Upselling: Supersize Your Dealership

The automotive industry is not so new for everybody. There are dealers out there (which those in emerging markets wouldn’t believe) who are celebrating their one hundredth anniversaries.

Based on their experiences, we can conclude that the majority of a dealership’s profitability stems from aftersales. Therefore, when going to a dealership today, one should not only expect standard services but also the selling of more services. This is known as upselling. The concept itself is a simple one; there is a customer at our dealership, they came to spend money for a service job, so why not to persuade them to spend a little bit more.

Upselling already begins when you contact your dealer to make a service appointment.

Would you like to have a rental car while your vehicle is being serviced?
We have a special offer for summer checks, would you like to check your car before you drive to your vacation destination?
Are you interested in…?

70% of dealers already try to upsell when the customer is making a service appointment.

What happens when you arrive for the service appointment? During reception, the chances of upselling improves to 85%, in which the Service Advisor will check your car and try to offer you something you need or offer you further options such as seasonal campaigns or promotions.

Some opportunities may also be discovered during the repair process itself. In these cases, the customer will be contacted to decide whether or not they would like to proceed with the additional services. This happens in roughly 50% of all cases.

When do you up-sell to your workshop customers? (%)

Source: incadea, 2014

However, what happens next is really interesting. The dealership, which spent so much time upselling and caring for you and your vehicle, will most likely forget all about you once you leave the premises. Let’s imagine you are offered a brake disc replacement, and based on the evaluation of the Service Advisor you decide to delay it by two or three months, because it is not urgent, or you do not have the finances at the moment. So, what are the chances that after these two or three months someone will reach out to you and remind you about the break discs? The disappointing truth is that the chances are not high.

Only 30% of the dealers say they would follow up in these situations.

However, this number has to be taken with a grain of salt, as surveys can easily be misconstrued. In fact, when those Service Managers were asked how they conducted the follow-ups, many of them drew a blank. The reason is that deferred services like the brake disc replacement, are in most cases noted down using pen and paper. This is problematic because if the dealership wanted to conduct a follow-up, someone would have to search through a pile of papers and try to organize and identify the specific job. In reality, less than 5% of dealers have an implemented process and system which allows them to avoid forgetting any open jobs.

Upselling opportunities on average a month

Source: incadea, 2014

Even though dealerships are forgetting about potential revenue streams, at least the opportunity has been identified. But how significant is the value of this opportunity? In 2014, incadea conducted a study by interviewing a number of dealerships across six brands (from volume to luxury cars) in six different countries (from emerging to the mature markets). The data we cover in this article all stem from this study.

The average dealership in our findings services roughly 600 cars every month. Around half of those vehicles presented some form of upselling potential. Several vehicles may be too young, and are still serviced by the leasing companies, which leaves roughly 300 customers we can upsell to. Out of those, around 130 vehicles will be fixed immediately, or in other words, accept the proposals of the Service Advisor. Another 50 vehicles will be followed up, based on the 30% of the dealers who informed us this was done. As mentioned before, this percentage is questionable but we assumed it is true for the purpose of the study. This leaves approximately 120 cars which will leave the dealership with no future contact.

There is over a quarter million Euros being forgotten and left on the table at some dealerships!

So what can you do about it?

Well, it’s pretty simple; implement a process and a system which reminds and ensures you to store and follow up on all open jobs. It is quite a simple solution, which could be worth a quarter million.

About the author:

Rafal Jacaszek | Director Business Consulting

As Director of Business Consulting, Rafal's main tasks cover focusing on the strategic positioning of the professional services team to optimally drive the short and long term objectives of incadea customers. Rafal has over 15 years of automotive experience and has gained a significant reputation on market trends. Prior to incadea, he held leading positions at General Motors Europe, being responsible for the GME Dealer Management System Project, assuring processes between GME, DMS vendors and GM Retail network in Europe. Rafal started his career with the automotive business units of EDS.