Digital Dealer - April 2019 - 6

Road Trip to DD26 | April 9-11, 2019 | Orlando

DD26

D E A L E R O PS & M A NAGEM ENT: F ixe d Op e r a t i ons

Conquesting
Through Service
New-vehicle sales are
slowing, front-end
margins are shrinking, and
economic experts predict a
recession within three
years. For auto dealers,
these trends require a focus
on fixed operations growth
as a source for future
revenue. This requires a
two-pronged approach; first,
increasing service yield
from current customers and
second, increasing service
market share.
Most dealers don't track
revenue per units-in-operation (UIO), which is a critical
metric to measure customer
loyalty and retention. It's
also a far more effective
metric than service absorption. The major problem
with service absorption is
that you can have 100%
service absorption but still
be losing market share.
Revenue per UIO allows
you to measure both
service yield and market
share, so you can establish
a baseline from which to
grow.

INCREASE SERVICE
YIELD. Most dealerships

capture less than half the
work needed on vehicles
that enter their service
lanes. To increase service
yield, focus on providing
complete vehicle care to
your current customers.
You must identify,

6

APRIL 2019

communicate, and capture
all service needs, which
may require changes to
your write-up, multi-point
inspection, and service
recommendation processes.
Technologies such as
mobile tablets can help, but
incentives may need to be
put in place, so advisors
and techs are encouraged
to spend the appropriate
amount of time with every
customer. Additionally,
omnichannel service marketing strategies can help
to deliver relevant offers to
customers based on their
vehicle history. Digital channels increase both reach
and frequency, greatly
increasing awareness and
response rates from your
customers.
INCREASE MARKET
SHARE WITH SERVICE
CONQUEST. Traditionally,

dealerships rely on sales
conquest to acquire customers, then profit by retaining
customers through service
and the next purchase.
When the market is expanding this strategy works well,
but in today's environment,
sales conquest becomes
brutally competitive and a
zero-sum game.
As more dollars chase
fewer sales, conquest
efforts become more
expensive and less effective. It's not unusual to see

D I G I TA L D E A L E R . C O M

incremental marketing costs
exceed gross margin net of
commissions for conquest
sales, with dealers hoping
that service and repeat purchases will justify their initial
acquisition costs.
THERE IS A BETTER
WAY. Shift to service con-

quest campaigns to attract
new service customers,
with the goal of building
long-term relationships that
will eventually convert into
sales. Service conquest is
less costly with an average
of $40 to $80 per customer
acquisition when compared to sales conquest
campaigns with an average $1,200 to $1,600 per
customer acquisition. That's
20X more cost effective!
Service conquesting is
particularly effective in an
environment where four-to
six-year-old vehicles are
expanding rapidly, as will
be true over the next three
years. Owners in this age
cohort are less likely to
have strong servicing relationships. Many are second
owners and have defected from other franchised
dealers or are open to new
relationships now that the
warranty has expired. Unlike new-vehicle sales, this
category is expanding and
is likely to be less rigorously
defended by competition,
particularly by dealers

FEATURED SPEAKER
By Scot Eisenfelder
CEO,
Afﬁnitiv

who still focus on service
absorption.
Most dealers' service
marketing efforts utilize
mail and email channels to
remind customers about
factory-scheduled maintenance and select seasonal
campaigns. Many campaigns rely on "oil change"
offers to bring new customers in. This marketing strategy performs significantly
below potential impact.
To drive more responses,
an integrated marketing
campaign must replace the
"fire-and-forget" mentality.
Omnichannel marketing
leverages a variety of digital
channels to deliver relevant
offers to each prospect,
based on lifestyle factors,
online behavior, and predictive analytics. With every
customer interaction, data is
collected and used to create
a message or offer that
drives the customer to the
next stage. The customer
is guided through needs
notification to scheduling,
to the appointment, to
in-service notifications and
post-service follow up. This
strategy is designed to build
relationships, instead of a
one-and-done service experience. Creating processes
and marketing programs
that focus on the relationship, rather than the here
and now, is a critical part of
any service growth plan.
SCOT EISENFELDER is CEO
of Afﬁnitiv. Previously, he was
SVP strategy at AutoNation and
SVP, product management,
strategy and marketing at
Reynolds and Reynolds.
EMAIL: seisenfelder@afﬁnitiv.
com
http://www.DIGITALDEALER.COM
Digital Dealer - April 2019

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