As fixed operations become a bigger profit center for dealers, the opportunity is ripe for them to capture more vehicle-service market share, says Jim Roche, who wrote a book on how to do that.
He is vice president-marketing and managed services at Xtime, a provider of digital scheduling and other online service-related functions for dealerships.
Amid flattening auto sales, many dealerships are relying on their back-end operations to future-proof their businesses.
According to the National Automobile Dealers Assn., the fixed-operations department (including parts and service) now comprises an increased 49% of dealerships’ gross profit.
“With dealerships seeing a near 10% increase in all U.S. service visits since 2015, fixed operations will drive profitability for the next several years,” says Roche, whose book is entitled, “Fast Lane – How to Accelerate Service Loyalty and Unlock Its Profit-Making Potential.”
In a WardsAuto Q&A, he discusses things dealers can do to improve their service departments. He also talks about results of the Cox Automotive 2018 Service Industry Study, a survey involving 3,550 consumers and 404 people at franchise dealerships. (Xtime is a Cox brand.)
WardsAuto: You say dealers should think like a customer? What does that mean exactly?
Roche: It means a variety of things. Mainly, put yourself in the customers’ shoes. Those of us in the dealer world tend to get dealer-centric or transaction-centric. It’s hard to step out of that and be customer-centric. Think about what’s the best experience they can have.
WardsAuto: What would an example of that be in the service department??
Roche: According to the study, the No.1 frustration is that the service took longer than expected. Thirty percent of people said that. No.2, the dealership tried to sell additional services that weren’t wanted. No.3, the customer had an appointment but waited in line.
You want to do everything you can to prevent those things from happening. But it’s not uncommon for dealership personnel to operate within the existing framework of the processes and tools they have available to them.
I’ve visited about 2,000 dealerships over the years. I’ve seen the best and the worst, mostly the best. But a bad process will defeat a good person. (Jim Roche, below)
WardsAuto: It seems sort of like the doctor’s office. A patient often feels the visit is centered around the doctor and staff, not you. Especially when it comes to seeing you at an appointed time.
Roche: That’s about their operational efficiency, right? Wait in the waiting room, then wait in the examination room for maybe a half hour before the doctor walks in and spends five minutes with you.
WardsAuto: And that appointment you had seems to mean very little when that happens. Is there an analogy with dealership service department operations?
Roche: Well, 13% of the people surveyed said “I had an appointment but had to wait in line.” If you make an appointment, it means you don’t want to wait.
WardsAuto: What can a dealer do to prevent that? Hire more auto technicians or put in more service bays?
Roche: No. Keep in mind, those things increase vehicle-repair throughput. But typically when you schedule service, you schedule two components. The vehicle part, which is technicians and bays; and the people part, which is the service adviser.
But to your question, there are a couple of things you can do.
One, make sure your scheduling works. Do an inventory of all things that go into your scheduling system: number of technicians, number of shifts, skill sets, pricing. Make sure all of that is complete so you optimize how that scheduler runs work through your service lane.
Two, if you have a wide enough space, I’ve seen dealerships with separate lanes. One for people with service appointments, the other for people without appointments. That’s a way to make appointment customers feel special and that their appointments are meaningful.
WardsAuto: Do you advocate adding shifts if the demand is there?
Roche: We’ve found that for dealers with single shifts, the bays were busy 86% of the time. Some dealers are experimenting. Maybe a weekend shift, paying employees overtime to handle the vehicle overflow. We’re not advocating one thing or the other. We’re just reporting ideas from dealers. When they reach capacity because of a single shift, they add capacity.
WardsAuto: Would 86% be a troubling figure?
Roche: Yes. You are too close. Find a way to add capacity. Perhaps add an additional shift, but that’s a pretty big commitment. Paying a little overtime is an easy-step your way into whether you need another shift.
Expanding your facilities means land and equipment acquisition and construction costs. You have to do everything else prior to that to max yourself out.
WardsAuto: The study indicates customers feel dealerships are more expensive than other repair facilities. Aren’t they?
Roche: That’s a great question. The quick answer is, “No.”
WardsAuto: I’ll tell you as someone who’s learned the hard way. They may be more expensive, but they do better work, which is more cost-effective in the long run.
Roche: Cars are more complex today. You need diagnostic equipment and training. Because of their franchise agreements with manufacturers, dealers keep pace with all that. That’s advantage dealer.
But all the research I’ve seen indicates most consumers are not interested in lowest price. They are interested in fair price, which is wrapped up in value. You should show you are reasonably priced relative to the value you provide.
Our study found dealers on average are competitively priced (compared with independent shops, tire stores and national car-care chains).
With prices, a dealer should twice a year survey the competition and then price accordingly. You don’t have to be the lowest, you have to be competitive.
Put your service prices on your website, menus and at service lines. It sells credibility. And put it in your marketing. Don’t be shy about it. The study says 71% of consumers scheduling a service appointment online want to see prices.
With an online transaction, consumers want to know, “What do I need, when can I get and what does it cost?" Those are the three big things.