Halfway through 2024 we are being challenged with another uncommon year in the car business, where inventory levels are up along with interest rates and expenses, while customer interest in vehicle purchases and net profits are down from expected forecasts.
If you have been in this business 40 plus years like I have and seeing the slowdowns for every imaginable reason, there is a few unflappable techniques that some dealers have focused on that allows them to not only sleep well at night but grow their net profits.
As the title implies; Variable sales are something that has ebbs and flows while Fixed Operations implies a more consistent income stream, but increased volume in Service with poor customer engagement rarely improves Service net profits. In fact, Advisors having more customers to handle in many cases causes sales/RO (repair order) to decline, leaving you with overworked and frustrated employees.
There are two areas in Service operations that are given extra focus during these times which are vendor partners and appointment preparations.
When it comes to vendor partners, these relationships can innocently increase over time always with the idea of helping grow the business or making life easier for an Advisor or Technician. When you factor in automatic renewable contracts, it is possible your management team is unaware of monthly invoices from vendors that have long since lost their effectiveness in driving in traffic or assisting Advisors or Technicians. A quick evaluation of the product’s performance with the staff may find it is not generating enough to pay for its monthly billing in increased business or efficiency.
Appointment preparation is a generic term that encompasses a vast array of strategies to put the Advisor in a position of knowledge and confidence when greeting a customer on an appointment arrival, with a goal of customer engagement. The only true growth opportunity in a Service operation is more approvals for additional needed services not more low profit oil changes. Don’t interpret that phrase to mean we don’t want a high level of retention with customer oil changes, just the opposite, we just don’t want that to be the only service done on that visit, if more is needed.
When an Advisor staff is unprepared and is discovering a customer’s needs during the moment of write-up and is busy concentrating on their tablet or desktop write-up they rarely have time to look up and really connect with their customer (a “who’s next” approach), the level of customer engagement is small at best. When does this lack of engagement show up you may ask? It is when an Advisor attempts to sell the additional needed services listed on the multipoint inspection.
Having a structure day-before preparation process in place with Advisors reviewing the customer’s prime concerns (why they are coming in for service), the customer’s history, and what services are needed at their mileage interval, allows an Advisor to speak with confidence which builds trust with the client. More then money or time, the #1 reason customers decline additional needed services has always been a lack of Trust.
In conclusion, as new vehicle sales continue to stay soft and Service departments naturally increase in volume, this is the perfect opportunity to maximize net profits in your Fixed Operations. But a few words of caution are needed; vendor partners will want their cut of the production, and a lack of real structure in the service process will just create stress and chaos in a Service drive and no real growth in net profits!
