Thursday, August 29, 2013

Express Service and the Future of the Service Department

Several major threats to dealer fixed operations are on the horizon. They all stem from the fact that the customers’ needs, the dealers’ perception of those needs, and dealers’ strengths do not always line up. Non-dealers,which include chains and independent repair facilities, have many weaknesses, but as you can see in the chart below, they are good where it matters: convenience and how customers view prices. Improvement in vehicle quality over time has meant less warranty work and repairs, and more regular maintenance and light repairs. Automotive service chains are effectively competing with dealers by increasing service levels for these maintenance services and simple repairs. All this darkens the outlook for dealers and OEMs, unless they change the way they do business.

To address changing market dynamics, and retain their customers and profits, many OEMs and dealers are looking at quick service operations (a.k.a. Express Service). In fact, a recent NASB benchmark study found that over 50% of OEMs are investigating the Express Service business model for many of their dealerships. The benefits of Express Service are widespread, but the key benefit is customer satisfaction, which drives customer retention and, ultimately, sales.

Express Service can help dealers become more competitive in their markets and improve their productivity and sales.

The journey to a successful Express Service program is not easy, and requires several considerations. Here is a quick list:

  • Management/Dealer Buy-In: Like any dealership change initiative, Express Service needs to be a core element of a dealership’s operations; that means buy-in and support from top level management, including the dealer principal. The installation process can take anywhere from one week to six months and typically involves an in-dealership assessment, as well as meetings with dealer management and the OEM on in-dealership training. Everyone needs to buy into the overall philosophy of “No appointment necessary”.
  • Dedicated Resources: Dedicating resources to Express operations is necessary for success. Dealers must assign separate technicians, service advisors, and service bays to these operations. A recent Carlisle benchmark revealed that the average Express Service operation includes one dedicated service advisor, two dedicated technicians and two bays. However, this differs from dealer to dealer, based on the need. Maintaining supplies of fast-moving parts in Express Service bays is also critical. The key is to have flexibility and simplicity. Remember kaizen.
  • Facilities: Another essential decision is whether or not to create a separate facility for Express operations. There are two distinct models: the Ford Quick Lane model, which has separate facilities for quick service operations, and Nissan Express Service, which leverages an existing, but separate, area within the dealership. Either way, it’s imperative that the services be separate from the main shop, with clear signage so customers can easily locate Express operations.
  • Process Excellence: Express operations are more art than science. They require a carefully orchestrated sequence of events when a customer comes in. Nail down the inspection and service process, and know the exact time for each step. Within 10 minutes the customer should be told what services his vehicle needs and how long it will take. Most OEMs support dealers with a robust installation process; they leverage third party and/or corporate field staff for installation and follow-up visits.
  • Staffing: The Express Service advisor should have a different background from staff in the main shop. Customer service in Express should emphasize personality and sales traits over automotive knowledge. It is important to have a succession plan in place for Express staff, because there is a high turnover rate associated with Express Service operations.
  • Services Offered: Most OEMs start Express operations with maintenance/scheduled services (Level 1). Once they perfect the process, they graduate to light repairs, such as brakes and tire repairs (Level 2). Very few offer medium to heavy repairs through Express operations.
  • Monitoring: Key performance indicators (KPIs) for Express Services typically include measuring demand, profitability, and customer satisfaction. It is also important to establish Express op-codes to track and monitor Express repair orders and related metrics. Some OEMs check in with Express Service operations annually, while others monitor data daily.

Bottom Line: To compete in the new market, OEMs and dealers must align their goals and processes. The industry has set the bar for change: fewer repairs, simpler maintenance services, and longer service intervals. The big auto chains, like Pep Boys and Firestone get this and are going after it. Just look at what they’re spending to market these services. OEMs must look more like “chains” in the future – in the new world, simplicity and dependability will be the trump card.

No comments: