The Connected Customer
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  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.”