Want to Build Customer Loyalty?The old adage "Location, Location, Location" may be the three
most important elements of new car sales, but for automotive service departments, the
three most important elements is "Convenience, Convenience, Convenience".
Be Convenient !
New car dealerships pretty well have a captive audience for sales and
customers have to go to one that carries the kind of product they want. However, service
is a different matter. There are a number of places that people can go for service outside
the dealership once the warranty period has expired or for maintenace during warranty.
As manufacturers and dealerships are working hard to find ways to
retain its customer base for new vehicle repurchase, a lot of the attention has been put
on service departments as the key source for keeping customer's loyalty, rightly so.
After vehicle purchase, which basically attracts the customer to that manufacturer and
dealer, the service department really has the responsibility for keeping the customer
because the dealership service department and manufacturer are one in the customer's eyes. The idea
being that if the customer has found a service department they feel takes care of them and
their vehicle needs with good support from the service provider, the customer will continue to buy
Unfortunately, this is a very complicated issue. I think what a lot of
the manufacturers are missing is that continuous service is also based on how convenient
that service is for the customer to use. The only way to do that is to be in a location and open hours
that makes it easy for a customer to stop by, especially on impulse for simple items
like oil changes.
It has been suggested that dealerships only get about 15% of all the
available service business, and that is down from about 20% five years ago. What is
interesting about these numbers is that if we were to look at the percentage of the
population that is around dealers, 15% may be all the business we can take in any single
A service department can only book so many hours a day because hours
are the only product they sell, whether it is warranty or customer pay. I don't think the
issue is trying to find ways to retain customers in our service departments. I think part
of the concern should be making it easier and faster for customers to use the service
Service departments are packed, scheduling up to a week or more in
advance to minimize carry-overs. In a sense, this is the real problem. In other words,
service departments just don't have enough hours for all of the available business, so the
customer has to go somewhere else to be serviced in a convenient and timely manner.
Another issue this affects is customer satisfaction. How many times has
a vehicle been repaired correctly the first time, on time, but due to how long it took to
get the vehicle in the shop, the dealership still got bad scores from the customer on
their CSI reports. A dealership must have service sales for profitability, however they
are also required to handle warranty service, which can tie up a lot of available time
used for customer pay.
Another thing that educates the customer about a dealership's service
department is how they are handled during the warranty period. If it is hard and time
consuming for the customer to use the dealership for warranty services, or having to
return several times for a repair problem or special ordered parts, they probably will not
return there for customer pay. To take advantage of this concern, many of the independents
are running ads claiming same day service, you pick the day.
Another concern is multiple service visits for the same problem. Due to
the complexity of vehicles, I feel there should be a central manufacturer's service
vacility available for hard-to-diagnose repair problems. A vehicle would be sent there and
a loaner provided by the manufacturer while the problem vehicle is being inspected. This
would not eat up precious dealership service hours by trying to diagnose a unique repair
situation. Otherwise, this creates the domino effect for the dealership service department
and it gets backed up with carryovers and upset customers.
Part of the issue may not be in finding ways to offer more service
hours daily, but to also consider how to take those services out to where the community
lives, works and shops. I am suggesting that dealerships have service satellites to make
their service department more convenient to a wider range of customers.
Think about it, if a company is located near a common shopping area (
like many quick lube services or tire companies ) the customer naturally goes there on
impulse because it is convenient, and they can do some shopping while they wait. In the
same manner, it wouldn't be so much that the satellites are full service, but they could
focus on the basic maintenance type items and for more complicated repairs or warranty
jobs schedule the customer to the main store from the satellite.
Now a big concern, of course, is the financial resources needed to set
up these smaller stores. I think a way to do this would be to seek out smaller shops and
either buy them out or go into partnerships. This would allow dealerships to go into
established service areas as well as have some of the basics needed to operate. Another
possibility would be to have mobile repair trucks that can go on-site for the repair or
maintenance bringing the most appropriate parts based on the symptoms or services
discussed over the phone.
My main point is if I can go to my local, convenient dealership outlet
for my minor needs, then schedule through the satellite my more major needs to be taken
care of at the home store, it would minimize the chance of going somewhere else. Once a
customer quits doing business at a store, especially due to finding a new store more
convenient, they tend to stay away.
A couple of ways to find out how well a dealership is retaining its
customer base is to do some research into the customer sales and services files and asking
What is the percentage of customers who buy a car from your dealership,
also use your dealership for warranty service? Of that percentage, how much customer pay
are they buying in relation to the warranty service?
After warranty, what percentage of your customers are returning for
repairs and services?
Where do most of your customers live? This could affect possible
Copyright, 1996, J. Daniel Emmanuel