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The Old Rules Don't Apply
Judy Williams, director-parts and service for Downtown LA Motors, spends much of her time trying to find ways to streamline the department's operations to provide service advisors more time to sell to customers.
Cliff Banks
July 1, 2007
9 Min Read
Judy Williams, director-parts and service for Downtown LA Motors, spends much of her time trying to find ways to streamline the department's operations to provide service advisors more time to sell to customers.
The Mercedes Benz store's service department is the 27th largest with $11.6 million in service revenue, according to the inaugural Ward's Service 150, a ranking of dealership service departments based on service revenue data from the Ward's Dealer 500, published each June.
Williams is at the front of what is a quickly changing tide in service departments today. The old rules don't apply any more — especially for dealerships that have relied on warranty work to carry their service departments.
Overall service revenue generated by franchise dealerships declined by nearly $5 billion in 2006. Much of that is due to warranty work that is quickly disappearing as quality continues to improve, according to Wayne Phillips, a Twenty Group director for the National Automobile Dealers Assn.
“The old days of hoping service doesn't lose money are gone,” he says. And that is true for brands such as Mercedes, whose vehicles sometimes require a lot of repairs — especially in the area of electronics.
“The factory has never condoned us relying on warranty work,” Williams says. “For us, the focus is on customer retention now.”
In short, successful service departments are getting creative in how they generate the customer-pay business. E-mail campaigns, customer-relationship management initiatives and online scheduling applications are some of the ways savvy service directors are capturing more business.
Downtown LA Motors is starting to use e-mail and is seeing strong responses, says Williams, but one of the more successful initiatives was a simple double coupon direct-mailed to the store's current customers, many of them who had not been in the service department for nine or 10 months.
“Our Saturday business was drying up,” Williams says. Many of the dealership's customers work in downtown Los Angeles but live up to 40 miles away — not a recipe for strong Saturday sales.
Following the mailer, the store increased its Saturday repair orders from a range of 20 to 30 to 75 to 150 repair orders. Customers received as much as $50 off for service.
But many service departments aren't even doing something as simple as that. “Not maximizing all of the opportunities is one of the biggest challenges in service departments today,” Phillips says.
Ironically, part of the problem is that service advisors are too busy answering the phone setting up appointments rather than walking the customer around the vehicle in the service lane upselling necessary repairs.
Service advisors leave a lot of money on the table when they don't fully evaluate the vehicle with the customer.
“Unfortunately, our competitors, such as the independent quick lube shops are upselling much better than we are,” Phillips says. “There's an old mantra in the finance and insurance departments that says ‘Present 100% of the menu 100% of the time to 100% of your customers. It really needs to be the same in the service department.
“The dealers doing a better job of selling to their customers, I can assure you they are probably on your Ward's Service 150 list — that's how they got there.”
Last year, Williams implemented Xtime's online service scheduling tool to free up her advisors so they could do more selling.
“It took me four or five months to sell my advisors on the concept,” Williams says. “I love it but it was hard to implement.” One of the challenges was developing a pricing guide for the service advisors.
“That may have been one of the hardest things I have ever done,” Williams says.
Customers are beginning to use it, Williams reports. “It frees us up and even helps us capture more e-mails.”
Although it sounds simple, getting e-mail addresses is proving to be a challenge. “This industry always seems to be a bit behind, doesn't it?” Williams says.
She has added a line in the repair order that almost forces the service advisor to ask the customer for the e-mail address. Williams also is looking at doing a raffle for the service advisors based on the number of e-mails captured.
“The e-mails are getting higher retention,” she says.
There are firms such as IMN, AutoRevenue and OnStation, the Cobalt Group's e-mail marketing and lifecycle management tool, that help dealers capture e-mail addresses as well as maintain their e-mail databases.
“There can be as much as 25% to 35% annual churn on a dealer's e-mail list,” says Charles Tildon, product marketing manager for OnStation.
One of OnStation's clients recently e-mailed a $4.99 oil change coupon to its customers to fill up the quick lube bays providing the advisors an opportunity to upsell. Over a two-day period, more than 100 people showed up with the coupon.
It's not just the service department that benefits from increased selling and customer retention. Most dealers understand that car sales drive service sales. If you're not selling cars, over time, your service revenue will begin to dry up.
But there is a flip side to that statement. Service sales can impact vehicle sales. The problem is, very few people in the industry consider the service department as a tool for creating vehicle sales.
Phillips recently moderated a Twenty Group in which one of the dealers was creating an incredible amount of business using a business-development center for the service department. He had originally implemented the BDC for his showroom, but it failed miserably.
The trick, says Tildon, is to approach marketing and customer service from a lifecycle management perspective.
“The goal at the end of the process is to get the customer back into the showroom and into another vehicle,” he says.
One thing is certain, the service departments that stay ahead and continually innovate are going to end with a majority of the service business, and in the end, most of the sales.
The trend is already happening. Service revenue accounts for 5.3% of total revenue for the Ward's Service 150. For the rest of the dealerships on the Ward's Dealer 500, service generated only 4.6% of their total sales in 2006.
That number has not changed much since Ward's began tracking it in 1998, although average service revenue per store has increased just over $2 million since then.
Ward's Service 150
Rank | Dealership | Owner/Principals | City | ST | Service Revenue | Total Revenue |
|---|---|---|---|---|---|---|
1 | Fletcher Jones Motorcars | Fletcher Jones, Jr. | Newport Beach | CA | $36,580,343 | $588,608,822 |
2 | Braman Motorcars | Norman Braman | West Palm Beach | FL | $24,012,981 | $393,985,468 |
3 | Longo Toyota | Penske Automotive Group | El Monte | CA | $21,592,000 | $703,103,000 |
4 | Smythe European | AutoNation Inc. | San Jose | CA | $20,706,682 | $169,297,275 |
5 | Fletcher Jones Imports | Fletcher Jones, Jr. | Las Vegas | NV | $16,193,903 | $202,416,692 |
6 | JM Lexus | Patricia G. Moran | Margate | FL | $15,489,741 | $421,916,093 |
7 | American Service Center | Morton Zetlin/Alvin J. Brooks | Arlington | VA | $15,387,711 | $190,488,548 |
8 | Penske Motorcars | Penske Automotive Group | West Covina | CA | $15,238,000 | $201,562,000 |
9 | WI Simonson Mercedes | Sonic Automotive | Santa Monica | CA | $14,365,418 | $209,262,235 |
10 | Crevier BMW | Donald Crevier | Santa Ana | CA | $14,350,640 | $269,366,380 |
11 | House of Imports (Mercedes-Benz) | AutoNation Inc. | Buena Park | CA | $14,282,159 | $284,750,832 |
12 | Autobahn Motors | Sonic Automotive | Belmont | CA | $13,693,778 | $162,019,096 |
13 | Mercedes-Benz of San Diego (& Maybach) | United Auto Group | San Diego | CA | $13,540,936 | $170,939,614 |
14 | Mercedes-Benz of Walnut Creek | Sonic Automotive | Walnut Creek | CA | $12,382,669 | $125,055,042 |
15 | Mercedes-Benz of Pompano | AutoNation Inc. | Pompano Beach | FL | $12,288,952 | $155,027,738 |
16 | Galpin Jaguar Lincoln Mercury Inc. | Herbert F. Boeckmann II | Van Nuys | CA | $12,276,255 | $211,429,749 |
17 | Mercedes-Benz of Houston Greenway | AutoNation Inc. | Houston | TX | $12,242,548 | $196,552,502 |
18 | Braman Motors | Norman Braman | Miami | FL | $12,242,071 | $266,412,037 |
19 | Mercedes-Benz of Fort Lauderdale | AutoNation Inc. | Ft. Lauderdale | FL | $12,203,513 | $204,535,203 |
20 | South Bay BMW/Mini | Frederick E. Hitchcock | Torrance | CA | $12,035,551 | $224,038,794 |
21 | Towbin Dodge | Daniel Towbin | Henderson | NV | $11,994,794 | $146,407,686 |
22 | Global Imports | Sonic Automotive | Atlanta | GA | $11,981,724 | $181,150,954 |
23 | Ray Catena Mercedes Benz | Raymond Catena | Edison | NJ | $11,817,154 | $264,925,093 |
24 | Galpin Ford | Herbert F. Boeckmann II | North Hills | CA | $11,778,706 | $346,371,509 |
25 | Chapman Scottsdale Autoplex, LLC | J. Baxter Chapman | Scottsdale | AZ | $11,683,595 | $210,992,157 |
26 | Longo Lexus | Penske Automotive Group | El Monte | CA | $11,664,000 | $369,953,000 |
27 | Downtown L.A. Motors Mercedes-Benz | Jeanette Shammas/Darryl Holter | Los Angeles | CA | $11,580,312 | $218,424,527 |
28 | Mercedez-Benz of Tysons Corner | United Auto Group | Vienna | VA | $11,482,133 | $140,308,479 |
29 | Earnhardt Ford Sales Co. | Hal J. Earnhardt III | Tempe | AZ | $11,447,977 | $210,496,700 |
30 | Stevens Creek BMW | Sonic Automotive | Santa Clara | CA | $11,402,615 | $158,620,344 |
31 | Gaudin Motor Co. | H. Gary Ackerman/H. Don Ackerman | Las Vegas | NV | $10,860,526 | $230,008,835 |
32 | Midway Chevrolet | Larry Van Tuyl | Phoenix | AZ | $10,589,353 | $284,448,423 |
33 | Norm Reeves Honda Superstore | David M. Conant | Cerritos | CA | $10,545,887 | $252,700,866 |
34 | Mark Christopher Auto Center | Christopher Leggio | Ontario | CA | $10,527,202 | $222,598,460 |
35 | Hendrick Lexus | Hendrick Automotive Group | Charlotte | NC | $10,347,653 | $162,627,550 |
36 | Beverly Hills BMW | Sonic Automotive | Beverly Hills | CA | $10,331,663 | $132,757,085 |
37 | Roseville Toyota | Sullivan Auto Group | Roseville | CA | $10,310,277 | $235,018,466 |
38 | BMW of Mountain View | AutoNation Inc. | Mountain View | CA | $10,256,940 | $122,164,360 |
39 | Tustin Lexus | David W. Wilson | Tustin | CA | $10,123,016 | $181,943,022 |
40 | Mercedes-Benz of Miami | AutoNation Inc. | Miami | FL | $10,112,262 | $215,117,150 |
41 | BMW of San Diego | United Auto Group | San Diego | CA | $10,025,496 | $159,222,202 |
42 | Momentum BMW/Mini | Sonic Automotive | Houston | TX | $9,839,053 | $149,627,821 |
43 | Power Chrysler Jeep Dodge | AutoNation Inc. | North Phoenix | AZ | $9,782,253 | $181,967,218 |
44 | Mercedes-Benz of Westmont | AutoNation Inc. | Westmont | IL | $9,647,116 | $127,193,471 |
45 | Mercedes-Benz of South Bay | AutoNation Inc. | Torrance | CA | $9,628,281 | $286,972,987 |
46 | BMW of Dallas | AutoNation Inc. | Dallas | TX | $9,564,763 | $147,276,626 |
47 | Capitol Toyota | Autofocus, Inc. | San Jose | CA | $9,551,686 | $173,100,374 |
48 | Mercedes-Benz of Chicago | Fletcher Jones, Jr. | Chicago | IL | $9,523,139 | $96,418,997 |
49 | Three-Way Automotive Group | Harold Meek | Bakersfield | CA | $9,469,527 | $198,912,510 |
50 | Lexus of Stevens Creek | Patrick Kane | San Jose | CA | $9,429,000 | $177,074,000 |
51 | Fred Haas Toyota World | Fred Haas | Spring | TX | $9,425,172 | $253,655,035 |
52 | Bill Heard Chevrolet, LTD | William T. Heard | Sugarland | TX | $9,424,000 | $219,395,000 |
53 | Pinnacle Nissan-Infiniti | Martin Peters - Larry Van Tuyl | Scottsdale | AZ | $9,335,464 | $180,783,669 |
54 | Drew Ford, VW, Hyundai & Isuzu | Joe Drew/William Drew | La Mesa | CA | $9,308,440 | $138,124,166 |
55 | Carr Chevrolet | Wallace Preble/Gene Bradshaw | Beaverton | OR | $9,252,049 | $199,383,753 |
56 | Lute Riley Honda | Sonic Automotive | Richardson | TX | $9,205,922 | $158,263,731 |
57 | Camelback Toyota | John O'Malley & Larry Van Tuyl | Phoenix | AZ | $9,141,449 | $208,406,788 |
58 | Lexus Kearny Mesa | United Auto Group | San Diego | CA | $9,069,320 | $141,215,774 |
59 | BMW North Scottsdale | United Auto Group | Phoenix | AZ | $8,939,734 | $153,334,590 |
60 | Sanderson Ford, Inc. | David Kimmerle | Glendale | AZ | $8,865,271 | $241,603,394 |
61 | Momentum Jag Porsche Volvo | Sonic Automotive | Houston | TX | $8,852,698 | $111,153,876 |
62 | Sam Galloway Ford, Inc. | Sam Galloway, Jr. | Ft. Myers | FL | $8,799,783 | $218,393,142 |
63 | Mercedes-Benz of Orlando | AutoNation Inc. | Maitland | FL | $8,799,361 | $137,957,238 |
64 | Courtesy Chevrolet | William R. Gruwell | Phoenix | AZ | $8,771,780 | $297,029,779 |
65 | Braman Honda | Norman Braman | Miami | FL | $8,705,369 | $190,756,478 |
66 | Hendrick Imports | Hendrick Automotive Group | Charlotte | NC | $8,702,968 | $137,191,131 |
67 | Herb Chambers Motorcars of Boston | Herb Chambers | Somerville | MA | $8,605,976 | $104,782,323 |
68 | Dave Smith Motors | Ken Smith | Kellogg | ID | $8,545,142 | $438,366,312 |
69 | Lund Cadillac Hummer Saab | John R. Lund | Phoenix | AZ | $8,501,105 | $115,951,144 |
70 | Rick Case Honda | Rick Case | Davie | FL | $8,453,000 | $218,435,000 |
71 | Gwinnett Place Honda | Hendrick Automotive Group | Duluth | GA | $8,417,515 | $180,170,923 |
72 | Stevens Creek Honda | Sonic Automotive | San Jose | CA | $8,416,857 | $123,920,521 |
73 | Greenway Ford | Frank Rodriguez; Carl Atkinson | Orlando | FL | $8,387,159 | $145,233,238 |
74 | Kearny Mesa Toyota-Scion | United Auto Group | San Diego | CA | $8,327,373 | $113,001,268 |
75 | Herb Chambers Honda of Boston | Herb Chambers | Boston | MA | $8,286,921 | $123,262,287 |
76 | Desert Toyota | AutoNation Inc. | Las Vegas | NV | $8,238,732 | $164,898,694 |
77 | Brown & Brown Chevrolet | AutoNation Inc. | Mesa | AZ | $8,236,044 | $255,579,846 |
78 | Mercedes-Benz of Houston North | AutoNation Inc. | Houston | TX | $8,191,554 | $122,962,089 |
79 | Power Toyota Tempe | AutoNation Inc. | Tempe | AZ | $8,191,253 | $204,845,902 |
80 | GO Toyota | AutoNation Inc. | Centennial | CO | $8,165,010 | $236,240,037 |
81 | Roseville BMW | AutoNation Inc. | Roseville | CA | $8,116,684 | $120,226,842 |
82 | Atlantic Automall | John Staluppi | West Islip | NY | $8,086,952 | $238,786,832 |
83 | Lexus of Palm Beach | AutoNation Inc. | West Palm Beach | FL | $8,071,302 | $176,233,163 |
84 | BMW of Austin | United Auto Group | Austin | TX | $8,058,028 | $114,612,068 |
85 | Al Serra Auto Plaza | Joseph O. Serra | Grand Blanc | MI | $8,015,647 | $244,970,841 |
86 | Michael Cadillac, Inc. | Michael L. Rosvold | Fresno | CA | $7,995,972 | $225,631,620 |
87 | East Bay BMW | Hendrick Automotive Group | Pleasanton | CA | $7,985,581 | $103,985,666 |
88 | Showcase Honda | Tom Buis - Larry Van Tuyl | Phoenix | AZ | $7,936,261 | $154,396,683 |
89 | Libertyville Toyota | AutoNation Inc. | Libertyville | IL | $7,839,728 | $147,654,639 |
90 | Bill Heard Chevrolet Corp.-Las Vegas | William T. Heard | Las Vegas | NV | $7,806,000 | $130,253,000 |
91 | Champion Toyota Austin | AutoNation Inc. | Austin | TX | $7,788,664 | $169,020,822 |
92 | Maroone Ford of Margate | AutoNation Inc. | Margate | FL | $7,766,802 | $178,750,656 |
93 | Lexus of Rockville | Sonic Automotive | Rockville | MD | $7,713,893 | $113,134,032 |
94 | Millennium Superstore | John Staluppi | Hempstead | NY | $7,707,285 | $219,975,066 |
95 | Desert BMW of Las Vegas | AutoNation Inc. | Las Vegas | NV | $7,648,134 | $106,479,555 |
96 | Newport Auto Center | AutoNation Inc. | Newport Beach | CA | $7,521,531 | $150,194,621 |
97 | Folsom Lake Ford | Chuck Peterson | Folsom | CA | $7,506,772 | $94,321,276 |
98 | Fletcher Jones Motorcars of Fremont | Fletcher Jones, Jr. | Fremont | CA | $7,476,795 | $91,224,255 |
99 | John Sullivan Chevrolet | John L. Sullivan | Roseville | CA | $7,429,121 | $176,058,113 |
100 | Lexus of Tampa Bay | AutoNation Inc. | Tampa | FL | $7,381,444 | $148,924,034 |
101 | Maroone Chevrolet of Pembroke Pines | AutoNation Inc. | Pembroke Pines | FL | $7,353,998 | $167,730,858 |
102 | Toyota of Orange | David W. Wilson | Orange | CA | $7,350,396 | $219,951,607 |
103 | Mercedes-Benz of Pembroke Pines | AutoNation Inc. | Pembroke Pines | FL | $7,311,986 | $122,159,885 |
104 | Herb Chambers BMW/Mini | Herb Chambers | Boston | MA | $7,260,972 | $143,735,734 |
105 | Performance Chevrolet | Hendrick Automotive Group | Chapel Hill | NC | $7,258,370 | $100,479,896 |
106 | AutoWest Chrysler Jeep Dodge Roseville | AutoNation Inc. | Roseville | CA | $7,234,641 | $128,011,109 |
107 | Koons Tysons Toyota | James Koons | Vienna | VA | $7,223,895 | $216,818,086 |
108 | BMW of Fairfax | Sonic Automotive | Fairfax | VA | $7,182,979 | $119,665,091 |
109 | Hudson Toyota - Scion | United Auto Group | Jersey City | NJ | $7,155,574 | $184,890,676 |
110 | Power Nissan Tempe | AutoNation Inc. | Tempe | AZ | $7,053,264 | $139,944,712 |
111 | Herb Chambers Lexus of Norwood | Herb Chambers | East Walpole | MA | $7,051,425 | $165,423,430 |
112 | Chapman Chevrolet Isuzu, LLC | John H. Chapman | Tempe | AZ | $7,022,848 | $197,888,764 |
113 | Ancira Winton Chevrolet Inc. | Ernesto Ancira Jr. | San Antonio | TX | $6,997,647 | $136,247,359 |
114 | South Bay Toyota | David W. Wilson | Gardena | CA | $6,993,018 | $147,755,588 |
115 | Fairfax Honda | Robert Rosenthal | Fairfax | VA | $6,989,491 | $118,350,861 |
116 | Power Toyota Irvine | AutoNation Inc. | Irvine | CA | $6,977,792 | $171,208,267 |
117 | Mercedes-Benz of Sarasota | AutoNation Inc. | Sarasota | FL | $6,934,809 | $119,186,684 |
118 | Gillman Honda South | Ramsay H. Gillman | Houston | TX | $6,926,193 | $130,247,348 |
119 | Fred Anderson Toyota of Raleigh | Fred Anderson | Raleigh | NC | $6,922,334 | $159,075,733 |
120 | Lexus of Bridgewater | United Auto Group | Bound Brook | NJ | $6,913,075 | $114,821,287 |
121 | Ford of North Scottsdale | AutoNation Inc. | Scottsdale | AZ | $6,904,406 | $125,162,893 |
122 | Wilde Lexus of Sarasota | Mark Wilde | Sarasota | FL | $6,902,984 | $137,925,064 |
123 | Lauderdale Imports Ltd./BMW | J. S. Holman/Dan Villani | Ft. Lauderdale | FL | $6,874,452 | $142,821,870 |
124 | Courtesy Toyota | AutoNation Inc. | Winter Park | FL | $6,799,190 | $158,211,513 |
125 | Rosenthal Jaguar Land Rover | Robert Rosenthal | Vienna | VA | $6,787,066 | $94,360,747 |
126 | Burt Toyota, Inc. | Lloyd G. Chavez/Lloyd G. Chavez, Jr. | Englewood | CO | $6,751,876 | $135,170,693 |
127 | Bell Honda | Larry Van Tuyl | Phoenix | AZ | $6,751,621 | $112,859,968 |
128 | Honda of Tysons Corner | Sonic Automotive | Vienna | VA | $6,728,951 | $89,554,473 |
129 | Criswell Chevrolet | Harry E. Criswell III | Gaithersburg | MD | $6,723,127 | $177,935,421 |
130 | Power Toyota Cerritos | AutoNation Inc. | Cerritos | CA | $6,713,212 | $214,457,814 |
131 | Right Toyota | David W. Wilson | Scottsdale | AZ | $6,650,415 | $170,273,588 |
132 | Appleway Chevrolet | AutoNation Inc. | Spokane | WA | $6,624,948 | $158,113,329 |
133 | Schaumburg Honda Automobiles | Robert V. Rohrman | Schaumburg | IL | $6,586,974 | $139,320,695 |
134 | Landmark Honda | Robert Rosenthal | Alexandria | VA | $6,559,244 | $106,758,711 |
135 | Prestige Imports | Henry C. Hansel; Stephen E. Hansel | Santa Rosa | CA | $6,552,361 | $71,652,209 |
136 | Maroone Chevrolet of Greenacres | AutoNation Inc. | Greenacres | FL | $6,546,683 | $148,645,761 |
137 | David Maus Toyota | David Maus & Cecil Van Tuyl | Longwood | FL | $6,539,074 | $204,473,251 |
138 | Capitol Honda | United Auto Group | San Jose | CA | $6,501,142 | $122,574,071 |
139 | Wilde Toyota | Mark Wilde; Pat Donahue | West Allis | WI | $6,500,468 | $152,871,080 |
140 | Van Chevrolet | Chuck Mullins & Larry Van Tuyl | Scottsdale | AZ | $6,492,548 | $161,958,893 |
141 | Jones West Ford | Richard West, Jr. | Reno | NV | $6,487,936 | $88,317,503 |
142 | Ray Catena Lexus of Monmouth | Raymond Catena | Oakhurst | NJ | $6,477,452 | $206,026,300 |
143 | Atlantic Toyota | John Staluppi | Amityville | NY | $6,476,002 | $145,208,521 |
144 | BMW of Pembroke Pines | Joseph S. Holman | Pembroke Pines | FL | $6,469,875 | $138,277,999 |
145 | Herb Chambers Flagship Motorcars | Herb Chambers | Lynnfield | MA | $6,468,370 | $85,635,832 |
146 | Lexus of Serramonte | Sonic Automotive | Colma | CA | $6,449,007 | $107,299,200 |
147 | Power Chevrolet Superstition Springs | AutoNation Inc. | Mesa | AZ | $6,441,479 | $107,849,089 |
148 | North County Ford | Jim Crowley | Vista | CA | $6,438,771 | $78,324,812 |
149 | Westway Ford | Cecil Van Tuyl & George Davey | Irving | TX | $6,422,152 | $115,075,475 |
150 | Five Star Ford of Texas | Sam Pack | N. Richland Hills | TX | $6,421,016 | $205,374,929 |
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