Driving service revenue: a solo approach

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Looking at the service-only centre trend and what it means for your business

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The Richmond Hill BMW Autohaus is the latest brand to jump on an emerging dealership trend: dealerships that offer maintenance and nothing else.

WHAT IS IT?

Service-only centres are popping up across Canada among luxury brands such as Audi, BMW and Mercedes, from Vancouver to Montreal.

Canadian auto dealer spoke to Paul Roach, General Manager of the recently opened BMW Autohaus service-only centre north of Toronto, who told us the new Richmond Hill BMW service-only centre is “a factory authorized BMW dealership, minus the new and pre-owned sales department.”

Taking the showroom out of the dealership creates a facility that can handle a larger volume of customers to reduce wait times and provide an upscale customer experience, said Roach.

“Every BMW customer deserves a ‘premium’ sales and service experience,” said Roach. “The introduction of BMW Richmond Hill Service allows us to present a state-of-the-art facility with the latest technology available to service a BMW vehicle.”

Architect Beto Najman describes the look and feel of the facility’s design as “boutique.” Employees were included when it came to design considerations. “It used to be a very back of house look,” Najman said about service bays. “What some dealers are now trying to do is make the shop a very nice area for their employees to work.”

bmw-shutterstock_311503934WHAT DROVE THE CHANGE?

How did this business model arrive on the radar of dealers? Roach said it comes down to customer demand.

BMW Richmond Hill wanted to offer better access for customers north of highway 407 due to traffic, to reduce wait times, and to provide a no-pressure sales environment for customers, said Roach.

The J.D. Power 2016 Canadian Customer Service Index Long-Term (CSI-LT) Study also revealed another service department complaint of many customers: a lack of the ‘connected experience’ that Wi-Fi affords.

That’s why the BMW service-only centre has made digital tech a seamless part of their service. “We are constantly looking for ways to improve our customer experience utilizing the latest technologies,” said Roach. Currently they offer free Wi-Fi, and are adopting tablets in the near future.

Despite consumer interest, the same J.D. Power study found a mere six per cent of service customers booked their last appointment online, even though 14 per cent wish they could.

But dealers do outshine aftermarket options with free Wi-Fi. The same study also found that 42 per cent of dealerships are connected, while only 14 per cent of aftermarket facilities have followed suit.

The million dollar question is whether building a stand-alone, top-of-the-line boutique service-centre is worth the significant investment these facilities demand.

how will it work?

A recent U.S. consumer survey by Cox Automotive found less than one in three maintenance visits happen at the dealer. A digitally connected, service-only centre may address that disconnect.

Since more than one-third of buyers don’t track their own maintenance schedules, sending email alerts — the top preference of survey respondents for receiving maintenance information — and online appointment scheduling can help draw them in.

“Currently, we offer online appointments, as well as service updates via email or text. After initial inspections, we provide digital copies of repair estimates, as well as provide reminders for previously declined work,” said Roach.

The Cox Automotive study also found introducing buyers to a designated service representative at the time of purchase increases the chances buyers will return for service by half. Putting the bulk of your service team away from the showroom could create a logistical problem to making those introductions in person — a digital solution may be called for in that case as well.

What Roach said is that “service consultants staff are the face of BMW Richmond Hill Service.” It’s all about building relationships. Whether digital would be as effective as a face to face introduction wasn’t looked at in the study.

Despite the power behind digital service, a bricks and mortar location may be what’s needed to make it easier for consumers to get service when they need it. The survey said “70 per cent of all service visits are less than 10 miles from the customer’s home,” and the percentage of consumers who return to the dealer for service drops off with every additional mile.

Another potential return from service-only centres is the opportunity to market and sell another big revenue generator. “If you have the space to can fit a car where you’re able to show accessories … that’s always a very good thing,” said Najman.

BMW Richmond Hill saw the opportunity. “We created a comfortable waiting lounge for those who prefer to wait,” said Roach. “Our customers can shop for lifestyle and boutique accessories, or just sit back and enjoy a hot or cold refreshment.”

The next frontier

The J.D. Power study showed that the biggest area for improvement in Canadian dealerships is to offer a more digital environment. Something as simple as adding the coveted free Wi-Fi to the waiting room increases the likelihood a customer will “definitely return” by 11 per cent.

Other digital technology like tablets also increase consumer confidence in service professionals. The J.D. Power study said when a service advisor uses a tablet while recommending additional work, 61 per cent had it done. When the advisor didn’t use a tablet but recommended additional services, that number was only 44 per cent.

Whether the service-only centre is a trend that will prove lucrative and break free of the luxury market remains to be seen. But the J.D. Power study revealed that taking your customer experience from “pleased” to “delighted” increases intended customer loyalty by 25 per cent, and customer loyalty means more business.

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