Dealer Insights - Nov/Dec 2012 - Should You Expand Your Store’s Hours?
Marty saw an opportunity: Three of his competitors had closed their doors, and he knew their customers would be shopping for a new place to get their vehicles serviced. Marty took action: He hired several more service technicians and changed his hours of operation.
Marty expanded service hours from 8 a.m. to 5 p.m. Monday through Friday to 6 a.m. to 8 p.m. on those days. As part of his business plan, Marty also allocated more money from his budget (about $7,000 a month) to radio and, for the first time, TV advertising.
So how did Marty do? In short, his service business took off with a vengeance. Many of the new customers — as well as some of his existing customers — seized the chance to bring in their vehicles before and after work. After one year, John’s service department revenue jumped from $100,000 a month to nearly $145,000.
CUSTOMERS CRAVE CONVENIENCE
If your dealership hasn’t expanded into evening hours, consider the concept. You may be missing out on a profitable opportunity and not setting yourself above your competition. And if you don’t already offer weekend hours, look into that, too, simply to keep up with your rivals.
The biggest rise in expanded service hours came during the recession, says Paul Taylor, chief economist for the National Automobile Dealers Association (NADA). Dealers needed to rely more heavily on service and parts sales for revenue than new car sales. The climb has been fairly steady since, according to NADA statistics.
As of year end 2011, 74% of dealerships offered their customers the chance to get their cars serviced during the weekend, according to NADA DATA 2012. And 28% offered both weekend and evening hours. Only 22% of dealers stuck to a daytime, Monday through Friday schedule.
COSTS MUST BE JUSTIFIED
Although expanded service hours fill customers’ need for convenience, dealership owners shouldn’t automatically think that additional service hours equate to additional revenue. “You could be open 24/7 but that’s likely to be prohibitively expensive,” said Taylor. “There probably would be hours when your service bays would be empty. Your costs wouldn’t be justified.”
Do your homework before jumping on the expanded-service-hours bandwagon. A good place to start is asking your customers whether they would service their vehicles outside your current hours. Are the positive responses high enough to justify your additional costs: utilities, salaries and wages, including possibly higher compensation for those working extended hours?
Your CPA also can be of assistance. He or she can analyze the financial side of the equation to determine the volume of sales needed to cover the extra costs incurred, including the number of additional employees needed to cover the increased hours. Or you might want assistance in developing a plan to restructure current staffing levels to allow for the expanded operating hours.
BEING MORE COMPETITIVE
Expanding service department hours might be a profitable move for your business. With more older vehicles on the road than ever before and used car sales steady, expanded service hours may be one smart way to expand your business without adding floor space, or buying or building another store. Additionally, expanded service hours may be necessary to compete with quick-lube stores and independent garages, which typically are open in the evening.
Dealer Insights - November/December 2012 Issue