Service in a Lean Inventory Environment

The service department has always been a secret weapon when it comes to driving profits at your dealership. Sure, salespeople deserve a lot of attention and credit for bringing in revenue, but don’t forget the high-volume, high-margin work associated with fixed operations. Given the current industry-wide shortage of vehicle inventory, your service department is about to take a more important, more prominent role in driving dealerships success. With fewer cars to sell, your service department can save the day in three specific ways—driving additional revenue, sourcing used cars, and speeding up recon times.

Driving Service Revenue

As manufacturers struggle to provide inventory, sales will become increasingly hard to come by. To counter low sales numbers, your service department will need to make the most out of every single service visit, increasing revenue at every step of the process. To effectively increase service revenue, you’ll need to improve the experience that vehicle owners have while visiting the service department. Specifically, you’ll need to improve convenience, communication, and transparency. Specific tools, including texting, multi-media messaging, and integrated service pickup and delivery, can help increase customer satisfaction, retention, and even the approval rate for additional service recommendations. Over time, those improvements will translate into profits that help your dealership endure inventory shortages.

Sourcing Used Car Inventory

In addition to driving revenue, your dealership’s service department can help counteract the impacts of vehicle shortages by sourcing used car inventory. Leveraging their regular contact with vehicle owners—and a deep knowledge of their cars—service advisors can be a great resource for finding used cars to sell with low acquisition costs.

Specifically, your service department can source inventory by encouraging vehicle owners to trade in or sell their current vehicles to the dealership. Whether in person, on the phone, or through the online scheduler, be sure to encourage frustrated customers to trade in their repair-prone vehicles to the dealership. Send out the signal that your dealership is in acquisition mode and that it’s willing to pay top dollar for trade-ins and purchases.

Not all invitations to sell need to come through one-on-one interactions. When done correctly, marketing to large groups of prospects can bring in invaluable inventory. Place banners on service pages to advertise used car purchases and trade-in opportunities. A simple “we buy cars” message can attract sellers when attached to outgoing service notifications like appointment confirmations, service reminders, and thank you messages. Targeting certain audiences for such promotions can be very effective. For example, customers with vehicles that are 4-6 years old are prime targets and should be offered aggressive price promotions.

Be sure to connect service staff with used car managers for more direct collaboration. For example, offer a daily appointment ledger to used car managers and salespeople so they know when to meet vehicle owners as they come in for service. Also, flag and notify used car managers when a customer declines an expensive service recommendation as it may be a sign that the owner is weary of repairs and is ready to trade in or sell. Used car managers may also want to manually review service appointments in order to identify prospects based on vehicle type, equity position, and maintenance history.

Quick Reconditioning

The service department’s job isn’t done once you’ve acquired a used car. They also play a major role in getting that inventory reconditioned and ready to sell. With inventory levels low, it’s crucial to speed up turnaround times and get used car acquisitions out to the front lines quickly. To improve your recon processes, consider digitizing the inspection process with digital quote forms, photos, and videos. Also, emphasize and facilitate quick, remote approvals by used car managers to further speed up turnarounds.

Your dealership’s service department has always been a significant contributor of income and profit. Now, in the midst of a major, industry-wide inventory shortage, its roles and contributions are more important than ever. Not only can service revenue fill the financial gap caused by declining sales volume, but the service department can play a major role in sourcing and reconditioning used car inventory to alleviate shortages.

To learn more strategies for thriving in the current inventory environment, check out our free Lean Inventory Playbook.