Dealer Group Protects Backend Turf

LOS ANGELES – A Porsche dealership’s website includes an icon touting service-department specials. But clicking it brings up this disappointing message: “Sorry, no specials are available at this time.”

That’s how not to do it, says David Hult, chief operating officer of the RLJ McLarty Landers Automotive Holdings, a dealership group based in Little Rock, AR.

“If someone goes to the specials tab and there are no specials, you’ve really made a mistake,” he says at the Automotive Customer Centricity Summit hosted by Thought Leadership Summits.

Dealers who run great car-selling departments sometimes falter at backend operations. “That’s because most dealers came up on the variable-operations side,” says Hult, who formerly was vice president-fixed operations and marketing for Group 1 Automotive’s 105 dealerships.

But follow the money, and it beelines to the service department. “Margins are as high as 70% on service, and you are lucky to get 7% on the vehicle-sales side,” Hult says. Yet, “most dealers focus on selling cars, not servicing them.”

Some dealers do a great job on fixed operations, as evidenced by the WardsAuto Service 150. Dealerships on the list earned $3.5 billion in service, parts, accessories and body-shop revenues.

But typically, independent shops and service-center chains do a better job than dealers in drumming up backend business, Hult says.

Midas and Meineke auto-repair chains use Twitter to provide regular service-special updates. For its auto centers, Sears has a website that is easy to navigate, contains relevant content and features a strong call to action, Hult says. “Does the average dealer site have that?”

Some do. Many don’t.

“Independents are trying to take our customers from us,” he says, citing the brazenness of such conquest efforts. “We’re the ones who sold them a car and put them on the road.”

Custom landing pages with one-click service-appointment scheduling are online marketing essentials these days, especially in appealing to Generation Y consumers who are heavy Internet users and not yet loyal to an automotive brand or dealership because of their relative newness to the market.

“You need to build landing pages that sell features and benefits of what the service customer is looking for,” Hult says. “Some dealers buy (search-engine) keywords, but then a click takes people to the (general) dealership homepage, not to the (specific) place they want to go.”

A good landing Web page contains information service customers are looking for, offers online scheduling and provides the ability to print special coupons.

In a test case, an RLJ Kansas dealership that included those things had high coupon print rates: 23% for a brake-work offer and 33% for battery specials.

Coupons are part of an overall aggressive pricing strategy that’s a must, Hult says. “None of this works without the right pricing.” Prices quoted in advertising must stand firm. “The $17.95 oil change can’t be $29.99 when the customer shows up.”

Studies indicate car owners are more likely to go to a dealership for major repairs but head to independent shops and national chains for minor repairs and routine maintenance.

For dealerships, key defection points are tires, brakes, batteries and oil changes, Hult says. “If we spent as much time on these as on selling cars, we’d be in better shape.”

Tire sales and express oil-change service don’t bang the gong at dealerships because of relatively low margins, but such business helps retain customers both at the front and back ends. People who regularly service their vehicles at a dealership are more likely to buy another one there, surveys indicate.

Eighty percent of people who took advantage of an oil-change offer at an RLJ dealership “had never done service-department business with us before, even if they had bought the car from us,” Hult says. “The goal is to get them to come back for 30,000-mile (48,000-km) maintenance work.”

If effective marketing does its job of bringing in customers, the service department should make it easy and convenient for them to do business there.

“Set up processes that are focused on the customer experience,” Hult says. That includes answering emails and phone calls promptly. “It may sound obvious, but it is frustrating to spend marketing money and then have customer calls sent to voice mail.”

He advises against email marketing blasts because spam filters often block those. Instead, he recommends specific demographic targeting. It offers greater efficiency and less guesswork.     

He’s a believer in the power of social networking when done right. “Our dealerships’ Facebook pages are community-oriented. Peppering them with ads is exactly what people don’t want.”

Some dealers aren’t comfortable with Facebook and the like, so they hand off oversight responsibility to someone else, often to young employees on the presumption that they will do well at it because of their youth.

“That’s not the way to go,” Hult says.

But increasing dealership service business through modern marketing should come from a group effort, he says. That group should include lower-level employees such as porters. “They see things and should have a voice.”

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