The Significant Impact of Service Revenue

It’s the automotive dealership equivalent to killing two birds with one stone.

The benefits that service and maintenance offerings afford a dealership’s customer retention efforts have been well-publicized. When your dealership succeeds with implementing a complimentary maintenance plan, you coax car-buyers back to your showroom the next time a vehicle purchasing need arises, fostering a sense of longterm customer loyalty.

Yet the advantages associated with having a strong dealership service department don’t end there. Like eating well to both lose weight and be healthy, the gains are synergistic and two-fold. In addition to incentivizing return car-buyers, service revenue can have a significant impact on your dealership’s bottom line.

Under the right circumstances, dealership service revenue represents a true cash cow for your automotive business. Forbes estimates that more than 40 percent of a dealership’s overall income can originate from the service department, and vehicle servicing accounts for more than $200 billion in revenue annually within the U.S. – and growing.

Still, it’s not uncommon for dealerships to experience difficulties with maximizing this revenue stream. As car-buyers see their complimentary maintenance plans and warranties expire in the years following their vehicle purchase, they’re often inclined to venture elsewhere for service needs unless they’ve been adequately enticed back to the dealership.

But don’t give up on this ever-important source of dealership profitability. Here are five ways to bolster your dealership service revenue:

1. Capitalize on Service Management Software

When it comes to improving dealership service revenue, technology is your friend. The right software does far more than simply post claims online – rather, it serves as a one-stop-shop for the entire service management process. An optimal software program tracks everything from which maintenance coupons have been claimed most frequently to which car-buying customers have returned for service, allowing your business to adjust your offerings accordingly and send service reminders. Moreover, a program like Performance Administration includes Dealer Performance Reports™ to measure customer retention and profitability, as well as The Lost Opportunity Transformer™which enables your dealership’s service department to easily engage with customers who have fallen by the wayside.

2. Bolster Your Online Search Visibility

Nowadays it’s commonplace for service-seeking customers to take to the Web in search of a provider of vehicle maintenance. They’ll scour the Internet to find the right repair service to fulfill their needs. Yet many dealerships lag behind the competition with regards to showing up in organic search engine results. Type “auto repair services” into Google and see for yourself. By developing a content marketing campaign in which your dealership creates SEO-friendly content surrounding your service offerings, you can improve your visibility within search engine results.

3. Optimize Your Complimentary Maintenance Program

Your dealership may already have a complimentary maintenance program…but is it truly maximizing your revenue generation potential? By switching to a program that’s owned and branded by your dealership as opposed to by the manufacturer, you can control the destiny of your quests for improved customer retention and increased dealership service revenue. Unlike the usual off-the-shelf plan,dealer-owned complimentary maintenance programs afford your dealership the opportunity to customize your service offerings, set maintenance intervals, dictate terms of service and retain 100 percent of the remaining money for unused maintenance.

4. Pursue e-Commerce Initiatives for Auto Parts

Many service departments experience limitations in generating sufficient revenue from their automotive parts division. In addition to considering a parts wholesale business, it’s worthwhile to explore e-commerce opportunities for converting excess auto parts into extra revenue generation. Large-scale auto parts e-commerce initiatives can be accomplished through eBay or Amazon – both of which have proven effective for auto part retailing – or you can even pursue an e-commerce website to be owned and operated by your dealership’s service department.

5. Utilize Automotive Marketing to Correct Misconceptions

Let’s face it: Many car-buyers neglect to consider the dealership when selecting a source for vehicle service fulfillment. Prevailing falsehoods, after all, often suggest that dealership service proves less cost-effective and less customer-centric when compared to service received from independent auto garages. Yet it’s never too late to start correcting consumer misconceptions for the purpose of growing dealership service revenue. Leverage the personalized customer welcome kits you deliver and the new customer clinics you host for vehicle purchasers to explain the many benefits associated with your dealership service department – from complimentary maintenance offerings and factory-authorized technicians to customer convenience and superior service.

Are you ready to take your dealership to the next level of profitability? Book time with a customer retention pro to discuss a personalized retention strategy for your dealership or dealer group. Or, watch this short video to see how a Certified Maintenance®Complimentary Maintenance Program uses a customer retention strategy to create a consistent flow of service department traffic.