Even before they make their first appointment, many of today’s customers are already skeptical about servicing their vehicles at a dealership.
That skepticism is significant: dealers are currently experiencing defections to competitors that cost them over $40 billion a year in revenue, according to our industry analysis. Those defections not only reduce customer lifetime value, they also lower the chances of customers repurchasing vehicles at the same dealership.
In addition, dealers are encountering a growing expectation of, and demand for, the high level of personalized service provided by non-automotive retailers such as Amazon, Nordstrom and Apple. When you factor in the recent explosion of aftermarket service providers — whose locations now outnumber dealers by more than 10 to one — it’s easy to see why dealers are worried.
Dealers Can Still Have the Upper Hand
Many of these existing situations can be changed, or their impact significantly reduced, if dealers clearly understand the main factors influencing their customers’ behavior. To that end, we recently performed an Automotive Digital Experience study designed both to identify customer experience gaps and also to provide actionable insights. The report surveyed 1,000 auto consumers and over 100 auto dealers, and the results are crucial to helping dealerships regain their competitive advantage in service and retain more long-term customers.
Service Starts with Sales
Is your dealership experiencing a decline in service revenue? It’s not just your fixed ops department. In our study, two-thirds of customers surveyed said their vehicle-buying experience impacted their decision about returning to the dealer for service. They specifically mentioned the vehicle warranty, their perception of the price paid on the vehicle and the offers received at the time of purchase. So, it’s a two-sided coin: a negative buying experience can deter customers from returning, but dealers also have the opportunity to provide an outstanding first impression and win customers over during the sale — an opportunity aftermarket shops simply don’t have.
Contributing Service Factors
Unsurprisingly, the areas identified as influencers in sales are similar on the service side. When asked to list the top reasons for using an aftermarket provider to service their new vehicle, our survey participants named the following:
1. Convenient location
2. Competitive prices
3. Price options
4. Speed of service
5. No appointment required
In part because of their experiences with companies like Amazon, modern consumers now have specific demands to justify their choice of servicers. As with sales, the factors influencing service decisions include price guarantees, incentives, competitive amenities and quick processes.
While it’s common for dealers to focus primarily on ways to improve their business, this is actually the wrong focus. Questions like “How can our service be more efficient?” or “What will help my advisors become more motivated to sell?” revolve around the dealership, rather than the customer. Instead, dealers should ask, “What parts of the process are most important to my customers?” and “How can I make the entire customer experience at my dealership unbeatable?”
Did you know that customers will drive an average 15 to 17 miles to have their vehicles serviced? This is assuming there’s value for them in doing so, of course. Even if your dealership is a longer drive than the corner lube/oil/filter shop, you still have that 15-17 miles of leeway; however, you’ll have to make the commute worthwhile to your customers.
Fortunately, our survey found two highly effective strategies for sweetening the value proposition: offering customers a free loaner car or shuttle service, and providing enticing waiting room amenities. The latter could include customer-oriented features such as a child-friendly waiting area, free Wi-Fi, small tables with ports for computer users, a shelf of read-and-return books, or even fresh, high-quality coffee and snacks. Extended and weekend hours, especially around major holidays, can also help drive business. Providing consistently clean, easily accessible restrooms also holds a lot of importance to waiting service customers.
Yes, But What About Price?
For many customers, the issue is less about actual dollars and cents than it is about perceived cost vs. received value. Shoppers will often willingly pay more for clearly better quality, as is evidenced by Nordstrom’s continual success. Dealers who highlight ways in which their shop is superior will give consumers added reasons to choose them over the competition.
Pricing transparency is also significant. The new vehicle buyers in our study said the lack of competitive pricing on purchase transactions was the largest influencer in their decision not to return to the dealer for service. Why? Consumers want dealers to either guarantee their prices or provide insight into the prices charged by competitors.
Some other options to consider: dealers could provide a price match guarantee for their maintenance and repair work or perhaps publish the prices of common services and/or local service centers on their websites. This allows consumers to compare pricing before their appointments and avoid sticker shock when they arrive.
Coupons: To Use or Not To Use?
Dealers may have mixed emotions about coupons, as it’s often thought that discounts cheapen their service, or worse, cheapen their image. Won’t coupons simply bring in those who are seeking the lowest price, possibly at the expense of more loyal customers? Not necessarily. However, strategically targeting your ideal customers is key. Intentionally focusing on owners with a history of regular vehicle maintenance, or those with specific vehicles, or even the geographic areas where your most loyal customers live, is a good starting point. Personalization helps, too. Try including hand-signed letters or invitations to visit your shop with direct-mail coupons, and use a variety of offers that consistently correlate with the owner’s particular vehicle lifecycle.
More Price Options, More Approvals
Not only do customers want better pricing strategies overall, they also prefer better pricing options. Customers given several pricing choices and service levels (known as good/better/best pricing) are more likely to take your recommendations — and not just the cheapest one. According to our study, simply providing additional options is enough to encourage more ROs.
Hurry It Up a Bit
Nearly half of survey responders identified speed of service as a top reason for choosing aftermarket service centers. But utilizing mobile technology helps dealers reduce or eliminate this lag time by implementing mobile check-ins and checkouts. In fact, when we analyzed dealers who provided mobile checkouts, we discovered that customers using that method rather than the traditional in-store process were much more likely to return. An added bonus? Our research found that mobile-payment customers had a 38-percent higher repair order amount, indicating a consumer preference for this approach with larger ticket items.
In addition, dealers can help speed up the service process by ensuring customers are greeted immediately and offered the options of text and email notifications. Not only will these small, easy changes help expedite the appointment, but they’ll also improve communication all around.
No Appointment Needed
Adding Express Service or walk-in appointment options may sound challenging, but according to our findings, it’s a challenge well worth taking on. Like the use of coupons, however, strategy plays a key role here. Even before the new options are implemented, dealers can make sure they’re announced and promoted on the website, through marketing campaigns, via signage in the service lane and showroom and anywhere else possible. Letting customers know about changes you’re making for their convenience is always a smart move — plus, it helps eliminate additional reasons for choosing the aftermarket shops.
Knowing why customers choose other service providers is the crucial first step to understanding how you can deliver the experience they want. That way, you can work to maintain or recapture their business and strengthen their loyalty. By using these insights to drive service, you can turn leverage more opportunities to maximize profitability. Doug Van Sach