HOW TO INCREASE YOUR DEALERSHIP’S AFTERSALES REVENUE

19/03/2018

Today, aftersales revenue is becoming increasingly important for car dealerships, especially in mature markets. For many dealers, efficient aftersales management also offers untapped potential to increase revenue and profitability.

In our article “Top 3 Key Performance Indicators for Car Dealer Aftersales Department,” we have already covered what aftersales absorption ratio, productivity, and utilization mean and how to calculate them. But what if you are just starting to track these key performance indicators (KPIs) and realize they are below the recommended benchmarks?

Read on to see some options to increase your aftersales performance and revenue.

1. How to improve your aftersales absorption ratio

Dealer KPI Aftersales Absorption Ratio

In most mature markets, the aftersales absorption ratio should reach a benchmark of 80% or higher. If the value is lower, that means your sales are slowing and, soon enough, the dealership might find it difficult to sustain a stable revenue flow.

The solution is to work on increasing aftersales revenue by running campaigns, keeping an eye on open jobs, and trying to reactivate those opportunities. And it’s always a good idea to cut costs if possible.

How to increase aftersales revenue or cut costs:

  • Remind your service advisors about the customer’s open jobs via your DMS or service cell phone app: many opportunities are lost when deferred jobs are not documented or followed up on. At least 30% of jobs offer an upselling opportunity, an average of 180 EUR per service order.
  • Integrate information and pop-ups on current packages and campaigns for the service advisor.
  • Analyze the aftersales process in detail to find processes that take too long and dig deeper to figure out the root causes. Our studies show that most problems arise because of lack of functionality, lack of process definition, and lack of data or integration. That might point out the need to clearly define and/or improve your business processes and implement some interfaces or other IT solutions.

2. How to improve utilization

Dealer KPI Utilization

Utilization mostly varies between 85% and 95%. It shows how well the work is being planned on the service bay. Low values might indicate a communication gap between departments or workshop planning that is not well organized. If you do it right, you have visibility on how many hours are available to be sold and then you can organize your workshop resources more efficiently.

Ways to increase utilization:

  • Around 25% of service appointments require an additional visit that, on average, costs 150–250 EUR per visit in operating costs. Combining service tasks and/or dividing them can cut those costs and improve customer satisfaction.
  • Many senior managers state that it is much more convenient if parts are delivered directly to technicians so they can focus on car repair only—an activity that actually generates profit. To achieve that goal, you need to ensure a seamless communication flow and cooperation between all involved departments, for example, through an integrated DMS solution.
  • Have your mechanics clock the time needed for their tasks. Use that data to calculate their utilization and base your workshop planning on real figures.

3. How to improve productivity

Dealer KPI Productivity

In the best-performing dealerships, productivity reaches at least 110%. This KPI helps to understand how skilled and well equipped your mechanics are. Knowing this KPI value, you might need to work on shaping a training strategy and increasing qualifications of employees as well as finding out whether there are enough tools for everyone in the workshop.

Here are a few ways to improve productivity:

  • Have a resource planning system in place to make sure you can schedule the use of special tools efficiently.
  • Evaluate what your mechanics do best and assign jobs to them based on their skillsets; you can even have them specialize in a particular area.
  • Train your junior mechanics and close the gaps in their skillsets, focusing on the skills that are most needed for the tasks commonly performed in your dealership. This will increase not only your profitability but also customer satisfaction and loyalty.

Improving customer experience is the main way to increase profitability

The KPIs described above will help you evaluate aftersales performance in depth and set you on the right path to increase your aftersales revenue. One more thing—customers come back to dealerships with the highest quality of service. Quick repairs, helpful service advisors, transparency, trust, and a smooth process will be your recipe for long-term success.

incadea.dms Dealer Management System - Service Management

RELATED BLOG

Cracking the Code on Generation Z: Three Ways to Prepare for Your Future Customers

With the rapid aging of society within developed regions such as North America, East Asia, and the European Union, automobile manufacturers and retailers need to prepare to target younger consumers.

READ MORE

GDPR: Understand Data Processing and Take the First Steps

What does "using data" mean and how do you do it right?

READ MORE

The D in GDPR: Personal Data in the Context of Automotive Retail

Let us take you through the main concepts and implications, without the intimidating legal terminology.

READ MORE
RECENT BLOG

Are your DMS and other systems GDPR-compliant? A guide to assessment.

Understand how to assess various software you might be using in your dealership to make sure you are compliant with GDPR.

READ MORE

How to Ensure a Smooth Transition to a new DMS for Your Dealership’s Team

The best way to ensure the switch will go smoothly is to use all three ways to train your employees: online e-learning, on-site training, and post go-live support.

READ MORE

Three Factors Impacting Customer Satisfaction with the Car Buying Process

Buying a car can be a time-consuming, boring process, so say customers and, unfortunately, research confirms that view.

READ MORE