When was the last time you took a step back and looked at how well your service department functions from end to end? Does it operate like a well-oiled machine of transparency and technology, or is it riddled with inefficiencies that sap productivity and profitability while damaging the customer experience?
Here’s an even better question: If you aren’t marketing your service department properly, does it even make a difference?
OK, that might be extreme. Of course it matters to your day-to-day performance how well your service department runs. But the truth is, the competitive landscape for your service department is complex – and it’s crowded with businesses trying to take your customers.
If you don’t have an effective fixed ops marketing strategy for your service center, you’re going to struggle to create loyal service customers and bring in profitable work long term.
- 50 percent of new and used car buyers do not return for customer-pay work after one year, while 80 percent stop coming back after two years.1
- Dealerships capture less than 45 percent of customer pay RO profit opportunities, meaning they’re missing the highest service profit margins.2, 3
- Though the ideal absorption rate is 100 percent, the average dealership’s is only 57 percent.4
These numbers reflect dealership service departments’ struggle to implement three specific areas of fixed ops marketing: positioning, budgeting, and strategizing.
Let’s review what it means to execute these areas properly, as well as the difference fixed ops marketing done right will ultimately make for your service department.
Positioning your dealership favorably in the mind of your customer comes down to understanding what’s important to them and then being able to effectively communicate why they should come to you.
But, what do customers want? We actually have the answer to that. Ranked in order, customer’s top considerations when choosing a business for vehicle service are:
- Competitive pricing
- Online reputation
- Speed of service/repair work
- Alternative transportation options offered
Put simply, customers are looking for something reasonably priced and convenient. However, don’t miss this critical point: 72 percent of consumers surveyed want to schedule their visit online, while over 50 percent of customers want to receive communications related to recommended maintenance and repairs.5
Taken together, you have everything you need here to formulate a marketing strategy that outshines your independent and franchise competition. Consider:
- You’re competitively priced and offer the specialized parts, knowledge, and training to make your customers’ vehicles run the best.
- You can offer alternative transportation options, pickup and drop-off¬ flexibility, and other benefits that most independent shops simply can’t.
The problem is not that you can’t compete on the merits – it’s that you’re not positioning yourself as the superior option.
It’s no secret that fixed ops marketing budgets are an afterthought compared to the amount of money spent on marketing new and used vehicles. This is bizarre if one actually stops to think about it, considering it’s the service department that often functions as the financial backbone of the business.
Even more eye opening: Marketing to previous and current customers is five times cheaper than getting new ones. Remember, going on to service the vehicles your customers buy is the way to build a loyal customer base in a dealership. So, why are fixed ops budgets getting shortchanged?
If only 9 percent of customers who defect from servicing their vehicle with a dealership return to buy another vehicle,6 then why does the average dealership only give fixed ops 5–15 percent of its total marketing budget to maintain customer relationships?7, 8
If the average service drive is only at 86 percent capacity,9 then what could reviewing your investment in fixed ops marketing do to fill your bays?
Here are some points to consider when addressing advertising budget for your service department:
- Marketing requires both long-term and short-term adjustments, so running a marketing strategy is a full-time gig. Does your business have a designated marketing manager?
- Each marketing medium is different. Are you an expert on the demographics, vehicle registrations, and ideal communication styles of your audience? Do you know where they spend their time and what they respond to?
- The best return comes from a multichannel approach to target different shoppers wherever they may be in the buying process. What is (or can be) available in your ideal budget?
There are two components to forming a comprehensive marketing strategy, especially in your service department: proactive marketing and reactive marketing.
Proactive marketing, including techniques such as email and direct mail, remarketing ads, and some social media ads, has your dealership making the first move. The goal of proactive marketing is to pull the customer into your store to get work done they hadn’t previously considered – before they search or convert.
Reactive marketing, as the name suggests, is the opposite: It’s a reaction to a customer’s search for service. Reactive marketing includes search engine management and optimization (SEM and SEO), as well as your website.
Any functional marketing strategy needs a healthy mix of these two concepts to inspire customer loyalty, recapture opportunities after the first appointment, generate web traffic, and improve search engine rankings for better exposure.
Just throwing out random one-off specials or the occasional discount on oil changes doesn’t cut it when it comes to a long-term marketing strategy for your service department.
The financial backbone of your dealership deserves better. Look at formulating a strategy that synthesizes proactive and reactive marketing to create a constant flow of leads who will eventually become loyal customers for the long-term.
A Multi-Point Marketing Inspection in Service
In many ways, your service department is your dealership’s most dependable asset, yet when it comes to marketing, it’s too often an afterthought.
Use the principles outlined here and take the time to give your service department a true multi-point marketing inspection. There are always areas of improvement to be found, and nothing but good can come – to your dealership and your customers – from making those improvements.
This article is sponsored by Naked Lime.
1, 7 Google
2 Grandview Research
3, 4, 8 NADA
5 Reynolds Consumer Study
6 Automotive Aftermarket Suppliers Association (AASA)
9 Auto Care Association