As I look through a group of dealers’ financials I quickly see the huge increase in warranty labor sales and gross. I quickly think of the enormous opportunities there are to capitalize on the increased traffic coming in the door. They are endless, increased revenue, increased customer database, unknown or lost customers coming trough the door and I even know of a dealer that sold 12 cars last month off customers that have come in simply for a service recall. These are all great right? The answer is yes, for the short term. Even though there are incredible profits made currently due to the increased warranty traffic you need to keep a few things in mind to make certain your business is positioned for future prosperity.
Keep an eye on your retail business: Due to the increased traffic and workload from the recalls your retail business will suffer. Quite frankly all of your service advisors made more money last month than they did the prior year due to the “free” warranty money coming in, so their focus is not on your core business. All your hard work and effort to build your retail sales and gross can go out the door simply due to the ease of running and filling your stalls with recalls. Suggestion: Do not let the recall business erode your “core” business and keep your advisors focused on selling service, menu presentations, complete multi point inspections, proper walk around and cultivating customer loyalty.
This too shall pass: Although the immense nature and huge volume of recalls that still need to be done will keep us going for a period of time, there will be a point in time that they reduce. When this happens your traffic will stop. If we are successful in retaining ten to fifteen percent of those that came in for the recall and that have never been in with you before I would consider it a success. The point is, the majority of them you still will not see coming back to your store. On smaller scales history would dictate this to be the case.
Learn from history: When I was running a Ford store in the early 2000’s at the height of the firestone recall we had more late model trucks and SUV’s coming in for replacement tires. Then this was the largest tire recall in history. At the time everyone in the store from parts to service was fat and happy because we had more traffic than we could handle doing over 100-tire replacements daily including Saturdays. The bad news we were more interested in getting the work done instead of looking to grow and retain our customer base. In addition we didn’t have awesome tools at our disposal to give a customer a professional inspection printout with a competitive price quote. Suggestion: Increase staff to help with the increased demand, perform a complete inspection and communicate to the customer. Take it to the next level and make it a positive customer experience and imagine if we were able to retain half of these customers that have not visited a dealership prior to the recall.