Despite economic downturns during the pandemic, many dealerships saw their service department revenue remain relatively consistent throughout 2020. According to NADA’s midyear report, sales and service revenue decreased its average share of total dealership revenue by only 0.3% compared to 2019.
With sales revenue down, for many dealers, the service drive became a critical component to survival and future success. But while most dealerships at least recognize the value of the service department as a revenue generator, few dealers fully maximize the profitability of their dealership’s service-to-sales process.
In a study by WardsAuto, 53% of dealers cited fixed ops as a main initiative area for improving revenue and profits.
Reactive dealerships waiting for their service customers to decide they want to buy are playing fast and loose with a potentially huge boost to their bottom line. Proactive dealers, on the other hand, are empowering themselves to capitalize on industry trends through a robust service-to-sales process backed by advanced marketing tools.
In this blog post, we share three ways to maximize service-to-sales profitability at your dealership by:
Proactively Leverage Data Through Advanced Technology Tools
A successful service-to-sales process starts with identifying your best prospects. Oftentimes in the past, dealers would deploy a dedicated person to manage this process. Faced with tightening margins, many dealers are starting to find success by utilizing their BDC to identify and engage potential service-to-sales prospects before they’re in the service drive – and before they re-enter the buying cycle.
Instead of viewing every upcoming service appointment in your DMS as a potential sales opportunity, this approach tasks your BDC to identify customers who have the highest probability of entering the buying process before they realize they need a new vehicle. To do this, your BDC needs the right tools and technology for the task.
Dealership predictive marketing tools utilize all available data from your CRM, maturity manager or data mining solution to predict which of the prospects in your database will likely begin shopping for a new vehicle. This empowers dealers to tap into the factors motivating each prospect’s purchase decisions to increase the relevancy of their outreach and increase the likelihood of a sale.
By combining behavioral or demographic data (such as changes in a person’s career or identifying growing families driving vehicles too small for their situation) with sales indicators like expiring warranties or over lease mileage, proactive dealerships can engage prospective buyers where they are and kickstart their buying journey instead of simply hoping that person decides on their own to return to the dealership.
Connect Your Service and Sales Departments
Customers are usually, and understandably, averse to being shuffled between departments. Coupled with potential costly inefficiencies, it’s critical to break down the barriers between your service and sales departments to maximize the profitability of your service-to-sales process.
This starts with getting buy-in from service, sales and F&I to create a consistent and collaborative process and to ensure every team member knows their individual role in the process.
Some dealerships find success in deploying a dedicated member or two of their BDC to serve as a service-to-sales liaison to ensure no customer feels passed around and no detail is missed when identifying sales prospects. There’s no “one-size-fits-all” approach and whether you dedicate one person or create a new department is up to your management team to determine.
Every dealership’s needs and capacity are different, so start by auditing your service-to-sales process and needs. Ask yourself questions such as how many repair orders come through the service department every day, how experienced and tech savvy is every member of the crew and how robust is each department.
Like any other sales effort, this process needs to include clearly defined key performance indicators (KPIs) for tracking your success and improving your service drive profitability efforts. Look at clear and actionable insights like how many phone calls and emails your service drive sales team is generating, and how many of those generate meetings or sales.
Make Service Drive Loyalty a Top Priority
Maximizing the efficacy of your service department marketing and outreach offers a massive opportunity for dealers who think long-term. According to Mastermind data based on the behavior of customers who returned to market over a 120-day window, those who service at the dealership are 2.5x more likely to purchase their next vehicle at that same retailer.
Service drive customers who remain loyal always yield the highest-profit sales, but keeping customers coming back for the long haul also means ensuring they don’t become conquest customers elsewhere.
For some dealerships, maintaining consistent communication with customers is part of their dedicated customer concierge’s responsibilities. This team member is typically someone who has been with the dealer for a while, has clout and rapport with customers and serves this role as part of their daily responsibilities connecting with customers. On the other end, consistent and ongoing customer communication after the sale can be as simple as automated – and personalized – service reminders.
Investing in new tools, creating a new sales team and focusing on long-term loyalty rather than short-term sales may seem daunting, but the benefits of optimizing your service-to-sales process to boost service profitability far outweigh the frustrations of personnel and project management. In fact, proactive dealerships that utilize Market EyeQ’s behavior prediction technology increase customer retention up to 15%.
If you’re interested in learning how Market EyeQ can help your dealership strengthen its service-to-sales process, contact us for a free demonstration.