Why Dealership General Managers Should Focus More on Service
Why Dealership General Managers Should Focus More on Service
Dealership general managers (GMs) are responsible for a wide range of tasks, including hiring and training department heads, overseeing the daily operating control (DOC), annual forecasting, handling serious customer complaints, and much more.
And while the most effective general managers possess a broad range of skills, many of them have one thing in common at their core: they are affable salesmen.
Without a doubt, that experience is priceless when it comes to inspiring the sales crew and facilitating transactions on the lot and showroom floor. However, some GMs underestimate (or at least overlook) the significance of their dealership service divisions, even if unintentionally, by relying too heavily on their sales backgrounds.
It is inevitable that dealership operations will gain precedence over the parts and service departments when GMs focus excessively on car sales.
In this post, we’ll explain why maintaining a balance between sales and service is crucial and offer some advice on how to run a more well-rounded business.
Are You Getting the Most Out of Fixed Operations?
The success of dealerships is greatly impacted by the parts and service departments.
The National Automotive Dealers Association (NADA) estimates that, on average, fixed operations account for 12 percent of a dealership’s annual sales, 60 percent of a dealership’s net earnings, and around half of its gross profits. Those numbers make sense when you consider how profitable each department is on its own.
It is obvious that the performance of the parts and service departments is crucial to the financial success of dealerships.
Service, parts, and sales are all interrelated.
Fixed operations can aid in defraying dealership expenses, simplifying the car-selling process.
Your service department is crucial to increasing fixed operations earnings as well as future new car sales. Give your fixed operations department the attention it needs to succeed by making sure everyone is on the same page to cross-sell services rather than concentrating solely on car sales.
Making sure your salespeople are doing all in their power to persuade a customer to come back to the dealership for their initial service appointment is the first significant step. In this post, we dig deep into the sales-to-service handoff, but two crucial steps are training your sales team and modifying your sales commission scheme. Both of these need the GM level’s guidance and support.
GMs may help to maintain a successful partnership between the parts and service departments by ensuring that both are in continual touch with one another. Carefully coordinate regular stock-level reviews for parts. The consumer gets increasingly impatient the longer they have to wait for a repair or the longer the resolution time is if common parts need to be ordered.
A recent SimpSocial Report claims that tires are another market where dealerships have a significant chance for expansion. Less than one-third of survey participants said they bought tires from their dealership. Only half of the customers, even those who described themselves as being particularly committed to their maintenance dealership, purchased tires there.
This is a blatant sign that many dealerships are squandering money. They are not only losing tire sales to a rival but also a chance to upsell, cross-sell, and perhaps even lose out on recurring business.
You run the risk of permanently losing a customer’s business if you don’t keep a close eye on how your parts and service departments work together, keeping well-trained personnel and in-demand parts adequately stocked.
Although they may seem obvious, GMs who aren’t as interested in the fixed ops side of the business tend to miss these issues.
Adopt a departmental “Service Sales” Mindset
Sometimes all it takes is a shift of perspective regarding your service department. Consider them your “service sales department” because they offer much more than parts and services.
Fix operations should be treated more as a sales department than as a cost division where spending should be reduced. By doing this, you’ll be far more likely to apply the leadership strategies that turn fixed ops into the profitable machine it should be, putting your sales knowledge to good use.
This can be accomplished by holding regular sales meetings with your service advisors and managers to discuss performance expectations, financial objectives, forecasts, and client retention. The agenda for each meeting should contain the following items:
Analyses of service managers
Regular and honest communication will demonstrate your commitment to your group and help you lead more effectively from a position of knowledge and trust. Additionally, it enables you to spot possibilities and deal with problems right away. Perhaps most significantly, it encourages a sense of empowerment and camaraderie among your fixed ops staff.
The Most Vital Fixed Operations Metric
Once you’ve made the conscious decision to concentrate on fixed operations—fostering more departmental coordination and adopting a service sales mindset—you’ll discover that retention is the fundamental factor driving profitability throughout the whole dealership.
Increasing the number of times new car owners return for service increases sales of parts and services. As a customer’s car ages, more and more repair requests are generated. Customers will return to you for their future vehicle purchases if you consistently satisfy their service needs. The key is retention.
There are numerous strategies that can help you retain more clients. The use of SimpSocial is one approach with audible outcomes. SimpSocial helps you keep clients coming back for service, tires, and unforeseen repairs by giving them a special set of perks with every oil change and car sale—all without cumbersome loyalty schemes or profit-eroding discounts.
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