Dealerships in Charlotte and Duluth turns leads into sales

In the service department at Sonju Two Harbors, a multibrand dealership near Duluth, Minn., Jodie plays a central role in converting sales leads to customer appointments. She’s a model employee: always comes to work on time and is unfailingly polite yet persistent when following up with customers by email. Jodie also happens to be a virtual assistant powered by artificial intelligence.

At the other end of the spectrum is Scott Clark Toyota in suburban Charlotte, N.C. There, 22 human employees in a dedicated call center make tens of thousands of phone calls each month to woo service customers. Service advisers promote customers’ immediate approval of recommended work by sending them text messages that include photos of worn or broken parts.

Two dealerships, two different scales of service operations: 12 bays, nine technicians, three advisers and about 720 vehicles serviced each month at Sonju, compared with 72 bays, 70 techs, 25 advisers and 6,000 cars and trucks serviced monthly at Scott Clark. But the goal of both stores is identical: Get current, former and new customers to say yes to service work.

That’s vital as vehicle sales slump, especially because service departments typically generate 40 to 45 percent of dealerships’ gross profits, industry studies show. Many dealerships could do better at converting service leads, if a survey commissioned by the software provider Conversica is any indication.

Failure to communicate

The survey concludes that dealership service workers lag their sales colleagues in lead conversions. Often, service departments respond to potential leads belatedly, inadequately or not at all, Conversica says.

The vendor sells sales marketing software that includes Jodie, the virtual assistant “hired” by Sonju. Conversica works with more than 1,000 dealerships. The product might cost an average-size dealership about $1,000 a month, says Gary Gerber, Conversica’s head of product marketing.

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McKinzie: Jodie frees up advisors

At Sonju, Jodie sends hundreds of emails each month to convert leads to service appointments and sales. In the first three months of 2018, Sonju converted 37 percent of service leads, says Keith McKinzie, owner of the dealership, which sells Chevrolet, Buick, Ford, Chrysler, Jeep, Dodge and Ram vehicles. That compares with a 17 percent conversion rate when the store started using Jodie in early 2016, he adds.

The dealership’s gross service revenue so far this year is roughly 15 percent higher than for the same period in 2017, McKinzie says. That’s no small feat, he notes, because the store is in a small town in a remote area of northeast Minnesota, where it’s hard to get customers to drive as much as 100 miles for an oil change. He credits Jodie for much of the success.

“Jodie engages more customers than any real person could truly do,” McKinzie said. “That frees ups service advisers to take good care of the customers in front of them, which is the most important thing in our operation. We’ve found it’s best to let employees do what they do best, which is work face-to-face with customers.”

Gerber says repeat inquiries are often essential to converting service leads to sales.

“As long as this ‘person’ is trying to sell you something you need — you have a car, so you need service — people appreciate her persistence,” he says. “Customers are busy, too, so they don’t always respond right away. Sometimes they even apologize to [the AI assistant] for taking so long to respond.”

David Marod, Conversica’s vice president of sales, says Jodie politely keeps probing when she doesn’t get an answer and intuitively changes her approach and message each time. That’s something harried service advisers typically don’t have time to do, Marod says.

“She might make seven, eight or nine attempts,” he adds. “Automation is much more effective at bringing people into service departments without additional use of scarce resources.”

‘Aggressive’ approach

Leading issues

Software provider Conversica surveyed 50 new-vehicle dealerships to determine how well they converted customer leads to service sales. Among the findings:

  • Just 23% of service departments responded to leads within 5 minutes of an initial inquiry, compared with 28% for dealership sales staffs. The lead conversion rate rose substantially if the response occurred within a minute, but it dropped significantly the longer the response took.
  • 1 out of 5 service departments didn’t respond to a service inquiry at all.
  • Just 10% of service departments made 8 or more attempts to contact a potential customer, while roughly two-thirds gave up after 1 or 2 tries. It’s not unusual for a conversion to require 8 to 10 contacts, according to the survey.

Source: Conversica 2017 survey

Scarce resources are less of an issue at Scott Clark Toyota, which for the last two years ranked first among 177 dealerships in Toyota’s Southeast region in generating customer-pay repair orders, says Dave Blackburn, the dealership’s service director.

“We’re extremely aggressive,” says Blackburn, a 41-year industry veteran. He notes that the dealership created a call center two years ago specifically to chase service leads. Its employees make 35,000 to 40,000 calls a month and schedule service appointments, he says.

“Cars are better than they used to be, so we can’t sit here and do warranty work all day,” Blackburn says. “With 72 service bays, we need a lot of customers coming through the door in order to keep the lights on.”

To prospect for service leads, Scott Clark Toyota uses a customer relationship management system developed by ELEAD1ONE that allows the dealership to target particular groups of potential customers. Blackburn declined to say what the dealership pays for the system.

In April, Blackburn says, he targeted owners who had bought used Lexus vehicles at the dealership in the last two years but never had come in for service.

Within three hours, that information was extracted, a script was written with a specific discount hook, and employees started making calls.

The dealership’s service advisers also use the ELEAD1ONE platform to make repair presentations to customers. For example, if a multipoint inspection reveals worn brake pads, the customer gets a text message, complete with pricing and photos.

“A picture speaks a thousand words,” Blackburn says. “It adds an element of credibility. If you tell customers they need new brake pads, they might say, whatever. But if we show them the worn pads, they’re more likely to buy them.”

Educating customers about repairs is a key selling point, says Bill Bok, vice president of dealer management systems for Dominion Dealer Solutions, a dealership technology provider.

Dominion sells a new system called Vue that enables service advisers to embed a video within a text message. Bok would not discuss the system’s pricing.

“Videos can directly educate customers about the value of the service,” Bok says. “If it’s a serpentine belt, for instance, the video shows what a serpentine belt does. That can help close sales, plus it communicates in a way that many customers want.”

Scott Clark Toyota also relies on an ELEAD1ONE call center to contact customers who decline service and encourage them to reconsider. In April, 1,044 dealership customers initially declined service.

But an email and phone call campaign from the call center resulted in 235 scheduled appointments — a 23 percent response rate — and $88,600 in revenue. The dealership’s lead-conversion rate for such declined-service campaigns generally hovers around 19 percent, Blackburn says.

Why do service departments typically lag in converting leads? Part of the reason, Bok says, is that so many dealership owners and general managers come from the sales side of the business: “They’re sales guys, and that’s what they know.”

Coversica’s Marod cites the overwhelming workload of many service advisers. “They don’t get the administrative support — [service] is out of sight, out of mind,” he says.

Blackburn suggests that service tends to have a lower profile at dealerships than sales.

“It’s not the sexy part of a dealership,” he says. “But you can’t put the blame on principals or general managers. Service departments get in a rut and expect customers will come back just because a light on their dashboard goes on, or they see the oil change reminder sticker on their windshield, or they get a discount coupon in the mail.

“We rest too much on our laurels,” he says. “Fixed ops managers need to go after the work.”

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