People that know me, know that I am about the most positive person they ever met. Throw me a curve ball and I’ll reach out and hit it. Dump some bad stuff on me and I’ll figure out a way to make the bad stuff good. Jump up with a surprise and I will tell you that I actually liked it and appreciated the reality check – that I was getting a little too complacent and probably needed the wake up call. I believe, turning negatives into positives makes us stronger. And I know a lot of you are like me – you love the challenges the car business brings to the table everyday.
With that said, the challenge I put before you today is an important one – in fact, probably the most important one you will ever take on. The challenge I am talking about is to really do some serious thinking about how the market has changed, what the competition is doing, what you are doing and what you need to do to keep up, keep customers and keep growing.
This challenge has always been there, but it is often overlooked and not talked about because in our business we sometimes get so wrapped up in the day to day stuff that we forget to look out into the future – to see where we are going. Kind of like driving down the road in a car with the door open looking straight down at the road – and not in front of us. That little exercise will most often end up in a crash – and if we don’t open our eyes and look out through the windshield and over the hood, we will all crash too.
You could say that this challenge is negative – and it could be if you let it – but as I said earlier – challenges make us stronger and give us the chance to turn negatives into positives. We have to realize that our market is changing at an alarming pace and that we need to change with it or we will get passed by and eventually fade out.
CHALLENGE 1: Cars today need less maintenance.
We used to have to change oil every 3,000 miles, spark plugs every 12,000 miles and coolant every 24,000 – but today we all know those and many other maintenance services are stretched beyond belief and that means less service revenue. It also means less service visits and that means less of a chance to start and build a relationship with service customers. It’s hard to really grow a relationship when you only meet face to face once or twice a year and everyone knows that long distance relationships often fail.
And when we talk about maintenance, we have to realize that the future includes the electric and hybrid vehicles on the horizon that have less moving parts, no oil change requirements, no other fluid services to speak of and other than servicing batteries (at who knows what intervals) will require almost no maintenance at all except maybe tire rotations, but how long before they figure out how to avoid that with different rubber compounds. Let’s face it guys – we live in a fast-paced world that wants everything to be as maintenance free as possible – and they have just about done it with cars.
CHALLENGE 2: Cars don’t break as often as they used to.
It’s true when you think about the past. Remember when you had to have your muffler and exhaust system replaced about every 2 years because they rusted out. Remember when water pumps and alternators went bad – or when front end parts got worn out. And remember when brakes went about 20,000 miles before having to be replaced – and when the old wheel cylinders would leak and have to be replaced or repaired with new boots. Remember when CV boots cracked, valve covers leaked, AC compressors failed and carburetors had to be overhauled to get rid of the gummed up gasoline residue? Ah, the good old days of service – that are gone forever. Today, cars still break but not as often thanks to better engineering and technology – but it put a dent in the service business big time. Now we have check engine lights that come on when parts fail, that set codes and sensors and computers have to be replaced – but these solid state parts are much more reliable than the old mechanical parts of the past.
CHALLENGE 3: Dealerships are not competitive or convenient for service.
At least consumers are keeping cars longer and longer and eventually they do need maintenance and repairs – but most drivers of cars over a year old don’t even consider dealership service departments for service for several reasons. The first thing they tell us is that we are not competitive enough – they believe and have had the perception forever that dealer service is over priced. It doesn’t matter if you are more expensive or not – if they think you are, then you are. Perception is reality.
They also tell us that dealer service departments are just not as convenient as the competition. We aren’t open nights and weekends and we aren’t open when they need us. They also note that since dealerships started moving out to the interstate to attract new car buyers – they also alienated service customers. Most locals (the real service customers) don’t like to get on the interstate and make a trip or go out of their way to go to a dealer that’s located of exit 21. They end up going to the more competitive, more convenient franchised chains that are located near where they live, work or shop. Think about that for a minute – it makes sense.
CHALLENGE 4: Dealer service customers are turning grey.
The number of consumers that follow their owners manual, trust a certain service advisor with their credit card and do whatever they are told are going away. We live in a much more technical, informed world than we used to. Today’s service buyers shop the internet for service and like choices when it comes to brands, warranties and incentives that stores offer to reward them for their loyalty. They have grown up in a “walmart world” that gave them all of the products they wanted in one place at low prices – and they apply that same approach to auto service. The X and Y generation is here folks, and we need to cater to them and change our image if we expect to survive and thrive in the future.
THE FIX: DO WHAT THE FRANCHISED CHAINS DID
The auto service business in our country is still an awesome $215 Billion industry. Consumers are keeping their cars longer than ever before and they eventually break and need serviced and that is good news for us. But, the competition for these valuable customers has never been stronger. Franchised chains are quickly “getting in and growing in” the business and they are smart and well financed and they advertise like crazy. They are most often located near malls or other high traffic areas and they are very competitive. They are a serious threat and they are strong – but the one thing they really have on us, in my opinion, can be overcome. They listen to consumers and they act. I have to say that again, they listen to consumers and they act. We, in the dealership service business are notoriously guilty of not listening and not acting. We just keep on doing what we always did, expecting to get what we always got – and guys, it just doesn’t work like that anymore.
Here are some suggestions to salvage and grow our service business – and I will tell you some are radical, some are expensive and some are down right not fun to think about – but we have to get in or we will be put out.
First, you have to get more convenient – really convenient. Franchised chains figured this out a long time ago. They become a part of a destination while we try to be a destination. Let me explain – there are only 3 reasons for people to go to a dealership: to buy a car, to fix a car, to buy a part. Franchised auto service chains, at least the smart ones, are located across the street from Walmart, or next to a shopping center or mall; they become a part of the destination and that folks, makes it a lot easier to attract customers. People go there to get their hair done, to buy groceries, to shop for clothes, to eat or to go to a movie. They have a lot more than 3 reasons to come there. They pay more for the property, but they save a ton in advertising.
So be near shopping centers and high traffic areas if you can and if you can’t move, build shopping areas or personal service areas around or in your store. Put a hair salon, nail shop, restaurants or other traffic builders near your store: build it and rent them out and reap off the traffic. Give customers more than 3 reasons to come to your store.
And make sure it is easy to get in and out of your store – make sure there is ample parking. Be open nights and weekends – and advertise the day lights out of it. Don’t be the best kept secret in town. And how about this - put satellite service centers in bedroom communities – I know, the factory won’t let you do that now, but if you lobby enough for it and show them a business model that works you can get this through – I know you can. Have really, really nice waiting areas, super clean restrooms and have free wi-fi and i-pads to loan out. Play into the X and Y generation – have a friggin’ theater or arcade in your store if you have to – you have to remember, you have to give consumers some real reasons to visit your store – give them something to brag about!
Next, you have to get more competitive – and not just on oil changes. You have to get more competitive on all of the services that consumers can shop. I’m not saying give the store away – I’m just saying get more price competitive on oil changes, rotations, alignments, check engine lights, tires...all of those things that customers can easily shop and already have an idea of what a good deal is. Prove you are priced right and make sure you fix the car right the first time.
And last, I believe you have to be more attentive and friendly. Nobody wants to do business with people that don’t act like they want to do business. You are the Ritz Carlton of the car business – so don’t act like Motel 6. Make sure your people are exceptional customer service team members that greet customers with enthusiasm and energy. Make sure they answer the phone, give shoppers reasons to visit and make sure they always ask when the customer would like to bring the car in. Advertise that you don’t require an appointment but you would be happy to make one if they want. We have to start seriously giving customers more reasons to want to visit our stores.
So what does the future hold for the auto service industry and your dealership? Where will you be in 5, 10 or 20 years? Well the answer I think is up to you. Are you willing to engage and go after more customers? Are you willing to invest in your service business? Are you willing to go to bat and fight for what you believe in and need to survive? Are you willing to think like a customer and listen and act on what you hear? Are you serious about your future?