What are you doing to grow your business, advertising or marketing? Marketing is the systematic planning, implementation and control of a mix of activities for the purpose of promoting or selling a product, service or brand. In fact, marketing is the “umbrella” that encompasses all of the efforts required to attract, motivate and retain the customer. While these efforts include advertising, they also include the following:
- Image or Brand
- Pricing / Support
- Retention Tools
If we merely focus our efforts only on advertising, we are likely to be disappointed with the results, especially long-term. Advertising might cause a customer to visit your service department, but what are they going to see and how are they going to feel as a result of that visit? A complete Marketing Strategy is requirement for success. Okay, so how do we create and develop a Marketing Strategy?
Step One – Understanding Your Audience
Unfortunately, most of our service department audiences share at least two common perceptions:
- Dealerships are overpriced
- Dealerships are inconvenient
If we are to grow our business, we must not only address these issues, but we must communicate this to our clientele. If we attract our customers with a ten-dollar oil change and then attempt to clobber each of them with two thousand dollars worth of additional services and repairs, we are not doing anything to dispel their perception of overpriced. In addition, if we line up customers in the service drive in the morning and/or we cannot predict status or completion times and communicate this with accuracy, we are not doing anything to dispel their perception of inconvenience.
Our industry has undergone major change in the last 10-20 years but many of our people and processes have not. These changes are a result of:
- Better built vehicles – less warranty work and customers keep them longer (9-11 years versus 3-4 years)
- Less required maintenance and repairs – as a result better built products require less maintenance and repairs
While older, higher mileage vehicles being a great indicator of increased spending for maintenance and repairs is exciting to the service industry, the following chart represents maintenance costs only and is alarming!
Dealer Share of Actual Average Maintenance Spend
As you can see, the best the dealership ever has is 52.9% in year two and by year nine, the dealership will have less than 18% of the customer’s maintenance and repair dollars. To make it worse, the loyal service customer is more than 70% likely to reward their dealership with a repurchase.
We, as an industry, have actually done some nice things to improve our image of overpriced and inconvenient but have mostly failed in the execution. Examples of these failures are:
- Good, Better, Best Pricing – Most of us have options available to us, but we fail to offer the choices to our customer. Instead, we always go for the best, due to perceptions of inferior quality. We should learn how to sell value in the upgrade and let the customer make the decision. When we don’t offer options, we reinforce the consumer’s belief that we are overpriced.
- Do we know what our service inventory is? Labor Hours! How many do we have to sell? Can we tell a customer an accurate completion time for their vehicle? In an age where we can track a package as it leaves a vendor and travels across the country, why can’t we tell a customer when their car is going to be ready? If we are going to be convenient for our customer, we must be able to answer these questions. The answer is an adequate structure that assures your staff has the tools to focus on our inventory and manage it correctly.
Step 2 – Merchandising
Are we merchandising the Good, Better, Best items that we sell? So often, I visit a dealership and see tires displayed as follows:
- Good tire – size???? – $135
- Better tire – size???? – $200
- Best tire – size???? – $188
Two issues come to the customer’s mind:
- Why is the best tire less expensive than the better?
- Why is the good tire so expensive?
The good news is: “at least the dealership is displaying tires!” My recommendation is to display the Good offering as the least expensive tire available that meets the specifications for that particular vehicle, the Better offering as the OEM standard tire for that vehicle, and the Best offering being the highest rating for that vehicle. Display these proudly!
Display wiper blades and batteries! Take your Service Advisors on a field trip to one or more of your local parts stores. Allow them to see the prices of batteries and wiper blades in the non-dealership world. It will likely change their attitude about pricing.
Balloons Create Excitement! Add balloons to your tire, battery and wiper displays. It shows excitement…and, parents end up chasing their kids to the wipers, brakes and tires! This is merchandising!
Step 3 – Retention
As mentioned before, advertising will never create long-term success if we are not creating an environment that causes customers to return. The old philosophy of “get ‘em in the door for a cheap oil change, then clobber them for additional work” is no longer effective. The new philosophy has to be “nourish the relationship”. With that said, it is important that we understand our audience (Step One) and that we make it convenient and affordable to do business with us.
In a world where almost half of our new vehicle customers never return for service, will new-owner clinics pay off? Absolutely! The secret ingredients to successful new owner clinics are:
- Feed your guests
- Make the meeting informative and brief. Talk about relative subjects: Safety devices, oil change intervals, etc.
- Reward salespeople for having customers attend
- Consider alternating between weeknights and Saturdays to fit everyone’s schedule
In addition, what can we do to reward loyalty? Many dealerships and manufacturers offer customer rewards programs that accrue small percentages for future use.
Improving retention can also be as simple as getting email addresses and communicating regularly with an electronic newsletter, etc.
In summary, marketing has to be a lifestyle, not just an event. You must look at everything that you’re doing and ask, “What message is this sending to our customers?” Be your own worst critic. All of the challenges discussed in this article are curable. Sometimes you just need outside help. That’s where we fit in.