Over the past few years we have seen robust annual sales, with the number surpassing 17 million last year. The used-car market is doing well too. All of these cars in circulation need servicing, which means dealerships have a shot at a lot more customer-pay service jobs.
And let’s not forget recall work –there are millions of new and used cars with open recalls waiting to be fixed – which means a lot more warranty work.
To prepare for the rush of service work, many dealers plan to hire new service technicians, build more service bays and expand service hours.
However, without starting a major building or expansion project, increasing shop capacity and technicians, how can you maximize potential revenue in service?
Well, one simple way is through capturing more of your declined service business
I know, I’m preaching to the choir, but the fact is that, in my experience, far too often service managers and dealers don’t truly grasp the actual revenue potential that’s driving away from their service departments. They know that it is — but not always the huge amount of money that is left on the table. There’s a relatively easy fix to that, however, and it involves the systems you already use, along with some accountability.
Let’s take a look at why consumers decline services. There are essentially two basic reasons: they either can’t afford the service, or they don’t trust the recommendation. Well, do you know which it is? And do you keep a record of which services were declined?
It is possible to do a better job of tracking and capturing more of that declined service with some simple tweaks to processes used by your front line employees and the systems you use to generate your repair orders.
A plan should be in place to help close additional sales that were initially declined. It begins right when the customer enters your service department. Service advisors need to have some level of salesmanship and the first thing they should focus on is selling themselves and the dealership. It’s all about building a relationship. And be sure not to pressure the customer and make them feel uncomfortable. If you establish trust and a good relationship, you have a better chance of that customer either accepting the recommendations on the spot, or returning at a later time.
It is also important to build value into any recommendations. How can advisors do this while providing a great service experience and not come off as too pushy? Through education. Many consumers don’t really understand vehicles and advisors talking “tech-speak” to them will lose the customer simply because they just don’t get what you are talking about. They won’t ask you to clarify for fear of appearing stupid. Advisors should relay information in layman’s terms and use education and consultative techniques when presenting service recommendations. Pictures and videos are a great tool to help build value and illustrate the importance of a certain repair. Or the advisor can simply take the customer to their vehicle, show them the part that needs to be replaced, how it works, and what a new part would look like. This practice could easily sway a customer and earn their trust that the recommendation is real and not a frivolous and unnecessary attempt to upsell them.
This initial service consultation is also the perfect time to talk about finance options. Ask the customer whether they will be using cash, credit card or financing to pay for the repair. This practice informs the customer that the dealership offers multiple methods of payment. If your dealership offers financing for service work, the advisor should inform the customer at this point that it is available, should they need it, or find it convenient to use. While the customer may not need or want financing now, they will be aware that the dealership offers it in case they choose to use it in the future.
In addition, be sure to train your service advisors not to make the mistake of pre-judging what their customers can afford. I have seen far too many instances where a service advisor did not present the recommendations as they feared they would upset the customer – they felt the customer could not afford it. You don’t know if you don’t ask.
Now let’s talk about your systems. At many dealerships, when a service advisor generates an RO which includes recommended services, after presenting them to the customer, the advisor simply codes the accepted services and ignores any which are declined. This causes those recommendations, and the fact that they were declined, to evaporate. Why aren’t they coding declined services? Perhaps the advisors or managers don’t want the dealer to see exactly how much potential revenue in declined services walked out the door. Or perhaps it is simply due to a lack of understanding of the value that tracking declined service can bring.
Coding declined services accomplishes two things. In the big picture, it allows a dealer or service manager to see exactly how much potential revenue the dealership failed to capture. Simply implementing a policy of coding declined services can help Fixed Ops Directors, Service Managers and their advisors better understand what’s going on both at a departmental and individual advisor level. You have to identify problems – in this case, declined services – before you can fix them. And, unless these declined services are recorded, you may know intuitively that you are losing out on potential service revenue, but will never be able to create an actionable strategy to capture more of it.
Coding allows you to see what recommended services are being declined, versus those that are accepted. You can view reports and see at a glance that, as an example, you have an unusually high ratio of declined radiator flushes. This allows you to analyze why. Perhaps the reason is as simple as you’ve priced the service too high compared to your competitors or independents. The service advisor may have done a fantastic job selling the importance of the service, but that consumer won’t hesitate to jump on their smartphone and price shop your service department. The second possibility is that the service advisor simply needs to be trained on the importance of that service so that they can better sell it to customers.
Recall repairs are currently bringing customers into dealership service departments in droves, which will continue for many years to come. Every one of these recall repairs should include an inspection accompanied by recommended services. The simple process change of coding declined services helps provide a better view of the overall business potential and how much is being captured or lost. Then you can take actionable steps to capture more of the business from the customers that are already in your service drive.
The bottom line is that one of the easiest ways to increase service revenue without increasing service traffic is to decrease declined services.
Author: Tim Clay
Tim Clay, Chief Revenue Officer, Confident Financial Solutions. Tim Clay is Chief Revenue Officer with Confident Financial Solutions, a consumer finance company that offers an auto repair financing program for service centers and their customers. Clay has more than twenty years of experience in the automotive retail space and is a graduate of NADA Dealer Candidate Academy. Previously, he was COO and Co-Founder of ClickMotive, an automotive technology company. He has instrumented one successful automotive startup exit and one successful medical company exit.