Dealers are always looking for new strategies that will increase sales and profitability in the service and repair sector, particularly as better component reliability means cars are spending less time in the workshop. Customer retention, market opportunities and technological developments all gave delegates food for thought at this year’s AM Aftermarket Conference, held at the Kassam Stadium, Oxford, on March 29.
The Conference gave delegates the perfect opportunity to meet other industry people
Customer retention strategies
Dave Cartwright, Carter & Carter
Dave Cartwright, aftersales business development consultant at Carter & Carter, says repairers have to look for new opportunities that will grow their aftersales business in the face of service interval changes and increased product reliability.
Important ways of building on the services already available for customers’ vehicles include increasing the value and number of transactions through additional opportunities such as cambelt changes, air-conditioning services, brakes, tyres and seasonal safety checks.
“Service intervals are no longer the key driver for your client relations,” says Cartwright. “Every time the customer’s car comes into the workshop is another opportunity for you to do more business. Attach a comprehensive visual inspection to every visit, and use it as part of the sales process. It’s an important way to plan for the next opportunity, when you will see the customer again.”
Cartwright suggests giving the customer an inspection report, using a traffic light scheme to identify most urgent jobs and price quotes, and giving reminders of their vehicle’s MoT certificate’s expiry and next service due. He also recommends monitoring reports to track where sales are lost.
Improving performance in service reception
David Lansdowne, Aftermarket Solutions
The knock-on effect of providing excellent customer services is invaluable to franchised and independent workshops, says David Lansdowne, director of Aftermarket Solutions.
Businesses that spend a little time with the customer to explain what repairs are necessary, listen to their queries and quell their concerns, will reap the benefits when the customer later recommends the workshop to friends, or returns to buy their next car.
Dealers should adopt a philosophy that the current visit by a customer could easily be the last. Lansdowne argues this will help them focus on the extra efforts they should be making to ensure the customer will return. “We should think ‘between sales’ not ‘aftersales’,” he adds. He encourages dealer principals to get out of their office and show more interest in the service reception desk, so that they can identify any aftersales opportunities.
“You have to treasure your customer and treasure your service receptionist,” says Lansdowne. “The good service receptionist will listen and ensure that the customer understands, and listen so that they can spot new selling opportunities. They will explain what has been done, what the costs will be, and what the benefits are.”
How new technology is changing the way cars are serviced
Frank Massey, Automotive Diagnostic Solutions
The raft of electronic technology built into today’s cars is providing an opportunity for independent diagnostic specialists to work closely with franchised dealers.
With modern vehicles having six or more high speed digital communication networks, 600,000 lines of code, and 70 system controllers, dealers need to recruit more appropriately to ensure they have high quality diagnostic technicians able to keep up with the changing technology.
Frank Massey, chief executive of Automotive Diagnostic Solutions, says: “It is important that the industry looks at skills training programmes, not just at its technology training programmes.”
“The most important part of your business is the repair. If you cannot repair a vehicle there’s no point selling it. It will drive the customer away – I know this because we’re picking up your lost business as a small independent specialist,” he adds.
Capturing owners of older used cars
David Manchester, Charters Peugeot
Franchised dealers need to look at the four- to seven-year-old vehicle parc for growth in their aftersales business, according to David Manchester. While loyalty in the first three years is very good due to the manufacturers’ warranty, longer service intervals mean it is harder to retain customers after this period.
“The owner cycle is a significant barrier to us retaining contact with customers: only 30% of vehicles over four years are still operated by the original owners,” says Manchester.
Peugeot’s solution to this is Express Fit, which targets cars with an average age of 5.7 years, but not every dealer has the space to integrate it. Manchester believes that the key is for every dealer to utilize its customer database, and this involves having up-to-date and accurate records.
“Attracting new customers is the costliest form of marketing, so retaining existing customers and regaining lapsed customers is important,” he says.
“The dealer database is a significant asset and its management is essential.”
Increasing profitability from tyres and related services
Brian Smith, Continental Tyres
Dealers need to bring themselves into the tyre industry, rather than just bringing tyres into their business, says Brian Smith of Continental Tyres. He believes a good tyre offering will help dealers retain customers and loyalty, and will also increase revenue and margins from higher service, repair and parts sales.
The tyre market in the UK is worth more than £1.7bn with a gross margin of £500m and attitudes among dealers are changing with more seeing the strategic importance of tyres.
“Drivers of vehicle up to three years old tend to replace tyres like for like and there is a continued trend towards profitable high performance tyres,” says Smith.
“Our research shows that 15% of all cars entering a workshop require new tyres. If a dealer group is seeing 50 cars every day, for example, the potential from changing just two tyres per car is more than £150,000 in annual sales.”
Consumer law and the aftermarket – what you need to know and act on
Anthea Worsdall, Motor Law
The Unfair Commercial Practices Directive, which will be implemented by June 2007, will have an impact across the entire motor retail industry, according to Anthea Worsdall.
The directive bans misleading and aggressive commercial practices but also covers misleading omissions.
“Where the Trade Descriptions Act covers what you do say, it doesn’t cover what you don’t say. This new directive goes further than the TDA but we will have to wait and see how the government decides to implement it,” says Worsdall.
Whereas sales are an obvious area for the new directive to cover, there will also be an effect on aftersales and repairs, in terms of what work is agreed on and then carried out.
Worsdall also warned that the OFT is keeping an eye on what the industry is doing in terms of replacement parts and the block exemption regulations, highlighted in two recent cases involving TVR and taxi maker LTI.
“The OFT has taken action in respect of parts and I think this is an indication of its interest in this area,” she adds.
Using the internet to sell more service and parts
Mike Seaton, Woods & Seaton
Although the internet has now become part of everyday business for most companies, it should be seen as a facilitator, not a solution, according to Mike Seaton, proprietor of automotive systems and communication specialist Woods & Seaton.
“If you can’t get a process right manually, you will only mess it up with a computer. Almost anything you try and do involving parts or servicing integrated with the internet still requires a lot of work at the base level of processes and logistics,” says Seaton.
“There will never be a complete move from traditional parts sales over the phone to the internet. “The people ordering the parts want to be absolutely 100% sure that the part is the right one, that it is in stock and that it will be delivered when the dealer says it will be,” he adds.
The latest online service and parts solutions use the internet as a customer access channel for both businesses and consumers, as well as an email channel for customer enquiries.
#AM_ART_SPLIT# Consumer experience is key
Acquiring a new customer is eight times more expensive than retaining a current one, according to Simon Cook of Mondial Assistance (UK). He believes that the consumer experience is at the heart of customer retention but this doesn’t always flow throughout the business.
“Aftersales customers are already your customers. It’s obviously vital to create a good customer experience in the showroom, but the rest of the business needs to follow this through,” says Cook. “You have to ask yourself whether it would be good enough for you. If you’re not sure, surely it’s not good enough for your customers,” he adds.
When it comes to retaining customers, Cook cites the likes of Tesco, Egg and John Lewis as the companies to emulate.
“You need to ensure that sales, service and parts departments are all talking to each other and sharing information,” says Cook.
When it comes to the service experience itself, dealers should be adopting a customer-focused culture where staff are empowered and trained to deliver the best possible service.
“I am worried that when it comes to servicing, procedures are taking over. It can sometimes feel like a process, it is quick and efficient - but not very personal,” he says.
This can extend to the presentation of the bill to the customer. Each element should be explained to the owner allowing them to ask any questions – this is a good opportunity to flag up any possible future work.