Many car dealers understand the importance of service departments, but are they aware of the new opportunities in today’s fixed operations business? In this CBT News Power Lunch, host Jim Fitzpatrick is joined by Jade Terreberry, senior director of business development at Cox Automotive, and Juan Flores, senior director of product management at Kelley Blue Book, to discuss how new consumer habits have opened doors to greater revenue and higher demand.
In the last few years, car owners have changed under the weight of inflation and rising interest rates. The length of time buyers keep their used vehicles, for instance, has been growing steadily. “This ties into an opportunity for dealers to take advantage of these…ownership trends to ensure that they’re prepared for service lane opportunities…” Flores remarks. Since consumers are waiting longer to replace their vehicles, fixed operations departments stand to be a significant source of revenue for dealers in the coming months. This means they should prepare to refine and expand their service offerings. “Re-emphasizing that the dealership is competitively priced and differentiating themselves [through] quality work; that would be the way to win people back and hold onto the customers they have now,” states Flores.
Dealers should also be sure to track key performance indicators to make sure their fixed operations plans are working. “I think more than ever the importance of focusing on revenue streams, understanding the revenue streams that our [dealers] want to have; it really comes down to retaining customers, retaining your staff, having the right tools and technology to be able to measure what’s working and what’s not,” adds Terreberry.
While these measures will help bring customers in, dealers must also remember that today’s service clients have different needs than they did before the pandemic, she continues. For many years, buyers have prioritized the ability to research their dealer and vehicle before making a purchase. Now, they expect the same levels of transparency and convenience on the fixed operations side as they receive on the variable operations side. “They’re wanting to do research, so give them a place to do that service research,” Terreberry explains.
Hoping to make research easier for their customers, dealers may think they should rely on the latest technology in their fixed operations campaigns. However, this new customer habit does not mean that every new solution or tool will work for every storefront. Many retailers are looking to integrate customer data platforms (CDPs), powerful data collection and analysis tools that can connect businesses with consumers and operate alongside other digital retail software. However, Terreberry cautions against using a CDP without performing a thorough cost-benefit analysis. These platforms can quickly become expensive, and while they can help dealers expand into new markets, they are no substitute for first-party data. For many storeowners, she explains, their marketing dollars may be better spent on their service departments since they serve as an essential method for establishing customer identities. “When you think about the ability to get that first-party consumer data, fixed ops is the way to do it,” remarks Terreberry. “There are people in your own backyard that are researching service, pricing, transparency, maintenance, recall…that is just a big opportunity in a big place…”
Flores agrees, encouraging dealers to embrace a multifaceted approach to take the opportunities present in today’s car market. Should they allocate more money to their fixed operations business, he notes, dealers must be sure to emphasize transparency, work quality, pricing and efficiency simultaneously, both online and in-store. “We all know that digital shoppers are now 43% of the market, so when you’re engaging with them in that similar fashion by providing those types of tools…what you’re doing is you’re doubling down on the fact that this dealership is there for the long haul to partner with that customer.”
To maximize their fixed operations earnings, both Terreberry and Flores underline how important it is for dealers to plan ahead. By thinking long-term, understanding their key performance indicators and carefully studying changes in the car market, storeowners can keep customers coming to their business regardless of how the car buying journey changes.