November 13, 2017
When asked “who are your competitors in service?” most franchise dealers answer, “independent repair shops,” and state that the focus of that competition is price.
While it is certainly true that most consumers who defect go to independent repair shops — particularly the large chains, and these shops tend to be less expensive — that is only part of the story.
In fact, when VINs are lost, independent shops are often not the largest leakage source, particularly during the warranty period. Rather, it is the most fearsome competitors — the evil twins “decline” and “defer.”
At AutoNation, we believed we only completed half the work needed on the VINs entering the service lane. We either failed to find, or failed to sell, that additional work. Most often price was not the primary factor giving rise to the evil twins. We failed to achieve our service potential because of inadequate trust and communication.
So, what can a dealership do to handle these evil twins? Here are a few tips:
1) Build Trust: Addressing Trust needs to start in the showroom. Years of adversarial negotiation — final prices that aren’t final and opaque add-ons such as Doc Fees — set the stage where consumers are conditioned to decline services not included in the glove box plan, almost as a reflex.
You do not help yourself in the service lane by adding high margin services with unclear value propositions, often at the expense of tires and other lower margin necessities. Most pay plans are aligned with this behavior, as writers are paid largely on the gross generated, not on perfectly meeting the needs of each customer.
While addressing these root causes requires more fundamental change than I have time to cover in this blog, it is important to acknowledge how traditional retailing practices are undermining lifetime value realization, as that realization is becoming more crucial to retailer success.
You can start improving Trust by addressing transparency and consistency in your pricing. Publish pricing for your most common service work on your website. Move from “percent off” to specific offers, and carry those offers proactively from marketing to scheduling to service lane, rather than forcing consumers to ask. Focus selling menus on items consumers absolutely need; factory maintenance, worn items, deferred services and recalls.
While I am not philosophically opposed to services over and above factory recommended, calling them “dealer recommended” is practically suicidal, reinforcing every negative view consumers have about dealer service. I always tell stores, “sell them if you believe in them enough to use in your vehicle and call them by their purported benefit,” – e.g. longevity, fuel economy, or performance packages.
When it comes to selling, the best advice I got was “intent trumps technique.” If your service writer clearly has the consumer’s best interest in their heart, consumers with say “yes,” even if the writer fumbles through the talk track.
So, the question to ask is whether you are hiring “care takers” or “mercenaries” as writers, and compensate them accordingly. Sorry, I am drifting back to pay plan and other bigger issues.
2) Communication: Next, you need to take on Communication. First, most dealership communications are too slow, not informative enough, and in the wrong media. The largest leakage point is the inability to reach consumers in a timely fashion, with sufficient information for them to decide on additional service requests. With predictive analytics, you can prepare consumers about likely service needs before they leave the store; and while they have time to thoughtfully consider a major expense.
Too often, writers rely on phone calls rather than texts or emails. These days, digital communications tend to be preferred. They are more likely to be received during the business day and can carry the contextual information the consumer needs to make any major purchase decision. According to JD Power’s 2016 CSI study, nearly 40% of consumers prefer to learn about vehicle needs via text, yet only 3% received a text. Now that stat is improving, but we have a long way to go.
3) Break down the MPI Results for the Consumer: When MPIs generate a long and expensive repair list, you can learn selling techniques from dentists. As one who too often procrastinates regarding dental visits, I am confronted with multiple issues which need to be addressed. My dentist does not ask for the full order that day, but rather she breaks it into the urgent, the important and the cosmetic. I think we could learn a lot from that approach.
4) Third Party Validation: Finally, third party validation can give consumers confidence on the items presented.
In summary, if you address Trust and Communication, not only could you realize more service revenue from the vehicles entering your service lanes today, but it would also go a long way to stemming later defection to the independent shops.