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The ‘red-headed stepchild’ of your dealership

By Jackson Smith

JacksonSmithWho is more important: Michael Jordan or the other four players who open the lanes and get the ball passed to him so he can take the shot? How about Ryan Dungey? Would he be as good if he didn’t have the talent of team manager Roger De Coster making sure his bike was tuned to perfection?

How about in your dealership? Does your owner focus only on new unit sales and expect the service and parts department to discount everything to help make their customer feel like they are getting a bargain? In a lot of companies the service department is often treated like the “red-headed stepchild” of the dealership. However, during the economic downturn in the powersports industry most successful dealerships realized how important the service department is to a company’s success.

While it's understandable that sales managers feel the primary focus of a dealership is new unit sales, the majority of successful owners and general managers understand the value of fixed operations. It’s very easy when times are good to take the low hanging fruit (easy new unit sales) and make the mistake of not understanding the importance of a strong service department. The service department is where most of your customers will do business with your dealership the entire time they remain your customers. Think about that: a customer may walk around and talk to everyone in your dealership, but they are going to have the most business transactions with your service department.

One way to ensure the success of the service department, once the shop has all the necessary policies and procedures in place, is to operate the department as a separate profit center. Many unsuccessful powersports dealers have made the mistake of viewing the service department as only something to support the sales team. One way to avoid this pitfall is to ensure sales department requests are handled as much as possible the same as all valued customers.

A dealership owner I recently spoke with to told me that during the last economic downturn his company’s new unit sales accounted for only about 20 percent of his gross revenue, but his service department accounted for around 47 percent. A fact, he stated, saved him from having to close the doors. Needless to say he now spends a lot of his time ensuring he has a strong service department.

A very strong way to build up your service department is to develop a marketing campaign just for service. You can use direct mail, email blast, special promotions or whatever works best for your dealership. I have found promotions that focus on giving quality work faster than our competitor’s works best for us. However, each market and customer base is different so experiment and see what works in your area.

An equally import role of the service department is to grow relationships with customers, which will result in repeat buys and peer recommendations to first-time buyers.

A JD Powers study shows that as many as 68 percent of new unit sales come from customers who have a good relationship with the service department. I have covered some ways in my previous blogs on how to develop a positive relationships with customers, but if you would like me to share some of my other techniques feel free to email me. Remember: Never underestimate the importance of each of the departments in your dealership, and look for ways they can complement each other to ensure your customers remain loyal.

Jackson Smith is the parts and service manager at Destination Powersports, a multi-line OEM dealership located in southwest Florida. Jackson has more than 30 years experience in both the automotive and powersports industries.

Contact:  Jackson.S@destination-powersports.com

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