According to Kurt Stephan of Dealer Marketing, service and parts make up between 40% and 45% of a dealer’s profits, meaning the service department is crucial to a dealership’s long-term success. Cox Automotive has released its 2018 Service Industry Study, which also emphasizes the enormous impact service departments have on dealerships. Since 2015, the percentage of dealership visits has increased by 12% and many customers are now requesting multiple services, so dealers are in a position where they must find solutions that will allow them to accommodate this influx of business.
Cox Automotive noted that dealerships can take an extra step and make sure customers understand that it is important to get their vehicles serviced at places that staff technicians who are knowledgeable in all of the complex, innovative technology that vehicles come with today. Cox Automotive found that 62% of customers with “advanced car tech features” opt to take their car to the dealership compared to 32% who would opt for a general repair shop.
Furthermore, the top reason customers take their cars back to the dealership of purchase for service has consistently remained “they know my vehicle,” followed by “knowledgeable/courteous staff” and “certified/qualified technicians.”
The service department is vital and needs to be efficient yet thorough to retain customers. Cox Automotive’s report indicates that many frustrations customers have in the service line result from having to wait longer than expected, and dealerships are well aware of this. In fact, 62% of dealers reported that they are “concerned” with increasing efficiency within their service departments. Other customers reported they disliked the department trying to push other services on them; therefore, finding ways to become more efficient and making an effort to understand exactly what customers need can help remedy these issues.
It is also important for a dealer to promote the fact that its service center usually offers more reliable and comprehensive warranties than small, locally-owned shops. Thirty-five percent of respondents reported that they chose the specific dealerships because their vehicle was under a warranty there.
In order for dealerships to stay afloat and continue thriving, Cox Automotive reports they must also “monitor the mix of recall vs. customer pay work” and actually view recalls as opportunities to gain new customers as opposed to free labor. Another major reason customers choose other maintenance and repair providers is due to high costs, so prices must also be kept competitive to convince customers to come back. Richard Truett of Automotive News noted that dealerships could do a better job of offering more competitive rates for basic services such as brake repairs, engine repairs, state safety inspections, and tire sales.
Ultimately, according to Cox Automotive, the relationship is the factor that makes customers come back. Fifty-three percent of customers report returning to a specific dealership because they trust it and 21% of customers reported it was due to the fact that they were personally introduced to the service department when they purchased their vehicle. Despite all of the technology available today, it is oftentimes still relationships that can impact a business the most.