You’ve probably heard about the “disruption” of our business model and the need to become more focused on asset management—in the service department we’d call this time management.
In the changing economy, the importance of understanding work mix, effective labor rate and gross profit planning by opportunity to do business has increased. This is a chance to create the “modern service department.”
The Rise of Meager Maintenance
Manufacturers have reduced required factory maintenance services to an oil change and tire rotation. Added to that is a list of “inspection only” items to be performed at each interval through the first 100,000 miles of ownership.
In a sense, maintenance has become an endangered species. I’m sure that essential services, such as oil changes and tire rotations, will continue for most manufacturers for many years to come. But, even today, there are vehicles on the road that do not require these services! Already we have vehicle equipped with fully electric motors and have directional tires with offset wheel configurations that eliminate the need—or even the ability—to perform a simple tire rotation. These same machines have powertrain components that require no fluids, contain sealed housings with contents that exceed field service capability, and, because of that same advanced technology, they will only fail on very rare occasions.
In response, we already see a change in work mix, in response. Based on the most recent statistics of NCM reporting dealers and our Retail Operations Consulting team is nearing five years old with an average of 60,000 miles. In metro markets, or those dealers with higher lease penetrations, the averages for both vehicle age and mileage are much lower.
Preparing for Fixed Ops’ future
I seriously doubt—and I’m confident you’ll agree—that any manufacturer will produce a vehicle requiring more maintenance than anything they are producing today. And I’m certain that our retention of new vehicle purchasers (especially used vehicle buyers) will never be higher than it is today unless we do something dramatic to keep these customers returning to our service drives for all of their maintenance needs.
The situation isn’t improving, so you had better figure it out how to deal with it! Here are my recommendations for dealing with disappearing maintenance jobs:
- Start with a work mix study. Look at the frequency of visits by make and model year, and what types of services are the most common, by the frequency of opportunity, coming through your service drive. Identify which maintenance services are not being presented or sold, and determine why.
- Second, review your current maintenance menu strategy. Does it align with your manufacturer required maintenance intervals? Even if your manufacturer uses some oil service or maintenance reminder algorithm, the maintenance service intervals are still predictable. Keep your menu simple, easy for both the advisor and customer to understand, and build the menu packages in “common sense mode.” Use “good-better-best” pricing strategies for factory and dealer recommended services, and make sure you involve your advisors and technicians in the menu building process. If they don’t buy in 100%, I assure you they will not present 100%.
- Third, the menu should be shown at the time of vehicle sale with a personal introduction to one of your service staff. The intervals and included services should be reviewed and the first service appointment scheduled before the customer leaves the store. This process should also be expanded to include 100% menu presentations for all existing customers who come to your dealership for service, either during the interactive walk-around if the client is in for routine scheduled maintenance or during the active delivery, to set customer expectation for the next service visit.
- Lastly, always set the next service appointment during the active delivery process. Do this by gauging the next service due interval based on historical time and mileage between services using the vehicle service history. Create a point of reference for follow-up with your customer—just like your dentist sets your next appointment before you leave her office after every check-up. When implementing this best practice at your store, you must also develop a process for follow-up with each of these customers several days before their scheduled appointment to verify they are still on track for the service visit. This gives us the opportunity to adjust the appointment date or time, if necessary, and will greatly reduce the number of “no show” appointments for our advisors.
Maintenance has become an endangered species, but it won’t become extinct anytime soon. Take a proactive approach in identifying missed opportunities, and look very carefully at your strategy moving forward to maximize what business exists. Plan your work, and then work your plan.
Need more help breaking down your work mix and identifying opportunities for improvement? Join Rick and the other NCM experts in the NCM Institute for Service Management I, II, and III classes.