How To
Car Dealership Profit Margins: 5 Secret Drains
Car dealership profit margins are a constant concern while trying to navigate the new normal created by the pandemic.
Convenience is King, and as long as it is paired with a fair price, it wins every time in your dealer auto service department.
Convenience is King for Your Dealer Auto Service Department
Convenience, Convenience, Convenience… you’ve probably heard it your entire automotive service career. “Convenience is King”, and as long as it is paired with a fair price, it wins every time for your dealer auto service department. So why do dealers still struggle to achieve it? There are costs involved, and that initial cash outlay to improve convenience can be scary. Attaining convenience for every consumer is also a moving target.
Convenience is constantly evolving. There was a time when convenience meant an oil change appointment took one hour, and that waiting in an area with adequate seating and a free cup of coffee was the baseline for successfully attaining convenience. To a very limited few, this may still be true… I’d like to meet them!
Convenience is something every dealer auto service department needs to keep under constant surveillance. This is because it can mean something different to each customer, or each customer segment. One of the biggest mistakes dealers make is cutting costs, or forgoing investments in convenience that negatively impact performance. Here is an example:
Taking Tech videos requires data licenses, smartphones or tablets, internet connection improvements, and solutions to enable sending the video to customers. The costs add up, so we hear rationale like this: “My staff is not comfortable talking to customers through videos… we are going to save money and not do it.”
The convenience these tech videos can bring to consumers is a reliable easy to understand recommendation channel. The trust perception they deliver is proven to increase acceptance rates. So the video costs each month can be paid for by just one marginal RO that a video solution transforms into a highly profitable job.
In this case, the dealership is saving itself – out of business – by limiting its ability to provide true convenience. They are missing out on repeat business from customers who like this feature, and they are missing out on the additional RO revenue they generate that far outweighs the costs. But this is just one example of cutting a convenience to save money. Rest assured, this is not just about video.
Scheduling and Communications
Think about scheduling tools that allow customers to connect with your dealer auto service department through voice, text, and email. You can have two-way conversations, through one connection point, with prospective service customers. The customers have the convenience of channel choice and the convenience of using one number to always reach their service contact at your dealership. You have the convenience of one tool that handles all of this for you.
Auto Service Payments
Customers don’t want to wait in line, they don’t want to wait to hear how much this is all going to cost, and today (remember moving target) they don’t want to touch anything at your dealership in the payment process. So why not offer the ability to pay online, on a phone, direct to the service advisor, or in advance? Does your dealership still hand a pen to customers as part of the checkout process? At least try to deliver the convenience of not having to wait in line at the cashier.
Customer Transportation Options
This is where keeping an eye on changes in what convenience means can really pay off. You can have an Uber waiting for the customer as soon as they complete their drop-off process. You can have an Uber at the customer’s door when it is time to pick up their vehicle. You and the customer can track the status of the Uber to know when it will arrive. Is that convenient?
Add options for shuttles and loaners deepening the value to the customer and increasing your business volumes.
Better yet, offer to service the customer’s vehicle at the location of their choice. This does require an initial investment in tools and trucks, and we hear that this is one of the biggest obstacles. But we also hear that once the investment is made, it is paying for itself after only a few services each month. Tools to help manage and track remote service add to the efficiency. They also help you optimize the business at your service bays. Know when mobile service is possible so that you can keep bays open for big-ticket services that have to be completed on-site.
Convenience is King
Achieving optimal convenience is an ongoing effort, but when accomplished well, businesses like Amazon leapfrog other industries to capture large market share and quickly obsolete many competitors. Don’t let this happen to your dealership auto service department. What if you could combine video with a shopping cart-like experience so customers can see the recommended repair, accept it, and pay for it from their phone? It’s possible NOW.
Do you still want to cut investment costs? What if you could get everything we talked about in one tool? This will enable you to cut the costs of investing in other tools only performing a singular benefit. Consider investing in platforms that encompass many aspects of convenience to optimize your investment and keep convenience going strong at your dealership service department.