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Adding value: How dealerships can deal with the lull in spending

Adding value: How dealerships can deal with the lull in spending

31st July, 2019


Profitability for franchised dealerships has long been a rocky arena, and the latest figures may provide little comfort. As customers navigate economic and political uncertainty, purchasing a new vehicle understandably slips down the list of priorities.


In turn, this leaves dealerships in need of alternative ways of generating cashflow and improving profitability beyond core vehicle sales. They need to find means of adding value to their core offering, not only for customers who have purchased a new vehicle, but also for those seeking to extend the useful lifespan of an older one.


How to achieve this? Here is a three-step plan for dealerships seeking to respond to the lull in driver spending.


  1. Extend your portfolio of aftersales products and services

The first core principle has to be to ensure that your range of additional products and services is as extensive as possible. Dealerships which trade exclusively in vehicle sales will always struggle during periods of customer caution. Dealerships which offer well thought-out aftersales services, including vehicle health checks and maintenance, have a greater array of possibilities to offer customers, and benefit particularly during periods when drivers are seeking to keep older vehicles on the road for as long as possible.


Of course, those products and services need to be high-quality and consistent, which is where solutions like autoVHC’s electronic vehicle health check system come in. These empower dealerships to offer health checks which are not only comprehensive, but also consistent every time and transparent and easy-to-understand for drivers.


  1. Encourage repeat business through points schemes and ongoing service plans

Next, you need to consider ways of encouraging drivers to use your dealership for such services repeatedly, rather than as a one-off. Ongoing service plans are an old idea but can be hugely effective – if they are tailored to drivers’ needs. If you are struggling to sell them, consider asking for feedback, or restructuring the financials. Tricky economic environments require financial sensitivity.


Loyalty card and points programmes are used to great effect in the retail sector, so why not apply them to car dealerships? There are so many different approaches and you can set up the system to work in a way that benefits both the dealership and the drivers. Points, for example, can be dictated to be used for either low-value items or higher-end services – whichever works best for your business.


The key principle throughout is to encourage customer loyalty, and to move a proportion of customers from one-off purchases to something more ongoing and predictable for both you and them.


  1. Enhance your customer marketing through personalisation and automation

On a related point, dealerships must work hard to make every customer feel special. A powerful way of being this can be to invite select customers – perhaps those who have joined a loyalty programme, as above, or those who have spent a certain amount of money over time – to join an exclusive scheme whereby they can get access to discounts, freebies or preferential rates.


Other ways of making customers feel special and ensuring that your services are truly tailored to their needs include steps like adjusting opening hours in line with drivers’ most likely working hours, or offering different pricing structures and the ability to pay for work in stages, particularly at times of economic uncertainty.


Finally, automated customer contact when health checks are due, or when an item which was not included in a previous maintenance check is up for review, can both encourage repeat business and keep customers better informed as to the health of their vehicle.