May 6 2020
As a dealership vendor, it should come as no surprise that dealerships see the largest profit margins from their fixed operations department. In fact, you’ve probably had your hand in the creation of content around this topic on some level, whether it be a comprehensive study or articles on your blog.
Even with significant data to back up the importance of investing in the service department, there are still many dealers that allocate only a fraction of their marketing budget for their service and parts departments – less than 10% according to this article.
There are several ways to help your dealer clients improve their fixed ops margins, however providing more effective and targeted service messaging to service and sales customers is one key program that can reap dividends in both service revenue and in building stronger customer relationships for future sales opportunities.
Every vehicle owner has access to maintenance schedule data via their owner’s manual; however, the majority rarely look at the manual, if at all. As a result, this leaves a large opportunity for dealers to communicate with past service customers, as well as new customers who have just purchased a car from the dealer, in a meaningful and targeted manner.
Here are some of the key benefits of providing targeted and vehicle specific campaigns to dealer customers:
Reaching out regularly to customers with targeted, highly relevant information about upcoming service for their vehicle is a great way to help dealers stay front of mind and in touch post vehicle purchase. Long-term customer retention is much more valuable than a one-time vehicle purchase.
According to an Automotive News study, dealerships only see 30% of all service opportunities – the remainder go to quick lube shops, tire repair stores, or independent auto repair garages.
An open line of communication between the dealer and its customers is a key factor in flipping these percentages and recapturing valuable service opportunities.
Many customers only hear from the dealership with randomly timed service specials and sales offers. Random email blasts regardless of the actual vehicle months, miles, and service history are a quick way to almost guarantee that emails are flagged as spam, and does not endear the dealer to the customer... far from it.
It is not uncommon for a customer to come in for an oil change, and within a week or two receive an email – not with a thank you or with an appropriate prompt for next service visit – but with an advertisement and call to action for... you guessed it... an oil change. On the other hand, vehicle-specific reminders for service, based on actual or estimated months/miles of the vehicle are actionable and perceived very differently by the consumer.
Not only will relevant and timely service messaging help dealerships stay in front of their customers, but the goal is to measurably increase the number of service appointments for both in-brand and out-of-brand vehicles. Relevant and timely advisories, such as oil changes or tire rotation/replacements are the key.
Though tires and oil changes have a low profit margin, they are a great way for dealers to connect with customers to offer more services. You may be familiar with the statistics that 75% of consumers purchase tires from the first person who recommends them and a staggering 78% of consumers maintain their vehicles at the place where they purchased tires. This is especially valuable with the average age of vehicles increasing to almost 12 years old, as mentioned in this AutoBlog article.
While every new car dealership has access to their own OEM's maintenance schedules - this data is primarily used by dealership service technicians and is likely not provided in a format or within a software platform suitable for marketing. You, as a vendor, have an opportunity to increase and optimize service opportunities by adding OEM maintenance coverage within your marketing programs for customers with both in-brand and out-of-brand vehicles.
Another benefit of targeted customer engagement is the early opportunity to educate the customer on additional services that may be currently due or due soon prior to their service appointment, rather than waiting until the time of service. These additional relevant services can be discussed more effectively at the time of service with an educated customer, and thereby easing a possible friction point on the way to increasing the average R.O. dollar value.
For example, a customer may have initially sought to schedule an oil change, however, there may be more service items that are overdue or upcoming, relevant to months or mileage, such as brakes, a coolant flush, a transmission service or a 25,000 mile service. Rather than additional services being discussed only at the time of service by the service advisor, it is preferable to have laid the groundwork for an educated customer to arrive perhaps even seeking these additional services.
We haven't forgotten about the customer experience. From a usability standpoint, the ability for the customer to engage quickly and seamlessly via mobile, html emails, or even with a quick link from a text (SMS) message to a custom PURL can make all the difference. Providing dealership customers with timely and actionable reminders in regard to service schedules, recalls, or a heads up on an expiring OEM (new car/powertrain) warranty or aftermarket warranty reinforces the relationship with the dealer and creates more opportunity for the dealership to engage. Likely this is where you, as a vendor, excel in utilizing the latest best practices and technology to manage the UI/UX and customer experience through available platforms.
While this article focuses primarily on customer outreach at the top-of-funnel level to build customer loyalty and measurably increase service visits/R.O. value, some of the same underlying data can be utilized to support other departments in the dealership such as service lane, eMenu, and BDC solutions - but these are topics for another article!
Effective customer engagement programs can represent a tremendous asset to your dealer's fixed operations department, paving the way for better service discussions with an informed customer as well as richer interactions at the BDC level and within the service lane. Ultimately, these programs are required in order to help dealers remain competitive within their local market, increase profitability for Fixed Ops, and continue to build and maintain robust relationships with their customers to have the best shot at capturing future service, sales, and referral opportunities.
Learn how DealerSocket has leveraged some of the DataOne products referenced within this article to support their customer engagement programs in support of fixed ops: