Dealership service departments are busy, due in large part to market conditions that encourage people to hang onto their vehicles for longer. But keeping bays full does not necessarily mean that long-term service retention goals are being met.
Prior to the last two years, dealership service departments have benefited from a steady stream of new vehicles sales to help boost service retention rates. In fact, year-over-year sales growth more than made up for vehicle owners who became inactive after the three-year mark.
As front-end margins return to normal, service departments should brace for repercussions from the last two years. First, there will be fewer new vehicle owners to market to because of inventory shortages. Second, more people are working from home and driving less, thus extending time between service intervals. Third, aftermarket repair shops and competitive like-make dealers are aggressively marketing to used vehicle owners as fixed ops becomes a priority.
These trends threaten to curb dealerships’ service retention rates and ability to manage the customer lifecycle through the next sale. To proactively address this challenge, dealers may want to expand their service marketing efforts to target new audiences.
Most owner retention programs (ORP) target the same list of customers, over and over. As a result, dealers are missing opportunities to build loyalty with the following audiences.
Most ORP-sponsored products stop marketing efforts to models in the seven- to 10-year range. While it’s true that people with older vehicles are more likely to frequent aftermarket shops for routine maintenance, for bigger jobs they can certainly be enticed into dealerships with strong value propositions. Don’t be afraid to target models over seven years old with messaging that promotes technician expertise, OEM parts and loaner vehicles. The volume of ROs generated won’t be as high as with other campaigns, but the customer pay revenue they yield will be much greater.
Most ORPs have reactivation campaigns targeting customers who have not been in within a certain time frame, such as 12 months. By expanding the definition of “inactive,” dealerships can generate even more appointments. First, identify customers as far back as four years. Verify contact information and ownership status, then use data and predictive analytics to estimate which services their vehicles need. The key to success with this strategy is to customize offers based on specific needs. Additionally, most ORP products don’t cover conquest, meaning the people who have recently moved into your primary market area (PMA). You’ll need a digital marketing partner to curate accurate lists, but these groups are worth targeting as well.
Dealers have been selling more used, off-brand vehicles than ever before. Don’t assume these vehicle owners will take their vehicles elsewhere for service. Target these customers with messages that promote your technicians’ experience working on a variety of brands.
Sales to Service Conversion
Most ORPs have communications that encourage new customers to come in for their first service appointment. However, a standard email or postcard may not be enough. Dealers should be aggressive with these campaigns, as every first service appointment is an opportunity to create a customer for life. In addition to using email and direct mail, I recommend outreach with live phone calls after 90 days, along with an enticing offer.
Don’t assume that customers who purchase pre-paid maintenance or extended service contracts will remember to make appointments. Some people forget what their contract covers. Create ORP campaigns to remind them. Use vehicle data to create targeted messages, such as “Your pre-paid maintenance contract covers oil changes. According to our records, you’re due for an oil change now.”
To prevent a service slowdown, dealers need to expand service marketing efforts beyond the typical audience they reach with their ORP. By expanding target audiences and using an omnichannel approach, dealers will ensure a steady stream of service customers as market conditions normalize.