New study says dealership service customers demand transparency, convenience

New-vehicle dealerships are losing as much as $266 billion a year in service revenue — $15.9 million for the average dealership — because they are falling short on keeping customers, a study estimates.

The latest phase of Cox Automotive's Service Industry Study, released last month, concludes that 70 percent of customers who bought or leased a vehicle from a franchised dealership did not return for service in the past year. Rates of satisfaction expressed by service customers with dealerships are about equal to those at general repair shops, the study says.

Service visits to dealerships decline as vehicles age. Dealerships continue to lead third-party competitors in their overall share of service visits, the study notes, but customer satsifaction and loyalty are dropping among all providers. Dealerships that want to boost profits from customer-pay work and build loyalty will have to do such things as enable service customers to pay their bills online and schedule service appointments easily on mobile devices, pick up service vehicles from and deliver them to a customer's home or workplace, and repair cars and trucks away from the shop, the study says. Cox Automotive provides dealerships with software brands such as Xtime, which processes service appointments and is designed to enhance other aspects of fixed operations.

"Dealers have to figure out how to get your vehicle to the service, or your service to the vehicle," Jim Roche, vice president of marketing and managed services at Xtime, told Fixed Ops Journal. The Cox study suggests that most service customers are willing to pay more and drive farther for a better service experience, Roche adds.

The study identifies five opportunities for franchised dealerships to build on their strengths and attract and keep service customers:

1. Overcoming vehicle owners' reluctance to return to the dealership for service by picking up vehicles for repair and maintenance and then returning them, and providing mobile service away from the dealership.

2. Giving customers a more specific idea of how the amount spent on service helps maintain a vehicle's value, and providing them the trade-in value of their car or truck when they bring it in for service.

3. Making service customers more aware of their ability to schedule appointments on the dealership website. About one in five dealership service visits is scheduled online. Among customers who don't make online appointments, the study says, more than one-third don't know that's an option.

4. Providing price ranges for services, including those of competitors, on the website. Most consumers say they would choose a dealership for service over a competitor if it gave cost estimates during online scheduling, the study says.

5. Enabling service customers to use the dealership website to monitor their vehicles' service history and get recall updates, service reminders and maintenance recommendations.

Roche says the way dealerships provide service is "changing under our feet."

Service customers, he says, "don't want the lowest price — they want a fair price and a good service experience." Younger customers are most dissatisfied with dealership service and especially want to do service business online, he adds.

The Cox study cites Temecula Hyundai in California as an example of a dealership that provides a customer-centered service experience and disdains excessive upselling. Its director of operations, Steve Nicholson, describes his shop's philosophy: "Rather than take a lot from a few, we want to gain a little from a lot. We want to see the customer more than once."

The study is based on surveys of 3,550 dealership service customers and 404 dealership employees involved in fixed operations.