Are You Prepared to Lose Profits in Your Sales Department?
- Make sure your service drive can cover the loss in vehicle sales margins.
- How to find and capture potential income in service.
Change in the retail sales environment is fast and formidable. The margins dealerships see in new car sales are slim and continue to shrink. Transparency in used car pricing and financial regulations tilts the scale opposite your favor. The dollar amounts keep getting smaller and smaller in your front end. Where do you turn to make up for it?
Your service drive is a consistent source of traffic and income, but there is always the potential for more. Potential income is the revenue you didn’t get from missed opportunities. It should be your top focus when working to improve your service performance. To find the potential income hidden in your service department, ask yourself these questions:
- Do we sell additional services?
- Do we follow-up after a service customer’s visit?
- Do we actively pursue customers to keep them coming back?
If you answered no to any of these questions, you have potential income in your service drive!
If all were answered yes, let’s take it a step further.
Do we sell additional services? What are you selling? It is much easier to sell another oil change or windshield wipers. But those don’t result in a lot of profit. How well can you sell recommended work like new tires, brakes, or batteries?
Do we follow-up after a service customer’s visit? Are you just saying thank you, or are you offering to schedule their next appointment for an oil change or a recommended service they declined? Are you getting any feedback? What do you do with the feedback? How do you get them back in the door?
Do we actively pursue customers to keep them coming back? How often do you send specials or offers? Who are you pursuing? It’s not about how many customers you keep satisfied, it’s about how many satisfied customers you keep. Make sure you’re sending the right offers to the right customers for better retention. Follow up!
Now that you have some better ideas on where your potential income may lie, here are 4 things you can do to capture it.
- Walk around the car with the customer. This helps set proper expectations, ensures you get a signature, allows you to quickly point something out for an upsell, verify prior damage, and lets the customer feel like you care. DO NOT leave the customer at the service desk to wonder why you’re looking around their car.
- Let the customer know all the needed work you find. Even if all you do is notify the customer, it gives them a chance to ask for it to be done. It also continues to work toward earning the customer’s trust.
- Make sure to document all opportunities – not just the ones the customer agrees to fix. This will help you in future follow-ups, increases your information for potential problem diagnostics, and adds value to the customer.
- Follow up. Send reminders on declined services, recommended maintenance work, upcoming or missed appointments, and relevant services and offerings. The more specific you are, the better.
The average fixed operations of a dealership accounts for over 60% of total net profits. Make sure your service drive is utilized to its full potential. It’s a lot easier said than done. Many dealers realize what they need to do, but just don’t know how to go about doing it. When implementing a change, it’s important to set proper measures of success – too high and you’ll never see a difference, too low and you’ll miss areas for improvement.
When you realize you’re stuck, don’t stay in the mud. Sometimes all it takes is an industry expert to come in with a fresh and relevant perspective. The Reynolds Consulting Services team has an average of 17 years of dealership experience prior to their tenure with Reynolds. They provide custom consulting; employing a combination of process analysis and changes, training, and planning. Learn more about how they can help at reyrey.com/consulting.