There’s a daily source of used cars in your service drive.
Every new car dealer knows intuitively that their customer database is their best source of used cars. Trade-ins command higher prices on the used car lot, generate internal reconditioning revenue, and grow retention by renewing customers into another new or used vehicle.
For decades, dealers have leveraged database marketing campaigns and VIP sale events to boost new car sales and to secure late model trade-ins. Indeed, database campaigns and events have become an integral part of many successful dealers’ quarterly sales strategy. As successful as these campaigns can be, though, dealers need more than a quarterly, or even a monthly, boost in sales and trade ins.
So, where can a dealer get a steady stream of late model trade-ins? In their service drive. Here’s why: an impressive 50 per cent of a typical dealer’s service-drive traffic purchased their current vehicle from another dealer. These are brand-loyal service customers, who aren’t necessarily dealer-loyal, and there are dozens of them in the dealership every day. Although they’re coming in the “back door” for service, not the “front door” for sales, they’re making their own appointments, showing up, and spending money at the dealership every day. Even converting a small percentage of daily service customers presents a significant opportunity for the sales teams to make sizeable gains in sales and used car inventory.
At Absolute Results, we know that it’s entirely achievable to convert these customers, too. A survey of over 100 Canadian dealers shows that Canada’s top dealers are converting 2.5 per cent of their monthly service RO’s to sales and buy-ins. Often, the sales from the service drive are some of the dealer’s most profitable transactions because they cost nothing in advertising, provide additional internal-service-reconditioning revenue, and offer the two potentially high-profit sales transactions of the new vehicle and the trade-in.
The key to attaining the impressive conversion rate of 2.5 per cent or higher is a service-drive prospecting plan, which the sales team can executed daily to engage these valuable customers in a selling conversation.
For this plan to be effective, it needs to be developed with an emphasis that respects two essential factors. First, the plan needs to show consideration for the fact that the customer didn’t come into the dealership intending to trade-in their car or purchase another, but for vehicle service. Second, it needs to be mindful of the service department’s agenda by protecting the profitability of today’s service transaction. Keeping these very important issues in mind, let’s look at three types of customers in a dealer’s daily service drive, and let’s discuss an approach that can effectively start a selling conversation that results in either a sales transaction or an inventory purchase, or both.
Five to ten percent of a dealer’s daily service customers are first-time visitors. Often, they discovered the dealership themselves, and now it’s the dealership’s job to deliver a positive experience. A successful way to approach these customers is with a goodwill conversation in which a sales-team member introduces themselves, inquires about the customer’s current vehicle, and asks how their driving needs have changed.
Repeat service customers make up 40 per cent of a dealer’s daily service customers. Although these customers haven’t bought from this dealership, they have chosen this service department over that of their original dealer, whether it’s because of the dealership’s location or a relationship they’ve built with this dealership’s service team through previous positive experiences. A useful way to approach these customers is by offering them an appointment for an upgrade conversation, where a sales-team member can provide them with a no-obligation upgrade quote or buy-back offer.
Fifty percent of the dealer’s daily service customers are sales portfolio customers, who already know the dealership. The sales team can look up portfolio customers’ current sales contract in the Customer Relationship Management (CRM) or Dealer Management System (DMS), prepare a quote, and arrange to meet them after their service, possibly with a sales-to-service rebate structured into the deal.
A simple, well-executed plan that’s implemented with the help of technology can turn a dealership’s service drive into the dealer’s best source of used cars.
Absolute Drive™ is a powerful automated technology developed by Absolute Results that helps more than 100 Canadian dealers every month with the process of engaging service customers in daily upgrade conversations, acquiring late-model used cars, and growing sales.