The Current Service Retention Dilemma…Not only are today’s automotive service customers demanding fast and responsive customer service for their vehicles, they have many options which allow them to easily defect to a competitor.  Everyone knows that competition in the automotive services arena is fierce. Many consumers equate vehicle service and maintenance to commodity level events with the belief that “any service center” can service and maintain their vehicle and that the lowest price or convenience wins.

For most people, having their vehicle serviced is not a priority in their everyday lives and at any given time, most people are not thinking about having their vehicle serviced.  Basically, two events stimulate a decision to have service performed on a vehicle: 1) a problem with the vehicle or the red light appears, or 2) a service reminder arrives communicating a time or mileage based specific need with a strategic offer.

Since there is no schedule for the timing of vehicle break downs, the first event above requires your store to be top of mind. In the second and most frequently occurring event, dealers search for the best way to remind customers when it is time to have service maintenance performed. To do this, first understand the genetic make-up of your DMS database.

In any DMS, there will be three types of customers:

• Active – customers who have had service performed within the required interval
  
• Inactive – customers who have missed 1-4 intervals
  
• Lost/Defective – customers who have missed more than 4 intervals
  

 What can you learn from segmenting your customers by type? 

Active service customers represent about 39% of the average DMS service database. These are your best customers. Most Service Managers will say that 50% of their Active customer database in their DMS will come in for service when it is due. The real question is… “Which 50% of the Active customer base will actually come in and when? Normally, Active customers will respond to a regular reminder communication without a discount option.

Inactive customers are the most fickle and represent about 30% of the DMS. The longer they wait to return to the dealership, the greater likelihood they will defect. For most, their behavior has changed and they need to be motivated by a specific offer. The good news is that these are customers that need the most work done and their RO value is 30-40% higher then average. Inactive customers can be converted to Active status if properly segmented and communicated with using targeted communications with specific offers.

Lost/Defective customers represent about 31% of the DMS database and really should not be recognized as service customers any longer. If they have not been in for service within 4 intervals, there is a good chance they are not coming back. Their likeliness to return depends upon such factors as distance from store, age of or mileage on the vehicle and other traits. These are the most difficult customers to reactivate and require specialized marketing programs.

A wise marketer once said, “Know your customer, earn their business!”

To know and understand your customer requires sophisticated software tools and a marketing process or program that effectively communicates with customers by type. In service, the slogan changes to “Know your customer and re-earn their business.”

The Current Service Retention Dilemma…Not only are today’s automotive service customers demanding fast and responsive customer service for their vehicles, they have many options which allow them to easily defect to a competitor.  Everyone knows that competition in the automotive services arena is fierce. Many consumers equate vehicle service and maintenance to commodity level events with the belief that “any service center” can service and maintain their vehicle and that the lowest price or convenience wins.

For most people, having their vehicle serviced is not a priority in their everyday lives and at any given time, most people are not thinking about having their vehicle serviced.  Basically, two events stimulate a decision to have service performed on a vehicle: 1) a problem with the vehicle or the red light appears, or 2) a service reminder arrives communicating a time or mileage based specific need with a strategic offer.

Since there is no schedule for the timing of vehicle break downs, the first event above requires your store to be top of mind. In the second and most frequently occurring event, dealers search for the best way to remind customers when it is time to have service maintenance performed. To do this, first understand the genetic make-up of your DMS database.

In any DMS, there will be three types of customers:

• Active – customers who have had service performed within the required interval
  
• Inactive – customers who have missed 1-4 intervals
  
• Lost/Defective – customers who have missed more than 4 intervals
  

 What can you learn from segmenting your customers by type? 

Active service customers represent about 39% of the average DMS service database. These are your best customers. Most Service Managers will say that 50% of their Active customer database in their DMS will come in for service when it is due. The real question is… “Which 50% of the Active customer base will actually come in and when? Normally, Active customers will respond to a regular reminder communication without a discount option.

Inactive customers are the most fickle and represent about 30% of the DMS. The longer they wait to return to the dealership, the greater likelihood they will defect. For most, their behavior has changed and they need to be motivated by a specific offer. The good news is that these are customers that need the most work done and their RO value is 30-40% higher then average. Inactive customers can be converted to Active status if properly segmented and communicated with using targeted communications with specific offers.

Lost/Defective customers represent about 31% of the DMS database and really should not be recognized as service customers any longer. If they have not been in for service within 4 intervals, there is a good chance they are not coming back. Their likeliness to return depends upon such factors as distance from store, age of or mileage on the vehicle and other traits. These are the most difficult customers to reactivate and require specialized marketing programs.

A wise marketer once said, “Know your customer, earn their business!”

To know and understand your customer requires sophisticated software tools and a marketing process or program that effectively communicates with customers by type. In service, the slogan changes to “Know your customer and re-earn their business.”

Each month, dealers spend thousands of dollars on marketing trying to drive traffic into their service departments. To a dealer, it is a beautiful thing when they see cars lined up in their service drive and hear the phones ringing at the service advisor stations. As a dealer, what more could you ask for?

Well here is what you are going to get…

If the lane is full and your advisors are busy helping those customers who drove their vehicle in or had an appointment, who is answering the phones and helping those customers who are calling in to set an appointment or ask questions?

Realistically, your “drive in” customers, who are ready to spend money, are not going to appreciate or tolerate waiting on your service advisors who are answering phone calls. Your “call in” customers, who are trying to spend money, are not going to appreciate or tolerate being put on hold. You now have a dilemma in your service department that must be addressed. 

Recently, during a conversation with David Vallone, an industry expert in Fixed Operations, it became apparent that this problem occurs on a regular basis in most dealerships and cannot be left unchecked. In essence, David explained that when service advisors are trying to work with “drive in” customers and answer phone calls during peak times, frustration sets in from all sides of the equation because of the chaos caused by all the activity in the drive.  He stated that once the phone starts ringing constantly with everyone busy with customers…it now becomes “the Angry Phone!”

Not only does the Angry Phone just keep ringing, the people who are calling are getting angry because their calls are not answered, directed to a voice mail, or placed on hold. If the advisor answers the call, the “drive in” customer gets angry because they are standing there confused as to why their visit to the dealership is less important than someone calling in. Even the advisor is getting angry because they are frustrated with the process and that has no chance of being right.

So…what is the solution to the Angry Phone problem? Implement a Virtual BDC live answer telephony “Backstop” system that is designed to answer the calls and make service appointments that your staff is unable to handle because they are busy or the call comes in after hours. The VBDC Backstop system can even handle your inbound calls after “x” number of rings not answered to ensure that your customers do not have to wait long.  This means that all calls are answered and no opportunities lost.

Please remember that profitable and long-term customer relationships are a by-product of timely and effective customer interactions that ultimately result in positive customer experiences. So eliminate the negative consequences of “the Angry Phone.”

~ Gary Mitchell

Director, Telephony & Virtual BDC Products, DMEautomotive

Bio:

Gary has 25 years of experience in providing franchised auto dealers with marketing and technology solutions designed to increase revenue and overall profitability. Gary has held national positions with ADP Dealer Services, LML Technologies, and DMEautomotive. He is currently responsible for researching and designing new products and marketing campaigns based on industry trends and specific dealership needs. He directly interfaces with Development and Product Management to monitor market needs and requirements, taking into account emerging technologies, competitor products / services, industry trends, and regulatory / compliance changes for both OEM and regulatory bodies.

LinkedIn Profile: http://www.linkedin.com/in/garymitchellauto

This blog has been republished from its original location at DMEautomotive’s blog

*Photo source: iStock.com

Each month, dealers spend thousands of dollars on marketing trying to drive traffic into their service departments. To a dealer, it is a beautiful thing when they see cars lined up in their service drive and hear the phones ringing at the service advisor stations. As a dealer, what more could you ask for?

Well here is what you are going to get…

If the lane is full and your advisors are busy helping those customers who drove their vehicle in or had an appointment, who is answering the phones and helping those customers who are calling in to set an appointment or ask questions?

Realistically, your “drive in” customers, who are ready to spend money, are not going to appreciate or tolerate waiting on your service advisors who are answering phone calls. Your “call in” customers, who are trying to spend money, are not going to appreciate or tolerate being put on hold. You now have a dilemma in your service department that must be addressed. 

Recently, during a conversation with David Vallone, an industry expert in Fixed Operations, it became apparent that this problem occurs on a regular basis in most dealerships and cannot be left unchecked. In essence, David explained that when service advisors are trying to work with “drive in” customers and answer phone calls during peak times, frustration sets in from all sides of the equation because of the chaos caused by all the activity in the drive.  He stated that once the phone starts ringing constantly with everyone busy with customers…it now becomes “the Angry Phone!”

Not only does the Angry Phone just keep ringing, the people who are calling are getting angry because their calls are not answered, directed to a voice mail, or placed on hold. If the advisor answers the call, the “drive in” customer gets angry because they are standing there confused as to why their visit to the dealership is less important than someone calling in. Even the advisor is getting angry because they are frustrated with the process and that has no chance of being right.

So…what is the solution to the Angry Phone problem? Implement a Virtual BDC live answer telephony “Backstop” system that is designed to answer the calls and make service appointments that your staff is unable to handle because they are busy or the call comes in after hours. The VBDC Backstop system can even handle your inbound calls after “x” number of rings not answered to ensure that your customers do not have to wait long.  This means that all calls are answered and no opportunities lost.

Please remember that profitable and long-term customer relationships are a by-product of timely and effective customer interactions that ultimately result in positive customer experiences. So eliminate the negative consequences of “the Angry Phone.”

~ Gary Mitchell

Director, Telephony & Virtual BDC Products, DMEautomotive

Bio:

Gary has 25 years of experience in providing franchised auto dealers with marketing and technology solutions designed to increase revenue and overall profitability. Gary has held national positions with ADP Dealer Services, LML Technologies, and DMEautomotive. He is currently responsible for researching and designing new products and marketing campaigns based on industry trends and specific dealership needs. He directly interfaces with Development and Product Management to monitor market needs and requirements, taking into account emerging technologies, competitor products / services, industry trends, and regulatory / compliance changes for both OEM and regulatory bodies.

LinkedIn Profile: http://www.linkedin.com/in/garymitchellauto

This blog has been republished from its original location at DMEautomotive’s blog

*Photo source: iStock.com

Opportunities Lost…but then Found!
Finding Service Revenue Opportunities at Your Dealership

Each day, during the service write-up and diagnostic process, service advisors and technicians frequently discover potential service revenue opportunities; otherwise known as “problems” to the car owner.  In most cases, they present their findings to the vehicle owner with the hope of “up-selling” additional service lines. Most of the time the vehicle owner declines the proposed services for one of two reasons or both: time and/or money.  The customer then leaves the building and the potential revenue is technically lost.  How much is lost?  Let’s play with some numbers.

Most service directors will say that up to 40% of all repair orders have at least one declined service opportunity listed. If your shop handles 75 repairs order per day then you will have up to 30 declined service opportunities each day or 780 per month (26 days).  Basically, your Service Department has missed out on 780 potential revenue opportunities in just one month

Now…let’s look at the financial implications of lost service revenue opportunities. Suppose that the customer pay and parts revenue attached to each declined service opportunity equals $150.  Using the numbers from above, 780 declined service opportunities missed per month equates to a potential loss of  $117,000 of additional revenue ($150 x 780) or $67,860 in Gross Profit ($117,000 x 58% GP)

So we assume that 780 declined service opportunities leave because they do not have the time and/or money to have the services performed. Does this mean that they will not have the needed service completed at some other time?  No…it could mean that the decision has just been delayed.

Theoretically, the money is not lost, but in a holding pattern. The key to “finding the money” is to proactively contact the declined service customers to remind them of the importance of having these services performed and to offer an incentive (i.e. 10% off, etc.) to return to the dealership.

Studies show that with an effective and automatic follow-up declined services process using multiple channels of communication; the average dealer will have a 13.5% response rate with an average RO value of $331.  Again, using the numbers above, 780 declined service opportunities per month at 13.5% response rate equated to 105 RO’s at $331.  By utilizing an automatic follow-up process and being proactive with the service opportunities you originally perceived to be lost, you just found $34,854 in revenue each month.

Not only have you found the lost money, but also proactively re-engaged that customer into your service department.  A “Win-Win” for everyone!

~ Gary Mitchell
Director, Telephony & Virtual BDC Products, DMEautomotive

Bio: 
Gary has 25 years of experience in providing franchised auto dealers with marketing and technology solutions designed to increase revenue and overall profitability. Gary has held national positions with ADP Dealer Services, LML Technologies, and DMEautomotive. He is currently responsible for researching and designing new products and marketing campaigns based on industry trends and specific dealership needs. He directly interfaces with Development and Product Management to monitor market needs and requirements, taking into account emerging technologies, competitor products / services, industry trends, and regulatory / compliance changes for both OEM and regulatory bodies.  LinkedIn Profile:  http://www.linkedin.com/in/garymitchellauto 

Original post is located at http://www.automotivedirectmarketing.blogspot.com

Opportunities Lost…but then Found!
Finding Service Revenue Opportunities at Your Dealership

Each day, during the service write-up and diagnostic process, service advisors and technicians frequently discover potential service revenue opportunities; otherwise known as “problems” to the car owner.  In most cases, they present their findings to the vehicle owner with the hope of “up-selling” additional service lines. Most of the time the vehicle owner declines the proposed services for one of two reasons or both: time and/or money.  The customer then leaves the building and the potential revenue is technically lost.  How much is lost?  Let’s play with some numbers.

Most service directors will say that up to 40% of all repair orders have at least one declined service opportunity listed. If your shop handles 75 repairs order per day then you will have up to 30 declined service opportunities each day or 780 per month (26 days).  Basically, your Service Department has missed out on 780 potential revenue opportunities in just one month

Now…let’s look at the financial implications of lost service revenue opportunities. Suppose that the customer pay and parts revenue attached to each declined service opportunity equals $150.  Using the numbers from above, 780 declined service opportunities missed per month equates to a potential loss of  $117,000 of additional revenue ($150 x 780) or $67,860 in Gross Profit ($117,000 x 58% GP)

So we assume that 780 declined service opportunities leave because they do not have the time and/or money to have the services performed. Does this mean that they will not have the needed service completed at some other time?  No…it could mean that the decision has just been delayed.

Theoretically, the money is not lost, but in a holding pattern. The key to “finding the money” is to proactively contact the declined service customers to remind them of the importance of having these services performed and to offer an incentive (i.e. 10% off, etc.) to return to the dealership.

Studies show that with an effective and automatic follow-up declined services process using multiple channels of communication; the average dealer will have a 13.5% response rate with an average RO value of $331.  Again, using the numbers above, 780 declined service opportunities per month at 13.5% response rate equated to 105 RO’s at $331.  By utilizing an automatic follow-up process and being proactive with the service opportunities you originally perceived to be lost, you just found $34,854 in revenue each month.

Not only have you found the lost money, but also proactively re-engaged that customer into your service department.  A “Win-Win” for everyone!

~ Gary Mitchell
Director, Telephony & Virtual BDC Products, DMEautomotive

Bio: 
Gary has 25 years of experience in providing franchised auto dealers with marketing and technology solutions designed to increase revenue and overall profitability. Gary has held national positions with ADP Dealer Services, LML Technologies, and DMEautomotive. He is currently responsible for researching and designing new products and marketing campaigns based on industry trends and specific dealership needs. He directly interfaces with Development and Product Management to monitor market needs and requirements, taking into account emerging technologies, competitor products / services, industry trends, and regulatory / compliance changes for both OEM and regulatory bodies.  LinkedIn Profile:  http://www.linkedin.com/in/garymitchellauto 

Original post is located at http://www.automotivedirectmarketing.blogspot.com

Historically, it was difficult for dealers to stay in touch with their customers throughout their lifecycle.  However, with all the communication channels available today, the consuming task of communicating appropriately with your dealership’s active customers is a much more palatable task. 

Do you want to keep your customers thinking of you first? Or do you fear that your competitors are treating your customers like they are their customers?  In order to lead your current customers down the preferred customer path there are two important timeframes and several related topics to keep them thinking they’re your customers. 
 
New Vehicle / Next Vehicle Purchase Timeframe

Your dealership’s Sales Department should communicate with your customers as if their interaction were a date or an event with a close friend.  If you attended a social event with a friend or attended a party at their home, normal etiquette would be to send a “Thank You Note” afterward.  The same would be true following the sale of a car.   Every salesperson would admit that the purchase experience is time-consuming and demanding on all parties involved.  Therefore, knowing the importance of and effort during a car purchase, it is a good practice to send the buyer a note expressing your dealership’s appreciation of their business.  Just as I am sure you would appreciate a “thank you note” from a friend after all the effort and time you put forth hosting a party.

Who doesn’t love to receive a birthday card?  Okay, so maybe the reminder of the fact I’m aging isn’t exactly fun…but it’s nice to know someone is thinking of me on my special day.  Well, car dealers should use this personal event as reason to communicate with their customers by sending birthday cards. 

What about a “Purchase Anniversary Card”?  Your customers need…and should… be reminded of how much you appreciate them as a customer.   On the anniversary of when the car was purchased, it is an opportune time for your dealership to send a card that not only expresses your gratitude, but also includes a special offer or discount to drive them back to your store.

What if you had a way to save a friend some money?  Toward the end of the customer journey, your dealership should communicate “Current Specials” to entice your “friend”, the customer, to purchase their next vehicle from your store.   Since they have purchased from you once before, you’ve maintained contact with them throughout the life of their vehicle and now they need a new vehicle, it is an ideal time for you to remind them of your relationship and extend an offer that saves them money.

Current / Past Service Timeframe

The communications from the Service Department should work concurrently with those sent by the Sales Department.  A “Welcome Note” to your customer, greeting them as a member of the Service Family is a nice touch.  We all want to feel welcome and like we’re part of a family, don’t we?! 

A friendly “Reminder for Minor or Major Services” are in order to distinguish your Service Department and its services.  The same would be true for notifying your customers of their Warranty and Extended Warranty service.  Reminders sent at the appropriate time can create an action by a consumer.  Consumers always want their vehicles to run like they’re new and, if reasonably serviced and maintained, they can.  Make it simple for the customer to see the basics not as extreme, but essential to the good maintenance of their vehicle.  When a customer sees simple value they will react on a consistent basis.  Make sure you think through the offer you are making to that particular customer.  Your customer wants to feel special; make them feel very special.

Consistent Message

Though you want to ensure that the current message sticks out from what you have sent previously, you want your marketing pieces to have a consistent feel and look that the customer recognizes and remembers.  It’s a fine line but essentially you want your messages to make an impact on the customers while making it easily recognizable that it is from you…someone they know, trust and have a relationship with already.  Always use something that they will remember you for.  Always ask yourself: What will your customer think of when they think of you?

Digital Media

In today’s rapidly evolving digital world dealers should remember to take advantage of all the different communication tools available.  A multi-channel approach, which entails utilizing email, text, telephony and social media to spread your marketing message, is the best way to continually touch consumers.
 
Do You Want It?

Last, but certainly not least, when considering your customer communications, maintain a simple philosophy:  If you would not want to receive the message, do not send it.  Be proud of what you send to your customers.  Keep your messages simple, truthful, personalized and make sure they have value to that particular customer.  If you want it, your customer probably does as well.  Stay friendly.  Your customers want to be part of an organization that wants them to be a part of their organization… and chances are, they’ll think of you first.

~ Paul Ryan, Sales Manager of Mail Team @ DMEautomotive

Bio:

Paul Ryan brings over 20 years of experience in sales, sales management, marketing, negotiation, leadership and client services. He joined DMEautomotive in February of 2008, as a Regional Territory Manager. With proven success as an inside sales representative selling the FullCircle Solutions’ Bullseye program, he was recognized frequently as Sales Person of the Month and received the highest honor of Sales Person of the Year for 2008. In August of 2009 Paul assumed his current position of Sales Manager, Mail Team. He is responsible for overseeing the entire Mail Division and manages a team of sales representatives.

Paul graduated with a B.S. In Business Administration from Iowa State University.

LinkedIn: http://www.linkedin.com/pub/paul-ryan/7/726/b35

Historically, it was difficult for dealers to stay in touch with their customers throughout their lifecycle.  However, with all the communication channels available today, the consuming task of communicating appropriately with your dealership’s active customers is a much more palatable task. 

Do you want to keep your customers thinking of you first? Or do you fear that your competitors are treating your customers like they are their customers?  In order to lead your current customers down the preferred customer path there are two important timeframes and several related topics to keep them thinking they’re your customers. 
 
New Vehicle / Next Vehicle Purchase Timeframe

Your dealership’s Sales Department should communicate with your customers as if their interaction were a date or an event with a close friend.  If you attended a social event with a friend or attended a party at their home, normal etiquette would be to send a “Thank You Note” afterward.  The same would be true following the sale of a car.   Every salesperson would admit that the purchase experience is time-consuming and demanding on all parties involved.  Therefore, knowing the importance of and effort during a car purchase, it is a good practice to send the buyer a note expressing your dealership’s appreciation of their business.  Just as I am sure you would appreciate a “thank you note” from a friend after all the effort and time you put forth hosting a party.

Who doesn’t love to receive a birthday card?  Okay, so maybe the reminder of the fact I’m aging isn’t exactly fun…but it’s nice to know someone is thinking of me on my special day.  Well, car dealers should use this personal event as reason to communicate with their customers by sending birthday cards. 

What about a “Purchase Anniversary Card”?  Your customers need…and should… be reminded of how much you appreciate them as a customer.   On the anniversary of when the car was purchased, it is an opportune time for your dealership to send a card that not only expresses your gratitude, but also includes a special offer or discount to drive them back to your store.

What if you had a way to save a friend some money?  Toward the end of the customer journey, your dealership should communicate “Current Specials” to entice your “friend”, the customer, to purchase their next vehicle from your store.   Since they have purchased from you once before, you’ve maintained contact with them throughout the life of their vehicle and now they need a new vehicle, it is an ideal time for you to remind them of your relationship and extend an offer that saves them money.

Current / Past Service Timeframe

The communications from the Service Department should work concurrently with those sent by the Sales Department.  A “Welcome Note” to your customer, greeting them as a member of the Service Family is a nice touch.  We all want to feel welcome and like we’re part of a family, don’t we?! 

A friendly “Reminder for Minor or Major Services” are in order to distinguish your Service Department and its services.  The same would be true for notifying your customers of their Warranty and Extended Warranty service.  Reminders sent at the appropriate time can create an action by a consumer.  Consumers always want their vehicles to run like they’re new and, if reasonably serviced and maintained, they can.  Make it simple for the customer to see the basics not as extreme, but essential to the good maintenance of their vehicle.  When a customer sees simple value they will react on a consistent basis.  Make sure you think through the offer you are making to that particular customer.  Your customer wants to feel special; make them feel very special.

Consistent Message

Though you want to ensure that the current message sticks out from what you have sent previously, you want your marketing pieces to have a consistent feel and look that the customer recognizes and remembers.  It’s a fine line but essentially you want your messages to make an impact on the customers while making it easily recognizable that it is from you…someone they know, trust and have a relationship with already.  Always use something that they will remember you for.  Always ask yourself: What will your customer think of when they think of you?

Digital Media

In today’s rapidly evolving digital world dealers should remember to take advantage of all the different communication tools available.  A multi-channel approach, which entails utilizing email, text, telephony and social media to spread your marketing message, is the best way to continually touch consumers.
 
Do You Want It?

Last, but certainly not least, when considering your customer communications, maintain a simple philosophy:  If you would not want to receive the message, do not send it.  Be proud of what you send to your customers.  Keep your messages simple, truthful, personalized and make sure they have value to that particular customer.  If you want it, your customer probably does as well.  Stay friendly.  Your customers want to be part of an organization that wants them to be a part of their organization… and chances are, they’ll think of you first.

~ Paul Ryan, Sales Manager of Mail Team @ DMEautomotive

Bio:

Paul Ryan brings over 20 years of experience in sales, sales management, marketing, negotiation, leadership and client services. He joined DMEautomotive in February of 2008, as a Regional Territory Manager. With proven success as an inside sales representative selling the FullCircle Solutions’ Bullseye program, he was recognized frequently as Sales Person of the Month and received the highest honor of Sales Person of the Year for 2008. In August of 2009 Paul assumed his current position of Sales Manager, Mail Team. He is responsible for overseeing the entire Mail Division and manages a team of sales representatives.

Paul graduated with a B.S. In Business Administration from Iowa State University.

LinkedIn: http://www.linkedin.com/pub/paul-ryan/7/726/b35