Last year, dealership service sales were estimated to reach $49.5 billion in the United States alone. For dealerships focused on their business development (and even those who aren’t), stats like that are extremely promising – and point to a much larger opportunity.

It’s almost too easy to assume new vehicle sales would be the main source for business development. After all, the revenue off a new vehicle will always be much higher than that of say a typical repair order. But such a narrow focus on one source of business growth can leave your dealership stalled out – ignoring the potential profit center within your service department.

Bonus: A whopping 46% of service customers plan to buy their next vehicle from the same dealership servicing their existing car. That’s an opportunity you don’t want to waste.

Refocusing Your Business Development

Your service department offers a unique opportunity for business development – unlocking heightened revenue and sales growth. And who doesn’t want that?

But first things first, setting your benchmarks.

A couple of things you might want to consider when taking stock of your current metrics and future goals include:

1. How much revenue is your service department currently bringing in? What percentage of your total revenue does this make up?
2. How does that compare to your competitors or industry standards?
3. How many repair orders make up that revenue number?
4. How many sales are coming from repeat customers? If the number is low, why is it low?
5. What are your most profitable services? In number of sales and revenue per sale?
6.  

Answering these questions will give you a good idea of where your service department currently stands and where it can be improved. Plus, you’ll get a good idea of specific services that will lead to the most profitable growth in the future.

Tactics for Business Development

Business development doesn’t just happen. These four business development tactics have helped drive growth for dealerships and businesses before you, and could be your key to new sales, improved revenue, and exponential expansion.

1. Invest in Your Resources

Having the right team is crucial to your business development success, a key reason why so many dealerships have invested in a business development center (BDC). These centers focus on a variety of sales and business development goals, and can act as a key driver of service business – bringing in new appointments and getting referrals. Which lets your service department focus on what they do best.

While the up-front investment can seem like an unnecessary expense on an already crowded bottom-line, the customer service and experience these departments are able to provide will quickly prove to be worth the extra cost. And as they bring in more customers, they also bring in more revenue. Covering the investment and then some.

Putting it into Practice: Setting Appointments

Between setting appointments, meeting with customers, and actually servicing the customers’ cars, your team has quite the daily to-do list. By reallocating the precious time they would normally use to set new appointments, your team can focus on providing the customers in your dealership with the highest possible standard of quality and overall experience.

Meanwhile, your BDC can focus their efforts on setting additional revenue-generating appointments for your team: reaching out to repeat customers, scheduling first time visits, and getting referrals.

2. Regularly Communicate with Customers

Did you know that in a recent survey only 44% of dealership service customers stated that they prefer to get all their vehicle service needs performed at a dealership? That leaves a whopping 56 percent of customers that are taking their business and their revenue elsewhere at least some of the time – and that doesn’t even include people who never take their vehicle to dealership service departments.

Communicating with new and existing customers may seem like an obvious business development tactic, but it’s one worth repeating. If a car-owner isn’t aware of the services you offer, how can they be expected to come to you for that service? Regularly reaching out to customers, whether through an email campaign or a social media ad, keeps you top of mind for the next time they find themselves in need of an unexpected repair or just their regularly scheduled maintenance.

Putting it into Practice: Running a Conquest Campaign

This type of campaign specifically targets customers looking for a service or repair from a competitor. The best part about a campaign of this nature? You are reaching out to qualified individuals actively looking for a service you offer. Take advantage of that moment and make them a customer for life. Not sold? When we helped run a DriveSure direct mail conquest campaign for Mazda of Orland Park, they generated over $100,000 in revenue. Talk about growth!

3. Add Value to Your Service

Add-ons, incentives, loyalty programs. Whatever you call it, customers love it. And it’s the reason they come back again and again. When you can directly add value to what would normally be a typical repair or service, you win more than just customer loyalty, you win positive word of mouth.

Why does that matter? Because when you can rely on positive word of mouth, your customers will do your business development for you. Referring friends and family to your dealership the next time they need anything from a tire rotation to a transmission tune-up.

Putting it into Practice: Partnering with a Service Provider

Partnering with an incentive service provider, like DriveSure, makes it that much more enticing for your customers to return to your dealership for their regularly scheduled maintenance. With renewable benefits like premium roadside assistance and road hazard tire protection, the added value makes it even more enticing for vehicle owners to do business with you.

4. Align Your Service with The Customer Journey

Fact: A bad experience is the leading reason why customers don’t return to their dealership for ongoing service. It’s no wonder why customer experience has become such a hot topic. In today’s market, customers expect an outstanding experience, and more than that, they expect it to be personalized to their preferences and their specific journey.

Doing so will also help to avoid the five most common service customer defection points along that journey. If you want to explore those defection points further, and get tips on how to overcome them, grab a copy of our free guide: Avoiding Potholes in the Customer Journey.

Whether your customer needs their first tire rotation, or they are looking to trade in their vehicle, when customers feel like an individual (instead of just a number) they respond with ongoing loyalty – and that can pay in dividends. In fact, according to HBR, “loyalty leaders…grow revenues roughly 2.5 times as fast as their industry peers.” 

Putting it into Practice: A Seamless Sales-to-Service Handoff

Every customer journey starts somewhere, and the majority of your customer journeys will start with the sale of a new car. But then what? Creating that seamless sales-to-service handoff is your starting point to ongoing service sales and future business growth – so it’s important you get it right.

What does that look like? Like the rest of their journey, this handoff will be personalized to the individual customer, but it can include setting the first service appointment at the point of sale or offering a tour of your service department. Whatever the means, the goal is to make that new sales customer comfortable with becoming your newest service customer.

The success of your business development strategy depends upon a multitude of factors, but by integrating just a few of these tactics, you’ll be well on your way to achieving your goals and driving new growth. And it all starts with your service department.

“Innovation needs to be part of your culture. Customers are transforming faster than we are, and if we don’t catch up, we’re in trouble.” – Ian Schafer

Dealerships are in constant competition. Between other rival dealerships, automotive repair chains, and local shops, customers have many an option to choose from. And they aren’t afraid to shift gears if the customer experience isn’t up to par.

While competing for new customers (and the loyalty of existing customers) isn’t new to dealerships, the “battleground” has transformed. Customer expectations are on the rise – and it doesn’t look like they will be decreasing any time soon.

And with such fierce competition, any opportunity for differentiation is an opportunity you should be taking advantage of. 

The good news? Dealerships have a leg up when it comes to creating that ideal customer experience. The kind that drives loyalty and makes customer want to return again and again.

And it can all be summed up in one word: amenities.

At this point, it’s fairly standard protocol for dealerships to offer things like free shuttle service or loaner cars for those customers whose cars are in the shop for an extended period of time. And while those offerings are by no means irrelevant, if dealerships want to continue to stand apart from the competition, they must elevate their amenity playbook to better fit the transforming needs of the customer.

Rideshare as an Amenity

Possibly one of the best ways to level up your CX score? Rideshare as an amenity.

Think about it. When was the last time you called a taxi? On the other hand, when was the last time you ordered an Uber or a Lyft?

Chances are the latter has occurred much more recently, and most likely, more frequently. The same could probably be said by the majority of your customers.

Transforming an Industry

Rideshare apps have changed the game. What feels like almost overnight, rideshare brands like Uber and Lyft transformed an entire industry simply by understanding the consumer and what they needed from a car service.

In Q4 of 2020 alone, there were 93 million active Uber users.

And this transportation trend isn’t just for individual consumers. As rideshare apps have increased in popularity their capabilities have proven to go beyond simply requesting a ride.

Now serving businesses globally, rideshare apps offer a host of solutions that include client/employee rides, meal delivery, and package transport.  

Transforming Your Dealership

So, what does this have to do with your dealership? A lot.

Innovation doesn’t always mean transforming an entire industry. Sometimes it’s as simple as transforming one customer’s experience.

Although most dealerships currently offer shuttle service or car loans for their customers, rideshare provides an opportunity for differentiation that can be beneficial across the board.

After all, why would a customer want to wait for a shuttle when they could just as easily request a car and be driven comfortably and quickly back to the dealership?

Some of the key benefits include:

For the customer:

1. The Convenience Factor: Chances are high your customers have used this type of service before. Forget trying to figure out a ride, requesting a car is only a few taps away.
2. Timing is Everything: Customers don’t like to wait. And when the options are a rideshare driver only a few minutes down the road or a shuttle 20 minutes away, guess which one they are going to pick?
3. Avoiding the Crowd: Even pre-pandemic, crowds probably didn’t top your customers list of favorite things. They avoid the crowd, and you avoid the complaints. Win, win.

For the dealership:

1. Low Maintenance: Offering rideshare as an amenity means you don’t have to worry about upkeep for your fleet of shuttles. Say goodbye to costly maintenance and repairs.
2. Lower Costs: Speaking of costs, maintenance and repairs aren’t the only thing you’re covering out of pocket for that shuttle service. Between the actual purchase of the shuttles and paying to run them, the dollars are quick to add up. And while an Uber or a Lyft isn’t free, this type of expense is often much less costly. Added bonus? When you work with a provider, like DriveSure, rideshare costs are covered in the event that a customer’s car breaks down and is towed back to your dealership for repairs. Keeping costs low and satisfaction high.
3. Happy Customers are Loyal Customers: It’s simple. When you can provide an easy and convenient service, your customers are more likely to return to your dealership in the future.

More than an App: Driving Loyalty

A single amenity isn’t ever going to win over hordes of new customers. What is going to win them over, however, is continuing to offer new amenities and services that prove you understand them and what they expect from their dealership of choice.

Because when losing a customer is as easy as a single bad experience, you have to make sure you are doing everything you can to drive loyalty. 

Your customer has signed on the dotted line, happily driving off the lot in their brand-new vehicle. It’s easy to think of what comes next as a bit of a honeymoon period. Whether they’re covered by a factory warranty or lucky enough to have factory-paid maintenance, the brand-new vehicle owner is enticed to come directly to your dealership for their maintenance and repairs.

But like most good things, your customer’s warranty must come to an end. 10 years or 100,000 miles later (even sooner if we’re talking factory-paid maintenance) and that loyal, revenue-driving relationship suddenly hits a bit of a roadblock. Why? The vehicle owner’s coverage has expired, and literally overnight every ding to their car is now a ding to their wallet. Hello, sticker shock.

With your customer at a proverbial fork in the road, your dealership faces a critical challenge: incentivize ongoing loyalty or risk losing out to the auto repair chain down the road. The good news: the industry as a whole is seeing an upswing in customer loyalty. But it’s up to you to make that swing a home run.

Driving Customer Retention

So, how do you do it? How do you take advantage of what could be a critical moment to ensure your customers don’t drive off into the sunset with your competition? We’ve put together our top four tips for keeping customers and keeping them happy. 

Before the Expiration Date

Think of these tips as your building blocks, setting the stage for when expiration day hits and your customer has a choice to make between you and someone else. Because in reality, it should never come down to just one interaction. You need to be continuously building out a loyal (and lasting) relationship with every customer that comes to your dealership.

1. Educate Your Audience

Think sticker shock is bad? Imagine the shock a customer faces when they are handed a bill with a hefty price tag AND they have no idea what went into their vehicle maintenance. It’s a recipe for disaster. 

Keeping your customers educated is the easiest (and most cost effective) way to build loyalty and trust. When you can position yourself as both the expert in your field and the expert on your customer’s car, you become the go-to person for all things service and maintenance – from oil changes to tires to whatever check engine challenges your customer might face on their journey.  

Pro Tip: Don’t wait until your customer has an issue with their car or warranty to start educating them. Before they even drive off the lot make sure they have a clear understanding of their car and their warranty – what it covers, what it doesn’t, and how long it lasts.

2. Reputation Matters

Reputation can mean different things to different people, but unless you fancy yourself a Joan Jett impersonator, chances are you don’t want a bad one. And thanks to factory-paid maintenance and/or warranties you have a chance to prove yourself – and build out a sterling reputation – before your customer is faced with deciding between your dealership and another service provider. 

Don’t waste that opportunity. Show off your service skills. Prioritize the customer experience. In short, make it so your customer never even considers another option. Because you are THAT good. 

After the Expiration Date

It’s expiration day and your customer has started shopping around for the best deals. They come to you with one critical question: How you are better than the shop down the road? 

Not sure what to say? We’ve got you covered.

3. Define the Difference

As a dealership you face an unfortunate, but true fact. Many of your customers simply don’t understand how you differ from any other service shop. While you may have been able to make some headway building up your reputation prior to expiration day, if you want to win in the fight for loyalty you’re going to have to highlight how and why you are better than your competition. Whether that’s your customer experience or your service expertise or both.

Luckily for you, you have the chops to back up your claims. Now you just have to communicate it out to your audience. 

Want to widen the gap between yourself and your competition? Partnering with a service offering like DriveSure, that bundles renewable value-added benefits with your customers’ regularly-scheduled maintenance puts a feather in the cap of your already outstanding offerings. 

4. Put the I in Incentive

What’s the best way to keep your customers coming back again and again? Incentivize them. Because who doesn’t love a free extra or a discounted deal?

There are a few different ways to think about incentives when it comes to your customers, but we are going to focus on two of the most common: 

Loyalty/Reward Programs: These types of programs encourage, well, loyalty. It’s a concept we see across industries, but which has a particular strong-hold in the automotive world. Whether it’s a point system that ends in high-ticket rewards or a freebie with purchase, these programs are often used to encourage customer retention. 

Value-Adds: It’s a commonly accepted business principle that customers are willing to pay more for a better experience. And how do you elevate their experience? By bringing in more value. Why go somewhere else for an oil change when going to the dealership means your oil change is complemented with extra perks? Incentive programs like DriveSure help dealerships elevate their value by offering customers a unique suite of renewable benefits including: premium roadside assistance, road hazard tire protection, and emergency alternate transportation. 

The Bottom-Line Impact

Two simple but hard hitting facts:

1.    Close to 50% of dealership profits come from service and maintenance departments.
2.    Dealerships provide less than one third of all service visits.

Just because the factory-paid maintenance or warranty has expired doesn’t mean your customer relationship should too. Understanding how to leverage this moment into ongoing revenue opportunities ensures your bottom-line never hits a roadblock. 

Looking to avoid other common potholes and pitfalls in the customer journey? Download our free dealership customer journey guide to explore the critical moments when customers are most likely to hit the eject button and (more importantly) how to stop them from doing so.

Electric vehicles (EVs) are quickly becoming the new norm, and service departments need to adapt to this reality. In the first quarter of 2021, battery-only EV sales soared 45% year over year, compared with 11% growth in the overall auto market, according to Cox Automotive.

This trend seems destined to accelerate in the near-term. From Ford’s launch of the F-150 Lightning electric truck, to GM committing to offer 30 new electric vehicles globally by 2025 (the same year Jaguar pledges to go all-electric), automakers across the spectrum are turning hard toward EVs.

For service departments, the clock is ticking. Unless dealerships figure out now how they will position their Fixed Ops departments in this new market, they run the risk of getting blind-sided by a significant loss of service demand (and revenue).

Part of adapting means facing the facts. Lifetime EV maintenance and repairs tend to be around half the cost of that for gas-only cars, finds Consumer Reports. But it’s not all doom and gloom. Service departments can make up some of this revenue gap by excelling at EV-specific maintenance and repairs to retain market share and build customer loyalty.

A Range of Services

When it comes to EVs, batteries take center stage. While they may not require as much maintenance as an internal combustion engine, they can still be a source of revenue for service departments.

For one, EV owners tend to care deeply about battery performance. In fact, battery and driving range is the top purchasing decision for EV owners. From there, battery range and accuracy of the displayed range account for around 20% of EV owners’ overall satisfaction, finds a J.D. Power survey.

So, there should be strong demand for maintenance that keeps batteries healthy. Work such as flushing coolants can help keep battery temperatures in check to maintain battery performance. And, making sure brakes are in good working order can also help, as regenerative braking can influence range.

Plus, when batteries do degrade over time or get damaged, they can be costly to repair or replace. While some EV owners may then decide to purchase a new EV that gets better range, service departments may still have a revenue opportunity to fix or replace older batteries.

Everyone Needs Tires

Regardless of what type of vehicle someone drives, everyone still needs quality tires and tire-related services. EV tires eventually wear down and need to be replaced and EV owners will also need services like tire rotation and balancing.

Plus, maintaining optimal tire pressure can help extend driving range. Research from ExxonMobil Chemical, published in SAE International, finds that optimizing tire pressure can improve EV range by 3-7%.

Emphasizing tire-related services can help your dealership win over all types of customers, but it’ll be especially important in getting regular business from EV owners. But dealerships have a lot of ground to make up in this area.

Over two-thirds of all vehicle owners chose a non-dealership location for their last tire replacement, according to DriveSure’s 2020 Dealership Service Retention Report. [1] And 20% of those loyal to dealership service departments are unaware their dealerships sell tires. If dealerships don’t act now to become known for tires and related services, they run the risk of losing out on the most frequently-needed maintenance for EVs.

One way for dealerships to help customers become more aware of tire offerings is through offering tire-related incentives. One of the core benefits of the road-hazard tire protection included in our DriveSure incentives is that whenever a vehicle owner has a flat, their dealership is the first place they think of because they can get the flat fixed for free. And if it turns out that they need the tire replaced, that’s covered too. This helps to associate your dealership with tires in the minds of your customers, rather than the tire shop or big box retailer down the road.

Accidents Happen

No matter the engine style, accidents still happen and require repairs. The question then is whether drivers will go to a third-party shop or a dealership for body work and related services. Given that many EV models are new, third-party body shops might not have much experience fixing certain vehicles, let alone inspecting important components like the battery. This gives dealerships the opportunity to position themselves as the experts to get EVs back to pristine condition.

Relatedly, all types of cars will still face incidents like breakdowns and flat tires. This is another place that incentive programs like DriveSure can help. DriveSure’s dealer-loyal roadside assistance perk ensures that, if a breakdown does happen in the area, the vehicle gets towed back to your dealership for quality repairs.

Market Your Expertise

Dealerships’ service departments can no longer afford to wait and see what happens with EVs. The future is now, and service departments need to find ways to capture revenue from EV owners.

By marketing your dealership as an expert in EV servicing needs, you can win over customers and build loyalty in this young but rapidly growing market. Focusing on EV owners’ top concerns, such as battery range, along with showcasing your dealership as the go-to place for EV tires, body work and other repairs can help your dealership easily navigate this transition.

The service department is a crucial profit center for new-car dealerships. But earning and retaining the customers that make that profit possible isn’t easy. Aftermarket service providers are constantly working to win your customers over, and they’re often pretty good at it.

However, dealerships have several built-in advantages that they can play up to capture and keep more business. And, with a little effort, there’s more they can do to remain the best and most obvious choice for vehicle owners.

Specifically, new-car dealerships can take the following actions to gain an edge over the competition:

1. Compete on Service Quality

Trying to compete only on price and discounts creates a race to the bottom. That’s a game dealerships don’t want to play. Instead, new-car dealerships can compete on service quality.

Our 2020 Dealership Service Retention Report that while customers do value price, they value quality of work even more when deciding where to go for service. By promoting their expertise with servicing specific makes and models, dealerships can remain the most attractive option. Better yet, let your customers help you promote your superior quality with a strategy for earning more positive online reviews.

But quality of maintenance/repair work is only half the battle. Dealerships also need to compete based on the quality of their customer service. The smoother you can make the experience from appointment setting to paying for service, the better. The goal needs to be 100% satisfaction. Just one bad experience can cause even the most loyal customers to consider other service providers.

2. Provide a Personalized Experience

In addition to enhancing customer experience based on providing top-notch maintenance/repair work, dealerships can also create more personalized experiences to keep customers satisfied.

“Think about selling forward: If a retailer retains the data that a buyer tested an SUV before buying a compact sedan, it can offer the SUV as a service loaner,” suggests Deloitte.

Dealerships can also create more personalized, convenient experiences such as through online appointment setting and appointment reminder systems. Ask customers their preferred communication methods, such as text, email, or phone call. Then, instead of calling every customer for service reminders, you can keep in touch through individual customers’ preferred channels to provide a better experience.

3. Be Proactive With Inspections

One of the factors holding back dealerships from gaining more service business is the fact customers often choose different providers for different services. 56% of dealership service customers that participated in our research go elsewhere for some services.

Most go to dealerships for needs like manufacturer-recommended maintenance, electrical issues, and unknown issues or check engine warnings. But for other issues such as with batteries, tires, and body work, consumers are much less likely to return to dealerships.

However, if dealerships can be proactive about identifying issues in these areas when providing other maintenance, that can elevate customer experience and keep them coming back to you for more work. But simply conducting a multi-point inspection isn’t enough. You also need to ensure your team has the people-skills and proper approach to upselling that’ll be effective in getting customers to take proactive action on your recommendations.
 

4. Get Serious About Tires

As mentioned, dealerships tend to lose out when it comes to tire-related business. In fact, 69% of dealership service customers in our study went elsewhere the last time they needed a tire replaced.

But that’s not just because they’re looking for the cheapest option. Almost one-quarter of vehicle owners weren’t aware whether their dealership even sold tires. Even among loyal dealership customers, 20% are unaware.

That means dealerships need to do more to publicize their tire sales and repair offerings. The more customers can associate dealerships with tires, the better.

One way to stand out from the competition is to leverage technology that ties into enhanced inspections. Almost 60% of tire checks are based only on visual inspections, according to UVeye, a vehicle inspection technology provider. Yet nearly half of service personnel think “that automated tire-inspection systems would more accurately pinpoint serious problems and help ensure customer safety,” the company notes.

Another way to ensure customers come back when they need tires is to offer tire repair and replacement for free as an added perk. With DriveSure, dealerships can provide renewable road hazard tire protection with every maintenance service and vehicle purchase. This kind of incentive ensures customers come back to you when they get a flat and gives them another reason to think of your dealership as a tire provider.

Provide Unique Value-Added Incentives

Amenities like vehicle pick-up and delivery, good coffee, and shuttle services are commonly used to keep customers happy. But incentives are where the real magic lies in attracting and retaining customers.

Value-added incentive offerings like the ones DriveSure empowers dealerships to provide to customers provide a competitive advantage that keeps third-party service providers at bay.

We’ve already discussed how DriveSure can help with tires, but DriveSure doesn’t stop there. With every qualifying service visit or vehicle purchase, DriveSure helps your dealership provide dealer-loyal roadside assistance, road hazard tire protection, and ride share transportation in the event their vehicle needs unplanned repairs. These benefits expire at the end of the dealership-recommended maintenance interval and can only be renewed by returning to the dealership for a qualifying maintenance service, such as an oil change.

With DriveSure, customers have extra reason to come back on time for regular maintenance. And, if they face an unplanned breakdown or flat tire, DriveSure makes your dealership the obvious choice to remedy the issue.

Stand Out From the Crowd

Vehicle owners have many options to choose from for servicing, but dealerships can do more to stand out as the go-to choice. Instead of trying to be the lowest-price option, dealerships that can play up their expertise and provide high-quality service can break away from the competition.

And by offering amenities like DriveSure benefits, which are unique to new-car dealerships, you can keep customers coming back for more services, such as tires. Over time, more customers will come to rely on your dealership for all their servicing needs, rather than picking and choosing different maintenance/repair shops based on the service needed.

While new-vehicle sales have rebounded nicely following the pandemic-related depths of 2020, current production delays and overall inventory issues threaten growth within the new-car market.

“There are nearly 1.1 million fewer vehicles in inventory at dealerships this April (2021) versus last April (2020), and this tight supply situation will constrain sales,” notes Cox Automotive.

In particular, a global shortage of semiconductor chips has been slowing down manufacturing, along with other supply constraints.

“In the first quarter of 2021, production was also impacted by a reduced supply of resins used in many automotive parts, as well as by severe winter storms that caused manufacturing closures. The chip shortage is extending into the second quarter and will cause further vehicle production losses,” notes the National Automobile Dealers Association (NADA).”

That can leave new-car dealerships in a bind. Even if demand is strong, you don’t want potential customers waiting around until you have enough inventory to meet their needs. You want to close sales now. The solution, then, is to turn to another supply source: used cars.

Doing so can help maintain sales now while also building a pipeline of future customers who can return for servicing and to buy new cars down the road. And while dealerships face significant competition in the used-car market from the likes of CarMax and Carvana, let alone local used-car lots, new-car dealerships can stand out with their customer service, expertise, and unique incentives like DriveSure.

Benefits of Focusing on Used Cars
Even when the current chip shortage fades away, new-car dealerships can still benefit from building out a robust used-car business. Doing so helps dealerships:

Manage the risk of future inventory issues

Increase profit, as gross margins tend to be higher on the sale of used rather than new cars

Capture revenue for parts and service in the short term

Gain recurring customers in the long term

Not only can used-car sales increase revenue from car buyers, but simply getting vehicles in shape to sell can lead to more money for your service department. Keeping the work in-house effectively means that your used-car department becomes a customer of the service department.

This type of cross-functional work is key to maximizing gross profit. Your used car, new car, and service teams can work together to value trade-ins correctly, know what to send to the auction, what to buy at the auction, and figure out the ideal inventory mix to keep your customers happy.

How to Compete Within The Used-Car Market

While the benefits of selling more used cars are clear, some new-car dealerships may think they can’t compete with all the other players in the used-car market. However, new-car dealerships have several advantages.

For one, new-car dealerships can rely on their brand expertise, in contrast to generalist used-car businesses. Plus, new-car dealerships tend to have a lot more at stake than a place that only sells used cars.

For those used-only lots, once they sell a car, that can be the end of their relationship with that customer. But for your dealership, you can keep bringing them back for parts and service.

In other words, you need a strong reputation to not only sell used cars initially but to keep customers coming back. The more success you have in building up your reputation, the easier it can be to stand out from the competition.

One way to gain a strong reputation is to make the transaction process as friction-free as possible. If customers prefer purchasing online, for example, that’s well within the capabilities of most dealerships. Or, if customers are disappointed about a lack of new-car inventory, be ready to suggest used options that can still excite them.

Plus, new-car dealerships have a secret weapon — DriveSure. Only new-car dealerships can offer our service, which provides your customers with renewable road hazard tire protection, dealer-loyal roadside assistance, and emergency rental coverage with qualifying vehicle purchases and maintenance services. That provides a huge incentive to purchase a used car from you rather than getting a similar model elsewhere.

How to Get Used Car Buyers to Return for Service

After the sale ends, the work doesn’t stop. You want customers to return for service to gain more revenue, but this can also help strengthen your reputation if you continue to provide a smooth experience.

However, getting car buyers, especially those who purchase used cars, to return for service can be difficult. This is especially true if the vehicle is out of warranty.

That’s why dealers need to demonstrate the value of their service department to customers. Offering DriveSure can help, especially with used-car buyers, who otherwise may be unlikely to return for their first service.

The initial benefits of DriveSure might move the needle enough to persuade customers to drive the car off the lot, and then the fact that they can renew these protections just by coming in for their first routine service helps your dealership stand out from quick lube locations and other aftermarket shops. Plus, if customers have issues such as tire damage, they have an incentive to return to your dealership for repair or replacement.

Getting used-car buyers to come in for this first service is huge. Nearly three-quarters of car buyers who used their dealership of purchase for service say they’re likely to return to that dealer for their next vehicle purchase, finds Cox Automotive.

Be Ready to Serve Your Customers

The challenges of 2020 may have been highly unusual and unfortunate, but as the chip shortages in 2021 show, there can always be new issues that come up and affect your business in new ways. That’s why it’s important for dealerships to remain flexible and have multiple revenue streams in place so that you can continue to serve your customers however they prefer at that moment.

You won’t get a second chance to make a good first impression

The relationship between a customer and a dealership’s service department doesn’t begin when the vehicle needs its first oil change. It actually starts as soon as the new vehicle owner agrees to sign on the dotted line.

Many customers only visit the dealership once or twice when they purchase a vehicle — making it difficult for dealerships to develop brand loyalty in the sales process alone. The service center is often where that loyalty is earned, so it’s crucial that your dealership’s sales team sets your service department up to delight your customers again and again.

Customers begin judging their experience as soon as they walk inside

From the moment they’re greeted by the sales team, buyers are evaluating how they’re being treated and whether they feel taken advantage of or if they’re getting a good deal. After all, most consumers have already done some research online, and they know that competition is high in the automotive industry.

If they aren’t happy at any point in the purchasing journey, or if they feel their needs are not being met, they’ll leave. That’s why providing excellent customer service and building trust will help dealerships stand apart from competitors — and it’s an important first step in getting customers to return for service.

You can earn that trust by sharing information like product reviews, buyer’s guides or case studies — resources that help them make informed purchasing decisions.

The sales-to-service handoff is a pivotal moment

Service revenue can have a significant impact on your dealership’s bottom line: NADA reports that while parts and service only made up 12% of dealership revenue in 2020, it can often contribute a substantially higher amount of gross profit than any other departments in a dealership. And as you know, the service department is also critical to retention and repeat sales.

And yet, a recent DealerRater poll found that only 42 percent of the 16,000 car buyers surveyed had been introduced to the service department upon making their purchase. Worse, 25 percent couldn’t remember whether they’d met any service employees.

Aligning the sales and service teams by introducing customers to the service department during the vehicle purchase makes them 1.5 times more likely to return for service and then again to purchase another vehicle, according to a recent Cox Automotive Maintenance and Repair Study. Dealers can improve that figure by making sure the sales-to-service handoff is a positive experience, beginning with a short tour.

A seamless sales-to-service handoff leaves customers feeling more confident – not only about their purchase, but in knowing where to turn when they have questions or need help with their vehicle moving forward. This way, the tone is set for the entire service relationship.

Get it right, and the car owner feels comfortable about trusting the service team down the line. Take up too much of their time, or waste it by not providing value, and the excitement over their new purchase fizzles out quickly.

Use this introduction and tour to begin educating customers about the maintenance schedule for their new purchase, and on the importance of returning on time for service to prolong the vehicle’s life and safety. Explain the advantage of having manufacturer-specific trained technicians onsite. And add more value by scheduling their first maintenance visit when you hand over the car keys, providing information about which repairs the service department offers.

Help customers understand what’s covered in their warranty

Nothing gets a vehicle owner more aggravated than showing up at the dealership’s service department expecting a repair to be covered and then finding out it’s not. That’s why it’s vital to make sure customers understand their coverage when they purchase the car. One way to do this is to walk around the vehicle itself, pointing out what is and is not protected.

Don’t offer an extended warranty as they’re leaving the parking lot. Instead, make this conversation part of the sales process, so clients can absorb what options are available. They’ll feel looked after knowing that every step of their ownership experience is covered.

Offer service-related incentives up front to bring customers back

Remember that great Honda service commercial from 2015 that warned vehicle owners, “Don’t open your hood to strangers”? Customers want to come ‘home’, but sometimes, they need a gentle nudge.

To motivate car owners to come back to your dealership for service, consider making it worth their while. Manufacturer-paid maintenance programs are one effective way to get them to come back. But not all dealerships have this option, and for those that do, the manufacturer doesn’t pay for maintenance forever.

That’s where an incentive program like DriveSure comes in — providing renewable roadside assistance, road hazard tire protection, and rental coverage at no cost to the customer for the length of the recommended service interval. Renewing the perks is simple: the customer just has to come back to the dealership for service or repairs. That means you get one more tool to delight customers every time they return.

Encouraging customers to bring their vehicles ‘home’ for maintenance and repairs starts the day they buy the car and before they pull away from your dealership for the first time, so don’t blow this important touchpoint.

From hiring and training department heads to monitoring the daily operating control (DOC) to annual forecasting, resolving elevated customer complaints, and so much more —dealership general managers (GMs) have a bevy of responsibilities.

And while the most successful GMs have a well-rounded and diverse set of skills, many of them share a common element: they’re personable salespeople at heart.

Make no mistake — that experience is invaluable when it comes to motivating the sales team and helping to close deals on the lot and showroom floor. But by leaning too heavily on their sales background, some GMs neglect (or at least overlook) the importance of their dealership service departments, even if unintentionally.

When GMs place too much attention on vehicle sales, it’s inevitable that the parts and service department takes a backseat to dealership operations.

In this article, we’ll tell you why it’s important to strike a balance between sales and service, and share some tips to help you lead a more well-rounded dealership.

Are You Maximizing Your Fixed Ops Profits?

The parts and service departments play a big role in driving the success of dealerships.

According to the National Automotive Dealers Association (NADA), fixed ops accounts for an annual average of 12 percent of a dealership’s revenue, 60 percent of a dealership’s net profits, and approximately half of the gross profits. When you look at how profitable each department is on its own – those numbers make a lot of sense.

Clearly, dealerships' financial success depends on parts and service departments to deliver results.

Service, Parts, Sales: It’s All Connected

Fixed operations can help cover dealership costs, making the process of selling cars easier.

Your service department is important to not only ratcheting up fixed ops profits, but also generating future new car sales. Instead of a singular focus on vehicle sales, give your fixed ops department the attention it needs to be successful — by making sure everyone is on the same page to cross-sell services.

The first major step is making sure your salespeople are doing everything they can to get a buyer to return to the dealership for their first service visit. We dive into the sales-to-service handoff in this article, but key components include training your sales staff and making adjustments to your sales commissions program. Both of these require support and direction from the GM level.

Parts and service departments must also be in constant communication, and GMs can help ensure a successful relationship between the two. Carefully work together to regularly review stocking levels on parts. The longer a customer has to wait for a repair, or if common parts need to be ordered leading to longer resolution times, the more frustrated they become.

According to a recent DriveSure report, tires are another area that represent a substantial growth opportunity for dealerships. Less than a third of survey respondents reported purchasing a set of tires from their dealership. Even among customers who identified as extremely loyal to their servicing dealership, only half of them buy tires there.

This is a clear indicator that many dealerships are leaving money on the table. Not only are they losing tire sales to a competitor, they’re losing an opportunity to upsell or cross-sell and may be missing out on repeat business altogether.

If you’re not keeping a keen eye on how your parts and service departments collaborate — maintaining a well-trained staff and in-demand parts fully stocked — you run the risk of losing a customer’s business for good.

This may sound simple, but these are the things typically overlooked by GMs who aren’t as invested as they should be in the fixed ops side of the business.

Adopt a “Service Sales” Department Mindset

Sometimes it just takes a change in how you view your service department. Far more than just parts and service, consider them your “service sales department.”

Instead of looking at fixed ops as a cost-center where expenses should be cut, treat them like a sales department. In doing so, you’ll be far more likely to use your sales experience to employ the leadership tactics that transform fixed ops into the profit-generating machine it should be.

This can be done with a regular sales meeting with your service advisors and managers to review performance standards, revenue goals, forecasting, and customer retention. 

• Number of customers helped each day
• Number of repair or service orders per day
• Open parts counter tickets and repair orders, especially those older than 30 days
• Average hours per RO
• Average dollars per customer-pay RO
• In-and-out times for quick lube
• Inventory of spare parts and fluids techs are storing at their workstations for side jobs
• Expenses (daily, weekly, monthly)
• Gross revenue (daily, weekly, monthly).

This regular and open communication will show you’re invested in your team and allow you to better lead from a position of knowledge and trust. It also helps you immediately identify opportunities and address issues. And perhaps most importantly, it fosters a sense of camaraderie and empowerment among your fixed ops employees.

The Most Important Fixed Ops Metric

Once you’ve made the intentional decision to focus on fixed ops ­— generating greater collaboration between departments and adopting a service sales mindset ­— you’ll find that there’s one key metric driving profitability across the entire dealership: retention.

Getting vehicle buyers to come back for service means more parts and service revenue. Keeping service customers as their vehicles age results in larger and more frequent repair orders. Consistently delighting service customers gets them to come back to you for their next vehicle purchase. It’s all about retention.

There are many ways to help you retain more customers. Using DriveSure is one method with clear results. By providing customers with a unique set of benefits with every oil change and vehicle sale, DriveSure helps you keep customers coming back for service, tires, and unplanned repairs — all without complicated loyalty programs or profit-cutting discounts.

Are you struggling to fill your service bays with new customers or retain existing customers? Or maybe you’re looking for big growth this year? Then it’s probably time to take a look at your fixed ops marketing strategy. The past 12 months haven’t been easy on many industries. Dealership service departments have had to adjust to meet evolving customer demands that have shaped the “new normal” for fixed ops.

The struggle to stand out with impactful marketing is real. But last year’s DriveSure Dealership Retention Report did reveal some of the most effective fixed ops marketing tactics, according to your customers. For example, we learned that text messaging was quickly rising in popularity, regardless of age or generation.

In this article, we want to go a little deeper. Granted, not all service departments will have the capacity to take on all of these marketing tactics. The key is to develop a roadmap and start small. Begin with things you can execute and implement immediately, and they’ll produce results faster than you might think.

Here’s a list of 5 marketing ideas to help you get new customers into your service center — and make sure you hang onto your current ones.

1. Improve your SEO

SEO stands for search engine optimization. In a nutshell, it means your dealership service center comes up when customers search by name, proximity, vehicle issue, or question.

Example:

By Name: “Aspen Auto Clinic”
By Proximity: Auto Shops Near Me
By Issue: Brake Repair Colorado Springs, CO
By Question: How often should I replace my brakes?

No matter how impressive your website is, it’s all for naught if customers can’t find you.

To help potential customers find you online instead or your competitors, SEO should always be top of mind with your fixed ops marketing.

The more localized you get, the better.

For example, if you’re a dealer service center in Cleveland, your marketing campaigns, landing pages, and videos should go beyond “best auto service centers.” Instead, target keywords and phrases like “best auto service centers in Cleveland” or “brake repair shops in Cleveland.”

Some tools for checking and improving your local SEO results include:

• - Schema Generator

- Local SEO Checklist from Synup
- Google PageSpeed Insights

2. Educate customers with video marketing

There is perhaps no better way to personalize your service department than with video marketing. Create a YouTube channel, produce a video or two to feature on the “home” or “about” pages of your website, and use short videos in your email marketing

Customer testimonials, videos with your staff and service manager, service center tours, and expert Q&As are all great ways to warm up to customers and make you look more approachable.

Example:
Many consumers don’t know the difference between conventional, synthetic, and high-mileage oil changes. Educate them with video marketing to set yourself apart. You might even consider including a personalized manager’s offer or promo code to incentivize the first visit.

For other potential video topics, consider things like:

• - Signs of alternator failure

- What does it mean when the steering wheel shakes?
- Questions to ask before my first service department visit
- What will void a new car warranty?

If you can produce regular video that attracts, engages, and delights your customers, it will go a long way in improving your SEO, establishing yourself as a credible automotive expert, and building confidence and trust among your audience.

3. Get active on social media

Simply take a scroll through Facebook on a Saturday afternoon. You’ll probably see people posting stories of vehicle issues and asking for recommendations.

Across Facebook, Twitter, and Instagram, social media can do more than just raise brand awareness for your fixed ops. It can show how you’re genuinely helping your customers. You may not become an overnight influencer, but here are a few best practices to optimize your engagement:

• - Retweeting and favoriting things your followers’ post

- Commenting on followers’ posts
- Being responsive to comments on your posts
- Responding to mentions
- Connecting with other professionals in your field or local area
- Uploading shareable videos, photos, and content
- Following/adding customers on social media

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•  
•  
• Beyond just boosting your organic social media presence with the tips above, many dealerships choose to run paid social campaigns as well. With targeted ads (on Facebook, Twitter, and even Instagram) promoting your fixed ops and relevant specials, you can reach audiences that traditional media often overlooks.
   

4. Encourage customer reviews

Online reviews are great for helping potential customers decide on where to go for service. But they’re also essential for helping customers find you in the first place. When people in your community write about you online, it affects your SEO and increases your visibility (see #1).

Like it or not, customers today are probably reading about you online before they pick up the phone or go online to make an appointment. So the more positive reviews you can bank, the better it is for your brand image. Here are some tips to help your service department get more positive reviews.

5. Launch a value-added incentive program

Incentive programs can be a marketing machine for dealer service departments. By partnering with the right provider, you can offer your current and future customers a unique suite of benefits with each oil change that both helps with retention and encourages future business.

Mazda of Orland Park is a great example of what incentives can do to supercharge fixed ops marketing. With an enticing program in place, they were able to increase their market share and improve customer retention resulting in 6X ROI.

Is Your Marketing Cutting Through the Clutter?

It can be difficult for fixed ops directors to ensure their service departments stand out in a crowded industry. But with the right strategy, you can make sure you’re front and center when customers are considering vehicle maintenance and repair.

Aside from unrivaled benefits that make you the go-to provider for maintenance, tires, and unplanned repairs, DriveSure’s experience with all things fixed ops marketing (including more tried and true tactics like SMS, email, and direct mail) can help you outshine the competition.

To find out how, contact us today for a free 30-minute consultation. 

Like it or not, customer reviews are a big deal for dealership service departments. We know, it doesn’t always feel fair that a seemingly innocuous set of “star ratings” can have such an impact. But it does.

Many potential new customers are going online to vet you long before they make an appointment to bring their vehicle in for service. And what they read in that list of reviews will shape what they think about you before they drive into your service bay.

While those numbers may not be specific to auto dealership service departments, you can be sure they apply to our industry, too. Whether retaining current customers, getting new buyers to return for their first service appointment, or attracting new business — having a bank of (hopefully positive) online reviews is not only good for potential customers when they’re deciding on service and maintenance, it also helps them find you in the first place. When people in your community write about you online, it affects your SEO (search engine optimization) and increases your visibility.

Think of online reviews as a “navigational beacon” that can help point a potential customer in your direction!

Creating an Effective Customer Review Process

Getting customers to write reviews really is a virtuous cycle that can benefit your service department in many ways. But it’s not as easy as simply telling your team to ask customers to submit reviews. No amount of “review us” stickers in your lobby will singlehandedly have an impact on the number of reviews you generate.

Boosting the number and level of reviews comes from a well-defined process and some key habit-forming behaviors.  

1. Provide Great Service

Great customer service is the catalyst for an exceptional customer experience. And a positive experience compels positive reviews.

Especially for dealer service departments who compete with local mechanics that often offer a lower price point for service. Providing superior quality of work and customer service will make it easier for you to elicit glowing reviews — and retain customers.

Every interaction counts. From the ease of using your website, to the way they’re greeted when they call, to their waiting room experience, post-appointment follow-ups, and so on.

Customers have even been known to review the cleanliness of the bathroom, type of on-site amenities, and the amount of paperwork they have to fill out. Some of that is out of your control, but spend time making sure that every touch point that is in your control is as personal as possible.

Ensure ease and convenience throughout the entire process, and your customer reviews will be a sight to behold — in both volume and rating!

2. Make it a Team Sport

One of the best ways to encourage and incentivize customer reviews is getting your entire team on board.

By simply telling the staff “Hey, we got four 5-star reviews last week, let’s see how many we can get next week.” Then, when you’re up six more reviews the following week, everyone high fives and feels great.

This is where a goal board or some visual back area of your office can serve as a reminder of the goal, and rally everyone’s efforts around boosting review numbers.

To accomplish this, it’s often as simple as making sure your techs and office staff stress how valuable customer feedback is during the check-out process and provide instruction on where to go online to leave a quick review.

3. Use Technology

We’ve talked before about why your dealership needs to truly embrace the digital age.

Tapping into digital marketing can be especially helpful in streamlining your customer reviews. Many dealership service departments use tools like Podium and RepLev to automate the process:

• - When the RO is closed, the system sends a text to the customer inviting them to share their feedback with a link
   
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• - The link takes the customer to a page that asks then to leave a review on Google, Facebook, DealerRater, Edmunds, etc. (this can be customized
   
• - Automated email campaigns soliciting reviews can also be created as part of your customer follow-up
   
• - Many systems will even track and alert you to negative reviews so you can personally respond

All easy, non-invasive, one-click opportunities to gain reviews. And as your customers are becoming more open to being communicated to digitally, they’re happy to oblige and leave a quick review.

How to Leverage Positive Reviews

Having a sizable collection of customer reviews out in the Internet ether to help spread the word is great. But if you can creatively use some of those reviews to further promote your service department — that’s even better. Brad Deery Motors in Iowa does a great job leveraging their positive reviews for maximum traction and exposure.

Used in email campaigns, Facebook and Google Ads, and even on YouTube if you can get video testimonials, the “customer review ads” always receive a good response rate.

How to Handle Negative Reviews

Try as we might, we can’t please everyone. Negative reviews are inevitable, whether warranted or not.

So just be sure to regularly check your customer reviews on Google, Yelp, Edmunds, and DealerRater. It’s imperative you stay in the know on what they liked about their experience, what they didn’t like, and if they had expectations you couldn’t meet.

Acknowledge all reviews and personally respond to the negative ones with an effort to remedy the issue — get on the phone if you have to. Before you reach out, talk to any of your managers or employees who may have been mentioned in the reviews (good or bad) and understand their perspective.

Do You Have a Service Department Customers Can Rely On?

There’s no doubt customer reviews can help drive your business forward, and we hope some of the tips shared here will help increase your positive online reviews. Remember that ultimately, dealerships that offer unbeatable vehicle maintenance and customer service are far more likely to dominate the review’s arena, which in turn sparks interest in potential customers and future business.

If you’re interested in learning more about how DriveSure’s unique suite of benefits helps dealerships stand out from the crowd, contact us today for a free 30-minute consultation.