By Scot Eisenfelder, CEO, Affinitiv
With fixed ops departments shouldering more of the profitability burden in dealerships, the ability to retain customers is more important than ever. Yet, nearly half of dealership sales customers never return to dealerships for service.
To earn greater revenue per units-in-operation ($/UIO), dealers need to retain a higher percentage of customers. To this end, the sales to service handoff becomes a critically important process. Unfortunately, this process is often neglected.
According to a Fixed Ops Journal/DealerRater survey of more than 16,000 consumers, only 42% of respondents said the dealership introduced them to the service department the last time they bought a vehicle. One-fourth of customers said there had been no introduction, and one-third said they couldnt remember if they had been introduced to the service department.
These statistics are pretty dismal, but it doesnt have to be this way.
Here are a few tips for improving the sales to service handoff ratio.
1. Provide customers with an incentive.
To be fair, some consumers probably decline an introduction to the service department because the car-buying process is already too long as it is. But even if half of customers decline, the question should always be asked.
To make customers more amenable to an introduction, provide them with an incentive such as a free first oil change or free car wash. Keep the coupons in the service department and accessible only by the service manager and/or service advisors. To get a free oil change, the customer must accompany the salesperson to the service department and meet the manager or advisor.
2. Extend service hours.
Another reason why the sales to service handoff doesnt happen is because the service department is closed. Most people go car shopping on weekends or evenings, and many dealerships close their service department early and are closed on Sundays. This is like going to CVS or Walgreens and the pharmacy is closed. To increase the sales to service handoff, dealerships need to extend their service hours. Besides, weekends and evenings are also when most service customers would prefer to get their vehicles serviced.
3. Create a virtual introduction.
If the handoff cant physically happen, text or email the customer a video immediately after they leave the dealership. The video should introduce the service manager and other staff members. Include a virtual tour of the department and a tutorial on how to use the online scheduler.
Make your videos model specific. Let the customer know how many miles before their first oil change and provide a coupon code for their first scheduled appointment.
Follow up this video with additional videos that include educational information; e.g. how to use the entertainment system, how to check tire pressure or how to program the trip odometer. These videos will help build customer trust and keep your dealership top of mind until its time for service.
4. Add value to pre-paid maintenance (PPM) plans.
If 100% of people need service, why do only 38 percent of people buy PPM plans? The answer is simple. Dealers dont provide any added value. Instead of looking at the long-term profitability of retaining a customer, they look at the short-term gain of another transaction.
If a customer is going to buy service in volume and commit to coming back to your dealership, that customer should receive a substantial discount on those services compared to rack rateespecially since the dealership is going to make money from the financing of that package.
Yet, most PPM plans dont offer discounts at all. If they do, they arent sufficient to capture customer attention.
5. Adjust pay plans.
Salespeople are compensated on sales transactions, not on service, so whats the incentive for them to introduce their customers to the service department?
Ive always believed that sales and service staff should be compensated on the customer lifetime value (CLV) of a customer, instead of on individual transactions.
Compensating on transactions encourages staff to say anything they think will open up the customers wallet at that moment, instead of giving advice based on the customers best interest.
Compensating on CLV gets the entire sales and service team on the same page. Additional small spiffs can be awarded to team members each time the customer returns for service.
The sales to service handoff is an important process that contributes to increased customer retention, but most dealers dont do a great job. Improving the ratio may require process change and dealing with pushback from employees, but the long-term increase in fixed ops revenue will make the effort worthwhile.
About the Author
Scot Eisenfelder is a 25+ automotive market veteran who has driven innovation across multiple auto sectors. Previously, Scot was SVP Strategy at AutoNation, responsible for major change initiatives in eCommerce, pricing, IT and creating a blueprint for auto retail transformation and before that served as acting CMO, focused on realigning marketing spending. Before that, Scot led JM Familys dealer software business and was SVP Product Management, Strategy and Marketing at Reynolds and Reynolds, leading both companies through value-creating sales. He has an MBA from Wharton School, graduating with distinction and is a Palmer Scholar. He attended Mannheim University in Germany as a Fulbright Scholar and graduated summa cum laude in economics from Princeton. EMAIL: seisenfelder@affinitiv.com