For every six minutes of billable time a technician loses, the dealership loses nearly $20 in gross profit, according to a recent NADA Dealer Driven podcast focused on time vampires. Over the course of a year, your dealership leaves a significant amount of money. In addition to wasted time, dealerships must contend with shrinking new car margins, customers holding cars longer and economic uncertainty. These factors combine to make fixed operations instrumental as the primary engine of long-term dealership health. Consider this article a step-by-step guide you can use to identify opportunities and implement real change in your service department, boosting revenue and customer loyalty.
Track your service center KPIs
How can service managers gauge whether they are maximizing their profitability? Before implementing any changes, it’s essential to track your key performance indicators to see an overall picture of your efforts. A key metric to pay attention to is service absorption, which refers to the percentage of your dealership’s total overhead covered by the gross profit from your fixed ops. At 100%, your dealership is profitable before you sell a single car.
While that’s the ultimate target, improving it requires focusing on the underlying metrics. Keep a close eye on:
- Appointment Conversion and Show Rate: How many inquiries turn into appointments, and how many of those customers show up?
- Technician Efficiency: The ratio of billable hours worked to hours attended.
- Customer Retention Rate: The percentage of customers who return for service within a specific timeframe.
- Customer Satisfaction Index (CSI): A measure of customer happiness with their service experience.
Improving these KPIs is the key to increasing your overall fixed operations revenue.
4 levers to pull for immediate revenue growth
To see a significant impact on your dealership’s profitability, consider implementing these four key levers.
Lever 1: From passive form to active conversation
You need more than just a “schedule service” button that leads to a static web form on your website. The better way to maximize efficiency here is to leverage a conversational AI agent.
An automotive conversational AI solution like STELLA Service can book a service appointment in less than 2 minutes, rather than forcing customers to wait for a callback, even on weekends, evenings and holidays. This quick assistance is key to providing a positive customer experience, as 67% of US consumers are frustrated when customer service can’t resolve their issues instantly, according to Salesforce.
Begin this step by conducting an audit of your own website. How many clicks does it take to book an appointment? Is it available 24/7 via SMS, voice and chat? If not, it’s time to look into STELLA. This is how you get more service appointments without adding staff.
Lever 2: Proactive outreach using DMS data
Too many dealerships stick with generic mailers reminding their customers that “It’s been 6 months!” since their last service. There’s a more effective method for proactively reminding customers to come in, and that’s by leveraging artificial intelligence.
Create an AI-driven SMS/email campaign that automatically follows up and reminds customers about their upcoming appointments, reducing no-shows. Additionally, when customers contact the dealership, STELLA AI can access dealership data and suggest specific services or recall information, making personalized recommendations. This builds immense trust. If you aren’t leveraging proactive service reminders, start doing so today.
Personalization is imperative for customers. According to Salesforce’s State of the Connected Customer, 61% of customers say most companies treat them as a number. Doing so will only lead to lower retention and profitability.
Lever 3: Efficiency through AI-assisted tools
Technicians spend too much valuable time on scheduling appointments, answering routine questions and handling calls. Using automotive AI solutions like those offered by STELLA AI helps them regain their time to focus on tasks that bring in revenue. STELLA has been built by automotive industry experts, allowing it to optimize the day’s schedule. STELLA has been trained on more than 270 opcodes, with an understanding of job types, required technician skill level and parts availability to maximize throughput.
Lever 4: Master the customer experience
Customer experience is key to maintaining the loyalty that drives repeat business. A phone call update and a paper receipt are no longer sufficient. Transparency and consistent communications are a game-changer for trust and upsell approval. Use a conversational AI agent to send a text three days after service. This shows you care and catches issues before they become bad reviews. If you haven’t already, implement a simple text-based survey after every service visit to start gathering immediate feedback.
Your dealership is a service hub
The most resilient and profitable dealerships of the future will be customer service centers that happen to sell cars. This transformation is accessible and starts with small, measurable steps outlined in this article.
