Following several years of ever-increasing growth, in 2017, experts predicted new vehicle sales have plateaued, and will likely decline in the coming years. Decreased sales, coupled with diminishing profit margins, mean dealers need to look beyond vehicle sales alone to maintain profitability in today’s competitive retail automotive market.
So how can your dealership set itself up success given the expected new vehicle sales decline? One way is to invest more in your fixed ops department. Here are some tips to increase the efficiency and profitability of your service and parts department.
Build Your Best Team
Your employees are your dealership’s main source of competitive advantage. If you don’t have a great team in place, your fixed ops department likely won’t be as productive as your dealership needs it to be, and customer service might fall short. Hiring a strong team requires two key ingredients (among many others) – a strong employment brand and strategic recruitment strategy.
Maintain a Strong Employment Brand
Less than one percent of today’s job seekers would consider working at a dealership, and service technician roles are especially difficult to fill. But any time your dealership is short a technician, it leaves a service bay open with nobody there to service customers – causing you to lose more revenue the longer a position is open.
To overcome the challenge of attracting and hiring team members in your fixed ops department, develop a strong employment brand to ensure you’re attracting employees who are interested in long-term careers at your dealership. This should include a strong career path, as many job seekers have the misconception that auto technicians have limited career prospects beyond entry-level service roles. But by highlighting your dealership’s career path and sharing employee success stories on your career site, you can attract more engaged technician applicants, who are interested in growing their careers at your dealership.
Rethink Your Recruitment Tools
In addition to a strong employment brand, you should think outside the box when it comes to finding fixed ops talent. One option is to take a page out of AutoNation’s book and host job fairs at your dealership. A job fair can help you attract engaged auto technician candidates, get to know potential employees and give prospective employees a glimpse into day-to-day life at your dealership before the official interview process.
Another option is to partner with local technical schools. Reach out to the career services department to see if technical schools have career fairs coming up on the calendar, an internal job database, or other resources where you can share job opportunities with upcoming graduates. Whether you host your own job fair or partner with local schools, make sure to clearly outline the benefits of working in your dealership’s fixed ops department, to get prospective applicants excited about the opportunity. Beyond salary, highlight benefits including time off, 401(k), discounts (on vehicles, service or parts), reimbursements you provide (such as ASE certifications and college courses) professional development (paid training or other certifications employees for employees) and what type of commitment you make to work-life balance.
Encourage Customer Loyalty
Once you have a great team in place that you’re confident will best serve your customers, the next step is to think about how to maximize profitability in your fixed ops department. To do so, it’s critical to encourage customer loyalty. According to recent data, franchised dealerships only handle about 30 percent of vehicle service work performed each year across the country – meaning the other 70 percent of service is a significant untapped opportunity. This remaining 70 percent of potential fixed ops business likely goes to independent and chain auto body shops, and other competitors.
How can you encourage customers who buy cars from your dealership to continue coming back for service?
Focus on Customer Satisfaction and Convenience
With so many options available to them, if you don’t give your customers a good reason to return, they’ll likely seek service elsewhere. When it comes to getting customers excited about remaining loyal to your dealership, you have several options available. For example, consider implementing a customer loyalty program so every third or fourth oil change is free. Or send customers personalized marketing when it’s time for a service appointment – so customers know you care about the health of their individual vehicle and safety of their family.
Beyond a loyalty program and personalized marketing, your dealership should place focus on making business with your fixed ops department as convenient as possible. If you’ve traditionally only been open from 9-5 and have seen a decline in customers, you might want to rethink your hours to schedule appointments outside many customers’ normal work hours. You should also make it as easy as possible to schedule, change and check the status of service appointments. You can do this by supporting online and mobile scheduling and confirming appointments via email or text. The easier you make it on your customers, the more likely they will be to come back for continued service.
Listen to Customer Feedback
A customer could be unsatisfied with service work, wait time or some other aspect of your fixed ops department. But in most cases, unless you ask customers for feedback directly, you likely won’t have any way of knowing this information. At your dealership, you should regularly collect customer feedback to ensure your fixed ops department – and all other departments – are doing the best to foster a positive experience.
Following a service appointment, make it a habit to reach out to customers, let them know their business is appreciated and feedback is valued. Leave printed cards at your dealership’s front desk for customers to complete on their way out the door. Or reach out via email a few days or weeks after a service appointment to ask customers about their experience as a whole and their experience with your employees. If you do receive negative or constructive feedback about the your fixed ops department – or any other part of the customer experience – you can use it as an opportunity to improve operations at your dealership.
Implement a Referral Program
Not only will satisfied customers return to your dealership time and time again – for additional service or future vehicle purchases – but they’ll be more likely to recommend your dealership to a friend or family member. For example, a family member might be in the market for a new car, and if a customer had a great experience with your dealership employees, he or she will jump at the chance to recommend your dealership to others. On the other hand, when customers have a poor experience, they’re far less likely to recommend your dealership – and might even tell others to steer clear, causing you to lose business. Consider implementing a referral program and offer current customers a discount on future service work for each new customer who mentions his or her name.
Your fixed ops department has the potential to be a major profit center for your dealership. By focusing on an effective people strategy and encouraging customer loyalty, you can set your service and parts team up for long-term success – helping your dealership stay profitable in the event of a vehicle sales decline. For more information turning your fixed ops team into a source of competitive advantage, download our eBook, “Overcoming the Struggle of Hiring Auto Technicians.”