The 2023 Cox Automotive Service Study reveals a significant shift in consumer preferences regarding vehicle service providers and customer experience. While dealerships historically led as the preferred choice, they are now facing increasing competition from general repair shops. This change is driven by a decline in consumer trust towards dealerships.
Sidebar: I didn’t need a study to tell me that trust towards dealerships is declining even more than what we all thought was rock bottom. All you have to do is look around. Everything still comes down to customer experience and if it’s bad, and your competitor’s is better, we know how that’s going to turn out.
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Factors influencing this trust erosion trend are attributed to several factors, but the three highlighted in the study are:
- Perceived Overcharging: Consumers often believe that dealerships charge more than independent shops for similar services.
- Uncertainty About Necessary Services: Customers frequently question whether all services recommended by dealerships are essential, leading to suspicions of unnecessary upselling.
- General Dissatisfaction with Value: There is a sense among consumers that the value received from dealership services does not justify the higher costs.
These findings underscore the importance of trust and transparency in customer relationships and highlight an opportunity for dealerships (and all other businesses) to regain consumer confidence by addressing these concerns.
I’ve been in the car business my entire life. I’ve worked out endless scenarios to satisfy and delight customers. The service and part departments are where the dealership profits are made (or lost) and as someone who’s been in this arena for a very long time, I offer the following key tactics that dealerships can implement to improve service revenue.
- Transparency in Pricing: Clearly communicate service costs and the necessity of each service, helping customers understand the value they’re receiving.
- Personalized Service Options: Offer customizable service packages tailored to individual customer needs and vehicle histories.
- Enhanced Communication: Utilize digital tools (such as short videos from technicians regarding their specific repairs and helpful, educational videos so people don’t feel dumb when they get to the store) for efficient appointment scheduling, service updates, and follow-ups, ensuring constant and clear communication with customers.
- Focus on Customer Education: Educate customers about vehicle maintenance and the importance of each service, building trust and reinforcing the value of dealership services. How can you make an impact here? What if you created ONE video per week around simple maintenance tips and posted it on your website, email and social media? It would have so much impact and the resources needed are minimal.
- Loyalty Programs: Loyalty and trust are fading fast, so your opportunity here is awesome. Develop loyalty programs offering discounts or rewards for repeat business, incentivizing customers to return.
- High-Quality Customer Service: Don’t just say it, live it and breathe it! Ensure exceptional customer service at every touchpoint to enhance overall customer experience and satisfaction. I could write volumes on the ways to approach this but for now, I’ll plant the seeds of opportunity.
- Investment in Staff Training: We’ve all seen the erosion of training programs that are supposed to be available via the OEMs. Unfortunately, this means as a franchisor, you are going to have to go it alone. Regularly train staff on the latest technologies and customer experience best practices, ensuring high-quality service delivery.
- Feedback Mechanism: It’s a fact that there will be unhappy service customers. Cars break and it’s never a good time when it happens. However, for every unhappy customer there are 100 happy ones and these are who you need to focus feedback programs on. Implement a robust feedback system to gather and act on customer insights, continuously improving service quality.
- Community Engagement: Engage with the local community online and/or through events or sponsorships, building a positive brand image and fostering customer loyalty.
By adopting these strategies, dealerships can effectively increase service revenue through improved customer trust, satisfaction, and loyalty. I’m begging, please give at least some thought into how you can apply this to your business. I care and I always want you to be profitable.
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