Issue Date: Service Manager Oct 15, 2010, Posted On: 10/15/2010
Service Manager Case Study Dealer doubles pre-packaged service sales The service and parts director at a smallish Honda store in Missouri knew he had to do something about the way menu-priced maintenance services were being offered at his shop. "We had the big $500 30k service or an LOF and not much in between. Those were the only options we were presenting to our customers, and too many were dropping all the way down to a LOF," he told The Service Manager.
So he came up with the idea of giving customers a choice of services to be performed by offering three service levels at each mileage interval: Good, Better and Best.
The program is patterned on what some of the independent retailers were doing with similar services. If nothing else it let customers know which services were available and illustrated how competitive his shop was with the aftermarket.
While the actual services performed vary between models and years, the Honda dealership based the three levels in the following manner:
Good: The factory-recommended maintenance for the interval for normal driving, the bare minimum that would maintain the vehicle in the lightest driving circumstances.
Better: The factory-recommended maintenance for the interval for severe driving. Many manufacturers' maintenance requirements actually describe the characteristics of most of customers as severe. For the vast majority of drivers, this "better" option is what they actually should be doing to maintain their vehicles.
Best: Starting with the factory requirements for severe driving, the new menu added some highly recommended dealership services. When advisors describe such services to customers they use terms like, "this is what I do for my own vehicles."
Because of the need to come up with logical price points and to build value in the mind of the customers, there was a little tweaking of services. Generally speaking, though, to build validity into the packages, the store stuck with the factory guidelines.
For example, a 15K service runs about $99 (LOF, rotate, air filter, maintenance inspection) for "good" and goes to $149 for "better" (which also includes balancing the tires). A 30K starts at $249 and moves up to $499. All the pricing for each model and year (where variations exist) is displayed in a flyer. Then those sheets are laminated and inserted into a book for the service advisors to review with the customers.
Also included with the pages are descriptions, again from factory manuals, as to the definition of normal and severe driving habits. This includes typical length of trips, past weather (has it been over 90 degrees for the last several months), excessive idling, stop and go traffic, muddy or dusty driving, and whether the vehicle is used for towing, uses a car top carrier or mountain driving. By showing the definitions when presenting the maintenance package, the service advisors are letting the customers categorize themselves.
We "quit selling scheduled maintenance as a one package fits all," the service director said. "This lets the customer determine where they belong."
Not only has this made the customer more involved in the decision process, it has also helped the advisors. "This takes the stress off the advisor since it is the customer making the decisions. It's easier to make recommendations when they (customers) feel they have input on the decision."
To avoid confusion between the varying maintenance packages offered for each vehicle, the menu pricing had to be changed. They eliminated the big menu board, and instead replaced it with competitive survey services like LOFs and other ala carte items.
Most opt for the middle of the road
The vast majority of the customers will go with the 'Better' plan. Because of this, a shop can throw some weight on the two extremes a bit, because most people will still want what is in the middle. This will provide the advantage of making your "good" plans extremely cost competitive, while having some in-depth maintenance in the "best" area for those who desire extra protection.
Of course, any shop will do whatever it takes to put together something that makes the customer happy, so if necessary the advisors should be able to add or delete services to get a package to suit the customer. However, most of the time one of the three options will fill their needs.