Your Service Department's Strategy for 2017 and Going Forward

There are a few critical areas that Fixed Operation Directors need to focus upon to ensure your service departments are prepared for 2017 and beyond.

  1. Consumer Behavior: Understand that consumers view auto repair as time consuming, inconvenient, and intimidating. Having a car repaired is one of the last things in the world that any consumer wants to do. Auto repair has become a need basis driven industry, versus a want and maintain industry. Consumers will put off auto repair as long as they possibly can. Consumer behavior is changing and we must adapt. We live in a convenience oriented world today. Everything we want is at our fingertips via the web...the web has made all of our lives easier and much more convenient. Consumers expect and demand convenience when it comes to auto repair. They enjoy convenience in every other aspect of their lives, why should auto repair be any different?
  2. Employee Turnover: This is an industry wide problem that doesn't have to be. What's contributing to this problem? A) Commission driven compensation B) Excessive discounting-low effective labor rates C) Too many in warranty customers-few opportunities to sell customer pay D) Too few out of warranty customers-due to low numbers, lends itself to overselling E) Ineffective management
  3. Excessive Discounting: Advertising loss leaders such as $29.95 LOF isn't an effective strategy for driving customer pay traffic. Discounts are also killing your effective labor rate. Franchise dealers should charge more for their services. It's ok to charge more than local independents, just be competitive and in the ball park. Consumers will flock to your dealership if you make the process convenient and not time consuming. The key is servicing the customer's vehicle without the consumer having to visit your dealership...sounds counter-intuitive, yet that's what consumers want.
  4. Trust & Transparency: The auto repair industry has had a black eye for decades. Consumers are very skeptical of repair recommendations; do I really need this repair, or can it wait another 6-12 months? Electronic MPI that offers consumers validation of repair recommendations via photos and videos is essential.

A recent survey conducted by AAA shows that "one-third of U.S. drivers -- 75 million motorists in total -- have yet to find a trusted repair facility. The top reasons that American drivers mistrust car repair shops are:

  • The shop recommends unnecessary services (76 percent).
  • The shop overcharges (73 percent).
  • They have had a negative experience with a shop (53 percent).
  • They are concerned that the work will not be done correctly (49 percent).

The good news is that you have the opportunity to garner your fair share and more of the 75 million motorist whom are seeking a trust-worthy repair facility. Consider this; even if you adequately address employee turnover, excessive discounting, and trust & transparency...are those accomplished tasks going to drive consumers to your repair facility? The answer is no...it will have a minimal impact. It takes a lot of time and money to convey to your lost UIO and prospective conquest customers that your service facility has limited employee turnover, competitive pricing, and provides for a trustworthy and transparent experience. Consumers must experience these attributes...get their vehicle in the door, provide a great customer experience, and your customers will advertise for you.

The average franchise dealer is spending $10K-$20K a month in service discounts. Those discounts aren't driving traffic to your dealership. Shift your excessive service discount expense to service pick-up & delivery, and watch your traffic count soar. The only means to drive lost customers and conquest customers to your service drive is through pick-up & delivery service. Once you have the customer's vehicle in your dealership, then you can demonstrate the quality of your staff, competitive pricing, and how your service center provides consumers with a trustworthy and transparent experience.

Cadillac and their Project Pinnacle is the latest OEM to require their franchise dealers to provide service customer pick-up & delivery. Lincoln and Hyundai Genesis are also providing service customer pick-up & delivery. Service retention has been very elusive for OEMs and their franchise dealers. Land Rover and Jaguar will require their dealer body to incorporate Rover and Jaguar loaner fleets effective January 2017...how are dealers going to increase loaner efficiency to ensure consumers don't have loaners longer than necessary? Make 2017 the year you focus upon service pick-up & delivery, and provide a convenience driven model for your customers. Consumer behavior will continue to change, and the auto industry must adapt to the ever changing needs of the consumer.

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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