Service and parts represent $4.8 million in revenue for the average dealership. For every $1 of service revenue, the dealership adds an estimated $1 of profit to its bottom line.
However, across the country, only 54% of customers who purchase or lease a new vehicle return to the original dealership for service.
How can dealers increase this percentage? In a Vennli survey, 516 car owners were asked where they go for ongoing car service: a dealership, an independent full-service center that services all models or a specialty service center that focuses on a certain type of service such as tires or brakes?
While these national insights might not reflect your local market, the findings shed light on the illusiveness of service retention.
For example, only 36% of surveyed car owners go to a dealership for regular maintenance and just 22% for oil changes. However, 91% who get oil changes at a dealership also get service done there.
The most important drivers of customer choice were quality of service, explanation of service, trust in the recommendations, expertise with make and model, speed of service, low price and comprehensive 1-stop service.
It was less important for car owners to be able to schedule online, personally know the mechanic, have the car cleaned before it was returned or experience a great waiting area, even though these represent common improvements dealerships make when trying to grow their services.
Car owners perceived independent service centers to be cheaper than dealerships. However, they valued the specific expertise of the dealership as well as the certification of mechanics, comprehensive vehicle inspection and use of parts by a specific manufacturer.
Those that go to dealerships perceived them to have higher quality of service and be equally convenient compared with other options. However, those who opt for independent service centers believed that they have better service and are more convenient.
Based on these findings, dealerships might consider redirecting focus from less-important items (waiting room, cleaning service) to the core customer choice influencers.
Customers want quick service or the option to drop off their car. They don’t want to wait while it’s serviced.
People who leave their car and return for service spend an estimated $3 on service for every $1 spent by a person who waits. (Customers who wait want to get out as soon as possible and will turn down additional services.)
A possible solution is to offer a concierge service where the car is picked up and dropped off.
Dealerships should also consider ways to focus marketing communication on the specialized and comprehensive service they provide. Marketing campaign strategies to bring customers in for oil changes may be particularly effective, knowing that most who come in for oil changes will return for regular service.
Pooya is chief product officer for Vennli, a firm specializing in data visualization and customer analytics.