As an automotive professional, you always want to stay informed on the latest trends in the industry. Economic forecasts, social behaviors, stock market fluctuation, and shifting political winds are all contributing factors in helping you “know what’s going on.”
Be sure that you and your management team don’t ever use negative trends and statistics as an excuse for poor performance. Don’t ever allow yourself to be a victim of circumstances; rather always strive to be victorious despite the circumstances.
To illustrate this, let’s take a look at the 2010 Customer Service Index Study released earlier this year by J.D. Powers and Associates. The CSI study showed that overall satisfaction with dealer services has increased, marking the 10th consecutive year of industry-wide improvement. (Dealer Magazine, March 2010).
The logical conclusion is that satisfied customers spend more money; hence, increased satisfaction produces increased revenue, right? Wrong!
In 2009, customer-pay revenue paid to dealership parts and service departments dropped roughly $2 billion to $28.8 billion.
JD Powers went on to project a 20% decline in service traffic and a 25% decrease in service dollars between now and 2013. If you aren’t careful, your service personnel will use these statistics as an excuse for under achievement.
Let me restate this JD Powers study a little more bluntly: you have satisfied customers who will never return to your dealership again. For your satisfied customers who do return, they will come back less frequently and spend less money on each visit unless you implement a process to prevent this loss.
Let me be clear, customer satisfaction is vital to service department success. However, customer satisfaction is merely one of the “means” to attain the “ends.” The end result is customer loyalty (retention) and dealership profitability.
I know of many service departments who are having a record year. Some are seeing more traffic on the drive and some are seeing less; but all of them are seeing record gross profits. How are they doing it? There are asking customers to purchase preventive maintenance service – what a novel idea.
New vehicle sales are down – dealers are selling about 5 million fewer cars per year –therefore, many pundits say it will result in lower service revenues. Here again, is another built-in excuse for whiners to justify falling service numbers. Granted, we might see a decline in warranty and internal service revenue, but who makes a living off of that? The real money is in customer-pay RO’s, and there are over 248 million cars on the road in the U.S. All of them need maintenance, and the vast majority of them are out of warranty.
Breaking news: people are buying preventive maintenance services. At the risk of sounding simplistic, the way to sell maintenance services is to: 1) thoroughly inspect every car and 2) ask the customer to purchase services recommended by the technician. Every car, every time.
The strategy is simple, but the execution and sustainability of the “inspect and ask” process requires commitment. Contact me if you need help. I work with a team of over 900 fixed operations professionals who do this stuff every day.
There is an upside to having fewer new cars on the road, according to Jim Lang, president of Lang Marketing Research, Inc.
Lang says, “currently in the U.S…. two forces are at work. Not only are vehicles increasing in average age, up more than one-fifth since 2000; but vehicle use (miles driven) is shifting to an older mix of cars and light trucks.”
The average age of vehicles in the U.S. is 10.3 years old. Combine that with the fact that Americans are driving 300 billion more miles per year than in 2000 and you have a “perfect storm” – older vehicles with higher mileage. That is great news if your service department is in the business of preventive maintenance.
The opportunities for selling preventive maintenance services have never been greater. Is your service department getting its share of the action or are your advisors sitting on the sidelines lamenting low traffic count due to low new car sales?
Formulate a plan right now to pursue this opportunity. Don’t accept a victim mentality. The goal is not merely to survive. Implement the “inspect and ask” process and your fixed operations department will thrive.