In the May/June issue of Fixed Ops Magazine, my article “How to Generate More Dollars per VIN” discussed a two-pronged strategy for growing fixed ops revenue.
First, dealers must increase service yield from current customers. Second, dealers must increase service market share. The May/June article focused on the first part of that equation, while this article shares strategies for increasing service market share.
According to the Cox Automotive 2017 Car Buying Journey, 46% of people who purchased or leased from a dealership never returned to that dealership for service. That’s a tremendous amount of service business that dealers can ill afford to lose.
In recent years, independent repair facilities (IRFs) have become increasingly aggressive and strategic with their marketing. As a dealer you have to ask yourself this question. Are you willing to concede nearly half your service business to the competition, or are you willing to fight for it?
Assess Your Current Market Share
The first step to increasing your market share is to assess what your current market share is. Typically, market share is calculated as a percentage of an industry’s total revenues. However, it would be very difficult to ascertain what the total service revenue is in your Primary Market Area (PMA). Besides, dealers have long relied on service absorption to gauge their success.
One of the reasons I’ve always disliked the service absorption metric is because a dealership can have 100% service absorption but still be losing market share.
Service absorption tells you nothing about how much business you’re leaking to the competition, which is why I recommend using revenue per units-in-operation ($/UIO).
I briefly discussed the advantages of using $/UIO in my May/June article. I also went more in-depth in the Nov/Dec 2017 issues of Fixed Ops in my article titled “A Better Way to Gauge Success.”
Most dealerships capture just 20-25% of revenue potential from their units-in-operation (vehicles sold). That leaves a lot of room for improvement. Once you’ve calculated your $/UIO, use that as a starting benchmark.
Leverage Third-Party Data
Most dealers are familiar with purchasing third-party data to use in service conquest campaigns. However, this data is typically under leveraged.
It may sound counter intuitive, but the most cost-effective way to find your customers in your PMA is to first gain a better understanding of who your current, most loyal service customers are. Why waste money blanketing an entire PMA with random post cards and email blasts, hoping for a two- percent response rate?
Data is a powerful thing, yet most companies use only 12 percent of the data they have on hand. This means 88 percent of data is not being used effectively. In dealerships, that 12 percent is typically contact information. Most customer records are limited to names, addresses, vehicle type, phone numbers and emails, if that.
To create more complete customer profiles, you’ll need to leverage three different types of data:
1. Vehicle data
Vehicle type, age and mileage can be used to predict what type of service the owner might need.
2. Customer data
This data can include demographics, life events and credit scores. Additionally, you might want to target prospects by zip code or within a certain income range. There are literally hundreds of demographic data points to filter through and you can get as specific as you like.
3. Shopper data
Vehicle and customer data become even more useful when they are layered with specific shopper data. Is a service prospect getting their vehicle serviced at an independent repair facility (IRF) or at a competing dealership?
You can also filter through shopper data from restaurants, department stores, sporting events and auto parts stores.
Use this data to create customer profiles of your most loyal customers. This will give you more insight to the type of new customer that you should be targeting. For example, you might have a loyal customer profile that looks something like this:
- married female
- lives in a certain zip code
- drives a 4- to 6- year old Nissan Pathfinder SL or Platinum
- purchased an extended warranty
- household earns over $120,000 annually
- has two teenage children, one of whom has a driver’s license
- eats at upscale restaurants
- is active on Facebook
- loves to travel
- has visited three different IRFs in the past year for service
This might be just one of several profiles that you come up with. Once you have this profile, it’s easy to find service prospects in your PMA with similar profiles.
The more you know about your current and loyal service customers, the more targeted and relevant your service conquest campaigns will be.
Omni Channel Marketing
Many dealers rely primarily on direct mail and email for service conquest campaigns. Limiting yourself to two channels is expensive and limits frequency and reach. In marketing, there’s something called the Rule of 7, which states that a prospective customer needs to hear and see your message at least seven times before he or she takes action.
Fact is, dealerships are not the first place most consumers think of when they need their vehicle serviced. To raise brand awareness and become an option in the consumer’s mind, your messages need to be where consumers spend their time. These days, people spend more time online, viewing videos or on social media, than they spend reading mail or looking at emails.
That’s why omnichannel marketing is the most cost-effective means for service campaigns. Omnichannel marketing leverages the power of data, online behavior and predictive analytics to deliver the right message to the right customer on the right channel and the right time.
Take a look at these response rates using different marketing channels.
- Direct mail campaign alone – 6%
- Direct mail + social display – 20%
- Direct mail + email – 27%
- Direct mail + email + social display = 37%
Additionally, fixed ops PPC and display advertising campaigns are a must if you want to capture consumers who are actively searching for service and parts online.
Attracting new customers is one thing. Retaining their business is another. Many dealers believe that as long as they provide good customer service in the service lane, the customer will come back. However, customer service and customer experience are not the same thing.
The customer’s experience with your brand starts before they come into your store; such as when they see your digital ad, search for service or read online reviews. The customers’ experience with your brand continues when they come into your store, and after they leave.
Imagine this scenario. A customer receives an oil-change coupon from your dealership. He decides to give you a try. He has a great experience and his needs are met. After he leaves, he doesn’t hear from you again for three months, when he receives another oil-change coupon in the mail.
Have you given this customer any reason to come back to you? First of all, you never thanked him for his service. You didn’t sen him any communications other than another oil change coupon which he doesn’t need right now.
This is a “What’s in it for me?” marketing strategy, when your marketing strategy should be “What’s in it for my customer?”
When it comes to service marketing, relevancy is critical. With today’s availability of data, there’s no excuse for sending offers that aren’t relevant. Once a customer visits your service department, you should know from the make, model, mileage and multi-point inspection (MPI) results, exactly what that vehicle’s needs are for the next 10,000 miles. Every offer the customer receives after that should be tailor made for that vehicle’s needs.
Additionally, not all service marketing campaigns should contain offers. Remember to thank your customer after every visit and create campaigns that are educational and/or entertaining. For example, newsletters and holiday card campaigns don’t ask the customer for anything, but they generate a lot of goodwill and help to build customer trust.
If you want to increase service market share, service conquest campaigns are a necessary strategy. The most effective service conquest campaigns use third-party data to target ideal prospects in a dealership’s PMA with relevant messaging and offers. Ultimately, data-based marketing and retention strategies result in more new customers, more loyal customers and more fixed ops revenue.
To read this article in Fixed Ops Magazine, click here.