Drive Service Retention and Be Your Dealer’s Hero

Over the past several years, it has been harder and harder for a dealer to compete with the “fast-lane” facilities popping up on every corner. Dealers are perceived as (1) taking too long to perform the service, (2) being more expensive than and are not as convenient as independent service shops.

What most customers don’t realize is this is not the case in most instances. Dealers now have “fast-lane” (Express Lane) type offerings, generally accept competitor’s coupons and have extended service hours – sometimes, far past the hours of an independent facility.

The question is: how do we educate the customer?

First, we must educate our dealers. Most dealers continue to treat the “fast-lane” customer like they would a warranty claim customer. They don’t let the customer feel the “fast-lane” process. As the dealer’s representative, we must help them to understand the difference. Reminding the dealer that just because it is a “fast-lane” customer, doesn’t mean they can’t make money! Most “fast-lane” facilities have an average customer pay repair order in excess of $65! The dealer must become good at talking the talk of the “fast-lane” mentality. Oftentimes a separate check-in process as well as a pay plan incentive are necessary to get the greatest results with a “fast-lane” customer.

As an agent or an administrator there are products and processes available that can assist you in becoming the dealer’s hero. Here are some examples:

Loyalty programs can assist in driving the service retention within the dealership. One proven version of loyalty program is a Lifetime Powertrain Warranty. This assumes that the administrator has written the contract in a way that assists the dealer in creating a reason for the customer to return to the selling dealer. Some things to look for when offering a Lifetime Powertrain Warranty:

1. Does the administrator provide an email reminder service that reminds the customer about their need to do the maintenance required on their vehicle, along with branding the dealership at the same time?
2. Does the administrator have anything setup to assist the customer in finding out what maintenance service needs to be performed and to remind them that dealership is the best place to service their vehicle?
3. Does the contract “freely” allow a customer to take their vehicle to ANY facility for maintenance or are there parameters that help keep the customer servicing with the selling facility?
4. Is the dealership notified every time that the customer decides to service their vehicle with another facility, giving the dealer the opportunity to call the customer and direct that customer back to their dealership?

We have to remember that once the customer leaves the selling dealer for maintenance service, the chance of them buying a vehicle from the selling dealer drops from 83% to 17% - that is a HUGE swing, making it even more critical that the customer services their vehicle with the selling dealer.

Another program we have found to be a big winner in the service retention area is prepaid maintenance. But, more specifically, a prepaid maintenance “give-away” with an upsell opportunity in the finance department.

The benefits of this type of program are unbelievable.

1. Every customer is provided (in most cases) their first year of oil changes upon purchasing their vehicle. This serves a few different areas of opportunity:
   1. It gives the customer a reason to return to the selling dealer for their maintenance.
   2. If a customer services their vehicle with the selling dealer for the first year, they are more likely to continue servicing with them after the “free” oil changes are gone.
   3. It allows the selling dealer to easily track through the administrator all of the customers that have NOT returned to the selling dealer, allowing the Business Development Center to call and capture those customers (Providing the administrator offers this reporting functionality).
   4. It allows the finance manager the opportunity to talk about something positive and the ability to “extend” the prepaid maintenance program for the entire ownership term at a competitive or reduced price; generally up-selling closer to 50% of the customers to a longer program.

2. If the dealer has chosen to only sell the Prepaid Maintenance Program in the finance department, they still receive some benefits, but as you can imagine, the penetrations are much lower.
   1. Most finance departments maintenance penetrations are between 15-25% if they are not upselling from a “give-away” type program.
   2. Keep in mind that some type of retention is better than none. By offering prepaid maintenance, this will provide at least 15-25% of their customers a reason to return.

3. The dealer can also offer the prepaid maintenance program on the service drive!
   1. Allows the dealer to capture those customers that DIDN’T buy a car from them and now make them a future buyer!
   2. Creates the opportunity to upsell those customers that didn’t take advantage of the upsell to a longer program in the finance office, the second chance to take advantage of the long-term savings available in a prepaid maintenance program.

Every dealership should have some type of program that is geared to bringing the customer back into their service department. Let’s do the math, and you will quickly see why you will be your dealer’s hero.

These numbers are based off an NADA study that showed that 83% of the customers that perform their routine maintenance with the selling dealer will return to them to purchase another vehicle. If a customer ONLY performs their warranty work or nothing at all with the selling dealer, then only 17% will buy their next vehicle from the selling dealer. On national average, only about 23% of the customers service with their selling dealer.

If you could double that with a service retention program, look at the amazing difference in future customer retention:

Over a five year period, the selling dealer would have 1564 MORE customers returning to them to buy a vehicle. The best part – NO ADVERTISING expense is required to sell these vehicles! In addition, the selling dealer has the opportunity to earn profit on the maintenance, plus the other items, like tires, brake pads, windshield wipers and more. This doesn’t include the increased opportunities in the finance office as well!

Now, you have truly become your dealer’s hero!