AutoPoint, the leading platform that drives improvement in auto dealer fixed operations, today announced that since installation, Kuni Lexus of Seattle averages more than $2.7 million in annual upsell revenue. In addition, in the first quarter of 2014 the dealership was up 20 percent year-over-year in customer pay revenue compared to Q1 2013, and has also improved its closing ratios on recommended repairs to the 40 to 50 percent range, placing it in the top ten percent of all Asian luxury dealers nationwide.
In September of 2010, Service Director John Willoughby implemented AutoPoint to improve Lexus of Seattle’s vehicle inspection process and streamline communications between parts and service. “It was always our goal to perform a lot of vehicle inspections, so I was surprised when the platform revealed that we were inspecting less than 70 percent of vehicles,” said Willoughby. “Now we are at 92 percent, which is about our max considering we do body work and repairs for other shops, so inspections aren’t required.”
In addition to increasing the volume of inspections, Willoughby began using AutoPoint’s performance reports to track closing ratios on recommended and failed repairs. What he found surprised him: his techs and advisors were being too aggressive and making too many recommendations, driving many customers away. Willoughby sat down with his advisors and techs to establish new benchmarks as a group. “We had a lot of discussions as to what is caution and fail, and eventually we got everyone on the same page,” said Willoughby. As a result of fewer recommendations and with the help of AutoPoint’s Know Your VehicleTM report, customers became more trusting and the group’s closing ratios began to improve.
“It has been a gradual process but we have increased every year,” said Willoughby. “Our closing ratio on recommended and failed inspection points ranges between 40 and 50 percent, which is in the top 10 percent of all Asian luxury dealers nationwide.”
AutoPoint’s Know Your Vehicle report provides the customer with a complete overview of the health of their car. “The report is great for building customer trust,” said Willoughby. “If the customer sees a gradual progression every time they come in; such as their brakes wearing at 50 percent, then 70 percent, then 90 percent, it builds the expectation the next time they come in they will need to replace their brakes, and they are mentally prepared for that.”
The increased vehicle inspection rates and closing ratios on repairs has resulted in a significant increase in customer pay revenue. In 2013 Lexus of Seattle averaged $232 per RO in upsell parts and labor after inspections. Multiplied by the nearly 12,000 customer-pay ROs that Lexus of Seattle generated, that totals more than $2.7 million in upsell revenue.
Willoughby credits the vehicle inspection, communications and reporting platform with helping his service department to achieve the increase. “We have a busy service department and prior to AutoPoint there was no way to track critical metrics without hiring three or four full-time people to go through thousands of repair orders (RO’s) manually, which is obviously not cost effective.”
Kuni Lexus of Seattle has 26 service bays, two detail bays, 20 technicians and six service consultants. Although they keep busy and serve an affluent market in the Seattle-Tacoma-Bellevue area, Willoughby says there is always room for improvement. “The biggest challenge we face is what every dealer is facing, which is to keep growing the business and retain customers,” he said, adding that the ability to track performance is the first step in achieving these goals.
Another challenge in the last several years is that improved technology in manufacturing has reduced maintenance requirements for Lexus owners. This has resulted in an overall decrease in the average revenue per RO for most Lexus dealers. “Back in 2006 to 2008, our average revenue per RO was $555, and now it’s around $465,” said Willoughby. “The cars just don’t need as much maintenance, so we are always looking for ways to increase revenue in other areas.” The metrics from the AutoPoint platform provide Willoughby with tools to identify and take advantage of customer-pay revenue opportunities.
It’s estimated that in the U.S. service maintenance and repair market that unperformed services on vehicles add up to a lost $67 billion in annual sales. Capturing these lost services, as well as retaining customers, are key strategies to continued revenue growth for many auto dealership service departments. Willoughby credits AutoPoint with producing great data, but advises that in order to achieve sustained revenue growth a service department must also have great salespeople and accountability for their processes. “In this last year, all the pieces fell into place for me,” he said. “I’ve seen the AutoPoint data for several years now, but until recently I didn’t have all the right people and processes in place to take advantage of it.”
With the combination of the right salespeople and AutoPoint data, in the first quarter of 2014 Lexus of Seattle has achieved 20 percent year-over-year growth in customer pay revenue compared to the first quarter of 2013. “This is during a time when hardly anybody else is up,” said Willoughby. “In the Lexus western region, the average increase in customer pay revenue is one to two percent. This increase is huge for us and AutoPoint has absolutely been a partner in this.”
For Lexus of Seattle, more vehicle inspections and higher closing ratios have resulted in upsell revenue of more than $2.7 million annually, 40 to 50 percent closing ratios on recommended repairs and in the last year, a 20 percent year-over-year increase in customer pay revenue. “AutoPoint is like the mortar between the bricks,” Willoughby said. “It keeps everything together.”
AutoPoint (formerly MPi) is a leading provider of revenue and retention solutions for automotive dealership service departments. AutoPoint is a business unit of Solera Holdings, Inc., the leading global claims solutions provider serving the automotive industry. Solera provides world-class claims, underwriting and information solutions that help customers automate their processes; managing millions of claims each year efficiently and effectively, and resolving billions of dollars in claims settlements. AutoPoint enables automotive service centers to operate at the highest levels of performance by increasing productivity and effectiveness, thereby improving the customer experience and raising service. For more information, please visit: www.autopoint.com.