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The Connected Customer

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It’s time to rethink the automotive experience. Customers already have. 

Expectations of customers are being driven by all these other experiences they have outside of automotive,” Jim Roche says. “We could all probably cite 25 examples off the top of our heads. The one I always mention is Amazon—but whether it’s Uber or Dollar Shave Club or Domino’s, there are all these examples of fantastic experiences outside of automotive that are technology enabled that have now set the expectations for what [consumers] should get within automotive.”

So, the question becomes, are you meeting those expectations?

Roche is the senior vice president of marketing and managed services for Xtime, a Cox Automotive offshoot that offers a digital platform aimed at managing the customer experience with a dealership. But Roche, who’s spoken on industry technology trends at numerous training events, isn’t talking about Xtime when he says that the “consumer is really in the driver’s seat today,” and that dealerships need to change their collective perspective when it comes to achieving profitable growth.

According to Cox Automotive data, roughly 30 percent of all service visits take place at dealerships. Yet, Roche points out, average gross profit in service is 47 percent—compared to single digits in sales.

"Everything [in a dealership] is servant to profitable growth,” he says. “We need to find new ways to drive this, and fixed operations is the area, especially service, that every dealership should be looking at.”

The key, Roche says, is to “meet customers where they are.” Sara Shabana, founder of industry consulting firm BDC Builder, says technology is your key to doing just that. The modern, connected customer needs convenience, information and immediate response. 

“That’s only possible through the use of technology,” she says. 
 

 

The Key to Customer Retention

A recent study of dealerships, conducted by Xtime, stated that 64 percent of respondents said retention was their No. 1 priority. The same group was asked whether the service experience or the repair itself was more important to success; 94 percent said the service experience.

“That’s mind-boggling how quickly that awareness has caught on with everyone,” Roche says.

The catch? Only 83 percent felt they had the technology in place to enable that quality experience.

“There’s an awareness of that need but the execution is still lacking,” Roche says.

Mark Vickery, senior director of performance management at VinSolutions, hears of similar struggles throughout fixed operations departments. Customer retention, he says, doesn’t need to be complicated or time consuming. But it does require the right information and tools in place.

“Show me a service department that has the downtime to call customers. They don’t exist,” he says.

“Providing an easy way to reach customers where they are is critical,” Vickery adds. “You need to manage your database. Is there a tool in place to keep that data pure?

“Let’s face it, if you have a regular customer—and I define that as someone who buys every car he owns from you and does all service with you—that means sales touches him every three to five years, and service might be 20 times in that same time frame. [Fixed ops] is where the opportunity is.”

 

An Even Playing Field

According to the National Automobile Dealers Association’s NADA DATA 2016 report, the advertising cost per vehicle sold has risen to $633 ($27 higher than 2015).

Now, take into account that, according to IHS Markit analysis, 52.8 percent of all car-buying customers in 2016 purchased another vehicle from the same make they already owned.

“This is what makes retention so important to profitable growth,” Roche says. “If you’re losing [47] percent, roughly one out of two customers, and the objective is profitable growth, the amount of money you have to spend in advertising and marketing to get that growth is tremendous.”

A better use of technology, though, shifts that dynamic, Shabana says.

“It’s not about budgets and size as much anymore,” she says. “The digital game has changed all of that, and it has evened the playing field for a lot of dealerships. It’s exciting.”
 

Two Common Tech Implementation Issues

Having worked with some of the most efficient and profitable dealership fixed operations departments over the past decade, Sara Shabana, founder of industry consulting firm BDC Builder, says that technology can provide significant and almost immediate positive results—if implemented correctly. However, she regularly sees two common issues for fixed ops departments when it comes to technology integration.

1. The wrong person in the wrong place. The biggest issue Shabana often sees simply comes down to hiring the wrong person—or not have that right person onsite.

“Sometimes, you have a sales manager who was brought into the business, or a GM who was a great salesperson, but none of them have worked in this [segment],” she says, “and there’s a gap in understanding exactly how to use the technology in the most efficient way or how to integrate it into the process. They might not understand the process or the steps to be able to say, ‘This is how we do it.’”

2. The wrong mindset. “Let’s take customer interactions as the example here,” Shabana starts. “Think of it like a date; there might be three different places to ask out the same girl—at a bar, on the phone, or online. It’s similar for customers in that the challenge is understanding how to change the approach depending on the venue.”

Bottom line: The approach that works for your team over the phone is likely not the same approach that needs to be taken via email or text messaging or online marketing.

“It’s a different venue, and you have to treat that interaction totally differently,” she says.

 

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