While speaking with a friend about the business division they oversee, they mentioned their CEO, after many years, finally came to a conference to show support. Many on their team felt the reason the CEO had never ventured to show support in the past was due to the fact this division represented only 10% of the revenue. After coming to the conference, the CEO saw how much more potential the division could have to the bottom line and is now more involved in their long-term strategy.
I mention this because for auto dealerships, this same behavior is often exhibited towards the Service or Fixed Operations division. Often, leaders within the dealership do not spend a great deal of time in the day to day of this division. Marketing budgets are only 5%-10% of the overall budget. Service managers are not brought out to marketing conferences to learn new skills to grow their division. The focus on advisor performance is not similar to sales, despite the reality that service often brings in 40% or more of the total revenue for the business.
Hidden behind that 40% number is a much larger potential. How much more revenue could be gained if Fixed Operations was given the same opportunities by GMs as they give to the sales department? One key to this increase in revenue would be customer retention. Each month, thousands of dollars are spent on marketing efforts to generate new customers for the dealership. Despite the cost of getting a customer’s foot in the door, once they come in and purchase there is not a fully realized strategy in place to retain those who bought or serviced at the dealership.
Once a customer is sold a vehicle, it should be the responsibility of the service department to retain this customer until their next purchase. Yet the structure of the service department is not set up for retention–it is set up to focus on the consumers who are in the dealership today. In most dealerships the salespeople or BDC representatives are tracked and monitored closely for their key metrics (appointment %, show %, sold %) or closing ratio. These metrics are discussed multiple times a month (especially when sales are low). Most service advisors are measured on revenue per customer, but it is not measuring how many customers return. This strategy can generate revenue as a one-time visit, but shouldn’t the business be focusing on creating long term customers?
One metric not talked about, either because it does not exist or is not commonly used, is the Service Advisor Customer Retention Score (CRS). What percentage of the customers assigned to a service advisor comes back to service at the dealership? Dealerships are ranked by their OEM for customer retention overall, but it is not broken down to the advisor level. Consequently, internal managers aren’t privy to who needs help improving their performance, which negatively impact the dealership as a whole.
In the PCG Auto Service Survey, three things stood out which consumers wanted dealers to improve on:
- Feeling pressure to buy unnecessary services
- Not listening to customers’ concerns
- Not making customers feel appreciated
The more the advisors can build relationships with “their” customers, the easier it becomes to remedy those three pain points by getting to the crux of the issue: trust. When customers trust their service advisors, advisors only need to offer necessary services with the knowledge that their relationship is built on trust–in other words, the customer will always come back.
If the CRS metric came into play, then a long term customer retention relationship strategy could be developed. It would be a responsibility of the advisors or other dealership employees to make the follow up calls to see how the customer’s visit was. Planning to reach out ahead of time to schedule the customer’s next service appointment, communicating status updates or coupons at the dealership, preparing for their visit and greeting them when they come in–all of these tactical actions have one singular focus: building a relationship with the customers so they don’t feel the need to go search elsewhere to service their vehicle.
If the bottom line for business is to generate revenue, retaining service customers who would then turn around and buy again from the dealership is truly one of the most important metrics we can track.
It is time for all of the training and strategic planning which has been delivered to the sales team to be brought into the service lane. Building relationships in order to retain customers and measuring CRS for each service advisor in the dealership should be the focus of 2020 and beyond.
If I can be of service or if you need recommendations on training for your Fixed Operations team, please reach out to me.
Please join Brian, myself, and the PCG Digital team this March for a one day Fixed Operation Marketing Boot Camp. Click here for more information.