Tire Replacement – Customer Retention and Revenue

“90% of dealership service customers that buy tires elsewhere never return to the dealership for service.”  Americans are keeping their cars longer than ever before, often for 10+ years. Tires typically must be replaced after six years (or more often, depending on road hazards and other driving conditions). In fact, tire replacement represents a $38 billion revenue stream, which is expected to grow even larger. Additionally, according to J.D. Power, vehicle owners are likely to purchase the same tire brand that was originally installed on their new vehicle.  This presents new vehicle dealerships the opportunity to significantly increase services department revenues through tire-related business. According to Scott Mueller, CEO of Dealer Tire (a distributor of tires to new vehicle dealerships) “Vehicles that were sold in the last five years are going to need tires in the next 2-3 years, which means that there is a real upside that has not been reached.” Dealership retail tire marketing share is currently 8.5%, up from only 1% in 2000. While this is significant, there is a lot of room for growth, which should make it the focus of dealerships’ sales efforts. The challenge is that consumers typically do not think of their dealerships when they need unplanned repairs, such as tire maintenance or replacement. In fact, 77% of routine service maintenance is performed outside of new car dealerships. New car dealerships must compete with these aftermarket competitors, who aggressively promote convenience and low price. New dealerships have an advantage because of their established relationship with customers, and because their technicians tend to be better trained and knowledgeable about the vehicles they sell....

Keeping Customers Happy is the Bottom Line

  Make new friends, but keep the old…  This is a ditty that many of us remember from our childhoods.  However, the idea is especially true for car dealerships when it comes to keeping existing customer happy … and coming back. The challenge is maintaining a good relationship with existing customers until they need their next new vehicle.  This not only improves sales, but adds to a dealership’s income stream, even during times of economic downturns. However, extended maintenance intervals and higher customer expectations, along with stiff competition from aftermarket vendors make it difficult to maintain customer loyalty.  In fact it is estimated that 77% of routine maintenance is performed outside of car dealerships. As automobiles age, customers become lost to the dealership when they need unplanned repairs and replacements, including tires, brakes and batteries. Aftermarket vendors tend to compete aggressively on price, convenience and expanded services, including multi-point inspections.  Some also tout their certified technicians. All of these factors combine to make it difficult to keep the loyalty of existing customers. How Dealerships can Compete Customers must be educated on the fact that technicians at dealerships specialize in the vehicles sold by the dealership. They are more intimately involved with the vehicles they service, and understand their products better than most aftermarket technicians, who must have a cursory understanding of a wide range of makes and models.  An important first step is to acquaint all new vehicle owners with the service department, including all of the products and services it offers customers to protect one of their most significant investments. Drive-Sure Helps Dealerships Compete The Drive-Sure plan engages...

Have Oil Changes Become a Commodity?

In the past month or so, I’ve heard a lot of Service Managers and Fixed Operations Directors express that they’ve resigned to the notion that prices dictated by their manufacturers commoditize their routine services – especially oil changes. In other words, their hands are tied – they must now compete on price. To their point, it seems like oil change coupons and promotions are everywhere. I Googled “Oil Change Coupon” and found oil change services starting at $18.95, $10 Off, and even an oil change and tire rotation for $29.95.  Does this suggest that oil changes are indeed a commodity? In the truest sense, a product is a commodity when purchase decisions are made on price alone. As defined by Webster’s: Commoditize to render (a good or service) widely available and interchangeable with one provided by another company Given this definition, oil changes fit the 1st part – they are widely available.  Yet, I don’t quite buy into the notion that oil changes are completely interchangeable from one service provider to another.  Here is why: 188,000,000 oil changes were performed by quick lubes last year – their average sell price for an oil change was over $38. (That’s $20 more than many manufacturer / online promos.) Thus, consumers are not buying on price alone. In an independent study performed by the Quick Lube Industry, consumers indicated that they selected Quick Lubes (in order of importance) for 1) Convenience, 2) Fast Service, and 3) Reputation.  The same study indicated that consumers selected New Car Dealerships (in order of importance) for 1) Trust and 2) Reputation. Thus, consumers are not buying...

What Are Your Customers’ First Impressions of Your Dealership?

As Will Rogers said, “You never get a second chance to make a first impression.” Creating favorable customer impressions may even seem easy when you can show off renovated waiting areas and state-of-the-art amenities. But, let’s not fool ourselves into thinking that multimillion dollar investments are the only way to inspire five-star reviews – or that such investments will guarantee them. The reality is that everything and everyone that your customers come in contact with makes impressions on them. Whether you have a brand new state-of the-art facility or a 50 year old pole barn, it is in your best interest to self-examine whether your facility and people represent the image you desire. Let’s examine some facility and employee checks that may – or may not – reflect the ideal impression: Facility Check Common sense tells us that your dealership should be sparkling clean. But, that goes beyond nightly cleaning and ongoing maintenance. If the coffee counter has spills on it at 9 am, the trash can is overflowing at 3 pm and the bathroom is out of toilet paper at 5 pm, it doesn’t matter how clean your dealership was when you opened your doors at 7 am. If your customers see any or all of these situations, you are not likely to elicit the customer experience or perception of your dealership that you desire. Even worse, your customers may assume that the work performed on their vehicles was just as sloppy. To prevent such situations, we recommend keeping cleaning logs within each area that your customers will see. But, don’t expect the log alone to accomplish anything....

Customer Feedback Should Drive Customer Experience

How are you using Customer Satisfaction Index (CSI) survey results? If you are like most dealerships, you are simply tracking CSI results. Each month you hope to stay “in the green” or above regional and national levels so that you can cash in on manufacturer incentives. Heck, you may even penalize or fire employees that don’t meet these levels. Unfortunately, you are not alone…  Somewhere along the line, the original intent of CSI surveys – to drive customer experience – has been lost. We still believe that the CSI surveys should be used to drive customer experience.  In other words, you should actively gather customer feedback so you can adjust your business model and practices to better meet your customers’ needs.  Here are our tips to achieve this: Gather the right customer feedback Use negative feedback to determine what caused customer dissatisfaction Use positive feedback to praise who exceeded customer expectations Adjust business practices to fix issues and encourage more positive results Gather The Right Customer Feedback There has been a lot of talk recently regarding whether online reviews or manufacturer surveys are better.  The reality is that ALL customer feedback – in any form – is valuable when used correctly.  The great news is that consumers now have lots of ways to express their service experience: social media status updates, website comments, car enthusiast forums, blog posts, Business Development Center (BDC) follow-up calls, email, and even manufacturer CSI surveys.  Make certain that you are gathering this customer feedback.  We recommend setting up Google Alerts to be immediately notified anytime your dealership name or employees are mentioned online.  This...

Increase Customer Retention By 10-12% By Collecting And Communicating With Email

With more service competition than ever before, you must communicate regularly to remain your customers’ preferred service provider.  Staying connected via email gives you regular opportunities to: remind your customers of your top-notch service; the maintenance needs of their car; share information regarding recalls; and stay top-of-mind when it comes to service providers.  Train your service advisors to collect and confirm your customers’ email addresses at each visit.  Here’s why: Email is preferred In the digital age, email communication is ideal.  With most consumers maxed out on time spent with work, hobbies or kids’ activities, they won’t be home to receive phone calls or be likely to open snail mail that looks like an advertisement.  Conversely, when customers receive an email from your dealership with an intriguing subject line such as, “A Friendly Reminder from Acme Dealership for Your CX-7,” they can immediately look at their digitized calendar to find time for a service visit.  If they require an appointment, they have your contact info right in front of them.  With a simple email, you provide a valuable reminder and assist your customers in taking the best care of their vehicle. Email works Krex, Inc. statistics show that when customers provide their email address to the dealership – and are subsequently reminded of their next maintenance needs via email – there is a 10-12% uptick in the round of service visits that follow.  This percentage correlates to real service revenue for your dealership; money that may have likely gone to an aftermarket competitor had the dealership not simply collected email addresses and sent maintenance reminders. Email is easy Once...