Why Service is Key to Shaping Customer Perception of Dealerships

Understanding the Impact of Service on Dealership Success

When it comes to automotive dealerships, many people think of the bustling showroom, flashy advertisements, and the exhilarating atmosphere of closing a sale. However, there's a silent profit hero operating behind the scenes: the service department. As emphasized in recent insights from industry leaders, including those at the NADA Dealer Academy, the health of a dealership's service operations is critical to both profitability and customer loyalty.

The Crucial Role of Fixed Operations

Fixed operations, which encompass service and parts, are not just additional services; they are a lifeline for dealerships. According to a report from the Virginia Automobile Dealers Association (VADA), many dealers are unaware that the revenue from their service departments often underpins their entire business model. In fact, a high absorption rate—in which service profits cover all overhead costs—is essential for sustainable success. The current national average stands at 63.9%, yet top-performing dealers are achieving rates above 100%. Understanding these metrics is crucial for any dealer principal looking to thrive long-term.

Customer Experience: The Heart of Service

The service department can significantly shape a customer's perception of a dealership. For instance, a striking statistic reveals that customers reach out more frequently to service advisors than salespeople. With approximately 10 times the contact volume, service advisors play a pivotal role in fostering trust and loyalty. It’s imperative to recognize that behind every service interaction, whether it’s a routine oil change or a significant repair, is an opportunity to either enhance or diminish customer perceptions. Issues as simple as poor Wi-Fi availability in waiting areas can lead customers to seek alternatives.

Bridging the Gap: Enhancing Customer Communication

Despite the importance of effective communication in nurturing customer relationships, many dealerships lose substantial revenue due to inefficient follow-up systems. Research indicates that dealerships could be losing up to $1 million annually due to poor phone handling. For dealerships, fostering a dedicated customer service role could be a game-changer. This role would focus solely on responding to customers promptly, improving the overall service experience. Moreover, leveraging technology—like Digital Voice Assistants (DVAs)—can allow dealerships to engage with customers 24/7, streamlining the engagement process and reducing wait times.

Future Directions: Evolving with Customer Needs

Today's customers are increasingly looking for transparency and efficient service. Foremost, establishing 24/7 appointment scheduling is vital. Integrating a user-friendly online platform allows customers to book appointments quickly, encouraging loyalty through convenience. Additionally, the idea of video updates from technicians regarding service recommendations has surfaced as a method to boost transparency. Not only does this educate the customer on potential services, but it builds trust by helping them understand the "why" behind each recommendation.

Investment in Training: A Key to Service Excellence

Many dealerships undervalue the training provided for their service staff. The traditional focus has often shifted towards sales training, neglecting the essential skills that can lead to customer retention and satisfaction in service departments. Establishing consistent training programs focused on customer communication and service excellence can empower staff. Techniques tailored to foster empathy and communication can dramatically enhance how customers feel about their experiences.

Conclusion: The Path to Sustained Success

For automotive dealerships, the road to success is paved with great service. By prioritizing service operations, investing in team training, and enhancing the customer experience, dealership owners can cultivate loyalty that strengthens their bottom line. As the industry continues to evolve, maintaining a focus on service will be the key differentiator that enables dealerships to thrive in a competitive landscape.

If you're interested in transforming your dealership into a customer-centric operations powerhouse, consider taking the next step in your education with the NADA. Explore some upcoming seminars to discover actionable strategies that can make a difference in your fixed operations.