Notifications & Messages

Jared Hamilton
From: Jared Hamilton
Hey - It’s time to join the thousands of other dealer professionals on DrivingSales. Create an account so you can get full access to the articles, discussions and people that are shaping the future of the automotive industry.
×
Scot Eisenfelder

Scot Eisenfelder CEO

Exclusive Blog Posts

Modern Online Shopping

Modern Online Shopping

Computers have been used for more things than computing and gaming for some time now, in fact most people now use their computers for shopping online than …

Are all 3rd Party trade in leads the same (like banging your head into a wall)?

Are all 3rd Party trade in leads the same (like banging your head into a wall)?

Over the last year, we have used several companies to assist in the "Hurry Up and grab these hot trade-in leads" trend.  We trained staff.&n…

10 Steps to Become a Servant Leader

10 Steps to Become a Servant Leader

The term “servant leadership” was first coined in an essay written by Robert Greenleaf in 1970. Later he expanded the essay into a book, which …

So how do you get leads to reply to you, anyways?

So how do you get leads to reply to you, anyways?

There is nothing more frustrating for the Internet/BDC Department (or for your sales team) than receiving a bunch of new leads... every single day... that …

The Best leads are Where now

The Best leads are Where now

As the internet and marketing manager, I am flooded with information from all parts of our buying process daily.  How many "real" leads d…

Auto Groups Losing $20K in CP Service Revenue Per Store

When a customer buys a pre-owned, off-make vehicle at your store, what are the chances that customer will return for service? One metric that every dealer should measure is the purchase to service rate (P2S), which is calculated by taking all deals within a certain timeframe and looking out 12 months from the deal date to see if that VIN had an RO.

Affinitiv recently analyzed deals conducted in the first six months of 2017 and in the first six months of 2018 to find out how many sales customers return to the dealership for service, and what, if any trends we could find in that timeframe.

In 2017, 55.2% of domestic vehicle owners, 63.6% of import vehicle owners and 57.2% of luxury vehicle owners who purchased new vehicles returned to the dealership for service at least once in the next 12 months.

In 2018, the domestic P2S rate stayed at 55.2%. Import dealers did a little better, attracting 65.8% of new vehicle customers back for service, while luxury vehicle owners had a 58.9% P2S rate.

In this blog I’m not going to address how dismal I think these percentages are and how dealers are conceding way too much service business to the independent repair facilities.

What I really want to address here are the P2S rates for customers who purchased pre-owned vehicles, and how dealer groups in particular are not even attempting to cross-market to customers who purchase used, off-make vehicles at stores within their group.

First, let’s create a scenario. John buys a 2016 Toyota Camry at his local Ford dealership. It’s unrealistic to expect John to return to that store for service. Why would he? John probably wants to take his pre-owned Camry to a dealership with Toyota certified technicians.

Indeed, that’s what the numbers in our analysis reflect. The 2018 P2S rates for customers who purchased used, off-make vehicles are 26.1% for domestic brands, 28.5% for import brands and 19.8% for luxury brands. Chances are, John will be one of the nearly 74% of domestic-brand customers who won’t bring his off-make vehicle back to that dealership for service.

But what if that Ford dealership belongs to an auto group that also owns a Toyota dealership? The salesperson who sold John his Camry should at the very least refer John to the Toyota store within their group for service. Ideally, John would receive a first-visit service coupon to the Toyota dealership, or perhaps the F&I manager could even sell John a pre-paid maintenance package for the Toyota dealership. If nothing else, the Ford dealership should send John’s name, contact and deal info over to their sister store so the Toyota dealership could market to John, congratulate him on his vehicle purchase and try to win his service business.

I don’t see any of this type of cross-marketing happening at any dealer groups. As a result, these dealers are losing a significant amount of potential service revenue that should and could be easy pickings.

How much revenue? We calculated lost service revenue opportunities per store, based off the average CP$ per RO, the average number of non-responders within 12 months of purchase and the average number of ROs per year, per VIN.

Even factoring all these in, dealers are losing an estimated $20,000 in CP service revenue in 2019. This adds up to a lot of missed opportunities in the service drive, especially in multi-store groups.

If you’re part of a group, wouldn’t you rather keep all of your customers in the same family of dealerships, rather than lose them to competitors or independents? There’s no excuse for letting buyers of used, off-make vehicles walk off your lots and into oblivion. A cross-marketing strategy is easy to implement, and should add a healthy chunk of service revenue to the bottom line of those dealer groups that make the effort.

Joe Tareen

Great study. What do the numbers say about customers who purchase a new vehicle but live outside the PMA (Primary Marketing Area) of the selling dealer? That would be a good number to look at to justify a mobile service unit.

 Unlock all of the community & features  Join Now