Article

Why Do You Have Inactive Service Customers?

May 2012, Auto Dealer Today - WebXclusive

by Don Reed - Also by this author


Recently I received a call from one of my trainers who was frustrated with the dealership he was training and wanted to know if I could offer any suggestions. I asked what his concerns were, and he stated that the service department had blocked out their appointment schedule for all technicians for the next five days. No appointments for their warranty or retail customers for the next week. Of course, I asked why they would do that and the answer was, “The dealer bought three truckloads of cars at the auction, and all of the technicians are working on nothing but internals until every vehicle is reconditioned.”

Are you still laughing? This dealer obviously has a strong interest in supporting his used car department, which is a good thing, but he still has to be able to service his retail and warranty customers in a timely manner as well. News flash: Any customer who has a mechanical concern with their vehicle does not want to wait a week to have it corrected! When those customers call the service department for an appointment and hear, “I can schedule you for an appointment next week,” they are most likely going to end the call with something like, “I’ll have to get back to you.”

In about two seconds, they call “SIRI” on their iPhone to ask for auto service centers close to their location. The vast majority of customers do not want to wait three to five days for an appointment. They want to hear “today or tomorrow.” As a dealer, you must ensure that every customer – new, used, service, parts and body shop – is treated the same. They are all vital to a dealer’s overall profitability, so let’s focus on putting the right processes in place and having the proper staffing levels to make this happen. Once you lose a customer to a competitor it is very difficult to get them back.

These customers now become members of your inactive database. At what point does a customer become inactive? I believe it’s between six and nine months. Others say it’s 12 months, and still others say it’s longer. Last April, a major Japanese manufacturer launched a pilot program with their dealers to develop a marketing campaign to try and recover lost customers who had not returned to their dealer in the past 18 months. The campaign promoted three different offers to three different groups of customers. One group was offered a free oil change, the second group was offered a free air filter and the third was offered a free 27-point inspection. Which group do you think had the highest response rate? If you picked the free oil change, you were wrong. If you picked the free 27-point inspection, you are pretty smart. By year’s end, participating dealers had earned an additional $800,000 in customer-pay sales.

NADA reports that last year dealership customer-pay sales decreased by about $800 million. With the rebound in new and used vehicle sales, they also report that internal sales have increased. This sounds a little like the dealer I mentioned above who tells his employees that the internal customer takes priority over the warranty and retail customers. Is it any wonder that new car dealers in America continue to lose market share in the parts and service industry? Currently dealers are getting only about 16 percent of the market, while the aftermarket gets 84 percent and continues to grow. Yes, I understand we have fewer new car dealers today than we had a decade ago, but instead of those remaining dealers’ customer-pay sales growing by leaps and bounds due to the dealership closures, they decreased by $800 million. Meanwhile, the aftermarket continues to grow. With the average age of a vehicle today at 10.8 years, it is imperative that dealers get those vehicles back into their service departments. I’m confident the owners see a real value in having their high-mileage vehicles inspected by a factory-trained technician to ensure they are driving a safe and reliable vehicle.

Many dealers will need to hire additional technicians in order to properly support all customers from all departments on a timely basis. Technicians are supposed to be productive employees, and they will pay for themselves by producing more billable hours and additional parts sales. Unfortunately, far too many dealers are hesitant to hire more techs because they are fearful of upsetting their existing ones. If you fall into that category then I simply ask you, who is running the store or service department? Does it make sense to ignore the needs of your customers, both internal and external, so you can pacify technicians? Wouldn’t 100-percent service absorption, increased owner retention and increased net profit?

Offer a free courtesy inspection to every warranty customer, every retail customer, and every quick-lube customer every day. Insist that your service advisors review the results of those inspections with every customer. Make sure they are properly trained to give feature-benefit presentations for following the technicians’ recommendations. Determine who your inactive customers are in the DMS and start marketing to them aggressively with the offer of a free 27-point inspection.

Vol. 9, Issue 3

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