Fact: At least 40% of dealership chain Group One’s net profit comes from 17% of the revenue from fixed operations.
Most other groups line up the same, but they also line up at the feeder bar for the status, money, and OEM gimmes that come with trying to be No.1 in their market for new-car vehicle sales. Which is only 11% of net profit.
Yes, car sales are part of the marketing expense for the service department at any dealer. It involves dealership and brand awareness. I get it.
You pay for your service marketing through your sales efforts. That showroom sign, those websites and all the other things related to vehicle sales help a dealership sell service too.
Yes. It’s true. Totally. And vehicle sales managers might grin and light up “I-told-you-so” cigars.
Not so fast.
That’s because the service department helps drive vehicle sales. Except it’s not a marketing expense. It’s nearly four times as profitable.
How does service market sales? Well, with high turnover rates among sales personnel, who do you think does the real follow up at a dealership to get the next sale? The service department.
Who makes the referrals and repeats happen? The service department.
Who helps in-brand conquest sales possible from those who bought vehicles elsewhere? The service department.
Who churns the customer-relationship management’s owner base for additional revenue? Who really controls your dealership CSI? The service department.
I know the service directors and managers would like to light up a cigar for all that. But they don’t want to burn down the place by starting a fire accelerated from a vehicle gasoline-tank leak they are repairing.
So they instead just smile and keep the customers and money coming in.
Keith Shetterly is an automotive consultant specializing in business development center operations, service, sales, processes and customer-relationship management. He is a former dealership e-commerce director. He is at [email protected] and 281-229-5887.