Are Service Departments Failing Consumers and Employees?

We have all read about employee turnover, and the challenges the industry faces with hiring needs. A recent article in Automotive News cited "Two of every five service advisers leave each year. How can dealers keep their best ones from burning out?"

What struck me the most, and should be a red flag for the Dealer and his/her Fixed Operations Director are the reasons cited by advisers for quitting their job and leaving the industry all together. The following list is per the Automotive News story.

• Long workdays and oppressive schedules, including weekend shifts, that play havoc with family life. 

• Inadequate pay, especially when their income depends too much on commission sales. 

• Ever-increasing and demanding duties, coupled with disrespect and verbal abuse from bosses, shop colleagues and customers. 

• Automakers and dealers relying too much on rigid customer-satisfaction surveys to judge the advisers' performance and set their pay. 

• Feelings of powerlessness and lack of appreciation. 

• Pressure from managers to lean on customers to buy service work and products they may not need in order to meet dealership profit targets. 

There are numerous reasons for the aforementioned list cited by advisers for leaving, however, I'd like to address some not so obvious concerns as it pertains to the cited reasons.

  1. I've spoken of service drives being busy with the wrong type of work, specifically too much recall/warranty work. Dealers need customer pay work. Understanding that a lot of recall and warranty work is out of the dealer's control, please don't think your service drive is busy, when it's busy with the wrong type of work. This simply fuels the reasons for all the employee turnover. It's very difficult to "up-sell" a recall/warranty customer, with the exception of a token LOF.
  2. Industry wide service retention rates of 30% are killing your fixed operations, and once again fueling employee turnover. Unfortunately, the 30% retention rate isn't compounded monthly or yearly, it's a variable metric. You may have a 30% retention rate, but those customers are in constant flux, thus it's virtually impossible to grow service retention rates significantly. That's why dealer service departments are full of in warranty vehicles, and a very small percentage are out of warranty.
  3. Waiters and inefficiencies are a contributing problem as well. Waiters want everything done yesterday, and contribute to less than average tickets as they're unwilling to wait for additional work to be completed. The more customers coming into your drive, the less efficient and productive your team will be. Think about itwhat you really want is the customer's vehicle in your service drive, but not the customer. Waiters and customers are time consuming, and drain dealer personnel of valuable time.
  4. The average vehicle on the road today is now 11.6 years old. How many vehicles in your drive are 4-5 years old and out of warranty? More than likely a small percentage. While it's important for new car customers to visit your dealership, it's just as important for out of warranty vehicles to visit the dealership. There are ample customer pay opportunities, trade opportunities and new car customer prospects. The aged vehicle is a vital link to the dealers overall success.
  5. Dealer advertising contributes to waiters and less than average tickets. Dealers promoting an Express LOF are contributing to waiters and anxious customers that expect their LOF to be completed in 20 minutes...one mishap and you have an angry customer, and probably a lost customer. Stay away from aggressive price discounts, and simply be competitive. Competitive pricing combined with a great customer experience is what your customers are seeking.

I would encourage every Dealer and Fixed Operations Director to drive a five mile radius around your dealership any day of the week, and take note of how many aged units are sitting at independent repair facilities...it's astounding. Every one of those lost customers represent an opportunity, an opportunity to gain a lost customer, gain additional customer pay, locate a valuable trade and even sell a new car.

Out of warranty vehicles are vital, and drive every department within the dealership. OEMs and dealers promote sub-vented leases, 0% APR, and thousands off in an attempt to drive traffic and sales. OEMs and dealers promote Express LOF and aggressive service pricing in an attempt to drive traffic and sales. Dealers and their department heads utilize third party aggregators to drive sales and service traffic. It's a vicious circle that never addresses the underlying problem...too few out of warranty vehicles. How much would your dealership save in advertising each month if you didn't have to constantly chase the elusive lead?

How do you drive out of warranty vehicles to your dealership? Take your dealership to the customer, provide Service Customer Pick-up & Delivery, with the ability to schedule, dispatch, track, monitor, utilize company drivers or your own, and provide a very turnkey uber=like system to manage the process. Consumers have made it very clear that they would prefer not to visit the dealership, why not support the customer and give them what they really want...Service Customer Pick-up & Delivery. The majority of consumers want to service their vehicle at the dealership, they just don't have the time, nor want the inconvenience.

Ken Hite is Senior Vice President at RedCap. RedCap's technology and drivers are utilized by OEMs and dealers for Service Customer Pick-up and Delivery, as well as Consumer Test Drives. Ken has 25 years experience within the automotive industry, inclusive of retail, OEM, after-market and start-ups. The auto industry must learn to exceed customer expectations and implement business processes based upon customer convenience.

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Comment by Squire Pettis on December 5, 2016 at 4:52pm

Well put - it is interesting that this sort of  conversation has been had over the past 4 or 5 years in different blogs, and different ways, yet we are still coming back to the same old story again and again. The aftermarket is building new structures, warehouses, and adding on additional ways to generate labor and parts sales (see the increase in auto zone and advanced auto parts stores) - these customers with 11 year old cares (heck, even 4 or 5 year old cars) are going somewhere to get things done, why not to the dealer?

Makes you want to say hmmmmmm....

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