Powering Thriving Dealerships with Dealer Service


Across myriad industry shifts and evolutions, healthy dealership service operations have powered thriving dealerships. Service lanes not only deliver high-margin engagements on the back end, they drive meaningful interactions that can build long-term loyalty that leads to future sales as well. To create, nurture and make the most of these opportunities, it’s critical dealers and OEMs recognize auto-buyer perceptions about how franchise stores stack up against independent repair shops – and adjust their approaches to mitigate risks and seize lucrative opportunities now and in the future.

May 13th,  2022

Service-To-Sales Link

It’s probably no surprise that 97% of dealers agree a good service department is key to driving new-car sales.

After all, successful dealerships embrace the challenge of building long-term loyalty across all aspects of their stores – not just in the showroom. Their management teams know that while sales often start relationships with consumers, positive service experiences develop those relationships to drive repeat maintenance and repair visits, and positive online reviews and new sales. As the industry continues to shift toward order and wait, it’s even more critical that dealers build relationships that elevate their brands and attract and retain their customers.

First Impressions

Auto buyers often view service departments as a reflection of a store’s overall brand. In fact, nearly half strongly agree their impression of a service department plays a significant role in shaping their decision on where to purchase their next vehicle.

This underscores the importance of ensuring positive, repeatable brand experiences in service lanes … and in the sales and marketing funnel that guides customers there. Overall performance has less to do with what dealers and service techs know and more with what they do – or don’t do – in their interactions with customers.

Service Experience

Our data suggests there is significant opportunity to enhance the service experience and improve customer satisfaction to not only boost service retention, but to improve the service-to-sales handoff, and increase both new and certified pre-owned (CPO) sales, as well.

The Basics

When asked about their last service visit, auto buyers reported their dealers were missing many basic and essential points of interaction before, during and after their visits. While some of these actions might seem commonplace, our data suggests they aren’t. Covering the basics is the first step toward building positive, meaningful consumer relationships. With the fundamentals in place, there’s opportunity to enhance satisfaction and in turn, drive improved retention that drives more customer-pay work.

The Handoff

Perhaps more surprising is how few auto buyers were provided a trade-in value for the vehicle they were servicing, given information on new vehicle offers, introduced to a member of the sales team or offered to trade in the vehicle they were servicing.

The value of the service lane in boosting both new and CPO sales is significant. Dealers who focus on processes that directly impact the service-to-sales equation can take full advantage of the customers in-hand and seize the collective opportunity they bring. The handoff can be to new sales or a dealership’s CPO sales.

What do all these actions have in common? Not costly outlays or reconfiguring of floorplans. The priority is to simply create a culture and process that engage customers and help keep them in the family.

Perceived Value

Through our research, we learned dealers generally feel confident they can compete on price with general repair shops to attract consumers to their service lanes. And while vehicle owners/lessees are split on whether manufacturer dealerships deliver unique value, the good news for OEMs and franchise stores is these customers are generally not detractors in this regard.

With nearly half of vehicle owners/lessees saying they’re neutral or unsure about the value franchise service drives deliver, heightening awareness of these stores’ unique value propositions in the service realm is key to driving consideration and trial. Focusing on converting this group into loyal dealership service customers presents a key opportunity to increase service department revenue and boost sales through service interactions, so making them a priority in acquisition and retention initiatives should be a priority. Dealers should play to their strengths early and often.

Dealership Strengths

While there’s some work to be done in enhancing auto-buyer perceptions, traditional dealership service departments were seen as “better” in most of the product/service areas we asked about. Dealer service departments are seen as more knowledgeable and a higher-quality option, especially when it comes to tools, technicians, diagnostics and parts. But, when it comes to routine, low-tech offerings, independent repair shops have a perceived advantage over franchise stores.

Dealers who can show consumers they are price competitive and more convenient than general repair shops have a unique advantage in winning customer trust. Once trust is gained, bundling services and proving the value in one stop shopping can help to create long-term customer relationships.

Incentives Work

Deploying targeted incentive offers drives customers to your service lanes. And one way to get customers to act on something they could see as a burden is to incentivize them.

Our data shows even smaller incentives can be highly effective. Raising an incentive from $35 to $250 only increases customer motivation by eight percentage points. Better yet, incentivizing customers can create an opportunity to build a relationship and the kind of trust in your service department that will keep them coming back.

Key takeaways

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GO BACK TO EV FUTURE

Urban Science will continue to release new data and insights fueled by our DTI research, conducted with the Harris Poll, to guide OEMs and dealers to certain, science-driven business outcomes — even in the most ambiguous market conditions.

Opportunities for Dealers

Dealership service – as is the case with so many other aspects of dealership operations – is only as good as the processes in place to help generate and seize opportunities. Yet, as the data shows, the opportunity is certainly there for those willing to give it the attention it deserves:
  • Create processes to close the service-to-sales loop when customers are in for service.
  • Take the time to properly diagnose service and parts performance to identify short- and long-term opportunities; understand why customers aren’t coming back; improve operational efficiency; and identify untapped parts potential.
  • Create a compelling value-to-cost proposition by bundling common repair services, supported with targeted marketing offers, to win back customers lost to IRFs; focus on millennials where the opportunity to influence is the strongest.
  • Leverage open recalls to reconnect with customers and build long-term relationships; deploy incentives to motivate action.

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    Bring customers back to increase service retention and build long-term loyalty.

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FEATURED

Dealership Service

Across myriad industry shifts and evolutions, healthy dealership service operations have powered thriving dealerships.

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