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As the industry comes out of the COVID shutdown where dealer profit was through the roof, OEMs are refocusing their efforts on after-sales operations to increase profit. The industry is returning to normal, and inventory is growing, which is driving down dealer profits. When a dealer can cover most of their expenses through the service department, they can increase their profitability and offset possible losses in the new vehicle sales department.
One of the key after-sales metrics is service loyalty. Service loyalty (or retention) helps dealers increase profitability by retaining customers in their assigned area of responsibility for service visits. Higher loyalty leads not only to additional service revenue but also potentially new vehicle sales. Loyal customers return to the dealership to purchase new vehicles and service their vehicle. When a dealer understands loyalty equals money, they tend to listen to their field representatives regarding the customers in their territory. OEM field staff want to help their dealers understand the opportunities in the service arena.
In simple terms, service loyalty is the number of customers going to a brand’s dealer for service for at least one post-warranty service work within a defined period of time (typically once a year). Service loyalty is typically measured for a dealer and the brand.
Ideally the dealer retains most of the customers in their territory since that dealer has a geographic advantage to those customers over other nearby same brand competitors. The final piece that dealers and OEMs need to understand is the inactive customers. These customers are servicing their vehicles just not at an OEM dealership. This presents another opportunity for dealers to increase loyalty and profitability.
Optimum Info offers a powerful and insightful Service Loyalty solution for OEMs to help their dealers improve service retention. Based on the UIO & Repair Order data, the Nova Service Loyalty solution offers the following important benefits:
By leveraging our Service Loyalty solution, OEM field teams can work with dealers to help them better understand the active and inactive service customers within their territories and guide them to develop service marketing programs to address deficiencies both geographically and with customers. With a strong understanding and focus on service opportunities, dealers can significantly improve loyalty, leading to a better customer experience, and increased revenue and profitability for both them and the OEM.
Joseph is an Account Manager Director at Optimum Info, a global company providing tailored software solutions for manufacturers to improve franchise network development, dealer profitability, field operations, and after-sales processes. Joseph has over 30 years of experience helping OEMs improve their network performance as well as helping dealers understand and improve their sales and financial performance.
