Customer retention

[trish]

I have just recently taken over as service mangager at a small rural dealership. The manager before me raised the customer pay labor rate to $71.90. This may not seem very high to dealerships in a larger metro area but the average around here is $58.00. We lost a lot of customers and I would like any ideas on how to win them back. I have lowered the labor rate to $62.00. I have tried car care clinics, vip cards and other approaches but still can't seem to get the customers in the door. Any ideas?
Thanks!

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[outlawjrj]

Trish;
Certainly shopping your competition is the first thing to do. How rural? Your competition is not really area dealers....for us in the metro areas (south Florida) the independents are our competition. Our labor rate is $79.00, but our competitive rates are of course much lower. We do about 75k in CP labor per month, and our ELR is $63 and change. Of course, you have to have your pricing set-up....we use a one price approach, a 30K service on a Hyundai Sonata is $284.88, same price for a Santa Fe, Accent, etc. How to "overcome" sticker shock after raising your labor rate is tough. Getting the word out is the best way. Do you use internal service reminders. We do, very effective way to quickly communicate with those customers. Pricing your services (CP Stuff) closely to your competition will help bring them back,....but your customers need to know it. Thats where a SR program comes into play. Any questions, email me:
pathwaystoprofit@comcast.net

[johnny o]

Hi Trish ....

It all starts with a team effort with sales and parts ....our sales and parts teams are set up to support service and each other. One of the mandatory things sales does at each delivery is a walk around with the client viewing every department (including the shop) and an introduction to the service manager(and team) and the parts manager.

Have the sales person leave you details (phone number etc) of the customer. Place a note in your company journal (or outlook tasks or calendar) to call the client in 3 months so you can then book their first appointment. Really helps to develop a good relationship. You build one person at a time but over a few months you will see results.

Parts really needs to support your service by helping sell tires and capturing the bookings. Saturn (and our owner) has a lot of training for our staff to do this for each others departments.

For sales or F& I , service lets them know if a new client is in the drive through , or if a customer is near 60,000 km for warranty extensions.

It takes time and effort, and you cannot not do it alone ...everyone in the dealership must be on board.

Hope this is of assistance.

[This message has been edited by johnny o (edited 06-07-2004).]

[robc]

My gut would tell me that your customers left for more than just the labor rate. So you might have to incorporate some other ideas in whatever efforts you try.

To overcome past pricing issues I would consider a targeted effort, cheap direct mail piece to those customers effected (those who were charged the higher rate). I suggest a postcard that blantly rips-off Walmart's rolling back prices theme. When I see good postcard it says something like "old price $15, now $9.99"

How long was the inflated labor rate in place? What franchise? What was your old car count compared to today?




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** Rob, Editor Dealersedge/WD&S **
Help is only a message post away!
robc@dealersedge.com

[tccollins]

Trish,

Step #1 was to survey the competition (good start), not to be redundant but Sears, quick lube and the sorts are as important if not more important than the other dealers.

Step #2 is to survey your customers, ask why they havent been in and they will tell you. I would suggest you start by calling customers yourself that have become inactive, introduce yourself and briefly explain your situation and survey them. I would have a discounted oil change or a coupon for a free car wash to thank them for their time. I would also suggest you have a few seasonal specials to offer in the event your timing is good and they are due for service. Last but most important I would be prepared to listen to what they tell you and react to it ASAP. If you are successful in reactivating some customers and the experience hasnt changed you wont get another chance.

Step #3 is to market the existing customers with a persistent & consistent reminder program, in house or outsourced you need to be in the mail box (e-mail or snail mail) when they need service.

I suspect as the moderator suggested, it may not be price alone.

Good Luck!

TC


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tccollins

[robc]

One thing I will caution you on is to take what customers give as a reason for leaving with a grain of salt.

I learned this from the sales department, but if you asked customers up front why they didn't buy that new vehicle their #1 reason would be "your prices are too high." It's the easiest thing to say to end the sale or relationship.

That may well be if the competition is significantly less than you - but ore often than not it is just the easiest response to give someone. My experience is that few customers take the time to give an insightful and honesty reason why they stopped coming your way. Why? Because they could care less about you - which is part of the reason why they aren't current customer. It is uncomfortable have such discussions so they avoid it by saying whatever gets them off the phone the quickest.

Plus price is so relative. The Hampton Inn was next to the Hilton I stayed at last week - that didn't make me want to run over and compare prices. But if I got flea bag motel service out of the Hilton people, I'd move on to another hotel and I am sure I would tell them is was because their prices were too high


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** Rob, Editor Dealersedge/WD&S **
Help is only a message post away!
robc@dealersedge.com

[Rob Gehring]

You have made no comment about a variable labor rate system. Most dealerships place to large a focus on the rate you would charge for a repair service when the real rate you recieve for the company is the effictive labor rate. Customer retension will be achieved when the company places all focus on the customer. Look at how long it takes to have an oil change at your dealership. People do not come to a dealership looking for the cheepest service. They want quality, professional service that is fair and honest. If you consider the special tools and training the company has made to professionally care for the customer no aftermarket company can compair. Consider performing walk arounds and popping hoods to show customer concern. Look at your hours per repair order averages and never forget your professionalism is worth it. The obligation of the company should be that the customer is informed every time every car what it needs to be in peak performance. These practices will retain the customer and sell them their next car as well.

[Mike Vogel]

You might want to do a Dare to Compare program by getting a price comparison going between your dealer and some independent shops such as Pep Boys, Goodyear, Firestone etc. Get their prices on items such as LOF, Brakes, Alignments, Coolant & Trans Fluid Drain & Refills and see how your prices compare. Your prices don't have to be lower, just competetive. Get the word out that it's not neccesarily cheaper at the independents. Also if you have not done so already get the word out about new management, complete satisfaction guarantee, what your warranty is and so on. If people were dissatisfied with prices or the quality of service you need to prove that things have changed.

[Rob K]

Trish

Presuming that the only reason that your customers defected was price (not quality of handling, repair, scheduling, etc.) A good targeted direct mail campaign may help. I watched a store turn their price perception around by running specials based on the last time the customer visited their store.

If they had not been in within 90 days but less than 6 months, they got the regular reminder with coupons.
If they had not been seen in 6 months but less than 12, they got specials.
If they had not been in within 12 months, the specials were extremely aggressive, close to breakeven. In otherwords, real barn burners.

Naturally, regardless of the mailer, each service included a service inspection (to identify upsell opportunities.)

This went on for approx 12 months and was very successful.

If you have any questions, feel free to e-mail me.
rkealey@msn.com

[Hawk]

Trish,

We made a major increase in our labor rates as part of a plan from a consultant we hired. However, it was accompanied with a Menu Selling System. Also, all references to labor rate were removed from RO's and displays. It worked great. We lost some customers...the cheap skates, but the menu selling process and focus on effective labor rate helped us go from losing money every month to making good net profit and having happier customers. You would be surprised what your customers will buy if they are approached by properly trained advisors (salespeople). It doesn't just work to raise rates without a benefit to give customers. Good luck.

Tom Hawkins

PS: We are also a small rural dealer.

[This message has been edited by Hawk (edited 06-15-2004).]