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Editor’s Note: This is part 2 of a 2-part series. Go here to read Part 1.
The service department is the backbone of the dealership and has a big impact on the experience customers have both with the dealership and with the products you carry. I want to guide you to the next level of success in your service department, starting with how your team can be more professional.
The service department is an important part of the customer experience with the dealership and can help capture customers who have previously purchased through the mass merchants. While both parts and sales are important, no department has more impact on both current and future customers than a service department.
One of the most important elements in both improving the professionalism of the shop and having it produce more dollars for the dealership has to do with improving efficiencies.
I will provide more specifics later in this series, but now I want to emphasize the importance of understanding the value of having defined processes and then working to make sure those processes are constantly evaluated. Through regular evaluation, you can see if they can be enhanced to increase both the speed of moving equipment through the shop and the quality of work that comes out of the shop.
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By evaluating both speed and quality and working to improve both, you are focused on the two most critical elements of any service department. First, by taking less time to service a piece of equipment, you can service more units with the same amount of techs. If you have a shop with just two techs and can improve the speed of each tech by 25%, which is easy to do by making process changes, you have added 50% more capacity to your shop.
By focusing on processes, the quality of the work your techs produce improves the experience your customers have with both your dealership and the products you sell. As a result, you will have a couple of positive things happen. First, a better experience with your service department means customers will come back. Second, and more important, they will tell other people they know about the great work you do and the timeliness of both your service and the repairs you complete.
As more customers hear about your department, your service business will continue to grow. More efficient technicians will produce more labor dollars, which will add to the bottom line profits of the dealership and give you the ability to offer them bonuses based upon productivity. With better processes, everybody wins — the dealership, the techs and, most importantly, your customers.
Don’t forget: You can also improve your profitability by working to upsell additional needed services. Many times, customers bring in equipment and we see there are other issues that should be addressed to make sure the equipment is maintained in optimal condition.
Let’s say that you notice a cable is frayed on a piece of equipment and could potentially break or at least bind while the customer is operating the equipment. The same is true for mower blades that are worn out or similar “wear” items on equipment. It only makes sense to notify the customer that their equipment could use additional repairs and let them choose whether to move forward or not.
I have found over the years that most customers appreciate it when the service department makes them aware of other issues. In a high percentage of the cases, the customer will gladly approve the additional work to be completed. Again, it will make the service department more money and it also lets our customer have a better experience with their products. Plus, it’s what we should be doing as professionals.
Have you ever noticed that car dealerships always seem to have special promotions? It could be a “scratch and dent” sale, a year-end clearance sale or a Fourth of July blowout. These specials generate excitement, so that customers will come in and buy. Many times in our service departments we don’t think about the importance of marketing and its value in keeping existing customers and attracting new ones. We encourage all dealers we consult with to invest in marketing their service department exactly like they invest in marketing and advertising their wholegoods.
Most dealerships invest about 3% of their projected sales in marketing and advertising. I recommend you do exactly the same thing for your service department. If your department is going to produce $200,000 in labor sales this next year, why not invest $6,000 in promoting your service department?
Some of you are offering a pre-season service special in the fall for snow throwers and in late winter or early spring for lawn mowers and handheld equipment. Both are great promotions that help keep your service department busy during traditionally slow times. In most cases, you are discounting at some level to make the offer attractive. So, it makes sense that part of your marketing money should be going to help support those service promotions.
If you haven’t tried doing a preseason service special, I would encourage you to get started and stay with it. Many dealers I’ve talked to have tried the special and didn’t get the result they were hoping for and abandoned the promotion. It takes time and energy to get a promotion of any kind off the ground.
Go to your database and pull out 500-600 names of customers who you have done business within the last 3 years. Start with that group, send out a mailer announcing your program and have your parts people follow up with phone calls. Make sure to check with your manufacturers to see if they have mailers already developed that you can use.
The mailer with a phone call follow-up will make the promotion a success, and you can then build on it year after year. I have one dealer that has been doing this for over 20 years and he is able to keep an outdoor power equipment shop with 6 techs busy 12 months out of the year.
Keep in mind that any preseason promotion you decide to do is a great way to build your service business so you don’t have to lay off techs during the slow time and don’t eat into your credit line, which will need to be paid the next year.
Developing a Loyalty Program
One way to generate new customers is through a customer loyalty program at your dealership. Think about how many stores have a “shopper card” or a “preferred customer” program. My wife shops at a specific grocery store in our town because the store gives customers a shopper card that gives them a discount on fuel they purchase at part of their store. The store does a great job in making customers feel special and gives them a bonus for doing business with them. In reality, the store is marking up prices on items to be able to give discounts on other items. We all understand that, but it makes the customers feel like they are getting a perk for doing business at the store.
I would encourage you to create a similar program for your service department. One of the easiest ways to do this is to build a program that gives discounts to those customers who purchase equipment from your dealership.
While a customer loyalty program may not be right for every dealer, it is a program that we have found customers get excited about and will actively participate in when they are getting their equipment serviced.
I would encourage you to have some plastic cards printed with your logo on them and have “preferred customer” somewhere across the middle. Have your customer show you this card when they come in.
An easy way to make customers aware of the program is by putting up a sign in the sales area that says, “Ask about the benefits of being a preferred customer!” That kind of marketing generates more revenue because customers are willing to spend more on the equipment for the perks they received from the preferred customer program.
Regardless of the program you have in place or the processes you refine in your service department, remember that we must always strive to deliver professionalism and a great and well-deserved experience to our customers. You sell products that customers love to buy, but if we “drop the ball” in service and don’t treat the customer with the professionalism they expect, it will hurt both your dealership and your manufacturer’s brand image. Make the effort to move your service department to the next level of success and watch the dollars roll in and happy smiling customers walk out.
Originally published in 2015
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Don’t underestimate what good processes, flat rating and efficiency incentives can mean for service department revenues.