Understanding the Service Customer

The Current Service Retention Dilemma…Not only are today’s automotive service customers demanding fast and responsive customer service for their vehicles, they have many options which allow them to easily defect to a competitor. Everyone knows that competition in the automotive services arena is fierce. Many consumers equate vehicle service and maintenance to commodity level events with the belief that “any service center” can service and maintain their vehicle and that the lowest price or convenience wins.

For most people, having their vehicle serviced is not a priority in their everyday lives and at any given time, most people are not thinking about having their vehicle serviced. Basically, two events stimulate a decision to have service performed on a vehicle: 1) a problem with the vehicle or the red light appears, or 2) a service reminder arrives communicating a time or mileage based specific need with a strategic offer.

Since there is no schedule for the timing of vehicle break downs, the first event above requires your store to be top of mind. In the second and most frequently occurring event, dealers search for the best way to remind customers when it is time to have service maintenance performed. To do this, first understand the genetic make-up of your DMS database.

In any DMS, there will be three types of customers:

· Active – customers who have had service performed within the required interval

· Inactive – customers who have missed 1-4 intervals

· Lost/Defective – customers who have missed more than 4 intervals

What can you learn from segmenting your customers by type?

Active service customers represent about 39% of the average DMS service database. These are your best customers. Most Service Managers will say that 50% of their Active customer database in their DMS will come in for service when it is due. The real question is… “Which 50% of the Active customer base will actually come in and when? Normally, Active customers will respond to a regular reminder communication without a discount option.

Inactive customers are the most fickle and represent about 30% of the DMS. The longer they wait to return to the dealership, the greater likelihood they will defect. For most, their behavior has changed and they need to be motivated by a specific offer. The good news is that these are customers that need the most work done and their RO value is 30-40% higher then average. Inactive customers can be converted to Active status if properly segmented and communicated with using targeted communications with specific offers.

Lost/Defective customers represent about 31% of the DMS database and really should not be recognized as service customers any longer. If they have not been in for service within 4 intervals, there is a good chance they are not coming back. Their likeliness to return depends upon such factors as distance from store, age of or mileage on the vehicle and other traits. These are the most difficult customers to reactivate and require specialized marketing programs.

A wise marketer once said, “Know your customer, earn their business!”

To know and understand your customer requires sophisticated software tools and a marketing process or program that effectively communicates with customers by type. In service, the slogan changes to “Know your customer and re-earn their business.”

- Gary Mitchell, Director of Client Retention and Account Management @ DMEautomotive

Gary has 25 years of experience in providing franchised auto dealers with marketing and technology solutions designed to increase revenue and overall profitability. Gary has held national positions with ADP Dealer Services, LML Technologies, and DMEautomotive. In his current role as Director of Client Retention and Account Management, Gary manages DMEa’s account management team, as well as continually monitors industry trends and specific dealership needs as he works to increase customer retention and the overall customer experience.

Gary enjoys spending his weekends riding his Harley Davidson motorcycle and spending time with his family.

LinkedIn Profile: http://www.linkedin.com/in/garymitchellauto

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