After the gradual recovery from COVID-19 pandemic, our country is going again through severe economic and political crises like the unstable US Dollar, the introduction of new taxes, high inflation rate, import restrictions, LC restrictions, and natural disaster which is hurting Pakistan’s automotive sector badly. Due to the weakening of the Pakistani Rupee and the rising cost of auto parts, car manufacturers would have no choice other than to increase car prices. As a result new car sales are decreased by 40% to 50% and the same situation will be remained the same throughout the current fiscal year.
Pakistan’s businesses have never faced such situations in the past and it’s really a hard time for auto makers and their 3S dealerships network. Dealerships across the country not only struggling with low new car sales challenge but their after-sales service business was also down by 30% to 40%. This is a big challenge for car dealerships for their survival. Dealerships that have learned from the COVID-19 pandemic and adapted their dealership operations are now less affected by current economic situations. Now many dealerships have no direction on how to cope with it. After-sales department is the backbone of a dealership which can support the dealership to survive when new car sales are down. Now it’s time to take action and find ways to make the after-sales department more profitable to survive under such conditions.

IDENTIFY THE CURRENT SITUATION:

The first thing, dealerships should identify their current situation like Daily RO count, RO mix, service absorption rate, NPS/overall customer satisfaction rate, customer retention rate, and current ongoing campaigns.

WAY FORWARD!

AFTER-SALES TEAM GOALS.

The first step is to set the after-sales team goals, a clear target, the big WHAT like “to increase the profitability of the after-sales department.”

KEY PERFORMANCE GOALS

The second step is to set performance goals with clear targets and dates. Following performance goals will serve the after-sales team goals. Following are the big 4 performance goals for any dealership’s after-sales department:
1. Service Absorption Ratio goals
2. NPS- Customer satisfaction index (CSI) goals
3. Customer retention & loyalty goals
4. Service staff recognition goals

1- SERVICE ABSORPTION RATIO GOALS:

The service absorption Ratio shows how much of the dealership’s fixed expenses are covered by after-sales profit. In other words, it tells you what is going to happen when your car sales are squeezed or you suddenly stop selling cars. First, dealerships have to calculate the current after-sales absorption rate and must set the goal for higher than 75% most likely to survive during the low sales period. Increase after-sales revenue by up-selling, maintenance packages, pre-paid maintenance cards and campaigns.

2- NPS- OVERALL CUSTOMER SATISFACTION INDEX (CSI) GOALS:

Net promotor score & overall customer satisfaction rate is the foundation for high after-sales absorption ratio, customer retention, and loyalty. Net promoter score will help you to bring new customers and retain the current customers with more smiles. Dealerships must identify their promoters, passive/neutrals and detractors. And must develop customized plans for each category. Like for promoters, make a sustainability plan to bring their service experience to the next level. For neutrals/passive customers make an improvement plan to bring them to the promoter zone. Make an improvement plan for detractors to address their biggest concerns with your services and how it can be resolved and bring them to the promoter zone. Overall customer satisfaction goal must be more than 92%. A great service experience retains current customers and attracts new ones which lead to more business sustainability.

3- CUSTOMER RETENTION & LOYALTY GOALS

Customer retention is the key challenge for dealerships and car manufacturers in Pakistan. According to my experience, 70% of customers who have purchased new vehicles didn’t return to dealerships for service. They preferred to go to local workshops for maintenance and repair. Dealerships must develop a follow-up framework and reward programs to bring those customers back to the service floor. Following will be customer retention goals for dealerships:
1st Year Target > 80%
2nd Year Target > 70%
3rd Year Target > 55%
If dealerships bring more customers to dealerships in the first years, it will create more probability for higher retention rates for upcoming years.

4- CUSTOMER LOYALTY PROGRAMS

Dealerships must develop loyalty programs for their loyal customers. Customer loyalty programs increase return customers and profitability as acquiring a new customer is 5 times more expensive than retaining an existing one. Loyalty programs can be designed in many ways like customer loyalty Card and VIP Privilege Club. We introduced customer loyalty card with some free service offerings and discounts at our dealership. we registered more than 1000 loyal members in the first three months of its launch. We celebrated our customer’s birthdays, hold quarterly high-tea programs with them, and got their feedback to discover new opportunities to improve their service experience. Further, we also offered certain discounts who like and share our Facebook page on their timeline.

CUSTOMER REFERRAL PROGRAMS

Do you believe that referral programs do increase for dealerships? Dealerships must design customer referral programs at their dealerships. Offer a discount, free oil change or some free services to your valued customers on their next visits, if any customers come to the dealership with their reference.

SERVICE STAFF RECOGNITION GOALS

Employee experience is the key here. Dealerships must have a service staff recognition system in place to keep them motivated to up-sell and reach their daily business goals. Dealerships must have Employee of The Month rewarding criteria to encourage service staff to reach their business goals. Ceremony to be held to announce Employee Of The Month or Winners on monthly basis to boost their motivation and loyalty.

The secret to superior customer experience (CX) is putting your service staff first means Employees Experience (EX). Creating a great customer experience requires having an engaged, highly motivated, and energized workforce that can translate individual experiences into satisfying gate-to-gate customer journeys.

My equation is

DX = EX + CX

Dealership Experience= Employee Experience + Customer Experience
If any of the above is compromised the dealership experience will be compromised.