COVID-19 moves pickup and delivery into mainstream brands

Thanks to COVID-19, the era of pickup and delivery is here.

Before the pandemic, a growing number of stores selling mainstream brands were slowly rolling out pickup and delivery options for their service customers.

But now it's pedal to the metal as pickup and delivery of customers' vehicles has emerged as one of the most effective ways fixed ops directors can keep their service bays busy while reducing the risk of exposing service advisers, techs and cashiers to the virus.

An added bonus: Pickup and delivery means fewer customers hanging out in lounges waiting for their vehicles to be fixed, further helping stores remain virus-free.

In late March, Ford began subsidizing dealerships that pick up and deliver customer vehicles. Customers are not charged for pickup and delivery. Ford covers dealers' costs by paying them $50 per repair ticket on cars picked up, serviced and returned. In May, more than 2,800 Ford stores — about 90 percent of all U.S. franchisees — were offering pickup and delivery. All Lincoln dealers offer the service as standard on 2017 and newer vehicles.

Volvo pulled forward an 18-month test of pickup and delivery and rolled out the program nationally to its dealers on March 31.

Other dealers are working independently with companies such as Redcap, myKaarma or Clutch Technologies to offer the service. Cox Automotive officials say about 1,100 more dealers today are using its Xtime software to offer pickup and delivery than a year ago.

Ask fixed ops directors who have been offering pickup and delivery since before COVID-19 why they're picking up a customer's vehicle, servicing it and then delivering it back to the customer's driveway or workplace and they'll tell you they are seeing:

• Increased customer satisfaction
• Higher retention rates
• Bigger profits from higher-dollar repair orders
• More technician labor hours sold
• Smoother and more consistent flow of work.

"It's a fabulous loyalty tool. I don't know any customer who is not interested in convenience," says fixed ops consultant Jim Roche, most recently a vice president at Cox Automotive.

But providing that convenience comes at a cost. Ujj Nath, CEO of myKaarma, says dealers pay between $1,000 and $1,500 per month to use his company's suite of pickup-and- delivery software. On top of that, dealers also pay for the cars in their loaner fleets, for drivers and insurance costs. Nath told Fixed Ops Journal the amount a dealer pays varies based on the number of repair tickets the service department generates.

MyKaarma, based in Long Beach, Calif., sells a pickup-and-delivery package that enables the store, the driver and the service customer to communicate; provides route tracking; and allows for videos of the customer's vehicle to be quickly created and uploaded to deter damage claims. Nath said the company does not sell a la carte portions of its package, but some companies do.

Roche estimates that the software to solely manage the pickup and delivery process ranges from $500 to $1,000 per month. If drivers are outsourced, he says, fixed ops directors should budget between $40 and $50 per hour to pay them.

Still, he believes even after COVID-19 fades, most stores that have offered the service to help them through the crisis will keep doing so. That's the plan at Ford, which is looking to make pickup and delivery a pillar of dealer service.

"Outside of the automotive space, people are finding different ways to live their lives, whether they are getting their groceries delivered or they're getting more meals delivered to their homes," Elizabeth Dwyer, Ford Motor Co. customer service division marketing manager, told Fixed Ops Journal.

"And to have these types of services available, whether it's to work or to home, is going to be a differentiator to Ford as well as our Ford dealers."

Pickup and delivery may not be a good fit for fixed ops directors who don't want to add the complexity and costs that come from increasing headcount, loaner cars, paying for software and higher insurance costs.

"It really comes down to knowing your customers. Understanding what the customer will pay for eventually answers the larger question around the economics of pickup and delivery," Roche says.

Because stores have diverse budgets, staffing and customer demographics, there is no single template for pickup and delivery that works for all dealers.

Some brands, such as Volvo, Lincoln and Mercedes-Benz, have developed custom software for dealers to integrate into their websites.

Fixed ops directors at other stores can outsource the complete turnkey pickup-and-delivery operation.

Packages are available that provide just the software or just the drivers. Or, pickup and delivery can be kept in-house using porters driving a loaner car to the customer and returning to the dealership in the customer's vehicle. Some dealerships also use flatbed trucks for high-end vehicles or performance cars.

Some stores charge a nominal fee for pickup and delivery while others don't — even if the service involves a low-profit job such as an oil change.

Some dealerships include a loaner car for no charge, but some stores offer an optional loaner for a small fee.

Roche, author of several fixed ops books detailing ways stores can maximize profits and efficiency, says dealers considering offering pickup and delivery should start by mining their data.

"First, you need to look at your market area and where your customers are," Roche says. Many dealerships offer pickup and delivery for customers within a 25-mile range of the store.

Then, fixed ops directors should survey their customers to determine whether they would use pickup and delivery and would be willing to pay for the service and a loaner vehicle.

"If pickup and delivery works, then you've got two options," Roche says. "You can use a service like Redcap, which is a great service, or you can hire your own drivers. I think the do-it-yourself model with between two and five drivers works best for smaller dealers. Beyond that it becomes unwieldy and you'll have problems managing it. You are not going to keep track of it with a pen and paper. You have to coordinate it."

Whatever pickup-and-delivery option its dealers choose, Ford plans to be in it with them for the long haul. The automaker says it will continue to subsidize dealerships that pick up and deliver vehicles. It's a service Ford believes dealerships should continue to offer after the pandemic ends.

"This is an opportunity to reach out to our customers on their terms," says Monica Viola, Ford's customer experience strategy manager, "and allow for it to be a way to deliver a great customer experience."