3 Common Misconceptions about Dealership Fixed Operations

Jul 14, 2021
Jade Terreberry (Cox Automotive Director Analytics) and Kevin LeSage (Cox Automotive Digital Marketing Director)

There’s no supply chain disruption (like semiconductor chips) or inventory shortage that will change the fact that people need to service their vehicles. What does that mean for your dealership? It means fixed operations is the most stable segment of revenue you have. Disruptions or not, that’s always been the case. 

And while we’ve been talking a lot about leaning into fixed operations, especially during the chip shortage and inventory crunch, we’re still hearing some of the same objections we’ve been hearing for years. We’re here to dispel some of the most common objections and help you understand why fixed ops is so important (both now and down the road) and how you can approach this increasingly important segment of your dealership’s business.

Misconception 1: I make more money in variable ops. 

We hear this one a lot. And adding to that narrative is that dealers are so busy right now (and making a lot of money!) due to the inventory shortage, they don’t really need to focus on fixed ops.  

The fact is that fixed operations makes up more than half of dealers’ overall profit, but it’s only about one-tenth of their marketing investment and a very small focus area for growth. If you shift your focus to getting people in your service bays now, you could gain a huge competitive advantage — and enjoy long-term profitability.  

Service is hot right now, and between summer road trips and companies sending people back to work, 33% of people say they plan to put more miles on their car this year than before the pandemic.? 

And since we know new inventory is tight and used car prices are high, people may delay a purchase and focus instead on maintaining their current vehicle. They might also be ready to trade in their current vehicle, so leveraging their increased service traffic will give you more opportunities to acquire new inventory with incentives like Instant Cash Offer. 

Misconception 2: There’s not much value in my service customer.  

Remember it’s not about a single oil change, it’s about the lifetime value potential of every customer, whether they’re walking in your door or you’re going to their doorstep for pickup and drop-off. 

But you need to be where the customers are, and there’s no turning back when it comes to their evolved expectations both online and in-person; they want convenience, transparency and a positive experience.  

And that positive customer experience is just as important in the back end as it is in the front. People don’t want to spend hours sitting in your waiting rooms; hate to say it, but the coffee isn’t that good. Think about what technology you can use to make the customer experience more efficient, whether that’s at the dealership or via home delivery. Build brand loyalty and a positive impression, demonstrating all the reasons car owners should do business with you. 

Lose the friction, gain the revenue

Have you considered pickup and delivery? This offering is a prime way to make the entire service experience easier for the customer. You’re also setting the expectation that you’re progressive, because you’re willing to come to them vs the traditional service model. This immediately removes the friction points between you and the consumer. We’ve talked with some dealers who have adopted 24/7 bay utilization. They hired a third shift mechanic crew and work on cars through the night, delivering back the following day. Service bays are not cheap, and space may be limited. In many cases, this is an efficient strategy to increase productivity and therefore, revenue.  

The progressive dealers that we know that have chosen to adopt the tools, services and strategies to meet service shoppers online are gaining whole percentage points of fixed ops market share, which they know will carry them through any inventory volatility they’re seeing on the variable ops side and set them up to retain more profitability in the future. 

Misconception 3: Digital marketing is too expensive and not worth it.  

Digital marketing’s biggest advantage is tracking. Unlike traditional mailers and print advertising, you can target and track every dollar you spend on marketing. It’s time to shift your perspective on where to get the most bang for your buck: your customers are online, and you should be too.  

Ready or not, the online transition on the fixed ops side is happening 10 to 20 times faster than it did with digital retailing. COVID-19 accelerated consumers’ demand for an efficient digital process for servicing vehicles, so dealers who choose not to adopt these tool and strategies will start to lose customers to competitors who are. 

With a 10-15% marketing investment in service, and focusing on the right digital marketing strategies, you can gain a competitive advantage and get in front of today’s service shoppers.  

Make the digital swap

Replace those mailers or mass email blasts with things like: 

  • Ensuring your website, Google My Business and social media pages are up to date, including any new or extended service hours you can offer.  
  • Hyper-specific paid search and social advertising campaigns targeting big-ticket items like brakes, tires, battery and engine work.   
  • Exposure on digital marketplaces offering service listings for consumers.  

Consumers are doing more online than ever with the expectation that online options are available for all their needs, including researching and comparing automotive service providers, seamless online service scheduling, service pickup/delivery and fair and transparent repair pricing.  

Our industry is still in the midst of a digital revolution, but dealerships can give their service departments a competitive advantage by jumping in feet first and adopting the right online strategies to get in front of today’s service shoppers.  

We can help you find the right strategy for your dealership’s fixed ops.

While fixed operations is a key growth opportunity, and dealers should ensure they’re giving their service department the exposure it needs to increase their profitability, it’s just as important to deliver a great customer experience and build strong customer relationships. Because when they’re ready to buy, they’ll be coming to you first.