By Jennifer Falada, Director of Insurance Operations Field Services for Ally Financial,
and Mike Pleshakov, Director of Fixed Operations Consulting for Ally Financial
Did you know that, according to Cox Automotive, only 30% of customer pay repairs are performed at a franchised dealer, and of that 30%, only half return to the selling dealer?
Too often, after the customer signs their paperwork and gets the keys to their new car, maintenance and repairs are the last thing on a customer’s mind. It is your job to build a relationship, educating them when and where they should have their maintenance and repairs performed — which is at your dealership. As we all know, sales sells the first vehicle, and service sells every vehicle thereafter.
Here are three steps to make your fixed ops department and customer relationships more successful:
Step 1: Shift from Being “Car-Focused” to “Customer-Focused”
When we work with service departments, we always ask “what business are you in?” The answer we get too many times is “the car business.” We want to flip this mindset and have service recognize they’re in the customer business.
Ask yourself: how much training does your sales team receive to sharpen their focus on customer service? Then ask the same question about your service team, which has more customer contact than the sales team. The answer is probably “not as much.”
In reality, the sale is just the beginning of your customer relationship. Over the lifetime of their car, your customer may need dozens of service appointments. Customer retention is especially important near the end of the warranty period, when customers start defecting at higher rates.
Step 2: Provide an Exceptional Customer Experience at Every Service Appointment
When your customer arrives at the dealership for their first appointment, do they know where to go? Are they being greeted?
Once again, these seem like basic questions, but we see all too frequently that customers arrive and stand idly in the drive not knowing what to do next. Your customer skills need to be as sharp in the service lane as they are on the sales floor.
One oft-overlooked consideration is presenting the customer with the right menu of repair and maintenance options. According to J.D. Power, two-thirds of customers weren’t asked to purchase additional services, but of the third remaining who were asked, the closing ratio was 43%.
Once your customers purchase a service, you must ensure exceptional customer experience throughout the entire process. Communicate in the way your customer has requested, whether it is phone, text or email. Make sure your team is following up: if an update is promised at 10 a.m., that communication needs to happen by 10 a.m. Provide great customer service every time, because research from Xtime indicates 94% of customers are willing to pay more for a better experience.
Step 3: Focus on the Big Picture
Once you take these first two steps, you should ensure you have a process in place for tracking progress and applying accountability. Are you tracking the right metrics? Do you know what your fixed absorption is (calculated by dividing the fixed operations gross profit by the total dealership expenses)? Do your service advisors know what their goals are regarding hours per RO, ELR and sales? Is your service management team communicating these expectations and holding advisors accountable for results?
Finally, be sure to retain dollars collected from factory warranty repairs by being compliant with your manufacturer’s policy and procedures. One of the costliest mistakes your dealership can make is failing a manufacturer’s audit — which falls squarely on the fixed ops department. In the current industry climate, it’s not a question of if, but when you will get audited. Manufacturers conduct these audits to make sure dealerships are handling warranty claims in accordance with their guidelines, so you should understand your exposure, how compliant you are and ensure you have a defined process for handling these audits. Consider consulting with an outside trainer who has experience with audits.
Your fixed ops department should be a reliable engine of revenue for your dealership. Your salespeople might hand out the keys to new cars, but it is your fixed ops department that holds the keys to long-term customer relationships.