BG Products Industry News

By Charlie Polston, Automotive Customer Retention & Profitability Consultant, BG Products, Inc.

Customers in your service department say that value is their top priority. Does that mean you’re charging too much; that you need to lower your prices; or that customers want cheap service? No! No! No! 

The Cox Automotive Service Industry Study, after interviewing 3,500 dealership service customers, found vehicle owners want a good return on the vehicle maintenance and repair dollars they invest, and that is the definition of value. You get what you pay for; cheap isn’t good and good isn’t cheap. 

There is this crazy wrong impression that dealerships charge too much for service work – way more than anyone else does. It just isn’t so! For example, Cox found the average dealership oil change to be $61, while the quick lube average was $60, and tire stores and repair chains averaged a whopping $75 – for an oil change. 

Fact: Quick lubes, tire stores, and auto repair chains do millions more oil changes than dealerships. 

Fact: Their average oil change price is the same or much higher. 

Conclusion: Cheap price is not a huge motivator – but value is. 

Quality, convenience, and trust rounded out the top four customer priorities – in that order. I find that very interesting because a great definition for value is quality (skilled technicians and precisely engineered parts), convenience (reasonable wait times, loaner or rental cars, shuttle, and streamlined drop-off and pick up), and trust (keeping your word, following through, and showing transparency). 

Speaking of convenience, the study revealed the threshold for wait times was 2.4 hours. Customers that spent less than 2.4 hours at the dealership gave a CSI grade of “very satisfied.” There is this crazy notion in the collective fixed ops mindset that says we have to get them out in 30-45 minutes. 

This rush to push customers out the door is a great excuse to squash any service up sales. In their quest for speed, many advisers never discuss needed maintenance with the customer – or if they do, it is discussed in terms of “do it later.” My friends, never put off until tomorrow the labor that you need to sell today! Strike while the iron is hot – ask vehicle owners to buy tech-recommended, needed maintenance – right now. Your shop can get any fluid maintenance service, filter exchange, or fuel service done in an hour, and the Cox study says the consumers will give you the time. 

I realize this is an article about value but indulge me for a few more paragraphs about time and convenience. If you review the multi-point inspection with customers no longer than 25 minutes into their wait time, then odds are you can buy more time. Most people would rather spend an extra hour at your dealership today, than try to figure out a time to come back, fight traffic, and go through the inconvenience later. For heaven’s sake, ask for the additional tech-recommended maintenance and repair business – ask for it today! 

The reality is if you don’t sell it today, you never will. 

Oh, and by the way, the dealership will make more money doing repairs and maintenance services than oil changes – and so will managers, techs, and advisers. 

Remember, you do oil changes to retain customers so you can sell maintenance services to make money. 

By the way, that’s value. Your dealership becomes their one-stop service shop for all their automotive transportation needs. 

Your labor rate is probably somewhere around $125 per hour – wow, that’s a lot of money; or is it? Bob Greenwood says shops are, in reality, knowledge-based businesses. Your shop manages productivity through billed hours, which come as a result of selling your knowledge. Greenwood, president and CEO of Automotive Aftermarket E-Learning Centre, LTD., goes on to say that the automotive industry is all about competency – and competency is reflected in the labor rate. That’s value! 

Doctors, lawyers, nutritionists, CPAs, college professors, and automotive technicians are all paid in the same manner – according to their knowledge and competency! 

Earlier this summer, I bought a 14-year-old four-wheel-drive SUV so my wife and I could access two of our favorite fishing holes. It was in great shape, but it had a flutter, a stumble at about 40 mph. It annoyed me beyond measure. The shop diagnosed it as a transmission issue; yet $400 later the problem persisted. Then I went to one of the most expensive places in town. Ninety seconds into the test drive the technician diagnosed a misfire. Problem solved. 

Additionally, they found my alternator was on its deathbed. I can’t tell you how much safer I feel taking my sweet wife of 34 years into these remote locations to catch bass. (She usually catches more than me.) I paid more for the right diagnosis and cure – and it was worth it. That’s value. 

Let me make one final point. Value is not automatically perceived by vehicle owners; it has to be sold. It may well be your most important sale.

Make sure your advisers keep “telling your story” and that they explain the credentials and certifications your techs have earned. That’s how you build value. Examples of this might include: 

•  “Our techs have a combined 10,500 hours of training.”
•  “Collectively our guys have over 295 years of experience working on Fords.” 
•  “We’ve invested over $150,000 in diagnostic tools, equipment, technology and software to assist our techs in quickly getting to the cause and cure.” 
•  “Our maintenance technicians are fully certified to perform all necessary fluid exchange services.” 

Customers demand value, and your service department provides it! Happy value sales to you! 

(My special thanks to Jim Phillips of Cox Automotive for permitting me permission to quote from the Service Industry Study.)*

y Charlie Polston, Automotive Customer Retention & Profitability Consultant, BG Products, Inc.

Customers in your service department say that value is their top priority. Does that mean you’re charging too much; that you need to lower your prices; or that customers want cheap service? No! No! No! 

The Cox Automotive Service Industry Study, after interviewing 3,500 dealership service customers, found vehicle owners want a good return on the vehicle maintenance and repair dollars they invest, and that is the definition of value. You get what you pay for; cheap isn’t good and good isn’t cheap. 

There is this crazy wrong impression that dealerships charge too much for service work – way more than anyone else does. It just isn’t so! For example, Cox found the average dealership oil change to be $61, while the quick lube average was $60, and tire stores and repair chains averaged a whopping $75 – for an oil change. 

Fact: Quick lubes, tire stores, and auto repair chains do millions more oil changes than dealerships. 

Fact: Their average oil change price is the same or much higher. 

Conclusion: Cheap price is not a huge motivator – but value is. 

Quality, convenience, and trust rounded out the top four customer priorities – in that order. I find that very interesting because a great definition for value is quality (skilled technicians and precisely engineered parts), convenience (reasonable wait times, loaner or rental cars, shuttle, and streamlined drop-off and pick up), and trust (keeping your word, following through, and showing transparency). 

Speaking of convenience, the study revealed the threshold for wait times was 2.4 hours. Customers that spent less than 2.4 hours at the dealership gave a CSI grade of “very satisfied.” There is this crazy notion in the collective fixed ops mindset that says we have to get them out in 30-45 minutes. 

This rush to push customers out the door is a great excuse to squash any service up sales. In their quest for speed, many advisers never discuss needed maintenance with the customer – or if they do, it is discussed in terms of “do it later.” My friends, never put off until tomorrow the labor that you need to sell today! Strike while the iron is hot – ask vehicle owners to buy tech-recommended, needed maintenance – right now. Your shop can get any fluid maintenance service, filter exchange, or fuel service done in an hour, and the Cox study says the consumers will give you the time. 

I realize this is an article about value but indulge me for a few more paragraphs about time and convenience. If you review the multi-point inspection with customers no longer than 25 minutes into their wait time, then odds are you can buy more time. Most people would rather spend an extra hour at your dealership today, than try to figure out a time to come back, fight traffic, and go through the inconvenience later. For heaven’s sake, ask for the additional tech-recommended maintenance and repair business – ask for it today! 

The reality is if you don’t sell it today, you never will. 

Oh, and by the way, the dealership will make more money doing repairs and maintenance services than oil changes – and so will managers, techs, and advisers. 

Remember, you do oil changes to retain customers so you can sell maintenance services to make money. 

By the way, that’s value. Your dealership becomes their one-stop service shop for all their automotive transportation needs. 

Your labor rate is probably somewhere around $125 per hour – wow, that’s a lot of money; or is it? Bob Greenwood says shops are, in reality, knowledge-based businesses. Your shop manages productivity through billed hours, which come as a result of selling your knowledge. Greenwood, president and CEO of Automotive Aftermarket E-Learning Centre, LTD., goes on to say that the automotive industry is all about competency – and competency is reflected in the labor rate. That’s value! 

Doctors, lawyers, nutritionists, CPAs, college professors, and automotive technicians are all paid in the same manner – according to their knowledge and competency! 

Earlier this summer, I bought a 14-year-old four-wheel-drive SUV so my wife and I could access two of our favorite fishing holes. It was in great shape, but it had a flutter, a stumble at about 40 mph. It annoyed me beyond measure. The shop diagnosed it as a transmission issue; yet $400 later the problem persisted. Then I went to one of the most expensive places in town. Ninety seconds into the test drive the technician diagnosed a misfire. Problem solved. 

Additionally, they found my alternator was on its deathbed. I can’t tell you how much safer I feel taking my sweet wife of 34 years into these remote locations to catch bass. (She usually catches more than me.) I paid more for the right diagnosis and cure – and it was worth it. That’s value. 

Let me make one final point. Value is not automatically perceived by vehicle owners; it has to be sold. It may well be your most important sale.

Make sure your advisers keep “telling your story” and that they explain the credentials and certifications your techs have earned. That’s how you build value. Examples of this might include: 

•  “Our techs have a combined 10,500 hours of training.”
•  “Collectively our guys have over 295 years of experience working on Fords.” 
•  “We’ve invested over $150,000 in diagnostic tools, equipment, technology and software to assist our techs in quickly getting to the cause and cure.” 
•  “Our maintenance technicians are fully certified to perform all necessary fluid exchange services.” 

Customers demand value, and your service department provides it! Happy value sales to you! 

(My special thanks to Jim Phillips of Cox Automotive for permitting me permission to quote from the Service Industry Study.)

Dealership service departments have a great opportunity to increase traffic on the drive by pursuing recent used car buyers—those who bought from your dealership and those who bought elsewhere.

First, let’s look at the statistics (according to Lang Marketing):

 Almost a million vehicles were lost in 2017 due to hurricanes Harvey and Irma, creating a surge in demand for new and used vehicles.

 There were 42.4 million used cars sold in 2017; that’s up over two million units from 2014 when 40.3 million used cars were sold.

 The average age of used vehicles sold in 2017 was 4.5 years old. That is down from five years old not too long ago. (Newer vehicles typically bring higher prices, which may explain the next statistic.)

 The average sales price for used cars in 2017 was $19,500. That’s $1,400 more per car than in 2010 when the average sales price was $18,100.

Jim Lang of Lang Marketing makes the following observations:

“Higher used vehicle prices are generally positive for the aftermarket since they make it easier for consumers to justify investing in the repair and maintenance of older vehicles. Higher used vehicle prices also raise the value threshold for scrapping cars and light trucks, thereby keeping older vehicles on the road longer.”

So, as prices go up, many consumers are motivated to not only keep their old car but to spend some money on it to make it last a few more years. Yea! But the sobering fact is most vehicle owners aren’t spending that money at their local dealership; rather, they are heading to the aftermarket.

You’re okay servicing older vehicles in your shop, right? And you’re okay servicing any make or model, right? If you’re an import store that sold an F-150 pickup off your used car lot, then you’re okay having that vehicle serviced in your shop, right?

Most independent garages and franchised aftermarket shops are ready, willing, and able to work on anything. I’m suggesting your dealership should be, also.

There are 267 million cars on the road in the United States and that’s increasing every year. Combine that with the fact that the number of service bays are declining every year and you have the perfect opportunity for fixed ops growth…if you pursue it.

Action Point #1: First, let’s look at the low-hanging fruit. I’m talking about being intentional in retaining your pre-owned car buyers—making them lifetime service buyers. I see a plethora of new car retention programs designed to keep consumers loyal, but rarely do dealers aggressively pursue their used car buyers. That’s tragic and doesn’t make good business sense.

The action point is to give your used car buyers access to all of the retention programs available to your new car buyers. Things like “Engines for Life,” lifetime warranties, complimentary roadside assistance for life, and scores of other incentives to keep them coming back.

But you can’t stop there. Customer loyalty in and of itself won’t make you any money. You can’t deposit loyalty in the bank. Forgive me for stating the obvious, but you can only deposit money in the bank, and the only way that will happen is when the service advisors sell something!

Don’t assume your advisors understand the big picture. Take the time to have a service sales meeting and lay out your two-fold used car buyer retention strategy:

1: Get them back on the service drive.

2: Sell tech-recommended services to keep their cars trouble-free and fun to drive…and to keep them coming back!

Action Point #2:
Secondly, equip your advisors with word tracks that are brief and easy to learn. For example, if you implement some type of lifetime engine warranty on all of your used cars, you might coach your advisors to check vehicle history and say, “Mr. Customer, I see you are already enrolled in our Engines for Life Program. In order to keep your coverage intact, you would want our performance oil change package, right?”

Or you might have them say, “All of our pre-owned vehicles come with Lifetime Roadside Assistance as long as you choose our “better” or “best” oil service. Which one of the oil change packages best meets your driving needs?”

The intent here is to give your advisors an opening sentence—a proven phrase that will “get them started” on the road to a sale. Most professional advisors can take it from there if you can just give them a starting point.

Action Point #3: Lastly, proactively reach out to “lost souls”—vehicle owners that haven’t been on your service drive in over a year. Most folks have their oil changed twice a year, so if you haven’t seen them in that amount of time, they’ve defected to the aftermarket. Oh, you’ll see them again if they have a catastrophic failure that’s covered under warranty, but for routine maintenance, you’ve lost them.

Go get them back! How about a car care clinic on a Saturday morning? Make it a grand party with hot dogs and those inflatable bounce thingies for the kids. All fixed ops personnel will be needed, from “A” techs to lube dudes to porters. The centerpiece of the event is a free multi-point inspection performed on every vehicle.

Granted, it’s a lot of work, but if you regain 20-30 lost customers, it’s a great success. Plus, you’ll sell lots of labor hours simply by having your techs get their hands and eyes on every vehicle.

So many used cars, so little time. Go start rounding them up. It’s worth it! My personal thanks to Jim Lang of Lang Marketing. For more information on the Lang iReport, you can visit langmarketing.com.