The average parts and service department represents 40.7% of total dealership gross and 75.2% of total departmental net profit based on our clients' year-to-date performance.
Obviously, customer-pay labor and parts (opposed to warranty work) represent a large percentage of this gross and net profit. Yet once a vehicle's warranty expires, many customers (some estimates range up to 70%) defect from the retail dealership in favor of an independent service provider for many reasons, perceived and real.
Industry studies suggest three reasons are price, convenience and quality of work. It stands to reason then, considering customer-pay work is more profitable and warranty income is on the decline, that a dealership would have processes to ensure customers return for service work.
It starts with communication between the service advisor and the customer.
Obviously, you communicate when the write-up takes place and likely at some other point, whether it is a call to notify the customer of estimated charges, of additional repairs or that the repair work is done.
But what about when the customer returns for his or her vehicle? Should explanations of performed repairs be delegated to a cashier who generally lacks the technical expertise or time to explain?
How about some type of communication two to three days after the repair to answer any questions a customer might have, verify the quality of the repair and thank them for their business?
Another method for receiving customer feedback is to attach to the customer copy of the repair order a postage-paid postcard with a few questions and space for customer comments.
Having spent 25 of my 37 automotive career years in the retail dealership and 12 more working with dealers to improve their operations, can you imagine how I am when I return to a dealership as a customer? I try to be patient.
And in my more than 10 years as a contributor to this publication, I have tried to remain objective. That is certainly my intent here as I address how one franchised dealership handles its customers. Look at your operation to see if similar things are happening in your dealership.
I am committed to having my 11-year-old domestic vehicle with 180,000 miles on the odometer serviced only at a local franchised dealership.
Though price is important to me, timeliness and quality are my primary concerns. I've chosen this dealership because it is close to my office.
Without getting into specifics regarding an average of three visits per mechanical repair, imagine my frustration in dealing with the situations such as these:
- The service advisor indicating he doesn't have the authority to make policy adjustments.
- Standing in line waiting to pay while witnessing the cashier's frustration as she tries to locate a service advisor to explain performed repairs to a customer during the late afternoon rush so she can help the next customer in line.
- Lining up again waiting for my car to be delivered.
- The service manager not returning my telephone calls.
I remain committed to using only a franchised dealership for mechanical service. But it is painfully obvious why many customers lose their patience and defect from a dealership to an independent shop.
Look at the processes in your operation. Ensure the treatment your customers are receiving sends the message that you want their business, are committed to their satisfaction and deserve their loyalty.
If your customer-pay business is not increasing, this is a symptom. The real illness might just be your process.
Good selling!
Tony Noland is the president and CEO of NCM Associates Inc. He's at [email protected].
