Last year, dealership service sales were estimated to reach $49.5 billion in the United States alone. For dealerships focused on their business development (and even those who aren’t), stats like that are extremely promising – and point to a much larger opportunity.
It’s almost too easy to assume new vehicle sales would be the main source for business development. After all, the revenue off a new vehicle will always be much higher than that of say a typical repair order. But such a narrow focus on one source of business growth can leave your dealership stalled out – ignoring the potential profit center within your service department.
Bonus: A whopping 46% of service customers plan to buy their next vehicle from the same dealership servicing their existing car. That’s an opportunity you don’t want to waste.
Refocusing Your Business Development
Your service department offers a unique opportunity for business development – unlocking heightened revenue and sales growth. And who doesn’t want that?
Prepare for the 5 make-or-break moments that can cause service customers to start going elsewhere.
But first things first, setting your benchmarks.
A couple of things you might want to consider when taking stock of your current metrics and future goals include:
- How much revenue is your service department currently bringing in? What percentage of your total revenue does this make up?
- How does that compare to your competitors or industry standards?
- How many repair orders make up that revenue number?
- How many sales are coming from repeat customers? If the number is low, why is it low?
- What are your most profitable services? In number of sales and revenue per sale?
Answering these questions will give you a good idea of where your service department currently stands and where it can be improved. Plus, you’ll get a good idea of specific services that will lead to the most profitable growth in the future.
Tactics for Business Development
Business development doesn’t just happen. These four business development tactics have helped drive growth for dealerships and businesses before you, and could be your key to new sales, improved revenue, and exponential expansion.
- Invest in Your Resources
Having the right team is crucial to your business development success, a key reason why so many dealerships have invested in a business development center (BDC). These centers focus on a variety of sales and business development goals, and can act as a key driver of service business – bringing in new appointments and getting referrals. Which lets your service department focus on what they do best.
While the up-front investment can seem like an unnecessary expense on an already crowded bottom-line, the customer service and experience these departments are able to provide will quickly prove to be worth the extra cost. And as they bring in more customers, they also bring in more revenue. Covering the investment and then some.
Putting it into Practice: Setting Appointments
Between setting appointments, meeting with customers, and actually servicing the customers’ cars, your team has quite the daily to-do list. By reallocating the precious time they would normally use to set new appointments, your team can focus on providing the customers in your dealership with the highest possible standard of quality and overall experience.
Meanwhile, your BDC can focus their efforts on setting additional revenue-generating appointments for your team: reaching out to repeat customers, scheduling first time visits, and getting referrals.
- Regularly Communicate with Customers
Did you know that in a recent survey only 44% of dealership service customers stated that they prefer to get all their vehicle service needs performed at a dealership? That leaves a whopping 56 percent of customers that are taking their business and their revenue elsewhere at least some of the time – and that doesn’t even include people who never take their vehicle to dealership service departments.
Communicating with new and existing customers may seem like an obvious business development tactic, but it’s one worth repeating. If a car-owner isn’t aware of the services you offer, how can they be expected to come to you for that service? Regularly reaching out to customers, whether through an email campaign or a social media ad, keeps you top of mind for the next time they find themselves in need of an unexpected repair or just their regularly scheduled maintenance.
Putting it into Practice: Running a Conquest Campaign
This type of campaign specifically targets customers looking for a service or repair from a competitor. The best part about a campaign of this nature? You are reaching out to qualified individuals actively looking for a service you offer. Take advantage of that moment and make them a customer for life. Not sold? When we helped run a DriveSure direct mail conquest campaign for Mazda of Orland Park, they generated over $100,000 in revenue. Talk about growth!
- Add Value to Your Service
Add-ons, incentives, loyalty programs. Whatever you call it, customers love it. And it’s the reason they come back again and again. When you can directly add value to what would normally be a typical repair or service, you win more than just customer loyalty, you win positive word of mouth.
Why does that matter? Because when you can rely on positive word of mouth, your customers will do your business development for you. Referring friends and family to your dealership the next time they need anything from a tire rotation to a transmission tune-up.
Putting it into Practice: Partnering with a Service Provider
Partnering with an incentive service provider, like DriveSure, makes it that much more enticing for your customers to return to your dealership for their regularly scheduled maintenance. With renewable benefits like premium roadside assistance and road hazard tire protection, the added value makes it even more enticing for vehicle owners to do business with you.
- Align Your Service with The Customer Journey
Fact: A bad experience is the leading reason why customers don’t return to their dealership for ongoing service. It’s no wonder why customer experience has become such a hot topic. In today’s market, customers expect an outstanding experience, and more than that, they expect it to be personalized to their preferences and their specific journey.
Doing so will also help to avoid the five most common service customer defection points along that journey. If you want to explore those defection points further, and get tips on how to overcome them, grab a copy of our free guide: Avoiding Potholes in the Customer Journey.
Whether your customer needs their first tire rotation, or they are looking to trade in their vehicle, when customers feel like an individual (instead of just a number) they respond with ongoing loyalty – and that can pay in dividends. In fact, according to HBR, “loyalty leaders…grow revenues roughly 2.5 times as fast as their industry peers.”
Putting it into Practice: A Seamless Sales-to-Service Handoff
Every customer journey starts somewhere, and the majority of your customer journeys will start with the sale of a new car. But then what? Creating that seamless sales-to-service handoff is your starting point to ongoing service sales and future business growth – so it’s important you get it right.
What does that look like? Like the rest of their journey, this handoff will be personalized to the individual customer, but it can include setting the first service appointment at the point of sale or offering a tour of your service department. Whatever the means, the goal is to make that new sales customer comfortable with becoming your newest service customer.
The success of your business development strategy depends upon a multitude of factors, but by integrating just a few of these tactics, you’ll be well on your way to achieving your goals and driving new growth. And it all starts with your service department.
Master These Moments to Keep Your Customers
Discover the 5 critical moments causing customers to abandon your dealership service department, and how you can overcome them.