Although I’m in the business of creating customer retention for automobile dealers, I have often struggled with the cost versus return of the process. It is a well-excepted notion that retention involves all departments, but the service drive seems to be Ground Zero in making customers loyal.
How do we lose so many customers between the sale of the car and their return to service to have it maintained? I remember many years ago attending a seminar in Las Vegas when Tom Pappert of Chrysler chastised a large group of dealers for creating a multi-billion-dollar aftermarket business because they didn’t take care of their customers.
For the last three years I have been trying to develop a program for the service drive that will create long-term retention that is good for the service department while also being a great benefit to all of their customers.
To say this hasn’t been easy would be an understatement. It really started with a colleague of mine saying it can’t be done. Service writers, he said, aren’t salespeople for the most part and they really don’t have time to do a feature/benefit presentation to every customer they see each day. Still, I couldn’t get it out of my mind that the service drive sees roughly five times more customers a month than does the sales floor.
My first try was with a dealer in Ohio. He asked me to design a service oil change program he could sell on the service drive. We designed a very simple, easy-to-administer program that he did quite well with, selling 15 percent of his customers consistently. The problem with it was that he was using it strictly for retention — a way to get customers to return to his service department on a regular basis. It was what some people would call a loss leader. I showed it to some other service managers and found most didn’t want to give up their oil change and tire rotation profits just to attract more customers.
With that in mind, I redesigned the program into a VIP card system that was sold in service. I increased the amount of money that was reimbursed to service on the oil change and tire rotation, added some other products to build more value and built in a commission for the service writer. I then installed it in some dealerships I was currently doing business with in Texas.
You guessed it — it didn’t sell. Back to the drawing board.
Often, I think I miss other trends of marketing because I have been in this business for so long. I just think certain things should be done a certain way. The eye opener for me was when I saw an article in The Wall Street Journal that reported the Dollar Shave Club, which had only been in business for seven years, sold for $1 billion. Coincidently, the very next day a friend of mind then told me about a dollar car wash club he had joined which charged him a dollar a day for unlimited car washes. Slowly, the light was coming on over my head. I looked at my last credit card statement and, low and behold, there was the answer to my service drive dilemma staring me right in the face. I realized I had been a customer of this form of marketing for a long time. Every month I was paying a monthly fee for Netflix, XM radio, my gym membership, the Movie Card and Amazon Prime, plus assorted other products that I purchased in this manner either to save money or for their convenience and ease.
With this eye-opening revelation, I went back to the drawing board on the service drive retention program, using a recurring billing format and the subscription model. The key to this type of program is to combine the dollar concept with a rotating payment that is profitable for the service drive and offers great value and easy purchase options to the customer. Now, with this membership program, customers will be getting lifetime oil changes for as long as they are in the club, along with other value services they may not think they can afford at the time of purchase. The low cost brings every customer into play and the flexibility allows the service manager to build a very beneficial menu that is easy to present. By combining products and services, they can create a compelling value statement for his customers. Best of all, when the customers sign up, you become their dealership for life, car after car.
It goes to show that sometimes, to solve a problem or to find a solution, you just have to take a step back and examine the issue from a fresh perspective.
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