How Dealers Can Use Fixed Ops to Maximize Customer Lifetime Value

When most people think of a dealership’s automotive sales, much of the emphasis is put on cars. Nevertheless, the service and parts departments and their impact on automotive dealership sales shouldn’t be ignored. According to NADA, the service department now comprises practically half of a dealership’s profit.

Additionally, they found that 74 percent of customers who visited a dealership for servicing within the year (2018) purchased cars. Ultimately, fixed ops can improve your customers’ lifetime value, but how can you use it to make this metric work for your dealership? Take a look at these tips below. 

What is Customer Lifetime Value?

Before getting in deep, it’s important to discuss the concept of a customer’s lifetime value. As defined by Qualtrics, customer lifetime value (CLV) is the total worth of a customer to a business over the entire time of their relationship. CLV requires you to take metrics like customer acquisition cost (CAC) into account so you can determine the actual gains that customers are bringing to your company. Fixed ops can increase the length of the relationship with customers between large purchases, which can lead to a higher CLV.  

Introduce Car Buyers to Service and Parts Department Staff

Whether someone is coming in for a test drive or just purchased a vehicle, you want them to understand that fixed ops are an important part of your business. Many times, it’s easy for customers to forget they can get their cars fixed at your dealership. Additionally, the same can be true for purchasing parts. They can’t become lifetime customers if they do not know about your offerings. Therefore, educate them on all the fixed ops services you provide by introducing them to staff and consistently reminding them about these services. 

Use Email Marketing

Email marketing is an exceptional way to get the word out about your service and part-related offerings. You can offer promotions, incentives, and general education about what your customers can expect from you in these departments. A great idea would be to provide a promotion to new car buyers to get them in and acquainted with both departments. Email is still one of the top ways to reach customers. Don’t hesitate to use it to either get customers started on the sales funnel or bring them back after a past purchase. 

Put an Emphasis on Customer Satisfaction in Fixed Ops

It doesn’t matter how great the product is if customers are dissatisfied. This step is going to require some research on your part. You want to ensure that your fixed ops departments’ pricing, customer experience, and overall customer service offerings meet customer expectations. You are going to want to consistently seek out customer feedback and alter your service processes as needed. For example, if servicing appointments are falling through the cracks, or you are quickly running out of in-demand parts, this is information that can impact customer satisfaction and revenue. Consequently, these elements can significantly affect CLV. 

Keep Costs in Mind 

Again, CLV also depends on CAC. How much does it cost you to acquire new customers and retain past ones? You always need to keep an eye on the budget. You may be having an excellent season selling particular parts, but you may be losing money due to marketing and logistics. Your goal is to reasonably cut your cost to a point where you can still offer a high-quality experience while cutting things you may not need. This step requires you to sharply track your budget, and determine if the costs help you meet your goals 

Have Service and Parts Department Webpages

The inventory page isn’t the only important lead generation tool. It is crucial that you invest in webpages for both service and parts departments. Not only can this help you market these services, but it also enables your customers to start using these services online.

For example, you can add convenience to the servicing process by allowing customers to schedule routine appointments online. Additionally, you may want to invest in a parts inventory page so customers can order these items online without having to come by the showroom. You want to make these services as accessible as possible to keep your customers coming back. 

Fixed Ops Is a Crucial Component to CLV—Especially Now

In a world where COVID-19 is throwing off car sales, car servicing and parts are excellent ways to make revenue if dealerships cannot rely on car sales due to shutdowns or inventory issues. From providing servicing discounts to having a parts inventory website page, these departments are excellent for consistently building relationships with your customers.

The average car buyer is keeping their cars for almost nine years. This means you may only see someone once in a decade if you focus on only car buying. Service and parts departments allow you to maintain a consistent relationship with customers since both will be needed more than once. As a result, you are more likely to get them to the big buy (the car) when they need it. Using fixed ops to develop a long-term relationship with customers will be vital to moving through these new times of uncertainty to increase CLV.

Did you enjoy this article from Chanell Turner? Read other articles from her here.