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Owner Loyalty in the Service Department

July 8, 2016
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I was asked recently to explore the service retention space.  This is a little outside my F&I comfort zone, but everyone knows why service retention is important.  Parts and service make up 40% of a typical dealer’s gross profits.  And, there is actually some overlap with F&I.  Consider, for example, a service contract with “zero deductible at original dealer.”

Here, I present my impressions of the space in workflow terms, plus some thoughts on the features I found technically interesting.  The workflow has a natural break between the onsite procedures of the service department, and marketing procedures which may be a different department (or outsourced).

The space is dominated by two recent mergers: AutoPoint, which acquired DME about a year ago, and Dealer Track’s Service Pro offering combined with Xtime.  See Cox Strategy Redux.  There are some pure play marketing firms in the space, but these two vendors cover the full cycle.  They are able to exploit not only workflow synergies but technical ones.

telematics_dashboard1

For example, you want your telematics to feed information to both the shop and the invitation process, and you want your intake procedures to include information from the accepted invitations.  Also, if the vendor has analytics that can drive a marketing program, maybe they can optimize shop loading as well.

If you are looking at a full-cycle vendor, then the distinction I am making about workflow may seem arbitrary.  Here are features and functions commonly associated with software support for the service department:

  • Greeting boards and RFID tracking
  • Mobile greeting/CRM tools with write-up capability
  • Service menu with “loyalty products” as well as shop services
  • Scheduling and shop loading
  • Status tracking with text alerts for customers and technicians

Pure marketing, on the other hand, brings in additional vendors and different offerings.  In addition to the usual mailers and campaigns, these might include a box of cookies, owner loyalty “membership” programs, and prepaid maintenance.

If you’re in F&I, you may have sold the Ultra Care prepaid maintenance product.  The provider of Ultra Care is not a normal warranty company, however.  Performance Loyalty Group (PLG) offers this product as a service retention play.  Here are features and functions on the marketing side:

  • Multichannel marketing campaigns including call center support
  • Analytics to plan and evaluate the campaigns
  • Telematics interface
  • Geo-fencing and mobile apps

The service invitation process is well established, and now understood to include all media from cookies to WhatsApp.  What is interesting is the use of analytics to make best use of the media.  Text messages may be cheap compared to mailers, but there is a cost in terms of the customer’s attention.  AutoPoint has an advantage here, because they do original research on aggregated data.  Analytics is only as good as the data you put in.

Strategically, telematics is not only a powerful tool but a barrier to new entrants.  It reminds me of how the big DMS vendors once had a lock on OEM dealer communication systems.  For updates on the “battle for telematics data” follow Bob Chabot.

The holy grail of owner loyalty marketing is having the customer run your app on his smartphone.  This may even compensate for not having telematics data.  You can push invitations to it, and then manage service visits from scheduling through payment, along with geo-fencing and notifications.

Owner loyalty, of course, is not confined to the service department.  An app can be the touchpoint for new and used vehicle marketing as well.  Here, I am thinking specifically of the “velocity” method, in which the dealer is actively seeking vehicles to remarket.  For a list of popular app functions, look at AutoPoint or My Own Auto.

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