It's a “new day” for the auto-service industry, with 82% of surveyed car owners saying they intend to keep their vehicles longer, says Lonnie Miller, R.L. Polk & Co.'s director-industry analysis.
As owners of aging vehicles, 58% of those people say they'll spend more on parts, repairs and maintenance. But it might be less money than the industry hopes. Of 90% who say they follow a manufacturer-recommended maintenance schedule, “in fact, only 41% do,” Miller says.
Still, auto dealers are looking to their back-end operations to compensate for slower vehicle sales.
But dealers face formidable competition from independent repair shops, says Kevin Root, vice president-product strategy for DriverSide, an online provider of consumer information on car maintenance.
“The dealership service base is under attack from independent shops,” he says. And consumer perceptions don't favor dealers. “It's an uphill battle for them.”
Although typically charging more than independents for service, dealers argue that the quality of their work is better.
But Root cites a recent poll where people were asked, if prices were equal, which of the three — dealerships, independent local shops or chain repair centers — provides the highest quality of service?
“We thought most respondents would land at dealerships, but only 40% did, while 46% went with local shops,” Root says at a DrivingSales marketing conference in Las Vegas. “That was mindboggling to us.”
Likewise, he was stunned when 66% of respondents said dealerships were more likely to overcharge for service work compared with 18% for repair centers and 16% for local shops. “We were blown away by the difference in the percentages,” Root says.
By a two to one margin, local shops beat out dealers in having better ongoing relationships with customers, according to DriverSide polling.
Dealers can change that by marketing themselves better using modern means such as customer-relationship management systems.
“Dear Customer” mailers aren't enough, Root says. “Come on, how do you build a relationship from that?”
He says CRM let dealers enhance their relevancy, which improves relationships.
Such technology allows dealerships to email personalized service reminders addressing customers by name and including photos of their vehicles.
In addition to saying, “Hi Joe, Our records indicate your Dodge Charger is due for 50,000-mile (80,000-km) service,” the emails can detail what the proposed service will consist of.
“And how about a video?” Root says. “Maybe a video of a dealership mechanic explaining what to do if your car breaks down.”
He advises dealers to create an online “car page” with articles and videos on vehicle maintenance, including an interactive “Ask the mechanic” function. “Customers are not picking up the phone book and looking for service places,” Root says. “They are going online.”
Tech-centric marketers can match dealership customer records to a data base showing which customers are on what social networking websites.
“It is smart marketing and advanced profiling,” Root says. “It is marketing to folks who can touch others in their network. Social media rewards transparency in service. That is where marketing is going today. Dealers need to think beyond service reminders.”
It can get complicated, but systems like PolkConnect help, he says. “And Cobalt and DealerSocket have good products. Look for systems that are as automated as it can get.”
Such stepped-up marketing has increased service business 27% for dealerships using it, according to DriverSide.
That's at a time when independent shops are trying to grab dealership service business.
When General Motors Co. and Chrysler Group LCC terminated about 2,000 dealer franchises this year, Polk got calls from marketers representing non-dealership shops and centers.
“They wanted to know if they could get the customer data bases for the closed dealerships,” Miller says.
They didn't get it, but it was “a pretty aggressive attempt to go after dealership business,” he says.
Root suggests dealers counterattack against independent shops, particularly on the marketing front. “Why not turn it around and go after their business?”