Am I Ready For a Service BDC?
Many dealerships have seen a tremendous value in developing a sales department business development center. Without question, they improve the sales of new and used vehicles on a consistent basis providing the sales department with solid leads.
Far fewer dealerships have developed the service department business development center. Some have made attempts to add additional tasks to the sales department BDC personnel and include service contacts on some items. In this article we will evaluate the case for your dealership having a service Department BDC.
The standard dealership service department model of the past had advisors performing every task that involves the customer. In this model, customer care suffers dramatically as the advisors are pulled away from the customer to answer the telephone, set appointments, update vehicle status, cashier, and the list goes on and on. The service Department advisors might be expected to process over 400 repair orders a month as the dealership wonders why their customer satisfaction index is below industry standards.
Progressive dealerships today understand the importance of providing an incredible customer experience in dealing with the service Department. They understand that future sales are largely based on the experiences they have in the service department.
This is a tough task when you realize that none of these customers want to be there in the first place. Something is broke or requires maintenance and it is an interruption, to whatever they would rather be doing that day. Then when you start adding the irritations of the service department, such as not answering the phone, or being put on hold then sent the voicemail, many customers give up and call your competitor.
Customer retention demands that their experience illustrates professionalism in every phase of the dealership experience they are provided. After all, why wouldn’t a dealership want to build revenue in their fixed operations that has gross profit margins in excess of 50%? The fact is that dealerships in the past have done very little advertising or promotion for fixed operations, yet desire they absorb as much as 100% of the costs.
Let’s evaluate some opportunities that could be realized in the service department business development center.
Open Safety Recalls
Open safety campaigns the last several years have reached record proportions and show little signs that they are going to slow down in the future. The manufacturers now aggressively bring their issues into safety campaign status rather than face large fines from the governments or poor press reports. The manufacturers understand the issues with their vehicles and know the cost to them is endured. If not dealt with promptly, recall issues will tarnish the image of the franchise well into the future.
A service department business development center would have the time to be proactive in contacting customers with the safety issues. Why place a costly ad in the newspaper promoting a low cost labor operation, such as an oil change that you might lose profit on every one of them you perform? Instead, if you are performing safety recalls you receive regular warranty rates on the parts and labor providing normal margins.
Developing recall repairs also allows the dealership to perform multipoint inspections and recommend other needed maintenance or repairs on the vehicles at normal margins. Customers that are in the dealership to receive a low-cost oil change are seldom interested in additional maintenance. Safety recall customers are in the dealerships because they are concerned about being safe and are more likely to purchase other repairs or needed maintenance items.
Most dealerships don’t do a really good job following up with the customers and make an attempt to schedule the repair that was declined on the last visit. A business development Center for service would have the time to pull a declined repair report from the DMS and actively contact customers to go over concerns or offer at 10% discount if scheduled today. Best practice would be to share declined repair operation totals with service management so they understand what labor operations could use additional training with the advisor staff on feature benefit presentations.
Special Ordered Parts
Another challenge dealerships face is to properly follow up with customers that have special ordered parts, so these parts don’t accumulate uninstalled and collecting dust. Without proper contact, customers will always get irritated and questioned the dealerships commitment to their customer care. The BDC should use the parts department information on items received to immediately contact them and schedule vehicle for repair completion. They should also be consistently contacting customers about items that remain on backorder so they are assured the dealership didn’t forget them.
Every professional including doctors and dentists have telephone contacts to remind them of their appointment tomorrow. The reason they do this is they understand the cost of the professional standing around and not generating any revenue on a no show. The business development Center should have access to the DMS appointment schedule and contact the individuals set for arrival the next day. They should also check with the parts department for confirmation the customer’s items have all arrived and are ready for installation.
Contact Lost Customers
If the dealership irritates their customers most won’t go to the management and complain about their issue. The vast majority instead just won’t come back and find another dealership to care for them. If the customer hasn’t been in the dealerships for six months or longer the business development Center should contact them to determine if there are any issues unresolved. A free oil change or safety check provides another shot at getting this customer back. Without contact they are gone forever…
Customer Follow Up
Consistent follow up after a customer visit seeking information on how the vehicle repair was performed and finding information on the customer experience should be an essential part of any dealership service program. The vast majority of dealerships however, are not successful in performing this task at all.
With all of these opportunities to use the service Department business development center to generate additional revenue what is the downside of development? If implementing all of these procedures and the service department added an additional 10 cars a day with an average of $250 that would generate an additional $2,500. With six working days a week that would total $15000 and with 52 weeks a year that would generate $780,000 additional revenue in parts and labor. With gross profit margins in excess of 50% this would add over $350,000 dollars in additional gross profit. If your service department has two or more advisors with a monthly repair order count over 600 you should consider a business development Center. A quarter million here and a quarter million there really adds up. The real cost is if you don’t consider this a valuable part of your dealerships future.
Unless you are totally committed to have a professional BDC that is well staffed and well-trained don’t even begin the project. This is not an area that you can pull a guy from another department that’s not successful and determine their new talent is customer care in a BDC. This is not a situation where you can develop a BDC on a part-time basis. Customer care is not an 8 o’clock to noon event that you can anticipate putting your toe in the water and be successful. An efficient business development center will take several months to develop before any benefit should be expected as a result. With all the caution my view remains the Service BDC is the future.
Rob Gehring, President
Fixed Performance Inc.
There are many forms of advertising dealerships use to generate growth in their fixed operations. There are newspapers, mailers, open safety campaign processors, handouts, and the list goes on. There are many ways to measure the results of these using the dealership DMS program as a source of information.
The DMS is an accurate source of information however there’s no way to distinguish the difference between a customer responding to a mailer or just a dedicated client that has their maintenance done at the dealership. One interesting way to measure advertising is to look at the cost per impression. An example might be if the local newspaper has a circulation of 50,000 that your placing your advertisement in for a cost of $500 it would be easy to calculate your cost per impression. It should be noted that if your advertisement is in a certain section of the newspaper how many of that 50,000 would actually look at that page? Then ask yourself would they see your advertisement and take advantage of your promotion?
I’ve seen countless examples where dealerships spend large amounts of advertising when their service Department is slow to see no response. Even if they see a response it is so small that their low cost labor operation doesn’t generate near enough gross profit to pay for the advertisement. The mission should be to have processes in place that the service Department being slow doesn’t happen. My favorite ways to promote consistent repair order count growth remains using open safety campaign information provided by the manufacturer and contact the customer by phone directly. If the staff contacts ten clients per day per advisor to inform them of an open safety campaign on their vehicle the dealership will always remain appreciated and respected. There is no cost on effort by the staff to use the available information on safety campaigns to be proactive in servicing the needs of the clients. I believe there’s an additional way to advertise the dealership in such a positive way it builds consistent repair order count growth and recommendations by customers beyond any printed materials.
It’s a culture ingrained into the staff to not argue on issues involving customer concerns. If the customer had a nail in the tire and the vehicle was under warranty your staff could argue Mike is not a covered item and the client owes $30 to repair. There’s no way to win this argument in a manner that keeps the customer satisfied. Why not charge the $30 to advertising repair the tire and take care of the customer to retain them long term as a dealership client? I’ve seen so many times dealership staff wants to debate and argue with the customer about such small items they lose them totally. They surely won’t send family and friends to a dealership this so quick to find ways customers are covered and they owe money.
We must develop a culture in our staffs that understands the critical importance of the customer. They will send in their family and friends when they understand that your dealerships Mission is to identify ways to take care of the customer’s needs. No amount of advertising in mailers or newspapers can generate that amount of goodwill. Have cookies and snacks available with assorted beverages not looking for an extra dollar $1.50 for an item but just to provide better customer experience. Put money into these suggestions and call it the best advertising dollars you’ve ever spent.
Rob is President and Founder of Fixed Performance Inc. which he began over 15 years ago. His passion for customer care and helping others has assisted hundreds of dealerships with their fixed operations performance. His common sense coaching and training lifts people up as individuals and team members. With over 30 years of dealership management experience, he understands and respects the daily challenges of fixed operations. Placing a strong value in people and best practice processes always provide growth. His articles have been published regularly in national publications and weekly newsletters are read by thousands.