Yes, that's right. I said it and I can back it up with measured results. A formal customer education process exercised properly generates more customer satisfaction, customer retention, and service/parts profit than any "selling" system I have ever witnessed. Let me explain.
In the more recent history of American automobile dealer service, the art of customer handling has changed its purpose from solely providing competent customer service to a primary focus on selling "fast-buck" maintenance services. In fact, service advisors are generally far more rewarded for their "selling" skills than their customer handling abilities, product knowledge, or ability to manage workflow.
This "selling philosophy" transformation began in the late 1970s and early 1980s, when auto dealership profits, even dealer survival, began to depend solely on service and related parts profits. Prior to the 1960s, dealer fixed operations actually performed a very satisfactory job of paying most of the dealership expenses (even the new and used car department expenses). Amazingly, this accomplishment was performed with incredibly low labor rates of less than $8 per paid hour.
Service market penetration, technician output, maintenance work as a percentage of all work, and technician wage percentage of the labor hour (as high as a 50/50 split) were all far superior to today's performance in these categories. Yet service and parts managed to produce significant gross profits by maintaining their customers' loyalty. There may not have been many dollars per service visit, but there were many ongoing visits made to dealer service departments for many years.
One may argue that vehicles needed more repairs and maintenance in the past, but another view is that inadequate service would have simply driven the customer away from dealer service sooner. Keep in mind that most new vehicle service and parts warranties were only 90 days or 4,000 miles until the mid-1960s.
My point, you ask? The difference in dealer service then and now revolves around the service advisor experience. Rather than improving this interaction by expanding service lane technologies, the service advisor experience has actually deteriorated. No particular item has contributed to this dubious degeneration, but conceptually, the goal of serving the needs of the automobile has disappeared.
Concentrating energy on the "perceived wants" of customers has displaced the entire original concept, which was simply to find and fix customer concerns from the first moment of customer interaction, and to tutor maintenance needs. Those basics have never changed. But the ability to perform an excellent service transaction has diminished as new generations of management have determined that dealers are losing service business because they don't provide "extras" in the basic service experience.
While all of these extras can enhance the basic service experience, they more often utilize much of the time and energy of the participants, such as advisors, in the service experience, leaving little left for the basics. Consider the following:
· Loaner Cars If you can't identify and fix problems in a timely fashion, I suppose providing a free car is the next best thing. Customers love to take their vacations in loaner cars anyway.
· Shuttle Buses If it doesn't run on a schedule, it isn't a bus as we know it. Some of these systems create more ill will than good will, as well as employee frustration. "See those taillights, Ms. Jones? That's your ride."
· Car Washes This is always at the bottom of any list of customer mandated "needs" (not to be confused with "wants"). It is a great way to keep your body shop going with internal work. If you have provided this as a free service for some time, you may be stuck with it. · Lounge TV Sets What better way to entertain your guests than with your competition's advertising and Jerry Springer in the same hour?
· Extended Hours If you are not providing good service with a full staff during regular hours, just imagine what kind of service you can provide with less staff in extended hours. · Exorbitant Facilities Your customers always thought you were charging too much, now they know for sure.
· Coupon Specials Customers now have confirmation that your prices are too high in the first place. You had to reduce them just to get people to come in.
· Cashiers Well, at least it helps minimize the time the customer has to spend with that darn service advisor.
· Computers They certainly provide easy reading for those misspelled words and poor syntax.
· Selling Maintenance Services Since customers aren't taught what is needed, I suppose the next best thing is to surprise them with it when they happen by with other concerns. Since customer visits occur so seldom, getting all you can get seems like the appropriate philosophy.
· Unnecessary Oil Changes This business practice continues to baffle me. It is inconvenient for the customer, there is an alternative down the block from the customer's home, and frankly, there is no profit on this item.
While these extras can be fine add-ons to providing good service, they must not become the center of the service experience, nor the focus of energy for service advisors. Put your energy where it counts, and practice excellence in the following items first. These are the relationship builders that helped create the tremendous service customer retention that dealerships once had and can enjoy again.
· Technical Knowledge Service advisors should know how every vehicle system functions; they should know system characteristics, what generally breaks, how long repairs will take, what repair or diagnosis consists of, and how much parts and labor cost. Service advisors should determine pricing rather than have to ask technicians for pricing information. Generally, repairs (and certainly maintenance) are redundant procedures that total less than 80 and comprise over 85 percent of repair order situations. Service advisors must know them all in agonizing detail, period.
· Maintenance Knowledge Customers should never be "sold" required service needs such as maintenance. They should be taught their vehicle's needs and the resulting benefits as outlined by the engineers in the factory manuals. The cardinal rule here is that the only maintenance service that should be discussed now is the next one, because the customer is "purchasing" the current one based on the information shared by the service advisor during the last visit. Customer education begins at purchase and is cemented during the first visit.
· Communication Two real problems exist for today's service advisor. First, there is no privacy with the customer, and second, the vehicle is not readily available to the service advisor. Up until 20 years ago, service advisors worked with customers on a one-on-one basis, at the vehicle, where concerns could be examined and confirmed. Customers were always given estimates of probable costs based on these thorough examinations, and most importantly, relationships were cemented between the advisor and the customer, based on the demonstration of the advisor's knowledge. Get the vehicle, customer, and service advisor together without others where the job can be done right.
· Decision-Making Just as important as not spending money on a customer's car without authorization is not recommending fixes without the service advisor personally reviewing the vehicle and getting a thorough explanation from the technician. Until more modern times, the service advisor was also the supervisor of the shop someone with both skill and authority, as well as the respect of the technicians. The service advisor, not the technician, must make the final decision on what is best for the customer.
· Possession Long-term customer relationships with most types of service facilities develop through people, not freebies. Service advisors should possess their customer base as though it were their own business (in one sense it can be). Passing customers around will never allow a long-term relationship with the service advisor to develop. Systems that prohibit this type of relationship-building will have difficulty giving the customer a reason to justify using only one service facility indefinitely.
So what about selling? When your service advisors can execute the basic fundamentals well, they will establish a long-term relationship with your customer through education, explanation, review, and conferencing. Your service advisor can become the car doctor the customer seeks out after a few years of ownership. Unfortunately for dealers, that person and system are most often found in an independent shop.
Selling is usually associated with a seller interacting in a planned way to create a purchase for something the prospective customer may want, but doesn't usually absolutely need (such as a new car). Required maintenance and repairs are not a matter of want, they are a matter of absolute need. Without a relationship between the service advisor and the customer that revolves around basic relationship builders, real needs are never identified as anything more than a ploy to make a fast buck. In this case everyone loses.
Ed Kovalchick is CEO of Net Profit Inc, an international automotive manufacturer and dealer training and management consulting firm, located in Alabaster, Al. Mr. Kovalchick is a featured speaker and instructor at conventions, 20-Groups, associations, and other automotive-related events worldwide. He is also a former six-franchise new car dealer and independent shop owner. If you have specific questions or require more information about this subject, please check the appropriate box on the reader response form on page 3 . ekovalchick@dealeronline.com