam, who manages SPO's new business initiatives.
GM eventually may assist in financing interested dealers, he says.