The challenge facing franchised car dealers this year is to establish alternative profit centres during what is likely to be an even tougher year than the last. Although first reports are that many dealers reached their targets in January with the new car market very slightly up on last year, they are nevertheless cautious about prospects for the rest of 2012.
Whilst many businesses are looking at cost savings and encouraging all employees to be less wasteful, they are also looking at alternative ways of profit generation and profit retention, particularly in the area of aftersales where the business is perhaps under the greatest pressure from the independent sector.
I would bet that the following scenario is still very prevalent in many franchised car dealers around the country.
A customer takes their car in for its annual service.
The service advisor has the car serviced in line with the manufacturer’s instructions.
The technician gives the service advisor a list of extra work that needs carrying out, such as tyres, brake pads etc.
The service advisor costs the extra work.
The service advisor then presents these extra costs to the customer.
Said customer recoils at extra cost.
Customer pays for the service and has their book stamped.
Service advisor says cheerio.
Customer goes to the local independent garage which carries out the work needed for much less than the franchised dealer.
The pattern that has emerged is one where customers have concluded that after 3 years they will simply stop having their car serviced by the dealer with the manufacturers name above the door because, as far as they are concerned, it is prohibitively expensive.
So what’s the answer? How do aftersales staff change the customer perception and win these valuable customers back?
It is reckoned that more than 65% of customers who buy a new car do not have their cars serviced at a franchised dealer after 3 years and that is a big lost opportunity and loss of what could be a loyal customer. Many pro-active dealers are recognising that in order to stop this drain of their customers they need to present a more flexible approach especially when they attempt to upsell work to customers.
The scenario we have just described does not need to happen if at the point where the service advisor mentions how much the extra work will cost they then say;
“…but as we have made a profit from selling you the car in the first lace, probably a profit from your part-exchange, profit from the finance and GAP policy you took out, profit from the services you have already had carried out let’s see if we can keep you as a customer by trying to establish a figure that enables you to have the work carried out with us and encourages you to come back next year and tell your friends…oh and of course upgrade and buy another car from us so we can sell on your existing car safe in the knowledge that we have looked after it from day 1 and can therefore pay you more money for it and perhaps get a premium profit from the next customer due to the appeal of the pedigree of the car.”
Bit long winded but you get the point.
By investing in better training and employing staff who think more like sales people, and incentivising them accordingly, will lead to selling more hours, retain more customers and as a result be more profitable.
As my old sales manager used to say to us;
”you can either have a small percent of the whole pie or 100% of no pie”.
Clearly what he was saying is that by having little and often more often there are likely to be far more winners in the bigger picture; customers, dealers and staff all get what they want and dealers stop haemorrhaging income potential by losing customers to service agents who will be far more flexible over price.