Scot Eisenfelder explains how tailwinds are affecting independent repair facilities and why it's more important than ever to have strategies to protect dealership service business in part 2 of this 2 part video blog.

Most dealers know how many cars they sell on a weekly, monthly and annual basis. But if I asked you how many new customers you acquired this year, would you know the answer?

On the service side, you probably know how many ROs were closed last month and how much revenue was generated, but do you know how many new service customers you acquired? How many of those ROs were customers that you sold a vehicle to

In this business, we talk a lot about improving the customer experience, but if you’re going to run a truly customer-centric dealership, a mindset shift is needed. It’s natural to track numbers related to revenue, but if that is your only focus and priority, it will show in the way you conduct business with your customers.

Selling a car is more than a transaction. It’s an opportunity to develop a new relationship. Let’s give an example of a “sell the car” mindset vs. an “acquire a customer” mindset.

John and Suzy are both on your lot looking at cars. John lives 50 miles away and visited your store because he heard you’re having a sale and you have the vehicle he wants. Suzy lives five miles away and is also looking for a deal. Who gets the better deal?

A salesperson with a “sell the car” mentality might look at John and think, this guy lives in another town so I’m never going to see him again. I will discount $500 off MSRP just so I can make the sale. That same salesperson might look at Suzy and think, this woman lives so close by, there’s a good chance I can get her back in here. Therefore, I won’t give her as good a deal as I gave John.

This mindset is the exact opposite of what it should be. With this mindset, you will never see John or Suzy again.

A salesperson with an “acquire a customer” mentality will offer the bigger discount to Suzy because she does live close by. If you can get Suzy to become a regular service customer and/or repeat sales customer, her lifetime value as a customer will far exceed that of John’s.  So, it makes more sense to give her the discount and make the effort to acquire her as a customer.

Even better than a discount off MSRP is another type of incentive that establishes an ongoing relationship. For example, a service incentive. I’d rather give $500 of free service or aftermarket accessories than $500 off the cost of a car. You still make the sale and you have the opportunity to introduce her to your service department.

The same mindset shift can apply to your service department as well. Many dealers run conquest campaigns offering large discounts to consumers outside their PMAs. What is the point? You might get some ROs but you are not acquiring new long-term customers. With this type of marketing, you are buying transactions, not investing in relationships.

On the other hand, if you offer customers within a 15-mile radius a compelling reason to come in, you are creating opportunities to build long-term relationships. Coupons work well but I wouldn’t always rely on discounting tactics. For your best and most loyal customers, free loaners cars, movie tickets and other value-added offers can be incentive enough.

To build a customer-centric business, a fundamental shift in mindset is required. Instead of focusing on the number of cars sold, ROs closed and gross revenue generated, focus on how many new customers you are acquiring and how to retain them.

Scot Eisenfelder explains how tailwinds are affecting independent repair facilities and why it's more important than ever to have strategies to protect dealership service business in part 1 of this 2 part video blog.

From a consumer perspective, access to loaner vehicles is a major factor in service location choice—both in terms of franchised dealer versus independent repair facility, and among franchised dealer locations. Loaner vehicles help to overcome the inconvenience of having to drive further for service, and from having to wait at the dealership or make alternative transportation arrangements.

From a dealer’s perspective, placing consumers in loaner vehicles takes tremendous pressure off service throughout. A “waiter” is much more sensitive to service delays than a consumer returned to their daily routine in a loaner vehicle. In addition, a consumer with a loaner is more likely to approve an additional service request, because the unexpected additional time without their vehicles won’t affect their schedule.

Sounds like a win-win situation. Yet many dealers have not embraced loaner programs, and often limit them to the minimum requirements of the manufacturer. Rather than view loaner vehicles as a strategic asset that improves the customer experience and gives them a competitive edge, dealers focus on the expense, difficulty of managing the fleet and on the occasional customer who misuses the service.

Here we’ll address these three common myths about loaner programs.

1. Loaner programs are too expensive

The real issue here is that the expense is immediate and easily recognized, while the benefits are more subtle and long-term. For this reason, dealers have a hard time determining the right investment. In addition, most dealers fail to build processes that optimize the return that can be gained from loaner vehicles.

For example, loaners should be an explicit closing tool to convert additional service needs. When confronted with “no,” try offering loaners instead of discounts, particularly to waiters. Also, loaners can be used on an ad hoc basis to relieve waiting room pressure when operations fall behind, rescuing dissatisfied customers. Scheduling multiple shifts and expanded weekend hours also streamlines loaner utilization, reducing the cost per RO.

Instead of viewing loaner vehicles as an expense that needs to be managed, view them as tools that can help maximize service revenue and improve the customer experience.

Calculate the incremental cost of each loaner vehicle and estimate whether you generate sufficient incremental ROs or RO dollars to cover the cost.

If not, think about trade-offs that hold as much value as possible; e.g. expand coverage to your best customers only or in key situations, such as the last visit before warranty end.

2. Managing a fleet requires too many resources

Most dealers are not skilled in managing fleets, which is why many still outsource this function to Enterprise. Poor fleet management and infrastructure contribute to unnecessary expense and result in an unsatisfactory customer experience.

A fundamental shift in mindset is necessary. At most dealerships fleets are managed by controlling the overall budget, not by viewing what form of alternative transportation best meets the need for customers and helps to maximize long-term dealer profitability.

To those of us who rent vehicles nearly weekly or have used Zip Cars, it’s difficult to understand the antiquated sign-out and sign-in procedures at dealerships. It’s time to look into new technologies that facilitate a convenient process. Use technology to drive higher appointment rates and better understand when loaner access limits appointments, so that you can reduce the bottleneck.

Besides, when subscriptions become a meaningful part of the industry, dealers will have to become experts in fleet management, so you might as well start practicing with loaner fleets.

3. Customer abuse is rampant

While some consumers do abuse the service, most drive the car respectfully, pay their tolls and return the vehicle in a timely fashion. Habitual abusers should be removed from the program. Fortunately, these are the exceptions.

To help reduce abuse, it’s important to convey a clear, positive message to your customers up front. Ask them to respect guidelines so that the vehicle can be made available for others. This is better accomplished online than in person and separated from the formal contract. People are more likely to read and acknowledge simple guidelines on their computers than on paper when buried in paragraphs of legalize, when they are anxious to go on their way.

The most frequent abuse is not returning the vehicle in a timely fashion. Again, we should start with clear expectations and then look internally. Is it reasonable to expect the customer to return the vehicle before 6pm when we notify them at 5pm? The better we keep consumers informed about the actual completion time, the better they can plan their redelivery.

Second, we need to look at alternatives, such as Uber vouchers or pick-up services to handle situations such as airport runs or when a customer brings a vehicle home because the dealership missed their promise time.

Loaner cars are a strategic asset that give dealers a competitive edge. With proper management, technology and processes in place, they don’t have to be a resource drain. Loaner vehicles improve the customer experience and can help boost long-term, incremental service revenue. 

Scot Eisenfelder explains the three buckets that service customers fall into and how best to reach out to them.

CEO & Executive Chairman Scot Eisenfelder shares his opinion on Facebook's importance to automotive marketing.

On average, dealers capture just half of the necessary service work that needs to be performed on vehicles that come into their service lanes. This is a big leakage point that has a direct impact on service revenue. It also offers tremendous untapped potential.

In addition to acquiring new service customers, it’s important to focus on maximizing service potential from the ones you have. To be clear, I don’t recommend trying to upsell every customer or sell unnecessary repairs. If that’s your strategy, all you’re doing is compounding the problem.

Addressing this leakage point requires knowing why it happens in the first place. In my experience, most customers decline service for the following reasons, in this order:

Trust: I’m not sure if I really need this repair or not, and I don’t know if I can trust you.

Timing: I wasn’t planning to leave my car here today/more than one day, and I need my car.

Affordability: I only budgeted $300 for this repair, and now you’re asking me to pay $750. I don’t have the money right now or I’m not emotionally ready to pay for it.

It’s important to distinguish affordability and budget from price. Most customers coming into your service department know that you’re not the cheapest option in town. When a customer buys into your dealership value proposition, there’s a good chance they won’t go home and shop around to save $50 or even $100.

Think about it. You have a customer who bought into your initial value proposition. They brought their vehicle to your store. They were willing to buy some services from you, but not others. They have a need, even if they don’t realize it. You are prepared to fill this need.

All the ingredients are there for you to capture that business. So, what’s the best way to stop the 50 percent of unsold service repairs from leaving your service department on a daily basis?

Communication.

Start with electronic multi-point inspections (MPIs). A perennial problem most dealers have with the MPI process is that advisors and techs are compensated only for the work they do, not for doing the inspection. It needs to be ingrained that if they do the inspection, they are paying themselves.

An effective MPI process has five parts to it:

• Identify all the work that needs to be done.
• Have a quality conversation in a timely way with the customer about the recommended services.
• If the customer declines, identify the reason. Is it trust, timing or affordability?
• Offer a solution for the reason. If it’s trust, show visual proof of the repair with photos or videos, if at all possible. If it’s timing, offer a free loaner car. If it’s affordability, offer a payment solution.
• Continue the conversation for the 50 percent of the time when the customer says no.

It seems pretty simple, but communication is not something that registers as a high priority for many service staff. Conveying or relaying information, sure. Communication as in conversations that help to build relationships, not so much.

If you want to continue the conversation with your customers, it’s critical to have a tablet that helps your staff perform the MPI in an effective manner. A tablet can help to identify the work that needs to be done and it can be used to sell the recommendation, preferably with menu options.

The tablet also needs to be integrated with your CRM. I’m guessing that about one-third of dealerships right now use tablets for the MPI process. Yet in most dealerships, those tablets aren’t integrated with the communications system.

One of the most important reasons to capture the data in the tool is so you can use that data effectively downstream. It’s the data that helps you continue the conversation with the customer, which is necessary in order for you to re-capture that 50 percent of unsold service.

This is where most dealers fall down in the MPI process. Lack of continued conversations with customers. With an integrated tool, your CRM will prompt you to email, text or call the customer to remind them to come back in for service.

In your follow up communications, don’t just try to sell your customers. Offer solutions to their objections. Educate them on the importance of having the repair done, whether it’s a safety issue or because it will help to prevent bigger, more expensive problems down the road.

Tablets are more than just tools for capturing data. Their biggest benefit is that they can help your staff communicate, build relationships and overcome objections, so that you can turn unsold service into revenue.

CEO & Executive Chairman Scot Eisenfelder explains the importance of revenue yield to dealerships in service.

According to the 2017 JD Power CSI survey, only 13 percent of consumers scheduled their vehicle service online. The progress toward online scheduling has been glacially slow, rising only two percentage points over the past three years.

This is despite the fact that nearly all dealerships now have an online scheduler and most service reminders are digital. Online scheduling usage is particularly poor when compared to travel where 75 percent of airline reservations are booked online and 49 percent of airline check-ins are performed digitally.

The same JD Power survey suggests nearly half of the consumers not scheduling online are “unaware” the option to schedule online exists. So, the natural tendency is to focus on raising awareness by showing the online scheduling application during delivery or sending specific communications about online scheduling.

We should do a better job promoting online scheduling, but I do not believe “awareness” is the root cause of non-usage; inadequate value is. The bigger issue is that online scheduling has too little impact on the service experience, as evidenced by online scheduling users are just two points more satisfied than those scheduling the traditional way, on a thousand-point scale.

After initial launch, the airlines did not have to separately market their websites and apps because those capabilities improved customer service and spread virally. Why is that? The airlines’ solutions made the consumer experience substantially better.

Why is this not happening in automotive? It’s because we are grafting digital capabilities onto an analogue process. What benefit is the customer getting for booking online? Preferred appointment times? Shorter or more informed write-up process? Perhaps bypassing the service write-up all together? Not a chance! In fact, according to the JD Power CSI study, online schedulers are no more satisfied with service initiation than others.

Imagine if you checked in for your Delta flight this morning on your Delta app, but then you still had to wait at the ticket counter before boarding your flight. If this were the case, you would probably not use your Delta app. So why do we make consumers wait for service advisors?

One reason is so the service advisor can capture more information to help diagnose the problem. The second is to “upsell” more service. Other industries have successfully applied technology to address both. Chatbots can ask and respond to a multitude of customer issues. Think Alexa. In addition, Amazon has conditioned consumers to upsell themselves through highly relevant “people like you” suggestions.

Deploying similar technologies, dealers could clear the 7am to 9am bottleneck and accept vehicles when it’s most convenient to the customer. Additionally, they could increase service revenue by allowing consumers to make informed choices without perceived sales pressure.

Another major issue limiting online scheduling is that many dealers, afraid of competitive shopping, do not post prices online. So, they expect customers to schedule for a service when they don’t even know the price. Again, an analogy from elsewhere in the digital world. Would you order your Dominos pizza, if you went to check out and had no idea what your large Hawaiian pizza costs?

You can’t really expect a customer to schedule a 30,000-miile maintenance when they don’t know the price. Do you think a customer would use the Dominos listed pizza price to competitively shop Papa Johns? Of course not! Neither would most consumers on dealer service pages.

When customers click through to your online scheduler, they are trying to do business with your service department. If you make the process more informative and the gateway to a more convenient service experience, customers will respond by scheduling online more frequently. Not only that, but they will inform their friends about how to get better service. Before you know it, online scheduling for dealer services will go viral.

Affinitiv CEO & Executive Chairman Scot Eisenfelder explains why omni-channel marketing is so important for results in today's marketing strategies.