Fixed Ops Journal - June 2017 - 31

FIXED OPS JOURNAL

WHY CUSTOMERS STRAY

 And what your dealership's service department can do about it

f new-vehicle sales have peaked and
are leveling off, as many industry
analysts believe, the pressure to
generate profits from fixed operations
is likely to increase.
But given the U.S. industry's seven
straight years of year-over-year sales
growth, the future holds great potential for
your shop to boost the number of repair
tickets you write, as cars age and
maintenance needs increase.
RICHARD
Most seasoned service managers, I'd bet,
TRUETT
instinctively know what it takes to attract
Fixed Ops Journal
and retain customers and grow their
businesses in good times and bad. But it is
reassuring to have hard data to fortify these beliefs.
Last year, Cox Automotive, surveyed more than 4,400 consumers
about the factors that shape their decisions on
where to go for maintenance and repairs. (You
can see the whole survey here: autonews.com/
repairstudy.)
These are the survey's high points.
 Service departments have a big role in
new-vehicle sales: Nearly half of the respondents said their experience in the service
department "greatly influenced" their
likelihood of buying another vehicle from the
dealership.
Another 36 percent said they were "somewhat
influenced" by their service experience with the
service department. Bottom line: Make sure your
customers are happy when they leave your shop.
 Franchised dealers are snagging fewer than
one-third of repair orders: The average vehicle
makes 2.7 service visits a year. Quick-lube
shops, tire stores and independent repair
outlets account for about half of these visits;
dealers take 30 percent, and the rest go
elsewhere - body shops, retail stores and
specialist businesses.
Bottom line: With an average bill of $178 per service visit, dealerships
are missing out on as much as $99 billion in annual revenue. It's
unrealistic to think that franchised new-vehicle service departments
could fix every car on the road. But does your shop have capacity for
more tickets?
 Independent shops are strong in several profitable niches:
Dealerships do not dominate in state safety inspections, brake repairs,
engine repairs, air-conditioning service, suspension repair and tire
sales. Bottom line: Maybe it's time to consider setting up specific repair
bays for these types of repairs, promising your customers fast service at

competitive rates.

 A visit to the service department during vehicle delivery builds

business: Only 41 percent of buyers of new and used cars were
introduced to the service department when they purchased their
vehicle. Of these customers, 53 percent said that introduction was a
factor when they decided where to take their vehicle for service.
Customers who were shown the service department were 1.5 times
more likely to return to the dealership for service in the 12 months after
purchase. Bottom line: Every delivery must include a visit to the service
department and a quick tutorial on how to make an online
appointment.
 Half of new-vehicle customers leave the dealership's service
department after their warranty coverage ends. Only 3 in 10 dealership
service visits are for out-of-warranty vehicles.
One of the best ways to raise revenue is to improve service retention
among customers with out-of-warranty vehicles. Bottom line: Instead of
investing in marketing initiatives to try to get customers back, don't lose
them in the first place.
 Value - or its perceived absence - is the
main reason customers don't bring out-of-warranty vehicles back to the dealership for service.
Customers believe that they will be
overcharged, that labor costs are too high and
that they won't get an accurate estimate of the
total cost up front.
Most dealerships are competitive with
independent shops on the costs of such things
as oil changes and tire sales. Bottom line: Maybe
it is time to compete on price with specialty
shops for muffler replacements, airconditioning repairs and other common repairs.
Eighty-one percent of customers said it is
critically important to find repair price
information on the dealer's website when they
are shopping. Transparent pricing, linked with
coupons and special offers, resonates with
consumers.
Consumer experiences in other industries are
influencing the expectations of automotive
customers, says Jim Roche, senior vice president
for marketing and managed service of Cox Automotive's Xtime, the
appointment-setting platform used by 29 vehicle brands in 8,000
dealerships.
"Uber. Amazon. Dollar Shave Club. Open Table," Roche says. "All of
these fantastic experiences we have as consumers that are technologyenabled shape what we expect to happen inside of automotive.
"If you're working off dated assumptions of what your customers
want, you are not going to be driven to try and emulate those." 
You may email Richard Truett at rtruett@crain.com.

JUNE 2017

PAGE 31

http://www.autonews.com/repairstudy http://www.autonews.com/repairstudy

Table of Contents for the Digital Edition of Fixed Ops Journal - June 2017