Ever Heard of Service Market Positioning?

Ok, tell the truth – when you saw the title you just had to read this because you have never heard of Service Market Positioning (or SMP as I like to call it) before. You probably have never heard of it because I just made it up – so it's only fair for me to explain what it is and how it works and more importantly – how you can prosper from knowing it.

Basically, what I call SMP is an abstract definition of where you, or to be more clear your service department, stands in your marketplace. It's kind of like – well, for lack of a better way to put it, a popularity contest. I love it when service managers tell me that they aren’t in a popularity contest. Wrong, Mr. Tough Guy, you are. The popularity contest you're in results in bottom-line profits. If customers like you and trust you, they come back, spend more and bring friends and family. Now, before you get all anxious about what your SMP is, let me tell you that there is really not an actual calculation for this. I mean, if you call me I can’t run a report and tell you that your SMP is 89.7 while the dealer down the street is 65.4. It just doesn’t work like that.

SMP, in my definition and use, is somewhat subjective, and it is a constant work in progress. It's really a matter of how good you are and how good you can be. For example, shopping the competition every month and acting on what you find can improve your SMP – and the result is you get more customers. Training your people to answer the phone the right way to get more customers in can improve your SMP – and increase service traffic. Being open evenings and Saturdays will improve your SMP and result in customers seeing how convenient you are – even if they don’t visit during those extended hours. They see it and you move up the list as far as SMP. When you offer a great place to work, have a hospital clean shop and attract a lot of customer pay work – your SMP goes up and so does your ability to attract the cream of the crop technicians when others can’t. If you set up your customer lounge like a Ritz Carlton hotel (I like to call the waiting area a Guest Lounge), have super clean restrooms and a modern facility with nicely landscaped areas, you move up the SMP scale. Subconsciously, customers want to return and do business with you – even if they can't put their finger on exactly what you did to earn that business. In other words, these things are all factors that help customers decide whether or not to do business with your store.

Now, let’s talk about advertising and how it can improve your SMP. If you send out service mailers that boldly show that you are very competitive on prices, offer more than the other guys and show that you are ready, willing and able – in fact, anxious to serve your customers – you will improve your SMP.  And – this is important – don’t fall into the trap of cutting your fixed operations advertising budget just because things are slow up front. Now is the time to invest in good solid advertising to get your service customers back and attract new ones. Got a problem with that statement? Keep in mind that the average dealership grosses over 70% on labor and over 40% on parts – so before you get all wound up about cutting advertising – look at your financial statement and see if you wouldn’t really rather increase traffic back in your service department. Do the math on how much each customer repair order is worth (what is your average sales and gross dollars per repair order, do you know it – you should).

And don’t stop at advertising. If you are serious about increasing your business and customer retention, then you need to offer some kind of a loyalty program to get customers to return; show them that you care and appreciate them. When you do that, you improve your SMP. It’s really pretty simple -- take care of your customers and they will take care of you.

More on SMP - Don’t be the old nasty service manager from 1964 that loves telling customers to get out of the store. Nowadays, you need every single customer you can get. Enough is not enough anymore and customers are more critical, more demanding and have more choices out there than they ever have. And don’t think for a minute that you have them locked in – you don’t. You have to Wow them, make each customer feel special (they are by the way). They chose your store over all of the other places they could have gone for service. When you have a customer with a complaint, handle them with kid gloves. Show them just how sorry you are, how much you will do for them and how important they are to your future. Tell them right up front that you need them. And don’t stop there. Treat customers like you would want to be treated – a simple concept that started in kindergarten but still applies today. And if you do it right – Wow them, I mean – you will raise your SMP and your NET.

Another SMP tip - Train your techs on how to fix it right the first time. Nothing kills SMP and customer retention faster than customers having to return more than once to fix a problem. Make sure your techs know how important each customer is and also make sure your advisors are deeply involved in solving customer problems. All too often I see advisors blaming techs for comebacks when the complaint wasn’t written up correctly. The advisor has to provide the tech with a clearly defined explanation of the problem.

And get this, it’s the best part and I mentioned it earlier in this article. SMP is closely related to another important measurement item calledN-E-T. – otherwise know as net profit. Net is good, so go back there and get involved. Get serious about customer retention and customer pay business. Get excited about attracting new service customers and keeping your existing ones. Go after the service business like you do in your sales department and remember most service departments gross 70% or more on every dollar they take in from labor sales. Get serious about your SMP and you will be happy with your NET.