A look at how dealers can use new technology and practices to improve and retain service business
There’s often a view that automotive retailing is seen as a conquest business. Dealers, OEMs and their partners allocate a huge amount of resources in trying to attract new customers, while often neglecting existing ones.
It’s especially acute in the back end of the business. Service customers are our lifeblood, yet defection rates to the aftermarket remain high. Technology and new approaches are changing the game but for dealers to compete successfully in the future and realize long-term retention, they need to shake up their approach.
Gary Kalk, President and CEO of solutions provider Dealer-FX, says a major problem is that as an industry, we’ve become so focused on price, that the value proposition is often lost. By doing so, we’re actually training customers to not come back.
“The fact is that franchised dealerships simply can’t compete against the aftermarket on price,” says Kalk, who has been in the business more than two decades. “What we can focus on, however, is value.” Kalk says that the requirements for franchised dealers, such as OEM standards, regulations, factory training, equipment and others, make it difficult to compete with smaller independents from a price standpoint alone but the value proposition a dealership can bring, if implemented properly, can make a huge difference.
One way Kalk says dealers can overcome the traditional stigma relating to service is through transparency. and Dealer-FX has been a key advocate of providing tablet-based solutions to help dealership service staff deliver a much more transparent service experience for their customers.
ADDITIONAL SERVICES
“When we started in this business, we realized that often, dealers would sell a lot of other services that weren’t required under factory maintenance,” says Kalk. “Dealers felt they needed to take this approach simply to support dealership operating costs.”
When you start adding additional work and all the customer sees is the back of a monitor, followed by the vehicle taken into the back of the shop and later a phone call with an estimate, the result doesn’t exactly demonstrate transparency, nor confidence.
Via tools such as Dealer-FX’s Electronic Walk Around and Inspection, the service advisor is able to show the customer exactly what the vehicle needs according to OEM recommendations, completely changing the relationship and promoting a level of transparency and trust not seen previously.
Independent studies, including those by J.D. Power, have shown that the tablet approach leads to greater customer satisfaction overall. Kalk says he’s seen analysis that clearly shows retention rates increase three-fold when dealers adopt a tablet approach to service write-ups.
So the results are there, the big challenge is long-term. How can dealers reduce customer defection to the aftermarket once the warranty period is up? Kalk says that while new service drive tools and advanced vehicle telematics (including technology that prompts customers with service reminders and links to the dealer network) will help, at the end of the day it is down to the training and processes dealers implement that will be key to making it succeed.
“We are in a transitional stage,” says Kalk. “There will be a period where dealers have the advantage in tools, technology and training but we need to take advantage of it, because the aftermarket will catch up.”
EXCESS CAPACITY
Another issue dealers tend to still struggle with is shop capacity. Chris Howie, Vice-President at retention solutions provider Xtime, says that across the country, dealer service departments are on average, running at around 25 to 30 per cent in excess capacity.
“If you were at a dentist’s office, you wouldn’t try and squeeze a customer in on a Monday when you’ve got Thursday and Friday afternoons open and staff and equipment you’re paying for,” he says, “but that’s still often the case when it comes to dealer service departments.”
Howie says a big part of the problem is that in many stores, service advisors control the profits, which negatively impacts shop loading, scheduling and customer service and satisfaction.
Xtime, which was recently acquired by Cox Automotive, has solutions such as Scheduling 7, which can help dealerships maximize their service capacity, provide customers the chance to pre-book appointments and ensure service staff have a specific window of time devoted to each customer when they arrive.
It’s proved a successful strategy and Howie says that now, as part of the Cox Automotive family, Xtime is able to leverage the resources it’s parent is able to provide while remaining an independent business unit. “The new arrangement will allow us access to some other dealer solutions in the Cox portfolio, while enabling us to continue on in business as usual, with the same management team in the driving seat.”
While technology is playing an increasing role in delivering a more transparent and efficient vehicle servicing process, Howie says training and the ability for staff to really understand the tools available to them is hugely critical. Many of the solutions dealers are still using were developed in the 1980s and 1990s. They often aren’t easy to understand and can require specialist training and knowledge to be truly effective. Howie says that with Xtime, staff can be trained and up and running on the system in as little as an hour.
With the mentality that “time is money” more important in business today than ever before, such approaches can enable dealers to achieve faster ROI.
THE RIGHT TRAINING
Howie says that when it comes to marketing, dealership service departments aren’t effective because besides appointment scheduling issues, most service staff simply aren’t trained in marketing and communications. “Advisors are busy and once the morning appointment rush is over, they are checking vehicles or consulting with technicians and don’t usually have the time or the skills to actively market to their customer database.”
That’s part of the reason why tools like Xtime’s Marketing 7 are helping to change the game. “Dealers need to know how they are marketing and which customers are coming back,” says Howie.
Marketing 7, which staff can view within a dealership’s dashboard reporting tool, is able to show exactly what a dealership’s unsold opportunities are and how much those opportunities are costing the store. It also enables dealers to use enticements, such as discounts or special offers during periods when shop traffic is slower. “When a dealer is able to see they are leaving $40,000 on the table every week and need an appointment coordinator to reach out to those customers and actively follow up, it makes a big difference.”
