Service: A Dealer's Tool for Survival

Parts and service departments have long been profit generators for dealerships. In the best of cases they have even covered all or most of the fixed expenses of the entire dealership operation. The dramatic decline in new vehicle sales, however, has added even more pressure on parts and service to deliver increased dealership revenue. Consumers are keeping their vehicles longer than ever before, resulting in the potential for more customer-pay service work. To fully benefit, dealers must ensure they capture the opportunity available, and increase the efficiency, productivity, and profitability of their service business. There are proven ways manufacturers can help them do just that.

The key for manufacturers is to ensure that dealers have the tools and information they need to take advantage of these market conditions. Without fully understanding the current performance of retail parts and service operations and the opportunity available, it's difficult to succeed.

Information is king

First, you need to know where your dealership stands with potential customers and numerous competitors. Not an easy task. Having metrics that chart success and progress made are crucial to understanding if efforts are properly aimed to maximize sales. Dealers can also increase revenue by utilizing data that allows them to better target potential customers with appropriate offers.

For example, if a dealer has direct access to local customers who have not recently visited a brand dealer for service, marketing efforts can be targeted and fruitful. Also, the customer relationship with the dealer begins with the vehicle sale. So having information to grow, maintain, or improve the relationship of the dealer's own customer base is vital. If the customer appears to be wandering, contacting him or her quickly will help the selling dealer revitalize or save the connection.

Our automotive benchmark analysis shows that once a customer leaves the original selling dealer for service, the likelihood to repurchase a new vehicle from that dealer significantly diminishes, emphasizing even more the need to effectively manage your customers. By leveraging customer sales and service history information, dealerships can effectively create customized and relevant marketing efforts that in turn will provide improved ROIs.

The survival kit

A successful dealer survival toolkit will include the following essential components:

• An accurate view of potential customers and competitors in the market or region
• Informative data to target customers with appropriate and timely marketing offers

While dealers may not currently have the resources for in-depth market analysis on an individual basis, cost-efficient information is available for OEMs and dealers wishing to ensure success by market or region. For more information on these and other tools to ensure dealer profitability and OEM success, contact outlook@urbanscience.com.