A dealership service department's role goes beyond maintaining and fixing vehicles.
“We're also a support function of the sales department,” says Lee Harkins, a fixed-operations consultant. “Our job is to help sell cars. To support that effort, we must retain our customers.”
He moderates a panel discussion on “Fixed Ops: Customers for Life,” at Ward's Spring Training Conference in Tampa, FL.
Because of the current slump in vehicle sales, the main focus at many dealerships has switched over to fixed operations, Harkins notes. “We've been getting a lot of attention.”
The service department is crucial, says Ray Fenster, e-commerce director at the Lindsay Automotive Group with dealerships in Virginia and Maryland.
“My passion is fixed operations because that's where the business is and that's where a sale is made,” he says, referring to data indicating that customers who are satisfied with a dealership's service department are more likely to buy their future vehicles at that store.
In today's economy, “it's not new-car sales or used-car sales but fixed operations that run the business,” Fenster says.
Bob Horn, service manager of Firkins Nissan in Bradenton, FL, says he makes it a point to introduce himself to customers who are taking deliveries of cars.
American auto dealers might learn something from their Canadian counterparts, says Les Silver, a Manitoba native and chairman and CEO of Mobile Productivity Inc., a firm that provides dealerships with hand-held electronic devices for expediting vehicle inspections.
“Canadian dealers have been able to operate on smaller sales volumes because of their emphasis on parts and repairs,” he says.
“The biggest short-term opportunity for fixed operations is that, when the car is in your service department, what do you do to maximize that transaction,” he says.
Silver says offering free vehicle inspections helps because they can identify repair needs that offer dealerships additional service work and provide the customer with a car in good working order.
“Capitalize on existing traffic,” Silver says, although he notes that most dealerships, for whatever reason, fail to do that.
Customer retention is critical to a profitable service department, says Neil East, CEO of Xtime Inc., a provider of online service scheduling systems.
But dealerships see as much as 70% of their service business fall off, particularly as warranties expire and customers end up taking their business elsewhere.
“It's primarily our business, yet there's a big falloff,” East says. “Often that happens because of issues with trust and convenience.”
He says dealerships that “hide” their service prices by failing to disclose them openly and up front run the risk of engendering customer distrust, whether deserved or not.
Dealership service departments that are only open Monday through Friday can be perceived as keeping inconvenient hours, he says.
“And some dealership fixed operations don't have a holistic process,” East says. “A customer gets different answers from different people.”
Many dealerships spend money trying to increase vehicle sales through online efforts, such as search-engine optimization and search-engine marketing, Fenster says.
“But how much of that effort is put into fixed operations?” he asks. “If you are a dealer in the Northeast, do you include ‘snow tires’ or ‘collision repair’ as search terms? And how much real estate on your website is dedicated to fixed operations, especially in this economy?”
He recommends dealerships use customer-relationship management systems “to the max” by sending customers timely and useful service information.
“Customers should know when they are due for an alignment or when their tires should be changed or rotated,” Fenster says. “And just as a dealership may use microsites for sales, they should use them for fixed operations.”
Horn warns not to “bombard people with garbage” when sending service reminders and such.
“We send coupons, rebate information, incentive information,” he says. “We honor all oil-change coupons, and track it; if you're not measuring it, don't do it.”
His dealership also sends customers specific information relevant to the age of their vehicles. “Vehicles of different ages have different service needs,” he says.