January 27th, 2012 | Written By: Chuck Patton
There’s a new trend on what philosophies dealership’s should use to drive customer retention for service departments so they can maximize service profit and ultimately retain customers. The trend is a so-called smarter marketing that is based on an data algorithm. The theory basically professes that advanced data logic will be used to market to the customers with the right message, at the right time and to the right person in order to drive in service traffic for less cost. You are essentially only marketing to the customer when their vehicle is due for service.
This strategy sounds great, but it’s an important trend to monitor before making the jump. Many manufacturers’ service programs are heavily promoting this “right-time” strategy and if you are on one of those programs or if you are being pushed towards one, it is important that you understand the pro’s and con’s.
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Posted in: Branding, Direct Mail, E-mail Marketing, Marketing Plan, Segmented Marketing
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June 22nd, 2011 | Written By: Traffic Builders
Challenge
A Ford dealership, in a top 25 market, wanted to avoid its service being viewed merely as a commodity. Service marketing here had been Ford-focused with no real difference between the national brand and the individual dealership. The dealer had a reputation for quality expert service, but this wasn’t able to be communicated in their manufacturer-crafted marketing. Even though they did not have the newest facility or amenities, they felt their highly skilled, friendly technicians knew how to project value and confidence with customers.
Similarly, this dealership wanted a marketing partner who shared their personal-touch philosophy. Other marketing companies they had worked with in the past were absentee and difficult to work with. Furthermore, the service manager wondered how someone who had never visited his dealership could really help him improve repair order traffic. He wanted a marketing partner who would manage his service advertising effectively so he could spend his time with customers on the service drive. Read Full Post »
Posted in: Branding, Case Study, Marketing Plan, Segmented Marketing
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May 18th, 2011 | Written By: Chuck Patton
The easiest and perhaps most overused strategy in automotive marketing is trying to sell the same product or service for a lower price. In fact, trying a sell-it-for-less strategy to promote your service department can backfire and is often not the most effective way to increase your business for the long term.
According to an aftermarket service association study, new car service departments charge 33% more for the same service than the aftermarket. A dealership service manager might rightly say that this study is a bit self-serving and probably biased, but it really doesn’t matter. What matters is your customer’s perception.
With that in mind, have you ever really asked your potential customers why they don’t service with you?
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Posted in: Best Practices, Branding, Marketing Plan
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June 2nd, 2010 | Written By: Eric Johansen
In today’s competitive automotive service industry, it has become more difficult for dealerships to compete with the aftermarket. In order to attract and retain customers, a service manager needs to close the gap between the cost at the dealership relative to the often-lower aftermarket price by increasing the perceived value of his service experience for the customer.
One way to boost the perceived value of the dealership is to use direct mail with cost-competitive coupons. Dealers find coupons to be very effective in reducing negative perceptions about the added cost of the dealer’s service.
In addition to marketing initiatives, there are many simple behaviors you can start today that will instantly showcase your value—and they don’t cost anything to implement. They involved common courtesy coupled with a desire to make the customer’s visit as pleasant and unencumbered as possible. People like to feel that they are important to you, especially when they spend their hard-earned cash.
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Posted in: Best Practices, Branding
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May 16th, 2010 | Written By: Chuck Patton
Is your Service department a profit center or advertising investment? The answer is “both.” Chances are, the manufacturer you represent was down for the month of June. These market conditions are unprecedented for many of us, and we are trying to re-adjust our strategies in order to adapt and keep our numbers up. One trend remains, however:
We all depend on our service department to level off the front-end sales loss during a down sales cycle. The good news is service can still be there for you. Challenge yourself to look at things in a new light and start assessing the importance of reinvesting in your service department just as you would your personal financial profile. Most dealers set a goal for their service department to achieve the highest absorption rate possible. If you have the right perspective, your service department can achieve this and double as a prospect base to build strong sales. This is because the larger your customer base is in service, the stronger your prospect base is to sales. So, is your service department a profit center or is it actually an advertising investment? Increased loyalty in your service department will eventually lead to a larger customer base to mine for sales. But, first you must set it as a priority, and second you must mine it for potential. So, if you are thinking of cutting back on your service advertising, think again.
Here is a clear argument for making your service department an investment — go through the most current financial numbers and trends at NADA.org and read between the lines:
- The following numbers were down two years ago: total dealership sales, net profit before taxes and new vehicle sales.
- The largest increases in income came from the used car department and the service department.
- The average dealership achieves around $31 million in sales. Just under $4 million of that comes from service department.
- In 2006, the service and parts department profi ts accounted for 77 percent of total dealership operating profits, and that number is rising.
- If you consider any of the forecasting about the economy and how that will effect your retail department, it makes sense to concentrate your advertising investment in the area that makes you the most money — the service department.
- Your service department is definitely a profit center.
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Posted in: Branding
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February 9th, 2010 | Written By: Chuck Patton
Thinking about the future while dealing with the everyday pressures of your job can be daunting. I was consulting a large Nissan dealer in the Midwest about 10 years ago, whose core base of service customers who had purchased their vehicles from his dealership, was steadily eroding every month. The year before this dealer and I met, Nissan and his dealership were doing very well. However, he could see trouble coming because they had seen record lows in vehicle sales over the past three years and he knew that meant fewer units to service as time went on.
Perhaps that Nissan dealer’s situation is the same as what you may be experiencing. In the short term, you really can’t feel the impact, but after about a year, you realize something is wrong. At the end of the second year and into the beginning of the third, you really feel the problem. By that time, it may be too late for the dealership to turn around quickly, and your income, or your job, could be impacted.
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Posted in: Best Practices, Branding, E-mail Marketing, Lost Customers
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September 27th, 2009 | Written By: Chuck Patton
The whole is more than the sum of its parts. -Aristotle
How can all of the service departments in a group work smarter together than they do working individually? Will it save them money? You are ahead of the curve if you have spent time thinking about these questions. There are some very strong benefits to acting as a group such as cost savings, a consistent message, efficiency and the ability to manage the goal of growing a dealership. The payoff can be big, but not every dealer group has the resources to pull it off.
Elements you must have in place to make a group promotion work:
- Strong leadership – A good leader over each of the dealerships who can sell the benefits to the service managers and execute with success.
- Flexibility – A company that can take into consideration different co-op requirements, varying demographics of product lines and the ability to gel multiple service managers into one strong mission.
- A big picture plan for the year – You can do more damage than good with a “Let’s try it once” mentality.
- Open culture of change – More than likely many of the franchises are going in different directions. If they are to join together, somebody has to do something different. That is not easy.
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Posted in: Branding, Group Programs
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August 15th, 2009 | Written By: Chuck Patton
Operating an automotive service department effectively can allow it to serve as both a profit center and an advertising investment. It should be, by far, the most cost-effective advertising you make to generate sales leads. Why? A typical dealership generates 77 percent of operating profits from the service department, and it averages just below 25 percent of the total dealership gross sales. Most customers frequenting your service department will give you an opportunity to sell them their next car. You cannot generate that kind of revenue opportunity through investing in traditional advertising media. Keep the service customers loyal and you will profit from the service work, as well as build a new purchase relationship with the customer. This can be a simple formula as long as the customer has a positive perception of your dealership and is satisfied. However, this is easier said than done since you cannot always control every human interaction that occurs in the store. The impression that the consumer has of your dealership can make the greatest difference. So, how are you building that image or brand to keep that good impression?
Typically, a dealership spends a little more than one percent of their gross sales advertising — but how they spend it is changing dramatically. Consumers want more information and they want the information directed to them, for them and about them. This is why traditional marketing is changing so dramatically.
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Posted in: Branding, Marketing Plan
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