October 10, 2022
Solving your service absorption problems with data
Service Absorption Goals
Dealerships and their service managers are constantly trying to solve the problem of their customers defecting and servicing their vehicles at aftermarket locations. OEMs pay dealerships bonuses based on the number of OEM customers registered in their primary marketing area, compared to those OEM customers who continue to service through the dealership. In general, dealers need approximately 70% of the total brand vehicles servicing with them to get their bonus.
Solving the Defection Problem
What can service managers do when service cycles are getting longer and longer, and dealerships are unaware that customers have defected until it is too late? A considerable defection period occurs when a new vehicle’s warranty expires, and the customers start to service in the aftermarket instead of returning to your dealership. When that vehicle is sold to its second or third owner, the dealership must wait until that vehicle is registered in their primary marketing area and will not know who the owner is unless they have the registration data or if that customer decides to visit the dealership for service.
So, how many of your customers are defecting to the aftermarket? If you could capitalize on these known defectors, and “in the market” for service customers, how much closer would you be to hitting your OEM’s benchmark for servicing vehicles in your primary marketing area?
Who are these Known Defectors?
Known Defectors are people who own a particular make of vehicle, and who live within a certain radius of your dealership. By using proximity targeting, dealerships can now identify when a mobile device has been to an aftermarket location. Proximity targeting uses latitude and longitude information to determine if a mobile device is at an aftermarket location and can track the length of time they are there. When a customer is at an aftermarket location for over 30 minutes, they become a “known defector.”
In addition, data partners have the ability to scrape credit card statements in aggregate to see if customers have charges on their credit cards from aftermarket locations and can even see what service was provided. Using this data, these audiences can be specifically targeted with Facebook and display advertising, which can bring them back into the dealership when it is time to service again.
How does this work exactly? Take a real-world example: Peggy recently got an oil change at Jiffy Lube. The proximity targeting data determines that her phone was at the aftermarket location, in your dealership’s primary marketing area. Also, data partners see the charge for the oil change on her credit card. Peggy then receives advertising for a special offer that brings her back into the dealership for her next service instead of going to the aftermarket location the next time she needs an oil change.
How Do You Identify a Customer Who is “In the Market” for Service?
Data can also help dealerships find people who own a particular make of vehicle, live within a certain radius of the dealership, and are “in the market for service”. When customers visit different dealership websites and aftermarket websites, or are searching online for service parts or locations, that information can be tracked. This online activity indicates that the customer is in the market and then they can be sent a Facebook or display ad as well to encourage them to visit your dealership. Now you can entice the customers with digital ads and special and special offers that can bring them into your dealership.
For example, Doug’s car just broke down and he needs a new alternator. Data informs the dealership’s marketing team that Doug owns a Toyota Camry in the dealer’s primary marketing area. Doug gets his vehicle towed and calls his friend Ryan for a ride. They go back to Ryan’s house to start researching prices and more information. They might google “prices for alternator” and start visiting aftermarket websites like Jiffy Lube, AutoZone, to price out alternators and the cost of getting one installed. This online activity moves Doug into the “In the Market for Service” audience and is shown advertising for service at the Toyota dealership in his proximity. Doug then receives exceptional service from the dealer and becomes a loyal customer of that dealership for future service and vehicle purchases.
Does This New Technology Work? It did for a Luxury OEM!
Since this technology is new to the marketplace, a luxury OEM recently ran a pilot to determine its effectiveness. The pilot ran in the OEM’s selected store’s primary marketing areas for two months. Nine total stores participated, ranging from small to larger stores targeting owners of vehicles for this luxury OEM. who were defecting or in the market for service with advertising. On average, dealerships got $18 back for every $1 spent on advertising. Small stores reported an ROI of $16 per $1 spent. Medium stores reported an ROI of $18 per $1 spent, and large stores reported an ROI of $22 per $1. After the pilot, this luxury OEM is now rolling out the technology to all their stores across the country to continue capturing these known defectors and use the data for maximum service absorption.
If your dealership is interested in learning how to capture Known Defectors, and reach customers currently in the market for service, you can learn more at solera.com/knowndefectors.