Fact: Most customer-pay service work (maintenance and repair) is done by aftermarket service centers.
Fact: Aftermarket service centers outnumber dealerships by at least four to one.
Fact: There is a universal perception that dealerships charge more for service work and that the value received is not worth the price paid. This view is held by vehicle owners and, unfortunately, by many service advisors, too.
Myth: Dealership prices are, in reality, higher and not worth the value. This is a myth and it is wrong. The truth is, when it comes to preventive maintenance, dealership service departments are very competitive and the value far exceeds the price!
We have all heard the phrase “perception is reality,” which means that reality takes a backseat to perception. Sounds strange…the way a consumer perceives the truth has more power over his buying decisions than the reality of the truth.
It’s a little difficult for me to get my head around this concept, but I’ve talked to enough vehicle owners and service advisors that I know this is correct.
Since perception is reality, then the key to service success is to change the customers’ perception of your service value in relation to the prices you charge. OK, fine, but how do you do that?
The answer is so simple it will probably surprise you: when service advisors conduct a pre write-up walk-around and explain the charges for work performed, the perception of price paid significantly improves.
A recent study by J.D. Powers and Associates showed that 63% of customers perceived the price paid for service to be about what they expected or lower than expected when advisors didn’t conduct a walk-around or explain the work done. That number jumped to a 72% perception of a fair price by simply doing a walk-around and giving a concise explanation of work done.
But hold on, it gets better. In their study, J.D. Powers and Associates also discovered that when no walk-around was conducted and no explanation was made, the average RO invoice was $153. However, by doing these two simple steps, the average RO invoice went up a whopping 50% to $228. That’s an extra $75 per RO by taking an extra five minutes with each customer, doing a quick walk-around, and explaining the maintenance services you are wanting them to buy.
It can’t be that easy. Yes it can!
Action point: Conduct a walk-around
Every dealership service drive in North America has had a walk-around process in place at one time or another. Every service manager knows the value of a pre write-up, on-the-service-drive walk-around process. It’s been taught in 20 groups, it’s been taught at the NADA convention, and it’s been written about in every automotive trade magazine for the last 50 years.
The problem is that only a handful of dealerships actually do a walk-around on every car, every time. Isn’t it time you make the walk-around process a condition of employment for your service advisors? As Dave Anderson says, shouldn’t this be one of your “non-negotiables?”
When I say walk-around, I mean a basic, on-the-drive inspection of the vehicle with the customer present. It involves checking tire tread depth, looking for dents and scratches, observing headlights and taillights, and looking under the hood. It can be done in two or three minutes, and then the customer can be on their way.
Action point: Explain the value of your services
In the absence of information, people default to price. Read that again, it is a profound truth! Therefore, the primary way to counteract a price misperception is to provide a concise explanation of the services you are recommending. This doesn’t have to be an overly wordy narrative about the physics of the internal combustion engine, but rather a brief word track that takes about 90 seconds. I don’t care how busy your advisors are; couldn’t they take an extra two minutes per customer? If the J.D. Powers study is correct, and it is, then you could see an increase of $75 per RO…that’s worth 90 seconds, isn’t it?
I’ll go you one better, I have 16 webinars scheduled between now and the end of the year. These are concise 45-minute workshops to train service managers and advisors how to educate vehicle owners. The webinars are personally conducted by me and you can attend for free. I’ll even throw in a free written word track when you and your staff attend. E-mail me at firstname.lastname@example.org and I’ll get you signed up.
The fixed operations side of the automotive business can, at times, be overwhelmingly complex with technology, payroll, DMS systems, personnel issues, etc. Yet, many times, it’s the simple stuff like failing to do a walk-around or failing to communicate effectively that can trip you up. The good news is that it doesn’t take a total re-tooling of your department, just a mid-course adjustment to get you back on track. It’s not easy, but it can be done!