The Untapped Goldmine: How Fixed Operations Can 3X Your Dealership Profits
Fixed operations have always been the unsung hero in the dealership world. While sales floors get the spotlight, it’s often the service lanes, parts departments, and everything else behind the scenes that hold the true keys to profitability. In a recent episode of The Dealer Playbook, I sat down with Ed Pizzigati, Parts and Service Director at Johnson Automotive Group, to dive into why fixed operations are essential to sustained dealership success. Through Ed’s insights, we explored how focusing on fixed ops not only drives profits but also builds long-term customer loyalty. Here’s what we uncovered.
The Fixed vs. Variable Myth
One of the most significant misconceptions in automotive retail is the overemphasis on variable operations—new car sales—as the only avenue to profitability. I remember visiting a dealership in a small Saskatchewan town, where I saw firsthand how fixed operations were driving profits at a rate three times that of sales. Even in a small market, fixed ops were consistently delivering results. Yet, many dealerships still don’t fully embrace their potential because fixed ops require a different, more technical knowledge set, one that managers—often from the sales side—don’t always have.
Why Sales Still Get the Spotlight
It’s no secret that dealerships prioritize sales. Selling cars feels straightforward: get the car on the lot, sell it to a customer, and close the deal. Fixed ops, on the other hand, are more complex. With layers of warranties, compliance, and service protocols, it’s easy to see why managers without a technical background might gravitate toward sales over service. But here’s the kicker: this bias towards sales, while understandable, can lead dealerships to overlook one of their biggest profit centers.
The Role of Warranties in Retention
Ed and I dove deep into the different roles warranties play. Standard warranties are one thing, but extended warranties are an entirely different game—they’re a dealership’s golden ticket to building a longer-lasting relationship with customers. Every service interaction, from an oil change to a major repair, is an opportunity to enhance the customer experience and deepen loyalty. Ed’s philosophy is spot-on: maximize every single customer touchpoint to keep them coming back and engaged throughout the vehicle’s lifecycle.
Breaking Down Silos for Unified Success
One theme we couldn’t ignore was the detrimental impact of silos between sales and service departments. Too often, they function as two separate entities when, in reality, they’re strongest when they work together. Imagine the insights that could emerge if service data fed into sales: customers nearing the end of a lease or warranty could be identified and targeted for new sales opportunities. By treating service visits as potential touchpoints for upgrades or trade-ins, dealerships can capture more revenue and enhance the customer journey.
The Importance of a Sales-to-Service Introduction
If there’s one thing Ed and I agree on, it’s that the handoff from sales to service needs serious attention. Think back to your own car-buying experiences—how often does the dealership walk you through their service department or introduce you to a service advisor? Most don’t, and that’s a massive missed opportunity. Establishing a robust process that seamlessly introduces customers to the service side can set the stage for a long-term relationship.
Training and Vision Are Non-Negotiable
No dealership thrives without a strong training program. It’s essential for empowering teams and aligning them with the dealership’s broader vision. Training goes beyond teaching skills; it’s about helping employees see their roles within the dealership’s mission, transforming ordinary customer interactions into memorable, value-driven experiences. Ed and I both believe that investing in consistent, meaningful training allows teams to better navigate challenges and seize opportunities for growth.
Avoiding the Pitfalls of “Violent Forward Motion”
One of the terms I introduced in our conversation was “violent forward motion”—that single-minded pursuit of immediate goals at the expense of long-term health and sustainability. Dealerships can be so focused on short-term wins that they overlook deeper issues within their processes. Ed’s approach offers an alternative: taking a more measured, strategic path that allows processes and teams to develop in a way that’s sustainable and organic.
Conclusion: Creating a Seamless Customer Experience
At the end of the day, everything comes back to the customer experience. If dealerships can approach their processes from the customer’s perspective, they can create a more welcoming and seamless experience—one that builds loyalty and enhances the bottom line. Ed’s insights reinforce the need to create what I like to call an “anti-clobber” culture, one that avoids aggressive tactics and instead prioritizes building meaningful, profitable relationships.
Our conversation opened up a wealth of knowledge for dealership professionals at all levels. Fixed operations aren’t just a support system for sales; they’re the backbone of a profitable, customer-focused dealership. If you’re in the industry and want to connect with Ed Pizzigati to explore more of these ideas, he’s available on LinkedIn and ready to share his insights.
This discussion is just the beginning. The potential for fixed operations to redefine dealership success is enormous, and The Dealer Playbook will continue to explore the strategies that are shaping the future of automotive retail.
