I long for the old days. You may remember when we didn’t need no stinkin’ process for converting a newly sold customer into a servicing customer. Why? Well, within a month or two (or week), something was gonna break, squeak, whine, tick or otherwise bug the customer and viola, it was time for the all-too-soon oil change anyway – so back to the dealership for some freebie inoculation.
The even better thing was that this breakage fiasco would occur at least four more times in the coming couple years, guaranteeing customer service retention, and for good measure a recall or three provided us with the mail contacts to keep ‘em coming back – sweet manna from heaven.
Now, these darn vehicles are put together so well, little negative happens after delivery. Thank goodness for the tire pressure warning light (keeps ‘em calling), but we even diluted that panacea by pumping 45 pounds of air in each tire at prep. Worse for retention is the absolute competition dealers can’t compete with …. No “price” isn’t it, and no “speed” isn’t it. It’s … ready….. “location.” What sane individual wants to contest the typical U.S. city traffic dance for 45 minutes to get a 30 minute car service – “hey moron (to self), why not go next door for a simple no sweat oil change?”
Now, even Honda, king of the customer retention hill for mid-range vehicles, is seeing some 40% of the new vehicle buyers taking alternative-to-the-dealer choices for the very first “required” maintenance service. It only gets worse from there. I analyzed a Chrysler store’s first visit retention recently and it was less than 30%. Yikes! Is our baby that ugly?
Many of us have designed a Sales to Service vehicle delivery program, and few have actually implemented it to perfection, if at all. The reasons range from “the sales person turnover,” to “I forgot to remember,” to “the dog ate the paperwork.” But, now the need for this process to be implemented is at the critical stage. Based on the financial statements I see, the fixed operations are keeping the doors open at most dealerships, but with the massive elimination of first-owner units coming up (46% two-year drop), many will see a huge fall in repair order count.
Good news, Paco
As I was studying this issue I stumbled onto a comparative, which may help us turn the corner here. The average trade/sale cycle is around 48 months, so I looked up a four-year-old midline Corolla on the Internet at well-known Kelly Blue Book. Considering that used vehicles are sold at a pace four times faster than new, and that most are sold individual to individual, I figure Joe Schmo will decide what to sell or buy a vehicle for based on one of these popular lookups. The difference between rough and excellent book price was over $4,000! Wow. It would be fair to educate a customer that if they purchase a yearly appearance reconditioning service, and they get all the required services performed and validated in their maintenance log by the dealership, they will get more than their money back at the end – whatta country.
I ran this scenario by a few regular non-car folks and they were all incredulous. They wanted to know why they were never explained about the car value difference by the dealership employees. I just shrugged and said, ‘I guess we prefer rough book prices – keeps the back money coming from the wholesaler.”
My wheels have really turned after this revelation and the advantages keep coming. According to a Toyota study, customers are five times more likely to purchase a vehicle from a dealer they regularly use for service. The vehicles traded in would be sweet and immediately salable, customers would love their trouble-free and beautiful vehicles, more parts sales, happier techs (if that’s possible), more gross profit to pay bills with, etc., etc. Perhaps this is the glue we have been looking for since genuine factory parts, trained techs, express service, and free coffee don’t seem to be working that well.
I realize this isn’t as good for customer retention as a sloppy valve cover oil leak at 1,500 miles or a complete trans crash at 8,300 miles; but showing the customer how to get his or her maintenance money back seems pretty powerful to me. Just think how much more effective the arm-chair used vehicle appraisal approach will be – and way less beating up service for a “deal” because of loose appraisals.
If you need a pretty good Sales to Service presentation approach, just write me at ekovalchick@Dealer-communications.com and put on the subject line: Paco Needs More Retention. Thanks for the many letters I get each month and if you need something don’t be shy, just shoot me a note. If I can help, I certainly will.