When a customer buys a new car from a dealership it’s almost a given that service also just gained a new customer. Most of the time, if the customer is local, they will start bringing their vehicle into the selling dealership for regular maintenance and service. Some manufacturers even include a period of free service. This can further incent a customer to patronize the dealership and offers the dealer more opportunity to develop a relationship with the customer and avoid defection to independents.

In the customer ownership lifecycle, these are the honeymoon days, if you will. But what happens when the honeymoon is over (namely once the vehicle is out of warranty or the free service is no longer free)? Statistically, this is the most crucial time for dealers as far as customer retention because this is when most customer defection occurs.

One day you have a regular service customer that’s been visiting your dealership for a couple years and then… poof… they disappear. What happened, and how can you prevent this?

The customer starts making decisions on their very first visit as to the likelihood of continuing to service their vehicle at your dealership after their free service period expires or upon warranty expiration. Everything from how efficient the process is, to how welcome and helped they feel, begins to craft their feelings.

But it’s not only the environment and efficiency that matter. Build value in service at YOUR dealership (vs. independent).  And that starts by earning the customer’s trust. Frequently, dealership service is more expensive than independents – labor rates are higher and parts are more expensive. Consumers are already trained to think this way. Why? Because dealerships have trained them to and the constant barrage of marketing from independents announcing low priced services has made them believe that.

While dealers certainly try and position themselves as low (or, at the very least, competitive) pricing in sales, how often do you see a dealer marketing the same thing for service? Not often. This is a hill that many have to climb in order to overcome consumer perception about value.

People shop at Nordstrom even though they know it will be more expensive. Why? Because they know that the shopping experience will be good and they trust the quality of the merchandise. This perception is exactly what many dealerships need to instill in the minds of their customers from the very beginning. But how?

Service advisors are, in reality, salespeople. If a service advisor never upsold a customer, they probably wouldn’t be in that position long. That being said, service recommendations are only valuable to a customer and the dealership if they are accurate and timely. Instead of trying to sell the customer everything, focus on what is time-sensitive. Understand that preventative maintenance and timely services should be the priority.

Don’t try to sell the customer a service prematurely, such as a timing belt at 50,000 miles, when it’s really not scheduled until 90,000 miles.  Presenting the customer with something that doesn’t need to be done yet is doing them a disservice. It’s also a major red flag, especially if they obtain a second opinion and are told that they really don’t need what you recommended at that specific time.

Build a trust-based relationship with your customers and be honest in your recommendations. If everything a service advisor offers is timely and needed, those recommendations will be appreciated and will help to build trust and customer loyalty.

Use the various technologies available to educate consumers on the service recommendations you’re advising by showing them what’s wrong, why that service is important and how it benefits their vehicle. Pictures and video tools can powerfully help illustrate this to the customer, whether third-party informational videos, or actual video walkthroughs of their specific vehicle (i.e. this is what a healthy air filter looks like and this is what YOURS looks like).

Through accountability and consistency, your dealership can easily become the consumer’s go-to for service. But it has to be earned and cultivated from day one, not the day after their warranty expires.

Be the dealership where the customer’s needs come first. You should find that your customers appreciate it and they will come to trust you and be quicker to accept your recommendations.

Customer loyalty and retention in service are critical components of a healthy service department. Start focusing on what’s best for the customer and you won’t have to worry about them sticking around – they’ll stick around because they want to.

There’s nothing more disheartening to a service advisor than presenting a customer with a list of service recommendations only to hear the customer agree that they need the service, understand its importance and value, but they simply don’t have the available funds to complete it.

In such a highly competitive market that service advisor knows that when the customer walks out the door, the likelihood of them returning is not great. They will probably price shop the service and end up getting the work done elsewhere.

Sure, there are times when the “can’t afford it” excuse is simply that… an objection. But even the service advisor with the best sales skills can’t overcome the objection when the customer truly doesn’t have the money to pay for the services. However, there is a way to overcome those objections and assist customers that want the service but can’t pay for it all at once, regardless of their credit:

Offer them options!

I’m not saying start accepting bitcoins, or trading service for cows. But here’s the deal: Many dealerships limit the forms of payment they accept to cash, check and credit cards. And some now even refuse payment by check.

Not all of your customers have money sitting in the bank waiting for emergencies, or credit cards with available credit just waiting for their use. There are, however, plenty of options available for all types of credit customers. They are worth investigating so you can offer your customers all the many types of financing available – and let them choose the right one for their needs. It is a great way to improve the customer experience. And today’s sales process is increasingly all about that customer experience.

With that in mind, many of the dealers I talk to don’t really know about the different types of service financing options available. Here’s a brief summary of potential options depending on your customer, which I hope helps:

1)    Low Risk Customer: For customers with excellent credit

• Credit Cards – This is the option that almost every dealership accepts as a form of payment. While the upside may seem to be that it’s simple, there are unseen costs involved including processing, terminal and service fees, etc. And, just like any credit card processor, you pay a percentage of the total charge. Plus, you are banking on the fact that the customer has enough available credit on their card, which isn’t always the case.

Options: Synchrony, CFNA, OEM Manufacturer Card

2)    Mid Risk Customer: For the broadest spectrum of customers

• Simple Interest Loans – These loans are similar to car loans in structure – but in much smaller amounts. They allow a customer to finance the repairs – oftentimes at much lower interest rates than a normal credit card – and, in many cases, offer an interest-free period where the customer can repay the loan with no interest.  Several companies offer this type of loan. While the interest rates are credit-based, many have a wide range of credit scores they consider for loans and can finance the more credit challenged customer as well.

Options: Confident Financial Solutions (CFS), NetCredit

3)    Highest Risk Customer: This is a point-of-sale solution for those with no other options

• Secured Loans – This type of loan is typically secured by some sort of collateral. Because of this – and depending on the collateral – lower credit scores are considered and could qualify for these loans. While not as high of a cost to the consumer as a payday loan, the interest rates for low credit customers can go as high as 40%.
   
• Lease Agreements – This type of financing is typically reserved for the highest risk consumer. Leasing auto parts (and service) is costly but could be a viable option for those customers with the most challenged credit. The pros for the dealer are that they get the service business. It also gives that consumer who has no other resources an avenue to get their vehicle repaired. As opposed to rent-to-own products, this arrangement tends to come at a high cost to the consumer, typically resulting in repayment of double the amount financed over the entire term. However, it will help those that are truly in need.

Options: Springleaf Financial, One Road Lending

As you can see, there are many options for payment you can provide for your customers. The simple fact of offering all of these options will, by itself, help increase service revenue as car repairs, in general, are a necessity for many and maintaining a vehicle properly will, in the long run, cost them less.

I am not in any way suggesting that as a dealer you should act as a financial advisor. Just provide your customers with all the available choices. Let the customers decide which payment method best fits their needs. You may be surprised which they select. Either way, you’ll get the service business that might otherwise have walked out the door and down the road to your competition.

For car dealerships, when it comes to marketing, the overwhelming majority of messages tend to revolve around sales. The need to push more units, drive more traffic and conquest new customers seems to be the biggest priority for dealers as far as the allocation of marketing dollars.

The market is highly competitive -- dense markets can have three or more same brand dealers within a 30-mile radius – and that puts tremendous stress on dealers to capture as much of that business as possible.

But think about this for a second: For every competitor you have for sales, I guarantee that you probably have 50 for service in that very same radius. And not just franchised dealerships – all of the independents, whether they are large chain repair centers or small garages.

With lower margins, dealerships rely on the service department to keep them in the black.

Sure, service departments will always be busy with warranty and recall work. But what about customer pay maintenance and recommended services? This is the bread and butter and the highest margin repair orders that exists. However, I find that many dealers do little to market the service department outside perhaps offering some service specials, and an occasional direct mail coupon.

A study conducted by Google in 2012 found that repair and maintenance search outpaces search for vehicles and consumers needing vehicle maintenance increasingly use a search engine to find a local repair shop. Information is now easier for customers to obtain with a proliferation of online information and resources. However, if you visit the website of many dealerships, the presence of the service department is almost non-existent.

It would therefore be a wise move to look at every customer visit as an opportunity to start actively marketing your service department. The sad fact is that many customers already have the perception that dealership service costs more. But visit most dealership websites and you’ll find a surprising lack of information, and almost nothing about pricing or service specials.

Whereas, most independents – especially the large chains – publish information on basic, routine services, including price and details on what is performed.

Dealerships have huge advantages over independents when it comes to service: they use factory parts, service is recorded within the manufacturer system in case of any future warranty claims, and most of the technicians are trained and certified to work specifically on the brand’s vehicles. But those value propositions are rarely, if ever, listed on any website. In fact, on the majority of websites, the service department is little more than a schedule service form, hours of operation, and perhaps some expired service coupons.

Consider allocating more marketing dollars into you service departments through all outbound marketing channels including your website, e-mail marketing, social media, PPC and SEM and local listings. And, as customer reviews are now a big part of the decision process for consumers as far as where they chose to do business, train your service department employees to ask for reviews from ALL customers. Post these reviews prominently on your website as well as to Google and other top review sites. And don’t forget to include them in your traditional marketing – television, radio, direct mail, etc.

And let’s not forget that the service department is not only the most profitable area in the dealership in terms of service revenue, but also highly profitable in terms of sales. Think about those customers that loyally bring their vehicle in for service. If they keep servicing at your dealership, they inevitably become the next car buyer for sales.

If your service customers are treated right and enjoy an exceptional experience at your dealership each time they visit, they inevitably tell their friends and family and refer them to you to buy a car and can be your best source of referrals. They are also a great resource for acquiring front-line pre-owned vehicles without competition and provide the customer pay repair orders that your service department loves.

So, step up your service marketing game and try increasing your service presence in all your future marketing .I bet you’ll be surprised to find that extra sales come just a little easier -- all while seeing your service revenue grow.

The service department is typically the largest revenue source for a dealership. In some cases, service departments carry the dealership and keep it in the black. Yet, no matter how much revenue a service department brings in, it would be hard to believe there is a single dealer out there that wouldn’t want to see it increase.

Manufacturers are certainly pushing dealers to expand their service facilities to increase shop capacity. But what about that dealer that simply can’t afford it, doesn’t have the real estate or simply doesn’t want to make that investment?

Well, there is a simple way to guarantee an increase in service revenue -- and it doesn’t require any additional investment – only something that service managers should be doing already. And that is analyzing service declines.

The reality is that dealers and service managers both know that money is walking out the door with just about every service customer. You may have the best upsell percentage in the universe but I highly doubt every customer that drives through your service lane is accepting every recommendation you present. There’s always room for improvement and knowing how much service revenue is walking out the door, and which services are being declined, is something that can easily be fixed through a small process change and training of your service advisers.

Many dealerships don’t track their declined services at all. Yet just about every DMS has the ability to do it. Why aren’t more dealers and service managers doing it? Perhaps the managers don’t want their dealer to know exactly how much isn’t getting captured.

With every open RO, there are service recommendations. In most instances, after presentation to the customer, a service advisor will then proceed to input codes for accepted services to add them to the repair order. The problem is that at many dealerships declined services don’t get codes attached to them, thus erasing their existence.

Simply implementing and enforcing a process whereby all recommended services get coded appropriately – whether accepted or declined – will give you the data you need to get hard answers to the big picture of how much revenue is leaving and which services are being declined. This data can also be broken up by service advisor, for better accountability

Let’s look at a few ways in which this data can be useful.

• If you have a high decline rate on a specific repair, you now have the ability to analyze reasons. Perhaps you’re pricing yourself out of the market. Your customers have smartphones and can easily price shop your service costs -- just as we know they do when buying a vehicle. Adjusting the price to be more competitive could help capture more of that specific repair work.
• In the same scenario, perhaps your overall acceptance rate is average, but you find that you have one specific advisor that has a very high decline rate. Now you can consult with the advisor and try to diagnose the problem. Perhaps that the advisor simply needs more knowledge of the repair and its importance so that they can more effectively relay that information to your customer.
• By contrast, maybe you have one service advisor who is spectacular at capturing a certain type of repair.  Now you can talk with this employee, discover the secret to their success and then share those tactics or strategies with their fellow advisors, thus helping them all be more successful.

If you know how much total revenue is leaving your service department and can also break down those declined services by repair type and by advisor, you should be able to identify strengths and weaknesses of both the department and your team. With this knowledge you’ll be able to streamline your process, adjust pricing, analyze strengths and weaknesses of service advisors when it comes to recommendation upsells, and increase service revenue. All without expanding or hiring more technicians.

There is nothing more frustrating to a service advisor than presenting legitimate service recommendations to a customer only to lose the sale because of a customer’s finances. The service advisor could do a great job building the relationship, presenting the service recommendations and instilling value. However, if the customer cannot pay for the services, they lose the sale, no matter how much the customer wants to get the work done.

This is exactly why financing options make just as make sense in service as they do in sales. Retailers do a great job of this. You cannot go into a Best Buy without seeing offers for 6 months, or longer, interest free financing. The same is true for most furniture stores. These retailers force everything based on payment. Customers have become accustomed to it. They get it in sales. The first thing out of the customer’s mouth is usually something along the lines of “I want that Toyota Camry, can I get it for $299 per month?” But on the service side it is rare to even talk about financing. While a customer may not be able to afford a $1,500 repair bill all at once, they could perhaps afford a reasonable monthly payment.

We’ve seen dealerships that offer financing increase activity on the service drive, increase revenue at the service center and enhance overall customer satisfaction.  We’ve seen service centers consistently increase revenues by 20%; average R.O. close rates as high as 63%; and it is not uncommon for shops to add an additional $46,000 in shop revenue per month.

The key to decreasing service declines and maximizing customer participation lies in making your customers aware that they have other options available to finance the repair as early as possible in the repair process.

Start awareness early. Don’t wait until a large repair bill is presented, start making your customers aware of this option early in your process. Feature it as a drop down menu on your website under “Service.” Some dealers even have it pop up as an option as part of the online scheduling process. When you send service appointment reminders, include a message that financing options are available, with a link for the customer to get pre-approved. Whether they need a large repair, or a simple oil change, at the very least you have made the customer aware that financing exists.

If your financing partner offer it, promote that you offer 0% APR for qualified customers when they pay the loan off within 60 days. This could capture the attention of any customers that are perhaps momentarily cash-squeezed and find it more convenient to finance the repair for a couple of months, with no finance charges.

Integrate financing options into each process touchpoint. From the moment the customer pulls into your service drive, train your advisors to inform customers that financing options are available to them. The customer is then primed with the knowledge and may not be quite so hasty to decline the recommendations, opting instead to explore financing as a viable option. Copy the successful practices of department stores. Whenever the customer is ready to pay for repairs, train your employees to ask whether they would like to pay with cash, check, credit card or financing. Department stores use this process for a simple reason, it works.

Whenever a service advisor prepares to present a customer with a significant service recommendation or unexpected repair, make sure that they always inform the customer during that presentation that financing options are available. By making this a consistent process, customers that would normally decline service simply because they cannot afford it, can explore an alternate method of payment that they perhaps can afford. We have found that the customer is then less likely to turn down the service.

If you keep the message in front of your customers throughout the entire service experience, an increasing amount of customers will be happy to get the work done, instead of declining the service.