Now is Not the Time to Cut!

Every day I hear dealers complain about how bad things are. They talk about the stock market, the mortgage situation, how people are letting the banks foreclose on their property, and that all of those things are hurting car sales. Then I hear another dealer use the “it’s an election year” excuse, or the war in Iraq or the cost of a gallon of gasoline as the weak reasons their business is suffering. These dealers are the same ones that are trying to cut every expense including advertising as if they actually believe they can “save their self into a profit.” It seems like they have all just given up and resolved themselves to tighten their belts in the hopes that maybe, just maybe, they can survive this horrible situation they have been thrust into without any way of controlling it.

Well, I say this respectfully, but with conviction: What did you expect? It is time to wake up and as bad as it sounds, it is about time for dealers to get serious about customer retention, about increasing customer-pay service work and about advertising and marketing their service departments. This is not a new concept, but it sure has taken a while to hit home. Unfortunately, it takes a serious downturn to get everyone’s attention. So, here you are, right in the middle of it all and deep down, most dealers know that if they had done the right things long ago they wouldn’t be in the situation they are in now. What are the right things – read below:

Open early and close late. And open your service department all day on Saturday. The independents will tell you that Saturday is their best day - You have to be open to do business.

Get competitive. Make sure your oil change price is a great deal. Remember, the oil change is the traffic driver and almost all upsells come directly from oil change write ups.

Advertise your service department. Even though car sales maybe be down, that just means that customers are keeping their cars longer, driving more miles and needing more service. Beef up your service advertising budget – go ahead - crank it up, don’t cut it. Don’t be the best kept secret in town.

Increase customer loyalty and retention. It is time to invest in some form of loyalty rewards club to give customers a reason to visit and do business with you. Whatever it costs – it is much cheaper than constantly spending $400 to $500 in advertising for new car buyers. It is a known fact that loyal service customers visit more, spend more and are much more likely to buy their next vehicles where they have their current one serviced. Take a small portion of your advertising budget and invest it in your existing customers.

There you go – four things that will build your business. As crazy as it may sound, I am excited about the future. I know that dealers who focus on customer retention and invest in their existing customers will reap the rewards both in the service department, the sales department and the bottom line net profit. I also know that dealers who didn’t get serious will be weeded out and eliminated. Which group will you be in?