Management Workshop, News

MANY people already are challenging the way the dealership functions in different areas; but for everyone in our industry to be successful, we all need to look to do things better – from major changes in the tech and IT space to more subtle changes in how we look at dealership operations. 

Often, these subtle changes in perspective and the actions that follow can have the biggest impact. 

This is what we see in the dealerships and businesses which are always at the forefront of the industry. These businesses are continually challenging themselves and their teams to be the best they can and to look for better ways to be successful.

They are relentless.

In this first article, we look at service retention and how we can improve it.

Rohan Meyer

Ask yourself these questions about your service customers:

  • How many of my new vehicle customers came back for their first service?
  • How many of my new vehicle customers came back for their second or third service? 
  • How many of my new vehicle customers came back for the service required after their warranty expired?

Every dealer, general manager and service manager should know the answer to this question. It should be top-of-mind. If you do not know this answer straight away, then you are not measuring it; and you have to ask yourself whether your service retention is what it could be.

Both fortunately (and also unfortunately) we have a service department whose volume is usually based on sales at the front end of the business. The size of the throughput and labour sales is often loosely based around this reality.

However, this means we aren’t focusing on our real opportunity in the business – how much throughput and business could we really be putting through our workshop. It is identifying this lost opportunity that we should be focusing on.

There are a range of activities you can implement to turn service into a more proactive environment with a larger revenue base. We outline three here:

1. Know Your Numbers

There is a famous saying: “You cannot manage what you cannot measure”. Service retention is no different. If we don’t calculate what our various service retention numbers are we cannot manage it and put strategies in place to improve it.

Calculate monthly what your service retention is. Not just one number, but by year purchased. Understand where you are and compare it to where you want to be. Then you can put strategies in place to realise the opportunity.

 

2. Know Your Customers – don’t tick the box

As an industry, we have wonderful data we can utilise. We know who our customers are for service – it comes from the sale of the new and used vehicles. As a result we have their contact details and know when they should be servicing.

Conversely, we therefore also know who is and isn’t coming in for a service. Move beyond a “tick the box” approach to customer retention in service. 

By this, we mean don’t just send the service reminder or lapsed customer notes and move on – talk to the customers and find out why they aren’t coming back. This action will lead on to the third action for you to consider.


3. Be Proactive with “at risk” customers

As our second activity illustrates, we know the customers who should be staying in contact with us until they sell or move on to another provider. We should not regard them as lost if they haven’t responded after a reminder or lapsed notice. 

They may not be lost yet and should be classified as “at risk”. We may still have the opportunity to retain their business. If we don’t contact them at a personal level we will lose them. If we do contact them we may keep them in our service workshop.

Sure some people have moved residence or sold their car, but the others will go elsewhere for some reason unless we find a way to keep them. And most people who go elsewhere for their service for a particular vehicle, don’t bring that vehicle back to us for the following service.

In many businesses, Service Retention remains a reactive or tick-the-box exercise. But going through the motions risks the loss of serious revenue to the enterprise because there is more revenue to be made throughout the dealership, not just for service.

We encourage dealership management to set aside a specific time to study this issue:

  • Question the current methods in place to handle the retention process with customers
  • Look at what all your data is telling you about improving the processes
  • Become even more proactive with customers in the service retention space. 

Challenge yourself and your team – can we do it better? There is nothing to lose, only business to gain.

They are your customers – try to keep them as long as possible, not just until the warranty period ends.

By Rohan Meyer

Manheim
PitcherPartners
Schmick