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How Service Departments Can Prevail in Today’s Economy

vehicle behind closed gate
Article Highlights:

  • Focus on specific needs during economic uncertainty.
  • Three out of four car owners prefer dealership service.

It’s no secret 2020 upset many aspects of consumers’ day-to-day lives, leaving a general sense of unease. Between threats of job loss, shutdowns, and the overall feeling of caution, it’s hard for retailers to get consumers out of a timid mindset, especially when it comes to their spending habits.

Many individuals who have lost employment are struggling financially, and expenses like car repairs are likely to move to the back burner when budgeting their finances. Others who have seen loved ones experience these hardships or have felt a general sense of uncertainty throughout the year are also likely looking to bolster their savings accounts. In fact, 53% of customers report saving more money than they normally do these past few months (Cit Bank). Even though car dealerships have traditionally been permitted to keep their service departments open, business has been anything but usual.

Some customers may choose to forgo the premium service of the dealership for the cheaper repair shop across town. After all, there’s a known perception that dealership service is not as affordable, even when costs are comparable.

With that in mind, widespread uncertainty needs to be taken into consideration by service departments to continue to bring customers in for repairs and maintenance. The good news, however, is there are ways dealerships can adapt.

Emphasize Reliability

Service departments are a fundamental pillar of profitability for dealerships, so it’s vital to keep that revenue stream flowing. One approach dealers can take to keep their customers coming back for service is relatively straightforward: highlight reliability.

Communication methods like reminder systems use customized messaging to gain and retain customers through letters, postcards, and email. You can easily take your saved data of recommended and not done work and use these systems to personally follow up with customers and build trust, especially in times of unrest. Dealerships can highlight their differentiators with these reminder systems to instill value in the work they do when compared to independent storefronts. For example, newer vehicles can require specific technical knowledge some outside mechanics might not have, but your technicians are able and willing to complete the repair. Dealership technicians carry the highest level of expertise on the lines of vehicles they’re servicing. They could even spare car owners from future costs by fixing problems accurately the first time. These reminder systems can also alert customers of discounts or lowered rates.

Examine the Costs of Inefficiency

Dealerships need to provide customers the best value for their services compared to competitive stores. One way to achieve this is by leveraging technology to improve and streamline existing processes and workflows to create a better experience for both customers and employees.

For example, you might eliminate the bottleneck in your service department at the cashier’s desk by implementing a simplified payment system. Not only does this cut down on accounting time and cost, but it allows for faster, more secure processing of customer payments.

Another area that some service departments struggle with is managing parts inventory. By using barcode tracking, inventory is updated automatically, and manual errors are significantly reduced. This means dealerships have properly stocked inventory based on customer demands so they are always ready to service the vehicles walking in the door.

Extend Offers

Warranties are typically a way to get customers to return to the dealership for maintenance, and many drivers find dealership service to be superior, even after their warranty has passed. A recent DealerRater survey found three out of four car owners prefer the service of a dealership over third-party technicians. Offering extended warranties through your service department could incentivize car owners to remain customers even during a period of economic uncertainty.

Think Ahead

Whatever path your dealership chooses to take during times of public uncertainty, it must be sustainable and create success for your service department. By emphasizing reliability, examining inefficiencies, and marketing appropriately, your dealership can still capture service work in uncertain times.



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Product Planning, Reynolds and Reynolds

Jeff Adams is a Product Planning manager for Service applications at Reynolds and Reynolds.

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