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| A Service Department Can Be a Big Edge for Dealers Willing to Make the Commitment |
added, the payoff can be tremendous when the job is done right. “It’s always a challenge to get good technicians,� Lescota said. “So I suggest that dealers go the technical schools and start grooming technicians before they even graduate. Also, you have to give someone a reason to stay at your dealership.�
if technicians don’t have enough to do, they’ll go somewhere where their skills will be in more demand. It might also mean giving them more money. After all, technicians have to eat too, Lescota said. “When I hear that a dealer can’t keep him not getting either enough work or enough money,� Lescota said. “And you can’t cheat on the equipment. It’s the cheap man who pays the most for things. By trying to save money on new equipment needed to work on today’s computerized cars, a dealer will end up having to spend a lot of money trying to keep technicians. “People like to work in comfortable environments and technicians are no different from anyone else. I always say if a dealer can’t keep good mechanics, it can usually be traced back to poor lighting, poor parts and poor work conditions. There’s a demand for technicians and they’ll go where they feel most comfortable.� commitment, Lescota said. And getting good technicians is a competitive sport between dealers. Maybe that tech left to go to a franchise operation because the boss there promised to send him to an could improve his skill set. Independent dealers should consider similar actions. Bill Elliff, owner of Elliff Motors of a dealer who is committed to provides a full variety of services, and he long ago realized that in order to have a service department, he had to have enough service work to keep his employees busy. To better service his customers, his dealership can do anything from changing oil to engine replacement.
BACK TO THE BASICS: GO ALL IN
of seven service bays and 10 people and on the signage around his lots.
are dependable and can be counted on to show up on time ready to work every day is the tough part, Elliff said. But the effort is worth it. By hiring the right people, a dealer can have a service department that drives potential customers to the store, Elliff said. While they’re getting their car worked on, many of his service customers will wander around the lot and take a look at inventory. Maybe that person is looking for something new, and if he sees something he likes that service customer can be converted into a vehicle customer. Elliff estimates his service department accounts for about 20 percent of his fellow dealers don’t realize that a service department has to be able to make it on its own. It shouldn’t be a loss leader. Additionally, he sees dealers actually short-changing themselves when it comes to pricing their cars. A dealer might, for example, put $100 worth of reconditioning in a car he bought for, say, $5,000. When it comes time to price the car, he’ll
That’s a mistake. Any work put into a vehicle using the dealership’s own service department should be vehicle. If $100 of work was put into the car, that should translate into adding, say, $200 to the back-end value of the vehicle. So that car should “As an owner, you have to put the money in to develop the infrastructure needed to run a good service department,� Elliff said. “That means having the latest diagnostic equipment. But if you charge right for your services, you will always come out ahead.� department should mean more than another revenue source, Lescota said. By having a service department aimed at serving the public at large and not just his current customer base, Elliff is bringing in new potential buyers to look at his inventory.
But a good service department can do even more. When a customer brings in a car, a dealer can glean all sorts of information about the customer. It’s built-in market research. “The smart dealer should now know all sorts of things about that customer,� Lescota said. “The dealer should know how that service customer uses his car. Does he baby it or does he really run it through the ringer and wear it out? With that knowledge, the dealer can better help the customer make an informed decision on the best vehicle to buy when it comes time to get another car.� By having a complete service department, a dealer can get a customer used to bringing his vehicle to his dealership. Need an oil change? Bring the car to good old Joe’s. In an Need some engine work? Go to Joe’s. “There comes a time in every car’s life when it becomes counter-productive to keep putting more money in that vehicle,� Lescota said. “If you have a good relationship with your customers, and they bring their cars to you for service, you can tell that customer when it’s time to get a new car.� A service department can also their bottom line, Lescota said. It’s a rule of that segment of the used car business that when a car stops running, the payments stop coming. If a dealer has a service department, the customer can bring the car in to be added to the payment schedule. A customer might not have $300 on him right then and there, but he can usually make his payments if that $300 is spread out over the rest of the payment schedule. “A good service department gives dealers control,� Lescota said. “It gives the customer a reason to keep coming back to you. But if you’re going to have a service department, you can’t go in halfhearted. As they say in poker, you have to go all in – but the rewards can be huge. “These days, dealers need every edge they can get. Now more than ever, dealers who don’t keep up, fall behind and go out of business.�
BY JIM STICKFORD
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DEALER
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JULY/AUGUST 2012
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6/19/12 2:15 PM