Convert Your Service Department into a Profit Center

The new digital world is having as profound an impact on the auto dealership industry as in any other industry. It seems like the changes to our industry are coming faster than ever, but one fact hasn’t changed: the service department should be one of the best revenue generators in a dealership.

It wasn’t difficult to make a significant profit in the service department when warranty work represented 70% or dealership service business, but those days are long gone. Even with the influx of recalls from Chrysler and other manufacturers, warranty work still only represents about 20% of dealership service business. If your service department is going to make the profit it should, you need to find new customers. The question is: How can you bring in those new customers?

Unfortunately, there is no magic formula to attract new service customers. With the possible exception of first-time buyers, car owners are already servicing their vehicles somewhere (many of them at independent shops). If you want these consumers to come to your service lanes, you have to give them a compelling reason to abandon their current mechanic, who they likely have been working with for years—You need to earn their business.

Earning their business won’t be easy. Consumers are reluctant to change their habits; even more so when they have been using the same mechanic since they got their first car. If you want your service department to be the profit center it should be, however, you need to bring these customers in. That means both improving the customer experience and effectively communicating with consumers through marketing and customer outreach. The question is: How?

To help you answer that question and more, we spoke with three experts in fixed operations and service marketing. They are: Jim Jensen, Senior Director of Product Management for Auto Point, Scott Pechstein, Vice President of Sales for Autobytel Inc., and Jim Roche, Senior Vice President of Marketing and Managed Services for Xtime. They gave us their insights on how to grow your service business, connect with your current and future service customers, and turn your service department into the revenue generator that it should be.

Dealer Marketing Magazine: What kind of marketing is best to reach customers who currently use independent repair shops?

Jim Jensen: Get creative with your marketing, stop relying on the old standards like TV and print ads. Create unique marketing campaigns that can be promoted online and/or get people responsive; create posts and blogs that can be shared on social sites like YouTube, Facebook, and Twitter. In addition, ensure your website has strong search engine optimization (SEO), as most consumers today comparatively shop and research online. You need to be seen at the top of search engine results like Google, Bing, Ask etc. Another suggestion is to host customer car care clinics, which includes all makes and models, and offer free vehicle inspections, appraisals on vehicle resale costs, and host customer meet and greet events.

Scott Pechstein: Studies show that consumers perceive dealership repairs and service as the more expensive option, even though they’d prefer to have their car serviced by factory authorized dealership technicians.

That said, dealers can drive increased business by using digital media to highlight the quality and convenience of their service departments, and by marketing pricing transparency when it comes to repair and service costs. They can drive business too, by promoting positive service-specific consumer reviews online, at their desktop and mobile sites, and in social media. A number of dealers on our program also offer service and repairs for all makes and models which helps them cast a wider net, and generate more business, beyond the existing models in their lineup.


And don’t forget that texting is quickly becoming a great way for dealerships to market their service centers, since consumers increasingly prefer text communication over phone calls or email. With text message marketing, dealers include keywords and short codes in their marketing materials to drive inbound service requests. Texting can also be a great way for customers to communicate with service managers, get answers to questions, and schedule appointments. However, we caution dealers against advising staff to communicate with customers on their personal cell phone devices without the use of a texting platform that tracks conversations, manages opt-ins and opt-outs, and integrates into a dealer’s CRM tool. New and stringent regulatory guidelines can lead to hefty fines for violations—up to $1,500 per text message in some cases—so having a technology platform in place for texting is critical.

Jim Roche : Automotive retailers need their marketing to address the consumer’s needs around value, convenience and trust. By creating and implementing highly targeted marketing programs that highlight the improved vehicle ownership experience with dealerships, service departments will increase profitability through customer retention.

Analyzing data from past shop performance, dealerships can offer targeted discounts for expected services, toward specific types of customers or during unsold time slots. By better understanding your shop’s trends, applying past performance data is the main facilitator to predict future availability. For example, if data shows that business is slower during Wednesday through Thursday afternoons, the dealership can launch automatic campaigns for those specific times. Incentivize your customers with discounts to go to you during these hours rather than to an independent repair shop.

Marketing a dealer service department also requires focusing on their expertise and advantages. Dealerships have more and better capabilities to service both the owner’s and the vehicle’s needs. By emphasizing these advantages through marketing, vehicle owners will see that dealerships can deliver the value, convenience and trust they demand. First, dealers can provide a very convenient and highly personalized appointment experience, followed by courtesy reminders. Additionally, only dealers are able to provide warranty repairs and are better trained and equipped to service every vehicle situation. By marketing this expertise and how they can provide a more enhanced experience, dealerships will reach and retain more customers.

DMM: How can dealers increase customer satisfaction in their service lanes?

SP: Some of the more innovative dealers on our program have implemented second-tier parts pricing through their OEM aftermarket programs to stay cost competitive. Others have installed quick service bays for oil changes, tire rotations, and other light service work, while offering free loaner vehicles to busy customers. Others top off gas tanks, provide complimentary car washes, exterior hand waxing, or customer rewards for referrals. And some of the dealers on our program offer repairs and service for all makes and models, not just their brand(s).

New customer clinics are another great way to enhance customer satisfaction. Clinics enable new customers to have questions about their vehicles answered by trained technicians and they’re a perfect forum for customers to learn about the importance of routine service and the benefits of turning to factory trained service professionals. Even small gestures like handwritten thank you notes or free coffee mugs surprisingly go a long way in keeping customers happy.

Having the service advisor get permission to text with the owner makes for a great customer satisfaction experience. They can text when the car is ready, when they need approval for additional services and they can even send pictures of the problem with the vehicle. And consumers can text with questions on status. This still needs to be compliant with TCPA via some type of text administration platform.

JR: The number one cause of customer dissatisfaction in the service department is not meeting the promise time. This is a result of not addressing customer needs surrounding value, trust, and especially convenience. By implementing technologies that allow the service department to better schedule, manage shop capacity and set expectations, dealerships will improve the customer experience. For example, an important and major benefit of improved shop management is better communications with the customer. A well-managed service department will know when modifications are needed, and the service advisor can quickly change the promise time and notify the customer. This demonstrates a dealership that values the customer’s time.

JJ: Today’s customer has three real simple needs: quality service, transparent information, and competitive pricing. These three factors help drive customer loyalty. Between mobile apps, social media, and customers using the internet for comparative shopping, it is impossible to hide or pad pricing and not expect your customers to tell the world what they think of you as service provider. People talk and everyone listens! Be proactive and provide your customers as much information as you can about the condition of their vehicle, offer a quality vehicle inspection with an explanation of legitimate services and recommendations that are needed, be realistic and competitive with your pricing (because they will shop around) and be ahead of the game by proactively communicating the status of the customer vehicle before they ask.

DMM: What can dealerships do to bring younger/millennial customers to their service lanes?

JR: Millennials are driven by convenience, accessibility, and the best value. Additionally, they tend to be more connected through technology—they grew up with it. To reach this younger generation, dealerships should apply the practices and convenience technologies that millennials are already using.


By offering multi-channel means to reach the retailer, the dealership is fulfilling the millennial’s need for convenience. They want to be able to schedule from any platform—Web, call center, mobile, and even vehicle in-dash. For example, millennials are constantly connected to their smartphones. They’re always mobile, so the dealer must be mobile too. Dealerships should be accessible whenever and wherever the millennials have an automotive need. Service departments should provide different options so these younger customers can then choose the method that is most convenient for them.

Having multi-channel scheduling makes the dealership’s working hours accessible 24/7. Millennials want to connect with businesses when convenient for them, whether it be 2 p.m. or 2 a.m. They want to be in charge of their time and not go through complicated processes.

The service drive can also benefit from imitating millennial habits. As younger customers are constantly on mobile devices, dealership service advisors should be as well. With tools such as mobile check-in and walk-around, service advisors are providing convenience and transparency. By greeting customers on the service drive with all needed information on a tablet, it demonstrates that your dealership has a modernized service department that values the customer’s time.

Millennials also tend to lean more toward businesses that are transparent. By displaying service pricing and recommendations during the scheduling process or during check-in, dealerships instill a level of trust. Customers will see that dealerships have expertise about their vehicle and credibility about what repairs and maintenance are required. Having pricing transparency allows the millennial customer to trust that they are getting the best value at your dealership.

JJ: Millennials (also known as Generation X) are very smart consumers; a lot has been written about this. Millennials thrive on easy, quick communication, such as text messaging and using apps like Snapchat, Mashable, Skype, and Twitter. Connect with the Gen X using their preferred source of communication for service reminders, vehicle status, estimating and approvals, as well as promoting special offers. In addition, create a memorable customer experience while they wait for service. Offer special “VIP” lounges that have modern décor, free Wi-Fi, coffee/barista-type service, and high-definition big screen TVs. You can even go as far as hand writing a note thanking them for their business at the time of vehicle pick up.

Hyundai has implemented similar programs in their dealerships with the “Personal Service Amenities” for their luxury brand Equus customers. By creating a personalized vehicle purchasing and service experience with Gen X customers, you will reinforce brand loyalty and customer retention for the most consumer-savvy shopper.

SP: Millennials rely heavily on peer advice and referrals, so providing a great experience that results in favorable customer reviews of your service department (and then promoting positive service-specific consumer reviews online, at your desktop and mobile sites, and in social media) is a great way to influence this segment. Mobile is also critically important when it comes to reaching Millennials. They’re always on, and on the go, which means apps, mobile optimized/responsive design websites, text message communication and text message marketing—with the use of a texting platform that tracks conversations, manages opt-ins and opt-outs, and integrates into your CRM tool—are important when it comes to connecting with Gen Y customers.

The bottom line is that all consumers are trending to increased usage of mobile devices, but for Millennials, it is almost their exclusive access to the internet. With that in mind, dealers need to have mobile websites that are action oriented, easy-to-use, that promote their service departments, and provide the ability to have a text conversation with service customers in a controlled environment.

Studies show when younger customers are disenchanted with a dealership sales experience, they’re less likely to use the dealership for service. The first and most important step is to create a no pressure “Apple Store” experience from the get-go to keep younger customers coming back for service.

DMM: How can dealerships convince service customers to become new car buyers?

JJ: In your service drive, always view your customer as if they have the potential to buy a new car, whether this is their first visit or their 20th visit. It’s a good practice to ensure your service team is providing elite service to every customer to reinforce your commitment to their customer loyalty. Create an open and frequent dialogue about potential opportunity to introduce them to a new upgrade and buy their vehicle back as part of your certified pre-owned program. Take notice if they have any family lifestyle changes, like a new baby, a new driver, or upcoming graduation and causally discuss options that might help address the need for a new vehicle. Your service drive is an excellent business center to support your dealerships CPO and new retail programs. Stay engaged with your customers to maintain their brand and dealership loyalty.

JR: According to the J.D. Power 2014 U.S. Customer Service Index (CSI) Study maintenance packages and satisfying service experiences contribute to increased customer loyalty. Thus, to win the hearts and minds of car buyers, it is important for service departments to provide an exceptional experience. The dealership and its service department are important parts of the brand experience.

By implementing systems that meet customer needs for convenience, value, and trust, dealerships will provide that exceptional experience—and the customer will consider the brand and the dealer when purchasing their next vehicle.

DMM: What are the most common mistakes you see in auto dealership service lanes?

JJ: One of the most common mistakes service departments can make is taking your eye off the drive. Customers become increasingly frustrated if they have to get out of their vehicles and look for someone to help them when they pull in for service. Additionally, at the time of pick up the last thing your customer wants to do is to hunt down their service advisor in order to retrieve their vehicle or get a question answered. In contrast, it is not reasonable to expect a service advisor to be on the drive, at the cashier and taking care of another customer at the exact same time. Create a process where you always have designated greeters (more during peak times) that can greet the customers, take down their initial comments/issues, offer them a free coffee and/or coordinate their shuttle service as you politely pass them along to their service advisor once he/she has become available. For the customer, it’s all about being recognized and feeling like they matter. Eliminate the abandoned service lanes where the customer has to find someone to assist them, keep your eye on the customer and they’ll continue to be the prize.

JR: Dealerships often limit themselves by not embracing modern technology and tools. They are not modernizing in a way that enables the quality experience that customers have come to expect from other well-regarded retailers such as Apple, Zappos and Amazon. By integrating technology with well-designed processes, these companies set the standard for convenience, value and trust; the automotive industry would be well served by learning from these examples. Dealers today have modern convenience technologies available to them—they just need to embrace them.