How to Grow Service Revenue - AutoSuccessOnline

How to Grow Service Revenue

Creating processes and marketing programs that focus on the relationship, rather than the here and now, is a critical part of any service growth plan. 

To grow profits in today’s automotive environment, many auto dealers are focusing on growing service department revenue. Achieving this goal presents a number of challenges, including:

• Declining new vehicle sales volumes
NADA predicts 2018 new-vehicle sales of 16.7 million units, down 2.3 percent from 2017. That’s not a huge decline, but new vehicle sales also face stiff competition from a glut of off-lease and used vehicles. Fewer new car sales means less future warranty work.

• Higher quality vehicles
Available work per unit is declining as quality improves, service intervals lengthen and work shifts from repair to replace. Dealers can no longer count on substantial warranty work and in-warranty customer pay business from new vehicle sales as a way to feed steady business to their service departments.

• Increased Competition
Independent aftermarket chains are entering a recession. Due to the recent spike in new vehicle sales, the volume of vehicles older than seven years and still in operation is declining.

This decline will continue until 2022, prompting chains to expand service offerings and launch aggressive marketing campaigns. Their prime target is customers with vehicles from four to six years old; the same customers that dealers like to target.

Dealers cannot afford to lose market share to independent chains. To maintain yield in this environment, dealers need to capture a greater percentage of their market service potential.

• Shifting Customer Expectations
Today’s consumers expect a transparent and convenience-driven experience, which traditional dealer processes and systems are ill-equipped to deliver.

Your customers are baffled that they can track a pizza being made and delivered to them, but must call your dealership several times to check on the status of their car, then wait to pay at a cashier.

• Lack of Service Growth Strategy
Growing service revenue doesn’t just happen. Growth requires the creation, execution and management of a strategic plan. Many dealers don’t have a strategic plan, unless you believe that doing more of the same counts as a plan.

Opportunities For Growth
What was it someone once said about doing the same thing over and over again, but expecting different results?

The good news is, it’s not all bad news. Our industry is exiting a period of unprecedented tailwinds that have created exciting opportunities for growth.

Since 2012, the combination of increased new vehicle sales and a 13-percent reduction in the number of auto dealerships has created the highest units-in-operation (UIO) to dealer ratio in history.

To take advantage of this opportunity, you need to accomplish two things:

  1. Increase service yield from current customers/UIO
  2. Increase market share

Do you know what your dealership’s current revenue-per-UIO is? Do you know what you have to do to increase market share?

If you’re not sure, the first thing you should do is ditch the service absorption metric. I’ve written before how I believe that service absorption is a dangerous number and is an outdated metric for modern times.

One major problem with this metric is that you can have 100-percent service absorption, yet still be losing market share. You can’t manage what you can’t measure.

Revenue per UIO allows you to measure both service yield and market share, so you can establish a baseline from which to grow.

How to Increase Service Yield
Most auto dealerships capture less than half the work needed on vehicles that enter their service lanes. To increase service yield, focus on providing complete vehicle care to your current customers.

To do this you must identify, communicate and capture all service needs. This may require changes to your write-up, multi-point inspection (MPI) and service recommendation processes.

Technologies such as mobile tablets can help, but incentives may need to be put in place so advisors and techs are encouraged to spend the appropriate amount of time with every customer. Additionally, data must be leveraged so your staff can easily identify recommended repairs.

How to Increase Market Share
Most dealers’ service marketing efforts utilize mail and email channels to remind customers about factory scheduled maintenance and select seasonal campaigns. Many conquest campaigns rely on “oil change” offers to bring new customers in.

This marketing strategy performs significantly below potential impact. To drive more responses, an integrated marketing campaign must replace the “fire and forget” mentality.

Omni-channel marketing leverages the following channels and delivers highly relevant offers to each customer:

  • Direct Mail
  • Email
  • Facebook/ Instagram
  • Google/SEO
  • Service PPC
  • Display ads
  • IP-based retargeting

With every customer interaction, data is collected and used to create a message or offer that drives the customer to the next stage. The customer is guided through needs notification to scheduling, to the appointment, to in-service notifications and post-service follow up.

This marketing strategy is designed to build relationships, instead of a one-and-done service experience. Creating processes and marketing programs that focus on the relationship, rather than the here and now, is a critical part of any service growth plan.

You May Also Like

Protect Your Hands, Save the Planet! 

Magid introduces the flagship product in its sustainable product line – the GP102 General Purpose Work Glove.

Magid flagship product -sustainable product line – the GP102 General Purpose Work Glove.

Magid has announced the company is switching away from the traditional process of manufacturing micro-foam nitrile coated gloves, which wastes an enormous amount of drinkable water. 

Just one 40-foot container of traditional micro-foam nitrile coating uses an entire year’s worth of drinking water for 688 people, the company reported.

Topology and Your Scan Tool

Topology, the term used to describe the design, layout and behavior of a serial databus configuration, influences how you access modules with your scan tool.

Topology and Your Scan Tool
The Evolution of Impact Wrench Technology

The hardest-working tool in the automotive industry has seen its share of updates and evolutions.

The Evolution of Impact Wrench Technology
Unlocking Service Drive Revenue: The Critical Role of Technician Inspections

The true potential of service consulting lies in recognizing the nuanced art of quality inspections and leveraging it to drive success for both advisors and technicians.

Unlocking Service Drive Revenue: The Critical Role of Technician Inspections
Addressing the Technician Shortage with Innovative Training Solutions

Drawing on extensive industry experience, the team at DealerPRO Training has developed a program that exposes technicians to future career opportunities in fixed operations as well as executive positions.

DealerPRO training

Other Posts

Dealership GMs Need Fewer Worries; Start Here: Recon and Appraisal Integrity

How do you manage margin compression? With a focus on predictable outcomes.

Dealership GMs Need Fewer Worries; Start Here: Recon and Appraisal Integrity
Enhancing Accessory Offerings and Car Care Products in Service Centers

By expanding product offerings, identifying top-selling items and leveraging private-label products, dealerships can create value for customers, drive revenue growth and strengthen their competitive position in the automotive industry.

Enhancing Accessory Offerings and Car Care Products in Service Centers
Rislone’s DEF Crystal Clean Helps Get Customers Out of Limp Mode

New product removes damaging crystals from SCR systems and clears P20EE codes.

New Rislone DEF Crystal Clean™ Diesel DEF & SCR Emissions System Cleaner scrubs away crystal contaminants from the selective catalytic reduction (SCR) systems of diesel cars, trucks, and SUVs to cost-effectively restore power and performance.
Ford Dealers, Ford Fund Invest $2 Million To Train Future Auto Techs

The Ford Auto Tech Scholarship will grant 400 need-based awards to current or future students enrolled in post-secondary auto programs.

Ford dealers and Ford Fund, the philanthropic arm of Ford Motor Company, are investing $2 million in scholarship funding in 10 regions to help students pursue careers as automotive technicians.