New data explains why car-buyers pass on dealer Service.
Success in the Fixed Ops department is essential for dealerships. According to the 2020 NADA Data Financial Profile, dealers rely on their Service departments for 30% of their net profits. But for customers of new cars, dealerships are seldom their first choice for service options: it’s commonly estimated that more than 70% of new-car purchasers take their service needs to a third-party mechanic.
That’s an enormous gulf between dealership goals and customer behavior. What actions can dealers take to close that gap? Examining recent data for the reason customers seek other options may provide the answers.
The compelling need for convenience.
Research shows that new-car purchasers take their service elsewhere because of three major factors. The first of these is convenience. Customers have busy lives, and choose their service based on how easily it fits into their schedules. According to CDK Global Research, dealers rank below both independent and chain service providers when it comes to providing a convenient location and a streamlined way to schedule an appointment.Making appointment scheduling more convenient is an attainable goal for any dealership. By evaluating their current process and applying available technology, dealers can:
- Incorporate greater appointment availability
- Give customers the ability to schedule, track service, and pay remotely
While moving to a more convenient location is probably not an option, there are other solutions that could make even the most off-the-beaten-path dealership equally or even more accessible than its competitors:
- Pick up from the customer’s location for vehicle service
- Delivery to the customer’s location following vehicle service
It’s all about the price … or is it?
The second factor is price — or at least the customer perception that they will get a better price elsewhere. According to some estimates, 58% of service shoppers feel they would be overcharged at a dealership.
But despite appearances, this isn’t primarily about the consumer’s hunt for a bargain. It’s about their fear of being taken advantage of. This ladders up to our third factor, which carries the greatest emotional weight of all. And it’s where things get a bit more complicated.
Coming in Part Two: we’ll detail the biggest reason customers go elsewhere, and share the research behind winning customers back.