By Ian Grace

With new and used vehicle transaction prices plateaued at historic highs and OEM incentives limited, some auto dealers are considering pumping the brakes on their marketing efforts in 2022.

At the same time, diminished customer loyalty and extended path to purchase due to production delays and inventory shortages are emphasizing why it’s so important for dealers to stay in consistent communication with customers. Looking past the next 30 days, it quickly becomes clear why dealers need to continue consistently engaging their audience to maintain their competitive edge.

In this blog post, we’ll explore three key reasons why dealers need to continue communicating with their customers in 2022 including:

1. To promote customer loyalty even as consumer sentiment diminishes
2. To support your service and fixed ops departments amid inflation
3. To achieve sustainable success throughout 2022 – and beyond

1. Consumer Sentiment is low.

As new and used vehicle prices remain high and dealerships’ inventories remain low, consumer sentiment has taken a steady decline.

From March until April 2022, the Consumer Sentiment from the University of Michigan declined 9.4%. And by May, consumers’ views of buying conditions for vehicles declined to the lowest reading this year, according to Manheim reports. Customer loyalty has also taken a dip in recent months, with brand loyalty among U.S. auto buyers dropping to a six-year low in 2021. 

According to IHS Markit, a part of S&P Global Mobility, inventory shortages are having a profound impact on customer loyalty, finding a strong correlation between days’ supply and make loyalty, demonstrating consumers eagerness to switch dealerships and even brands to find the vehicle they want.

How to Promote Customer Loyalty as Consumer Sentiment Diminishes

To proactively prevent customer defection and protect your customer base from competitor’s conquest attempts, engaging customers well before they return to market is key. As inventory shortages extend the path to purchase, dealers need to engage customers earlier than they would in the past, up to 12 months before a customer returns-to-market.

By engaging prospects early with personalized messages that build buyer trust, dealers are empowered to set realistic expectations with customers early on, setting the stage for an excellent customer experience when buyers do return-to-market.

2. Fixed ops pricing is on the rise

While retail prices of new and used vehicles have made headlines in recent months, prices of automotive parts including tires and services such as those covered under F&I products like vehicle service contracts, are also increasing. In some cases, the costs for these services are growing faster than the national average.

Knowing the end result of inflation will be passing some of these cost increases onto customers, getting ahead of customer communication is key. This is especially important as some customers may already believe they’re being price gouged in the service lane.

How to Approach Buyers as Service Costs Increase

Building trust with buyers is critical here, too. If prices are increasing due to increases in parts or service costs, communicate that to your customers. Instead of being afraid to compete on cost, messaging should focus on your service department’s advanced knowledge and abilities as compared to the more generalized service shop down the road. Just like with your sales messaging, look for opportunities to engage customers in the method they prefer with clear and personalized messaging. Each customer communication should build on the last customer touchpoint, with consistent messaging carried across every platform. 

3. To achieve sustainable success through 2022 – regardless of what lies ahead

While many dealers started out the year on a high-note, what remains for the rest of 2022 is yet to be seen. According to S&P Global Mobility, production in the second half of 2022 is expected to result in SAAR rates that average 14.69 million units amid continued semiconductor challenges and ongoing supply chain, logistics and worker related issues.

While the underlying demand is currently stronger than US sales results to date, pent-up demand remains under threat from inflation and other macroeconomic pressures, according to S&P Global Mobility. 

In Q1, U.S. auto sales began to cool considerably. According to NADA, March 2022’s SAAR totaled 13.3 million units, down from 14 million units in February and 24.4% from last March’s SAAR of 17.6 million. While sales increased slightly in April, NADA noted, “the industry is still unable to produce enough vehicles to meet current demand, let alone restock dealer lots” amid ongoing production challenges.

As a result of unstable global markets, S&P Global Mobility further downgraded its 2022 and 2023 global light vehicle production forecast in May by 2.6 million units, down to 81.6 million for 2022 and 88.5 million units for 2023.

How Dealers Can Achieve Sustainable Success in 2022  

With retail prices likely to remain high for some time, now is the time for dealers to recognize the value of an excellent customer experience. Customers rank trust as important as purchasing price when deciding which dealership to purchase from.

To help offset any sticker shock, look for opportunities to provide customers a whiteglove customer experience that meets and exceeds their expectations. To achieve sustainable success regardless of what lies ahead, build value into your dealership’s processes at every step. This starts with with proactive, personalized outreach that supports a personalized sales or service experience and long-term customer loyalty.

While historic profits have some dealers considering if they should pump the brakes on their marketing efforts, declining consumer sentiment, diminished customer loyalty and ongoing inventory shortages are emphasizing why dealers can’t afford to lose communication with their audience. To achieve sustainable success in 2022 and continue breaking records in the years ahead, dealers need to maintain consistent, personalized engagement with their customers.

automotiveMastermind (aM), part of S&P Global Mobility and a provider of predictive analytics and marketing automation solutions for dealerships, has announced three new enhancements to its service-to-sales offerings through its flagship automated sales and marketing platform, Mastermind. 

The Mastermind enhancements support the entire dealership service-to-sales ecosystem – including bringing new customers into the door, activating service-to-sales opportunities and maintaining customer loyalty. 

The enhancements include the following: 

Service-to-Sales Generator 

Building on the platform’s ability to automatically identify and activate service-to-sales leads within a dealer’s existing customer portfolio, Mastermind’s new Service-to-Sales Generator fuels these efforts by reaching new customers and marketing to them. By targeting and engaging in-market conquest prospects that are also high-intent service customers, the expansion enables dealers to grow loyalty within their marketing area by nurturing immediate and future service-to-sales opportunities. 

Utilizing a custom, dual in-market audience, Mastermind will target consumers within a dealer’s Area of Influence who are: 

• Current owners of the dealer’s brand 
• In-market for a new vehicle 
• Have a Behavior Prediction Score® of 50-100 
• Are a net-new customer to the dealership 

Dealertrack DMS Integration 

aM is now part of the Dealertrack DMS integration partner program to bring real-time service arrival notifications into Mastermind, centralizing the dealership workflow by providing insight into which customers are visiting the service drive so they can meet customers in the drive with speed, strengthen relationships and increase service-to-sales opportunities. 

The Dealertrack DMS integration will allow Mastermind to serve as a “one-stop shop” for customer information by removing disconnected workflows from a dealership’s sales team. In addition to notifying salespeople at the store when there are upcoming appointments, Mastermind will inform users whenever a loyalty customer enters their service drive through real-time in-platform and email notifications. 

Expansion of Recall Data 

Dealers can now use Mastermind to see which customers within their loyalty portfolio may have open recalls. With these insights, dealers are empowered to build relationships with existing customers to drive a key touchpoint that fuels immediate and future sales opportunities and promotes customer retention.  

“These new service-to-sales enhancements showcase automotiveMastermind’s continued commitment to helping dealers navigate ongoing inventory shortages by maximizing revenue opportunities in the service drive,” said automotiveMastermind Vice President of Product Aaron Baldwin. “We recognize the service drive’s growing value to generating revenue and future sales. With these enhancements, we will continue supporting our dealers’ service marketing efforts at every step of the customer journey, generating critical revenue, supporting immediate and future sales and helping promote customer loyalty.”

It’s rare to find a dealership completely unaware of the value of their service drive. Parts and service sales currently account for 12.5% of new vehicle dealership’s total sales, according to NADA’s latest report. However, few are truly maximizing all the profitable opportunities available in the service drive, discoverable only by connecting a dealership’s service with their sales teams. 

In this blog post, we outline three dealership service drive best practices to drive vehicle acquisitions, conquest sales and loyalty through the service drive by:

• – Breaking down the barriers between service and sales departments

• – Building an effective data-driven service-to-sales process

• – Identifying and proactively engaging service-to-sales prospects to drive sales and build long-term customer relationships 

Break Down the Barriers Between Service & Sales

Many service drives remained bustling during the early days of the pandemic by serving as hubs of constant customer interaction while sales floors fell quiet. In 2020, sales and service revenue decreased its average share of total dealership revenue by only 0.3% compared to 2019, according to NADA. 

However, as customers return to the market quicker than initially anticipated, driven largely by OEM incentives, dealers are presented new opportunities to drive revenue through an effective service-to-sales process. 

This starts with breaking down the barriers between your service and sales departments. Many auto dealerships find success by deploying a dedicated service-to-sales manager to identify and engage service-to-sales prospects. Every dealership’s needs are different, so while considering this dedicated service-to-sales staff, assess the value by asking questions like how many repair orders your service drive completes per day and how robust is your current service department.

With many auto dealers strapped to “do more with less,” a dedicated service-to-sales manager may not be possible. In this scenario, many dealers are finding success by utilizing their BDC to proactively identify potential service-to-sales prospects, engaging those prospects and nurturing them through the car buying cycle. 

To have an effective automotive service drive sales process do this effectively, your BDC can’t simply view every upcoming service appointment as a potential sale. Instead, leverage insights from your CRM, maturity manager or data mining tool to quickly and easily identify your best service-to-sales opportunities. 

Solidify Your Dealership Service-to-Sales Process

Dealerships waiting for customers to decide when and where they want to shop – or have their vehicle serviced – are playing a game of chance with their profits, ignoring tremendous opportunities that come with proactively identifying and engaging prospects. In this same way, building an effective automotive service drive sales service-to-sales process hinges on a dealer’s ability to proactively identify and engage potential service-to-sales prospects. 

Identifying prospects before they enter the buying journey requires understanding which consumer behaviors typically precede a purchase, such as changes to a person’s career or a growing family. Behavior prediction technology tools enable dealers to do this by analyzing all the available data in a dealer’s CRM, DMS and sales platform to predict which customers are most likely to be shopping soon. 

Forward-thinking dealerships using these tools to proactively engage potential buyers are empowered to meet customers where they are with the right message at the right time, rather than waiting and hoping that customer comes to them. It’s in this way Market EyeQ's Service Conquest feature converts dealership service customers into new car buyers at a 4x higher activation rate than the competition. 

Create and Capitalize on Dealer Service Drive Loyalty

One of the most important aspects to any dealership’s long-term success strategy is creating and capitalizing on customer loyalty. Loyalty customers are always the highest profitable sales, and keeping a customer long-term means keeping them from becoming a conquest victory for your competition. OftentimesOften times, this loyalty is built in the service drive, with the number two influence on brand loyalty (only after the sales experience) being a customer’s maintenance and service experience. 

Much like identifying service-to-sales prospects, progressive dealerships are taking a proactive approach to building customer loyalty in the service drive to increase service department sales. By utilizing behavior prediction technology, auto dealers can maintain consistent communication with buyers and build long-term customer relationships through convenient service alerts. 

By serving as an ongoing customer concierge through well-timed service alerts and following dealership service drive best practices, dealers can build the type of service experience that keeps customers coming back and prioritizes the buyers who are most likely to re-enter the sale cycle soon. By proactively identifying and engaging loyalty customers before they enter the sales cycle, dealers who market with Market EyeQ increase retention sales up to 15%. 

While breaking down the barriers between your sales and service teams may seem daunting, the potential benefits that come along with solidifying this automotive service drive sales process in your dealership can’t be ignored. By building a proactive service-to-sales process, supported by data-driven tools and best practices, dealers are empowered to take advantage of additional sales and acquisition opportunities while building long-term loyalty.

How Dealerships Can Increase Service Drive Profitability

How can your dealership increase its service drive profitability? As consumers wait longer than ever before between new vehicle purchases, refining your dealership’s service department process to generate more revenue can make a critical difference in your dealership’s bottom line. In this blog post, automotiveMastermind discusses:

-  Why the service drive has become a key component in dealership revenue & the importance of  service drive loyalty

- How to grow service revenue and loyalty with actionable tips

- How to dedicate a sales team member to the service drive – and equip them with the right tools

If your customers aren’t buying new vehicles, then they’re repairing old ones. American consumers are hanging onto their vehicles longer, to the point where the average car or light truck on the road today is 11.6 years old. Incredibly, that’s three years older than the average just two decades ago.

Why the Service Drive Has Become a Key Component in Dealership Revenue

As vehicles get older, they require more maintenance. This is one factor why new-car dealership service revenues across the industry have been growing strongly in recent years, increasing from slightly more than $80 billion in 2011 to $116 billion last year. According to NADA, last year the average new-car dealership netted 16.2 percent of its profit from service parts and labor, writing 18,544 orders per year for an average staff of 16 technicians (including body shop).

Service revenues are not only key to a dealership’s bottom line, but service loyalty also drives sales loyalty. For dealers who want to grow their share of both revenues and loyalty, below are some simple data-driven suggestions on how to run a dealership service department in today’s competitive landscape.

How to Grow Service Revenue and Loyalty:

Don’t Be Afraid to Compete on Cost

It’s no secret to anyone who manages a dealership service department that consumers believe it is the most expensive place to get their vehicle serviced. That’s one reason why far too many customers stop visiting the dealership service drive once their warranty expires. Dealerships that in the past have balked at putting pricing online or marketing based on price because of a fear of being comparison-shopped against lower-cost independents must meet this consumer concern head-on.

While industry data does show a price differential, it’s also usually less than customers expect – and that difference can be tied directly into the needs and desires of today’s consumer. For instance, dealers have long promoted the perceived quality benefits of dealership service technicians and genuine parts in their marketing outreach. But with the aging vehicle fleet on the road, it’s time for dealer service marketing campaigns to connect those perceived benefits to the customer’s desire to have their vehicle performing at a high level as long as possible. Consumers who hope to drive their existing car or truck for many years after their warranty has expired will be more open to quality messaging such as, “We have the expert technicians and factory-quality parts to keep your car or truck running great for years to come,” and more sensitive to suggestions that they would be sacrificing quality and long-term dependability by entrusting their vehicle to the low-cost competition.

Treat Service Business as a Local Business

Research regularly finds that consumers are unlikely to travel more than 20 miles for a car service, and almost three-quarters of vehicle service visits take place within 10 miles of a customer’s home. Rather than fighting this, focus on marketing to your existing local customers with proximity and convenience messaging to try to keep as much of their business as possible out of the hands of local independents, tire stores, quick lubes and other competitors.

That 10-mile radius should also be prime service drive conquest territory for your marketing campaigns, starting with local brand owners who purchased their vehicle from another dealership and expanding into other owners whose vehicles your technicians are prepared to repair.

Today’s social media and digital advertising platforms have powerful geographic capabilities, and your service drive marketing campaigns should be taking advantage of them to ensure you’re not spending marketing dollars trying to sell service visits to consumers who are outside your local market. Is the team managing your service department marketing campaign focusing tightly on the consumers who are most likely to visit your service drive, or are they spending your resources on unlikely audiences?

Dedicate a Drive to the Most Time-Sensitive Services

Many consumers believe independent mechanics or specialized franchise tire, lube, air conditioning or brake shops are much quicker than dealership service drives for standard maintenance services or state safety inspections. In order to keep your existing customers and effectively conquest that business back from those competitors, you need to address the speed/convenience concern head-on by reducing or eliminating their advantage.

Review how those kinds of orders are handled within your dealership service department process and consider setting up a dedicated service drive or repair bay for those kinds of repairs, and marketing it directly against local competitors on speed, cost and competence.

How to Integrate the Service Drive with Sales

Great service performance supports great sales performance and service loyalty drives sales loyalty. In fact, industry data suggests that after five service visits, a customer is three times more likely to purchase their next vehicle from your dealership. Service conversion, when done effectively, is a tremendously powerful and efficient method of sales prospect generation. It depends not only on ensuring that your service drive is providing an excellent customer experience, but also on ensuring you have the right people and processes in place to connect your service and sales departments so you’re taking advantage of that connection.

Does your dealership have someone dedicated to converting service customers into sales prospects, reaching out to high-quality sales prospects with service appointments to schedule a quick discussion while they’re in the dealership? What tools have you provided that dedicated person to identify the best prospects, and how much do they know about the people who will be showing up in your service drive that day? Do they have the right resources and authority to structure an offer and close a sale? If the prospect isn’t quite ready to close but still worth keeping as a prospect, how is that relationship handled and who is responsible for keeping it active and working it toward closure?

Dealerships that are doing the best at converting service customers into vehicle sales have answered those questions, using processes and tools such as serviceMastermind, part of the Market EyeQ sales platform. Contact us to set up a consultation today.