The Lost Cause of the Used Car Customer

Sep 14, 2012 | | 14523 |

The Lost Cause of the Used Car Customer

By Mike Stoll

Originally published in Fixed Ops Magazine September/October 2012 Edition

If you’re like most Service Managers, you view your used car sales department as a lost cause when it comes to Service.  Often, there is little to no “warranty” work on used vehicles, so as soon as the car is off the lot, you don’t expect you’ll ever see it again.

Automotive News, in a May 21, 2012 article, substantiated this.  They made the astute observation that we are currently in a “service trough”. That is, that there are more older cars on the road and fewer cars which fall under warranty. This trough has manifested problems in the Service department, mostly involving low amounts of work and even lower profits.

With all this dismal news for the Service department, should dealers just shut their Service doors and let customers go to third parties? Absolutely not. I posit that there’s a huge untapped resource that just might help pull us out of this Service trough, and it all has to do with changing a misconception.

Think about how many used cars were sold last year—40.5 million according to NADA, up 1.7 million units from 2011.  That’s a massive source of untapped revenue! It is my belief that dealers need to look at Service through a new lens. New car sales shouldn’t be the sole funnel into Service to create revenue. Instead, Service should be seen as another opportunity to funnel customers into Sales.

Think about it – if your Service department’s oil changes are competitively priced, a potential buyer may just come into the department for their change….and stay. That competitive maintenance pricing, and time spent in your store, can make your dealership top of mind when that service customer begins looking for a new vehicle. Thus, a simple routine Service visit leads to something more for the dealership.

The goal for any new car sold is to get it into the Service bay three times a year. Many car salespeople will begin this process by setting up the first maintenance visit at the time of sale. Great, you now have one more customer in the Service department. That is, provided they don’t cancel the appointment, not show up or fail to set up the other two appointments a year you’re looking to get out of them.

I’ve found that it’s rare that a used car buyer is even treated like this new car buyer. They’re not asked to schedule their first maintenance visit. “It’s just a lost cause,” you might think. Well, that line of thinking will cause you to lose almost 16 million potential customers. Here, as in most areas of your dealership, is yet another place to apply the “offer every product to every customer every time” theorem.

Ok, I should give a little credit to dealerships now for making an effort to get cars into Service. We’ve all heard about and seen the free maintenance programs going on right now, offering free standard vehicle maintenance for the length of the new vehicle warranty. This was done in the hope that car buyers would make a habit out of using their dealership’s Service department over independent repair facilities. Has it worked? Is this program really converting customers into loyal Service users? That’s yet to be seen. And until I see the numbers, I don’t think anyone can call it the answer to the Service slump.

So if the used car customer is the golden ticket out of the Service trough, how do we get there? Yet again, it’s changing perceptions as well as an exercise in customer experience. There are three things I feel you need in order to help grow your used car Service customer base: get them into maintenance on the first cycle, be competitive in pricing of even your most basic offerings, and have the option of discounted bundling.

But first of all, we need to shake that awful stereotype that a used car salesman is some sleazy guy who just wants to sell you a lemon and then fall off the face of the earth. This kind of salesperson, if they asked a buyer if they wanted to come back to get their used car serviced with the dealership, would be laughed at. If you’re going to sell someone a car and then ask them to come back for Service, you better have some level of trust with them. That trust is built by treating used car buyers as if they were buying the newest model. The buyer needs to walk away feeling like they’ve made a good purchase and if there’s ever an issue, their salesperson is there for them and will help them through it. With that trust, a salesperson won’t get laughed off the lot when they ask if the buyer would like to schedule in their first maintenance appointment.

Now for my three customer service-y steps to reel back in that used car customer. We’ve already covered the need to get a buyer, of any vehicle new or used, into the Service cycle at the point of sale. The next step is probably the most important step, as well as the one that’s received the most attention as of late. Every dealer has heard a million times that the reason people don’t use the dealership Service department once they’re out of warranty is because the cost is just too high. Now I need you to ask yourself something, and answer as brutally honest as you possibly can. Are your prices truly competitive compared to local independent Service shops? Would someone who hasn’t even bought a car from your dealership put you on a consideration list when they need service? Or would you be glanced over because it’s still not on par with the competition? If you’re unsure about the answers to those questions consider this: a car owner looking to have their car serviced,often uses their oil change price as the baseline for all other services. If your oil change costs about as much as the independent shops up the street, then you’re probably on the right pricing track.

The other part of this step involves making your Service department much more customer experience oriented. My colleague Justin Sprague wrote in last month’s issue about the importance of the customer experience in driving up customer-pay work in Service. I want to reiterate the importance of this point. Customers now want to feel like they’re the only one in the Service bay. They are looking for personalized service in a timely manner and to leave feeling like they got a good return on their Service investment.

Another thing customers have told me is that they’re looking for a Service department that really feels like an independent. They don’t want to feel like they’re in a fancy dealership looking to rip them off, or a haphazardly tacked on department to a dealership. They want transparency. They want to feel like they’re getting a deal on quality work. This means you have to commit. If you’re going to sell tires, then sell tires like you’ve seen at independents. Sell them with price comparisons, reviews, and a Service Advisor who makes the customer feel like he has their best interests in mind.

Finally, Service customers are looking to bundle services for a discounted rate. Now, I know that this might not always be feasible in your dealership, but I think it’s an interesting proposition to consider. Hopefully every other Service article you’ve read has driven the point home about customers looking for ROI and to save money. This could be a route to accomplish both. Everyone loves a good two-for, from the grocery store to the Service bay.

Yes, we are in a Service trough. Yes, we need to get out of it. But looking to generate more warranty work through increasing car sales isn’t the way to go about getting out of the lows. We need to find new ways to tap the previously overlooked customer – the used car buyer. They are not a lost cause in the Service department. And, once we get them into the Service lanes by changing preconceived notions that are downright wrong, we could have a solution to the Service slump on our hands.

 

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Authors: 
Mike Stoll

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