CHICAGO — Manufacturer and dealership marketing and technology provider Affinitiv announced the release of a free ebook for auto dealers. “Why Service Absorption Is a Dangerous Number: An Auto Dealer’s Guide to Growing Service Revenue Using Revenue per Units-in-Operation” presents a case for why dealers should ditch the outdated service absorption metric and use revenue per UIO to guide their service revenue growth strategy.
“Service absorption is dangerous because it doesn’t measure a store’s achievement relative to its potential. Your service department can be at 100% service absorption but still be losing market share,” said Scot Eisenfelder, CEO of Affinitiv. “Using revenue per UIO as a metric forces effort on activities that grow market share and increase customer retention.”
To grow profits in today’s automotive environment, auto dealers are focusing on growing service department revenue. Achieving this goal requires overcoming a number of challenges, including declining vehicles sales, more replace than repair work, and aggressive competition.
To grow revenue, auto dealers need to increase service yield from their current customers (UIO) and increase market share, Eisenfelder added, and the best metric to measure and track these two goals is revenue per UIO.
“A focus on maximizing revenue per UIO creates a fundamentally different strategic and operating mindset where the dealer does not concede any revenue to the aftermarket. When dealers calculate their revenue per UIO it’s an eye-opening experience, and not necessarily in a good way.”
To download the ebook, click here.
Visit Affinitiv at Booth 3174C at the NADA convention in Las Vegas.
Originally posted on F&I and Showroom