As your dealership heads into 2024, it’s common to reflect back on the previous year and identify possible areas of improvement. As you reflect, consider things like whether or not you’ve had about the same number of people coming into your service department each day of the week or month of the year. As you reflect back on this past year’s sales and inventory hurdles, you undoubtedly know which months your store sold the most used or new cars.
Assume, for a moment, that your dealership services all of your current customers, manages to sell more cars in 2024, and that the owner of each car sold returns twice a year for scheduled maintenance. If you sell 100 cars in January, for example, you should see an increase in service department visits by 100 visits on an average of five to six months afterwards.
As a portion of those returning customers choose to upgrade to other vehicles, your customer base increases, resulting in additional increases in service visits, and later, increases in sales. At Amazon, this is referred to as “The Flywheel.”
So why are today’s retail auto dealerships not seeing a “fixed” number of visits to the service department day after day and month after month?
Mistake #1: Thinking of Fixed Ops as “Fixed.”
Any department thought of, or called “Fixed,” will be limited. The Service Department needs to be called the “Customer Retention Department” or the “Flywheel.” It’s a constant source of increasing opportunities if managed correctly.
Mistake #2: Service Departments operating without a growth plan.
Service departments must have a plan to service the variable side customers while maintaining all existing customers. They need to set the proper strategies, logistics and infrastructure to handle an increasing number of customers and cars.
Mistake #3: Not measuring the right things.
A dealership KPIs should be based on customer retention. Sales, Service and Parts should establish strategies that prioritize customer retention. A dealership customer’s LifeTime Value (LTV) is much more than the value of a sale or a repair order (RO).
Mistake #4: Treating customers like commodities.
Customer obsession is key. Every dealership must have processes in place to never fail a customer. How many times have you personally called a dealership’s service department on Monday morning and not gotten through? Moreover, how many voicemails have you left without a response? How many times did you get caught into the endless phone tree transfer cycle? If it’s frustrating for you, it’s a hundred times more frustrating for your customers.
Mistake #5: Partnering with the wrong talent or technology partners.
This is pivotal to your dealership’s success. Hire the right talent and the right technology partners. Do your technology partners have a strategy for your success? Does your staff? The difference between a company that provides an excellent, zero fault service and one that does not is simply a lack of strategy.
To learn more about simple tools created for dealers to make sure that customers are served 24/ 7 with zero fault, visit: https://www.autoservice.ai/ or stop by Booth #3507 in the West Hall at NADA 2024.
