According to the 2020 NADA Data Financial Profile, dealers commonly expect around three of every ten dollars of net profit to be generated by the service department. Another goal that’s pervasive in dealerships is the goal of 100% service absorption. But for franchised dealers to reach higher absorption rates and add even more to the store’s bottom line in an average (read non-pandemic) year, it requires keeping the customer coming back to the service department.
A recent report from CDK Global explores reasons that dealership abandonment rates remain high. What is revealed could make a case for a shift in how the service business is run – at least, in part. It seems that remote servicing is in demand.
Car owners want convenience
According to CDK Global Research, responses from car owners indicate that both independent repair shops and chain-based service shops are more popular than dealerships due to “providing a convenient location and a streamlined way to schedule an appointment”. For dealership owners, location can’t be changed for the service department as it currently is structured, although appointment scheduling can clearly use some work.
If it were possible to make servicing more convenient to keep customers loyal to your store, is it worthwhile? At an average higher than $700, it’s expensive to attract a new customer. Remote servicing could be a tool to lower defection rates, reduce expenditures to advertise and procure new customers, and make service more convenient for car owners.
Transparency helps build trust
Imagine a technician rolling up in front of your home with a truck and trailer, then watching your car loaded onto the hoist and serviced while you watch from your front window. That type of experience is what customers are looking for.
55% of customers surveyed by CDK Global indicated the top two reasons that they don’t trust dealer service departments: they upsell unnecessary services, and the owner isn’t informed or updated during the process. Remote vehicle servicing tackles both of those issues head-on, doesn’t it?
Vehicle pickup and delivery remains sought after
Of course, dealers have adopted vehicle pickup and delivery services in great numbers during the pandemic. That’s excellent since 60% of car owners would appreciate that option for their service visit. Although it doesn’t address a customer’s desire for transparency – and the resultant trust isn’t established with the dealership – it adds a convenience factor that is at least a middle ground to remote servicing.
It’s important to note that 74% of car owners who defected from the dealership are willing to give it another try. It’s options like pickup and delivery that add a unique service proposition that they won’t get from aftermarket service providers and bridge the gap of perceived value as well.
Is remote servicing feasible for dealers?
The initial cost to implement remote servicing is a hard pill to swallow. Fully equipped mobile lift trailers can range upward of $50,000 plus the cost of a tow vehicle, tools, and remote access to the CRM for the technician. For most service departments alone, it will immediately look like an insurmountable investment that won’t make its money back anytime soon.
Taking into consideration the whole-store mentality, it can make sense to establish remote vehicle servicing as an extra offering. Naturally, there would be a charge for the service itself in addition to the routine services and repairs that the technician performs. When calculating the potential benefits of customer retention, servicing remotely could have excellent returns. Perhaps a store would even invest in more than one mobile lift.
Remote servicing will never eclipse the need for an in-dealership service department for mass-market dealers, but it shouldn’t be written off as unnecessary or unprofitable, especially since it’s what customers would most prefer.
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