A Guide to Increasing Service Center Profitability
Every full-service car dealership knows that their fixed operations, including their service center, are a key driver of profitability. However, an estimated 90% of dealership marketing budgets are spent on new and used vehicles, often leaving little left for marketing of fixed operations.
That’s right; while a service department typically produces nearly 50% of a dealership’s gross profit, it accounts for less than 10% of the average dealership’s marketing budget!
So how can you increase service center profitability without going all-in on costly marketing campaigns? The team at fusionZONE Automotive has the answers in this week’s edition of the fusionZONE blog.
Here are a few tips and tricks that Service Directors, Service Managers and anyone working in a dealership’s fixed operations can use to help increase profitability through the service department.
Offer a Customer Loyalty Program
Location and convenience are certainly two major factors when motorists select their preferred auto service center. Pricing is a third reason, and some drivers prefer to service where they bought their car — assuming they had a pleasant purchase experience.
But what if your dealership and service center are located in an area with plenty of convenient options for local drivers seeking auto maintenance or car repair? You can set your service facility apart from the rest with not only top-notch customer service and repair expertise but with a loyalty or rewards program.
If you’re looking to retain new or used car buyers when it’s time for routine maintenance, offer special deals for those who purchased any vehicle at your dealership, such as a free first oil change or exclusive offers on tires and parts.
Whether you decide to create a VIP loyalty program, customer rewards program, customer appreciation program — or a combination of these — service center visitors will feel they’re gaining added value and benefits for being a consistent customer.
Service Team Goals & Incentives
Are you incentivizing your Service Advisors to reach daily, weekly or monthly goals? Creating goals and even some healthy competition among your service staff can certainly help the bottom line of your fixed operations and the dealership as a whole.
Maybe you offer gift cards or other perks to the service team member who meets or exceeds a certain goal or who tops all others during a given week or month.
Whether you’re looking to promote a certain maintenance procedure or simply want to increase the average dollar spend per visit, there are ways to increase service center profitability that start with your customer-facing team.
Encourage Upselling
The next tip goes hand-in-hand with the previous one. Upselling is a crucial component of any successful service department. Your Service Advisors are on the front lines every day, working to keep customers happy and cars moving through your service bays. And upselling should be a part of their daily routine.
Your goals and incentives can be tied directly or indirectly to upsells. For instance, maybe some of your Service Advisors excel at upsells while others simply bring in more repeat visitors or can consistently churn out higher Repair Order or RO counts.
Of course, any highly respected service center will find a balance in upselling; that is, by only promoting maintenance or repair procedures that may actually benefit each unique customer and vehicle.
Create Customer Rewards for Referrals
Did you know? Acquiring a new customer is 5 times more expensive than retaining an existing one?
Like our first tip, you can utilize rewards to attract new service center customers. Consider incentivizing current customers to spread the word about your service department with a referral rewards program.
Maybe it’s a free multi-point inspection or a service coupon for referring a local driver to visit your shop for their next oil change or any other service. Whatever it is, you’ll have to make it worthwhile for your customer; and remember, you’ll likely come out ahead if you can attract and retain that new customer!
Optimize Your Marketing Plan & Budget
Lastly, perhaps your dealership can afford to either spend a bit more on a service marketing budget or shift some of its current dealership-wide budget toward fixed operations. Considering the profit makeup of the average dealership and the significant weight that fixed ops hold, maybe an increase in the service marketing budget can lead to a substantial increase in overall profitability.
If you’d like assistance with these service marketing tips or your current digital marketing efforts across fixed operations or your entire dealership, feel free to reach out to the fusionZONE team. We’re experts in creating compelling marketing campaigns that drive leads and sales!