The automotive industry has experienced major challenges in the last few years.
Changes in innovation, shifting consumer preferences, and supply chain shortages have completely revolutionized the way we buy, sell, assemble, and service cars. With inventory shortages predicted to last into 2023, dealers are looking to refocus their marketing efforts from moving vehicles off the lot to ramping up revenue in other departments.
So, where should dealers spend their precious ad dollars instead? The service department.
Finding Success in the Service Department
Current dealership advertising strategies are focused on attracting new car buyers. Yet 47% of dealership gross profits are attributed to dealership service, not car sales.
Despite this significant stream of revenue, advertisers admit that service department marketing only makes up 10% of the average dealership’s advertising budget. Instead, 90% of their budget--and an average of $554,292 goes to prospecting customers for new car sales despite the best source of leads and revenue being consumers who currently drive a car sold to them by that dealership.
While vehicle sales fluctuate, all vehicles require consistent maintenance. This makes service departments a reliable source of revenue, and investing in direct maintenance marketing can produce significant results.
Driving Service Revenue with Direct Automotive Marketing
The average cost of an automotive lead is over $205. That’s over $205 just to market to an individual who might be interested in buying a car. However, maintenance is unavoidable. If a dealer can reach customers who are in need of service, the dealership has a much better chance of capturing their recurring business or even selling F&I products through the service center as well.
With direct automotive marketing, instead of spending over $205 to target potential customers, dealerships can target and market to current customers who they know are in need of service to strengthen their customer relationships and win loyalty to the dealership. This is can be done with connected car technology (CCT). What makes connected car technology so valuable is the massive amount of data it collects. However, this data is often controlled by the OEM or when available, not leveraged effectively by car dealers.
By using an aftermarket connected car product, dealerships can access and strategically leverage vehicle data to drive service revenue.
Here’s how it works:
When a connected car product is installed in a customer’s vehicle, the system then runs diagnostic scans and can notify the service department of their vehicle maintenance needs including check engine lights and routine maintenance. In a common use-case, if a customer reaches a certain mileage threshold, the service center will be notified that they are in need of an oil change.
For example, an application like CarRx allows dealerships to:
- Boost fixed ops profits
- Maintain a direct relationship with customers and their vehicles
- Easily send automated and custom messages for service alerts and mileage maintenance needs directly to customers’ phones
- Ensure customers are directed back to their dealership for service, unlike other factory apps.
- Be the easiest option, allowing customers to schedule service via the CarRx mobile app in half the clicks it takes on most websites
- Increase inventory through trade-ins with in-app-marketing campaigns to existing customers
- Save time and money previously spent managing complex marketing campaigns
- Access a convenient dashboard to see customers needing maintenance, send email and in-app marketing campaigns, track appointments, and more.
- Provide additional revenue at point of sale by passing value to the customer
Having this type of solution for dealerships can be a game changing income opportunity for agents. Knowing when maintenance is needed, your dealership can send personalized messages or custom offers encouraging the customer to return to their service center for maintenance. These alerts can be sent by email and directly to the customer’s mobile device. When a driver receives the message, they can schedule maintenance at your dealership directly from their phone–making it convenient for drivers, creating consistent revenue for fixed ops and F&I, and providing an exceptional driver experience to earn future business.
Many dealerships that use turnkey solutions like CarRx gross an additional $1 million per year in non-cancelable gross profit, in addition to the Repair Order (RO) revenues and all deployment and support can be handled by account managers to ensure success. Using connected car data through a marketing platform like this allows your dealerships to save money on cumbersome advertising spends and maintain critical service retention with precision marketing messages that they know their drivers receive exactly when it is relevant to them – and you get to be the hero providing the most relevant and current solution.
The targeted marketing approach these solutions offer allow dealers to incentivize customers for the services dealerships know they need rather than guessing (and hoping) some of the thousands of individuals they sent costly direct mailers to take the bait and return for service.
With connected car data and direct marketing solutions your dealerships can keep their valued customers coming back for their service needs without pouring money into advertising while establishing a relationship to earn future business.