MORE than half of the average dealership’s gross profit comes from service centre revenues, and yet dealerships, on average, retain just 30% of new car customers for their first major service.
The cause: a wave of market disruptors ganging-up on the traditional service centre.
However, it’s entirely possible that while a rising percentage of a dealership’s service customers may not have bought their car from them, they are living or working close by, and could become service customers if digital techniques are used to attract and engage their attention.
So, here’s a heads-up on 4 of those Market Disruptors, plus 5 Digital Engagement Techniques which dealerships can use to combat those disruptions and win more service revenue.
- With 82% of new car sales financed by Personal Contract Purchase (PCP) agreements, securing the loyalty of these customers through to their first service at the end of Year 1 (or often deep into Year 2) is proving increasingly vital for many dealerships that have been watching the volumes of new car sales – and the profitability of these sales – fall since early 2017. PCPs encourage customers to swap to a new car within three years. As car build and engine quality improves, so servicing requirements have reduced. It’s now common for a new car to have just one service before the customer moves on into the next new car – disrupting traditional servicing routine models.
- Over the next five years, we’ll see the rise of Alternative Fuel Vehicles (AFVs) – first dominated by Plug-in Hybrids (PHEVs), followed by Battery-powered Electric Vehicles (BEVs) – creating further upset for service centres, as vital service revenue linked to oil changes, for example, drains away.
- While AFVs claim a larger slice of the vehicle servicing base, they leave little scope for dealership service intervention. Battery maintenance checks and replacements are likely to be handled directly by the AFV’s manufacturer. That’s another reason why many dealerships are hardly falling over themselves to embrace the electric vehicle revolution.
- All but the largest dealership groups can’t look to used car sales market to help them maintain wafer-thin margins: the ascendancy of the ‘car supermarket’ model is already putting pressure on margins in the relatively profitable used car market – forcing a combination of further consolidation, redoubling of efforts to find operational efficiencies, and increased focus on servicing revenues.
Digital Engagement Opportunities
- As new car buyers approach that first servicing anniversary, they will likely be going onto Google to search for their nearest main dealer-based service centre. You need to make sure when they drop onto your website that you grab and hold their attention. Ensure that your website is optimised for local searches and has content that’s specifically geared to attracting and engaging service customers. Pre-winter servicing packages, for example, need to be promoted on the site at the right time of the year. Lists of typical servicing costs by vehicle type – providing as much transparency as you can on items you might need to replace in those all-important first and second services – is also useful.
- Offer live chat on your website that’s hardwired into your service centre manager’s systems. Managers should know in the morning how many potential service customers exchanged messages with live chat operators overnight. Actionable intelligence must flow back into the dealership if opportunities are not to wither on the ‘e-vine’.
- Can you offer a free shuttle service for customers within 15 miles of your dealership for servicing, or perhaps a reduced cost – or free – courtesy car service for locals? You may choose to incentivise sign-up to these packages by offering vouchers for money off future servicing, half-price MOTs, and other offers designed to persuade the customer to stay with you.
4: It’s also worth thinking about technology and mobile communications solutions, again integrated with your CRM or DMS, to make it easier to book in MOTs and services with you on the go. How about a mobile app for checking customers’ MOT due date with the DVLA and then booking-in that MOT with them? It may even be possible to link this to booking courtesy cars.
5: With appropriate customer data permissions, invest in marketing automation to help send ultra-personalised messages by TXT or email to service customers as they approach servicing anniversaries. Soon it may even be possible, with permission again, to integrate the Onboard Diagnostics (OBD) data of new cars you’ve sold into your CRM platforms, so that the system could send out a message to customers via their channel of choice when the OBD indicates the brake pads are wearing thin or oil change is due.