Are you a “Service First” dealer?

Serve your new-vehicle customers well and they’ll stick around

We are living through a transformation in automotive retailing, the likes of which haven’t been seen for generations. Ownership transition is at a heightened level, brand transition is as pronounced as ever and relative newcomers are surging forward while stable mainstays seem to be coming unglued.

In recent discussions with dealers, it is obvious to me that there are many distractions currently in play. And these distractions are taking energy away from managing the day-to-day businesses we all have. Many are caught up in the pace of change and heightened competitive pressures. And many others are standing on the sidelines observing but not taking action. There are a few, however, that are making hay while the sun shines and expanding their businesses.

Change can be both internal and external and we have much less control over external change than internal, but nonetheless, we must cope with what is thrown at us. That said, it’s easy to get caught up in change for the sake of change. This is rarely productive.

At times like this I like to examine the basics.

New, used and F&I

The variable portion of our dealerships, new, used and F&I, is very market-dependent. As we all know it is volatile and our individual experiences will vary greatly by brand. For example, showroom traffic for some brands is on fire, while for others, it seems like the customers are away on holiday. And for the most part, we have little control over the macro issues facing our brands, we can only do our best in our local markets.

Fixed operations

Fixed operations, however, is a different story. The parts, service and body-repair business is much more stable. There are approximately 22 million vehicles on the road in Canada that all require routine maintenance and repair. It is very hard to move that number in a significant way in the short-term but one key fact remains – they all need servicing.

The current dealership brand environment has created an unprecedented fixed operations opportunity. With the dealer body-count down by approximately 10 percent over the past 18 months, many customers are looking for a new dealership home.

Vehicles are changing. They are becoming more complicated than ever in the eyes of the consumer. These same consumers want to protect their investment and generally seek out experts to work on their cars and trucks. And with vehicles lasting longer and trade cycles being extended, dealerships have the opportunity to retain service business beyond the traditional warranty period.

Customer treatment – execute the basics

I believe that customers like to be treated properly. This is where the basics come into play.

When it comes to fixed operations, the process must be easy and simple. After all, most people must take time off work, get to work late, or significantly alter their daily routine to get their vehicle serviced. This is industry-wide and not specific to any one dealership. So how can we make the process as simple as possible and increase our service retention at the same time?

Dealer attitude

I have often observed that new-car dealers love the new-car department. It’s why they are new-car dealers. Most are “new-vehicle first” dealers, which can push other departments to take a back seat when it comes to mind and management. The funny thing is that most of the money is made in those other departments, where customer loyalty and retention is reinforced and thus the long-term new-vehicle sales growth of the dealership. Why then does 90 percent of the mind and management energy in most dealerships involve new cars?

The tone of the dealership is set by the dealer principal. We must set the fixed operations tone and if we don’t, we have no one to blame but ourselves. Here is a small example from a very successful fixed operations dealer.

A little story

Rather than invest in a CRM system that sends out regular reminders and campaigns and performs robust data mining, this dealer took a page from his dentist. Whenever he visited his dentist, his next appointment was agreed upon and booked. One week before the appointment, he receives a call from the dentist office confirming his availability. The day before the appointment he receives a reminder call.

He never missed a dentist appointment. It was a personal commitment.

When he thought about his dealership and service customers, he realized that there was no reason why the dentist’s approach to appointment scheduling could not work for his own business. The similarities were uncanny. He met with his service management and staff and asked them all to write down when their next dental appointment was scheduled for. He then said he wanted each and every customer to book their next vehicle service appointment with the service advisor as they were picking up their car from the shop. He wanted each service customer to know when their next vehicle service was scheduled through a one-week and one-day reminder call before the service appointment.

He implemented a simple booking system and installed the follow-up process to make it happen. He quickly found that the cost of customer follow-up was not a cost at all but rather an investment. In the process, he also found out how each customer preferred to communicate with his dealership: either by phone, e-mail or text message. This allowed him the opportunity to personalize the contact.

The call frequency to the service department dropped by more than 50 percent freeing up valuable service advisor resources to work on vital issues of the day. He also found a 95 percent drop in no-shows. The utilization of his workshop increased and his service satisfaction scores went through the roof. Now, he always has a 90-day view of his scheduled bay capacity.

Customer-friendly systems? Not always

The above system is simple, cost-effective and it works. In the beginning, customers will look at you like you have a third eye but after experiencing the simplicity and consistency of the process, they will quickly become vocal supporters. Customers respond to customer-friendly systems.

Many dealerships today have invested in CRM systems. For the most part, these are well intended. However some tweaking is often required. I frequently get reminders in the mail asking me to book for a service the week after I was just in. It’s comical really, but quite expensive for the dealer that thinks he is actually spending his money wisely. My wife has the same consistent experience from a different dealership. Clearly the CRM software does not talk to the DMS service software. The purpose of creating a meaningful and valuable customer communication experience is completely lost.

Attracting new service customers

Attracting new service customers is a skill we all need to master. With so much of the advertising budget earmarked for new- and used-vehicle advertising, little is left over to attract new service customers. To my thinking, every dollar spent on service advertising reinforces the new- and used-vehicle departments. New service customers obviously come from somewhere else and are new to your business. They are likely to continue doing business with you in the future if you treat them better than where they came from. They are long-term prospects that either live or work close to your dealership.

Do we need an attitude adjustment?

Perhaps we need a change in attitude. I said earlier that we are all new-car dealers. Perhaps we should adjust our thinking to believe we are service dealers that happen to sell new- and used-vehicles. We are in the customer service business, not just the vehicle sales business. It’s like a chicken and egg approach, but with all the orphaned and disillusioned vehicle owners out there, I would tend to think that the pickings are pretty good right now for the receptive “service first” oriented new-vehicle dealer.


About Chuck Seguin

Charles (Chuck) Seguin is a chartered accountant and president of Seguin Advisory Services ( He can be contacted at

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