Understand-Customer-Psychology

Psychology of Service Valet and the RO Value Increase

Why do customers who do not visit the dealership spend 18% more on auto service? Evidence and armchair psychology support our analysis.

RedCap recently published a case study about the effects of service pick-up and delivery (service valet) on loaner turn time.  You can read the paper here. (Spoiler alert: Loaner turn time was reduced by approximately 1.2 days, or over 40%.)

The study had a few other gems.  Among them, analysis showed customers who used service valet had RO values 18% higher than those who did not use service valet. Theoretically, these service valet customers  could have had more expensive repairs but that is not likely given the large sample size.

Instead, our longstanding experience shows service valet customers purchase more recommended services. So this begs the question:  Why do customers who do not visit the dealership spend 18% more on auto service?

Evidence and armchair psychology support our analysis.  Consider the psychology from the customer’s viewpoint.

The dealership saved the customer a few  hours by not requiring them to visit the store to service their car. Result: customer saved time, feels valued.

Customers expecting to wait in the customer lounge for an hour are less likely to purchase additional services if it requires more time at the dealership and less time where they were planning to be (i.e. work, family, golf).

Customers in the comfort of their home or office, with a loaner, have no time constraint and are more likely to say yes to a suggested repair as the car is already at the dealership, the repair is likely needed, and there is little sense is saying No only to bring the car back at a later time.

Many customer segments (females and non-automotive savvy males) are more likely to say no to an “in person” pitch, when the suggested repair is outside the realm of what they were expecting. This is a natural reflex, especially in the automotive sector.

The median annual income of a luxury car owner in the United States is $99,364 or approx. $50/hour. The average luxury car owner would equate two hours of savings to $100. A customer is more likely to make additional purchases if it’s directly connected to a savings or discount in the same transaction.

The pick-up and delivery service sets up the sales concept of reciprocity. Now that the dealership has given the customer something (time, less pressure, more convenience), the customer will feel better about reciprocating.

Is another explanation for the increased RO value that a service advisor could be a better salesperson over the phone? Granted, service advisors like to have a direct (emotional) connection with their customers but there is a valid explanation as to why service advisors who offer pick-up and delivery show higher RO values.

We’ll look at the upsell transaction and service valet from the viewpoint of the service advisor in the next blog post. Stay tuned. Be driven.

 

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Out of Store Experiences for Buyers Who Dislike Dealerships

Most Americans would rather give up their phone (for a month) than go car shopping. How can your dealership change that?

Let’s face it: the times, they are a’ changin’. There’s just no denying it. The days of customers walking onto your lot, strolling among your inventory, kicking the tires, chatting with your salesman and driving away in a new automobile are becoming rare. In fact, they might already be gone.

Your customers want what they want when they want it.

You see, today’s consumers are used to instant gratification and get it in most aspects of their lives. They are tech savvy, and they expect to be catered to on their own terms. And more importantly, they expect to be catered to on their own turf. With the advent of online shopping, consumers learned the convenience of researching and purchasing items small and large from the comfort of their home, office or the local coffee shop. They now expect this same convenience from your dealership: they want an out of store experience when it comes to purchasing and servicing their vehicle.

Is an out of storOut of Store Experiences for Buyers Who Dislike Dealershipse experience even possible in the car industry? Yes.

Fortunately, you can give your customers what they want. You can give them an out of store experience when you take advantage of today’s advanced technology developed to allow you to satisfy your customer’s desires. Technology streamlines, automates and seamlessly allows your customers to experience service, test drives, new vehicle purchases and even loaner cars – all without ever stepping foot onto your lot.

The bottom line? Boost yours.

Think about it: you can arm your entire staff with a tool that creates efficiencies across your operation while giving you the ability to deliver a superior experience for your customers. You can deliver a car for a customer to test drive right to his or her front door. You can arrange for a professional staff member to pick up your customer’s car for service and leave a loaner in its place. You can deliver the serviced car right back to your customer’s door – or another location if the customer requests – when the service is complete. Imagine the convenience you have just delivered to a now completely satisfied customer. Imagine the increased efficiencies your operation can realize. Imagine the confidence of your empowered staff. Imagine the boost in your bottom line.

In light of the changing times, it’s time for dealerships to embrace the opportunity to transform the way they do business. Harnessing the capabilities offered by the technology of today can ensure your success tomorrow. To find out more about offering your clients an off-site experience, contact us today.