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Dan Beres

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The Wrong Way to Increase Service Revenue

In search of service revenue, dealerships turn to randomly scheduling service appointments regardless of shop capacity. Or they take everyone that drives up. This can easily overwhelm the service department. It leaves customers frustrated and causes a LOSS in service revenue from both new/drive-up customers and customers with appointments.

How many times have you heard about the customer that made an appointment for a quick service who had to wait hours for an oil change? Or the regular customer who showed up and nobody knew about their appointment? So, they also suffered a long wait. This can be quite maddening and can drive your most loyal customers to the independents.

The truth is, consumers would prefer to service with the dealership. A July 2019 survey of 16,000 consumers revealed that 3 out of 4 consumers would prefer to service at a franchised dealership even after their warranty expires. So, if they perceive dealerships as their destination of choice, why are franchised dealers losing loyal customers to independents? The answer to that question is tied to convenience. Consumers are tighter on time. For some, it’s about cost, but almost all consumers are pinched for time more than cash.

And, if you allow someone to cut in line, that is how your scheduled customers will view those who pull up unannounced. Ideally, the number of cars coming into the service department should be the number that it can support efficiently. However, many Service Advisors take all comers, even if they are overbooked with appointments and service pending from existing vehicles. What happens then? Traffic jams.

According to an article in Digital Dealer, the top 20% of a dealership’s customers account for 79% of its profits. And, by replacing just half of the bottom 20% with customers similar to the top 20%, a dealership can increase its profit by 40%!

It may be worth taking a look at the cost of overbooking and going beyond your shop capacity. Perhaps a better idea is to focus on efficiently completing existing work, even if that means turning away drive-ins. Yes, that’s hard to do. But, in the end, if you are transparent with a “walk-in” and explain you are turning them away for their convenience, you can win them over. You can also offer an incentive for returning with an appointment or rescheduling for a more convenient time. Then you stand a better chance of retaining a customer, keeping them happy, and continuing to earn their business. 

If you do not want to, or can’t afford to invest in expanding facilities, there are many solutions available that can help maximize your shop while keeping customers satisfied. They may also be worth investigating.

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