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How Nordic’s Largest Retailer Is Keeping the Maintenance Dollar

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S-Group is one of the Northern Europe’s largest retailer groups. In addition to being a leading retailer in multiple categories, from groceries to fuel, finance, and insurance, it also is one of the largest car retailers in Finland, selling 21 different makes through various dealerships. The car makes sold through S-group dealers include, for example, Ford, Toyota, Mazda, Nissan, Mercedes Benz, Citroen, Renault, Mitsubishi and Hyundai.     

The maintenance services are crucial for S-Group dealerships. Like most markets, the actual car sales profit margins are in low single digits, and, to maintain their profitability, the car dealers must secure the vehicle servicing business.  However, with the free-choice of maintenance and continuously decreasing customer loyalty, this is becoming ever more difficult.

Having recognised that they were losing a significant amount of their maintenance business within 3.5yrs of the new car purchase, and even worse in the more lucrative used-car market, the S-Group dealers were looking for ways to improve their customer loyalty. Analysing the customer behaviour and preferences they decided that, instead of going into a pure price competition with the other businesses, they wanted to take advantage of the value the modern customer places on the ease of dealing with the brand and the overall service experience. They also wanted to provide new services which would keep the dealership’s brand relevant to the customer between services, and not something only thought about when the service indicator light goes on in the vehicle dashboard.     

To achieve this the S-Group dealerships deployed the Helpten Smart Maintenance application. With mobile-client and in-vehicle telematics device based applications they are offering their customers a new level of service experience (automatic service invites, remote diagnostics, one-touch roadside assistance, digital service log books, reporting and analysis of vehicle costs, etc.) and useful additional services, like automatic expense and tax-benefit reports, driving style analysis, and fleet management features. To further increase the customer loyalty the initially maintenance-focused services are also expanded to other products and, to make the customer’s other vehicle related tasks also easier, include, for example, vehicle leasing and finance, fuel-services, and Pay-As-You-Drive and Pay-How-You-Drive insurance products.

Thanks to the Helpten Software-As-A-Service pricing model, with very low deployment costs and operating costs, scaling based on the number of users, the S-Group dealers have seen almost an immediate Return on Investment. Lowering their customer churn, reducing their own labour costs, and increasing the workshop utilisation, they have seen a break-even in just few months and double-digit annual Return-on-Investment. When the additional services, such as finance and insurance products, have been introduced to the vehicle users, the dealer business case has further improved through the increased “ecosystem” customer stickiness and the additional revenue streams generated from the multi-service use of the telematics capability (e.g. Pay-How-You-Drive data sales to the insurance company, effectively ‘clipping’ the insurance ticket). See more about the general smart maintenance business case in this blog.

Digital disruption and the modern customers’ decreasing brand loyalty creates a challenge to all businesses, but also an opportunity. Taking advantage of the new technologies and focusing on the customer view of car maintenance, rather than just replacing parts when the car is brought into the workshop, the S-group dealerships are solving their key business issues and improving their business profitability through loyal maintenance customers. At the same time they are building their position in the value-chain of the emerging Connected Car ecosystem – the secret for their future businesses profits  

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