Don’t Fall Victim to the “Profits by Reduction” Mentality

By Ted Ings, Executive Director

Cutting back on dealership conveniences is penny-wise and dollar-foolish.

Sure, it can be tempting to cut back on conveniences when sales are down.

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You may think customers won’t notice if you take away perks – such as complimentary snacks or free carwashes – but they do notice, and removing such amenities can directly impact sales.

These days, scaling back is riskier than ever, since many dealerships are layering on additional goodies to be more competitive.

Why cutting back on amenities could spell disaster for your dealership

Certainly, you’ve heard the phrase “you’ve got to spend money to make money”. And nowhere is that truer than the automotive industry.

As irrational as it may sound, customers often choose a service department based on its waiting room area and conveniences. Buyers also feel more positive about a new car purchase when snacks and refreshments are offered during the transaction.

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On Reddit, one consumer writes, “Bought my [Dodge] Hellcat and didn't even get a water or anything, Bought my [Dodge] Charger from another dealer and was happy I got offered bottled soda both days I was there. In return: I bought a bottle of Jack for the dealer [Reddit].”

People love perks; that’s why today’s dealerships are spending a lot of time and money to spruce up their waiting rooms. Some locations have been known to add features such as an arcade, a barbershop [Edmunds] – all kinds of over-the-top luxuries. And guess what? It works.

Services you might be tempted to scale back on – but shouldn’t

While you may not be ready to provide an on-site barbershop (at least not yet) there are a few essential services you should never cut back on, including the following:

Wi-Fi:

Most customers don’t want to read tattered old magazines – they want to jump on their smart devices. So, make sure you have a good Wi-Fi connection at all times. Post the password prominently in the waiting area where everyone can see it.

Business area:

Cubicle-style desks help customers get work done while they wait for their car. Computers should also be available for guests without a laptop.

Play area:

A kids play area is beneficial for both you and your customers. Unoccupied children can be stressful for parents and disruptive to other guests.

Snacks:

Popcorn is great – but fresh cookies are even better. Some dealerships splurge and also put out additional items such as fruit, chips and granola bars.

Drinks:

Bottled water, coffee, tea, and soda are essentials.

Complimentary car wash:

These days, everyone expects to have their car cleaned up after service. Having a lot tech or shop assistant run each vehicle through the car wash is a must.

Shuttle service:

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The service department should always have a shuttle service available. Customers don’t want to – and shouldn’t have to – spend additional money on ridesharing or a taxi service.

What can happen if you stop offering amenities: a case study

A certain unnamed dealer group came under new ownership and started cutting basic conveniences like those mentioned above. First, it was the car washes, then the snacks and finally the soda went away. As you can imagine, customers were furious and dealership moral hit the skids.

Oddly enough, that same organization, which marginally reduced their costs by cutting conveniences, was still investing a large amount in ads in an attempt to bring in new customers. And based on sales statistics, those ads never produced the same ROI as the repeat and referral business generated by the dealerships goodwill. In fact, things rapidly got even worse.

An alternative to cutting guest conveniences

Don’t take away the free popcorn! There’s a better way, trust us. If times are tough and you’re looking to boost gross profits, consider finding ways to improve relationships with current customers. Find out what your guests want and provide it.

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In other words: tailor your dealership – and your conveniences– to your customer. After all, what matters to a Mercedes owner may not be the same as what’s important to a Honda owner. Both the sales and service department should ask guests what they want to determine what’s lacking.

Of course, in some instances, customers might not know what they want until they get it. That’s why you need to take the initiative as many other dealerships already have. Maybe start small by offering better snacks and drinks; instead of stale coffee and burnt popcorn, lay out a spread of various treats and beverages. Customers always respond positively to complimentary food.