Sunday, July 20, 2014

The War On Driving

Lately, I’ve heard several people say that they hate driving. As someone who’s always felt the opposite way, I wonder why.

My daily commute to work, roughly 18 miles each way, takes me 30-45 minutes, depending on traffic. I could get to the same destination, but in almost twice the time, if I took several trains and a few short walks to and from these trains. I could avoid the hassles of driving: navigating roads with their painted lines and colored traffic lights; dodging bicyclists, pedestrians, animals, and, of course, other drivers; monitoring my car’s speed, fuel, mileage, tire pressure and myriad other vehicle maintenance requirements. I could simply sit on a train and read, catch up on work, check my social media, etc., but I choose not to. Why?

For me, the ability to get directly from point A to point B on my own timetable and in privacy (or with company, if I choose), is spectacular. Time alone in my car allows me to think—about the day, about tasks at hand, about weekend plans, about the political situation in Wherever. Anything really. Since I began driving to work I’ve also rediscovered one of the greatest inventions of our time—the radio. I have access to new and old music, news, sports, comedy, you name it. Most importantly, I have some respite from staring at a screen. Although the way automotive technology is heading, this may not be the case for much longer. Driving is my time to unplug (if you drive an electric car, pun intended!), relax, and think. I try to make my driving experience enjoyable and to appreciate that when I’m driving I have control.

This doesn’t appear to be true for many people. Here’s an example. This morning on my drive to work it was a beautiful day here in Boston. The sun was shining and birds were chirping. As I drove to work with my windows down, listening to my favorite summer tunes, I looked at the cars around me and noticed that no one else was enjoying this moment. Nine out of ten drivers were sitting in their cars, windows up, in climate-controlled cubes, staring down at an unknown object at every stop sign or traffic light. In the days when rolling down a window takes only a single push (no longer even a hold!) of a button, it boggled my mind that on this glorious day, people preferred to sit in their cars, windows up, and stare at their cell phones. If people can’t appreciate the open air and (somewhat) open road, no wonder they hate driving.

Maybe I’m making too big a deal about this. Maybe it’s a stretch to draw a connection between those rolled up windows and the drivers’ dislike of driving. However, I do know that technology could soon make driving a thing of the past, or reduce it to minor operator inputs. Manual transmissions are nearly extinct, engine noises are being “engineered” and piped into cabins through speakers, and cars are taking over the tasks drivers used to do. What happened to the glory of a perfectly executed (unassisted) parallel parking maneuver?

Don’t get me wrong, technology has immensely improved vehicle safety, performance, and fuel economy, but it’s also created a greater disconnect between the driver and the automobile. As the passion for driving diminishes so will the connection people have with their cars and their love of particular car brands. As people become less passionate about their cars, and the associated brands, what will happen to their preference for OEM parts installed by OEM-certified technicians? What will happen to the OEM-customer relationship?

Picture a world in which everyone is commuting in Google’s Driverless Cars. Highway transportation is 100% efficient and every aspect of driving is engineered, connected, mobilized, integrated and optimized. Sound great? Not to me; I’d rather drive.

Bottom Line: The war on driving has begun! Can we stop it? Probably not. But if automobiles do become completely commoditized and “driving” simply becomes “passengering”, the automotive industry as a whole will have to evolve. In the meantime, what we can do is roll down our windows, turn up the radio, and enjoy the open road while we still can!

Friday, July 11, 2014

Waiting for Service Retention

Year after year, our Consumer Sentiment Survey shows that vehicle service customers hate to wait, particularly when the wait is longer than promised. “Getting the vehicle back when promised” is consistently a top-tier customer value. The chart below has become familiar to our clients and the top concerns remain the same. “I just want my vehicle back when you told me it would be ready.”

As consumers, we are forced to wait for things all the time. On a recent flight from our NAPB conference, we sat on the tarmac for 30 minutes waiting to take off. I was shocked to find that, despite this delay, we landed five minutes ahead of the scheduled arrival time. While waiting on the tarmac, I had been anxious about missing my tight connection, so I was thrilled that the airline not only got me there on time, but early! My prior frustration disappeared when I realized I wouldn’t have to race through the airport to make my connection.

Perhaps the winds really were in our favor on the flight from Atlanta, as the pilot claimed, but I suspected that the airline overestimated our flight time to increase customer satisfaction about “on-time performance”, and decrease the number of missed connections. Even if the airline had intentionally misled me about their flight estimates, it had worked, and I was even grateful.

A quick Google search shows that this practice has indeed become commonplace for airlines. Some airports have even responded to complaints about wait times at baggage claims by routing travelers to carousels farther from their gates. Travelers spend less time standing and waiting, and complaints have dropped as a result. Airlines have realized how large a role waiting plays in a customer’s experience, and they have found ways to respond.

As an industry, we need to find new ways to address wait times and improve the waiting experience. Nowadays, customer satisfaction isn’t just about getting the vehicle back when promised, but also about the experience the customer has while waiting for their vehicle. Three aspects of waiting can make or break someone’s experience:
  1. Whether or not the time spent waiting is “occupied” or “unoccupied”
  2. Whether or not the customer feels as though their wait time is “fair”: Is the wait proportionate to the value of the service I’m receiving? Is everyone abiding by the rule of “first come first served”?
  3. Whether or not the experience ends on a positive note
Regardless of the various tactical and operational improvements dealers can make to shorten wait times, a few basic changes can significantly improve the customer experience during the wait.
  1. Give the customer something to do while they’re waiting. This seems too simple to be true, but an appealing and pleasant waiting area can ease customers’ boredom and frustration during a long wait time. This doesn’t just mean having a few chairs, old magazines, and a crusty coffee pot. Dealers need to provide TVs, free Wifi, private areas for business calls, play areas for children, and more. Some dealerships we’ve seen have gone so far as to have free manicures or massages!
  2. Quick or Express Service should be just that - fast. Customers coming in for a quick lube service select this option based on its speed and convenience. They know this service isn’t rigorous and expect the vehicle to be out quickly. Service Advisors should be clear and communicative about the progress of the service. If something comes up, the customer should be informed immediately so they don’t think other customers are getting faster service. When a customer observes another customer arriving and departing before their own service is completed, even a short wait time can feel quite long.
  3. A long wait can be saved or ruined based on the last 10 minutes. A customer who is frustrated by their wait can still be saved if the dealership handles their closeout process in a sensitive way. Customers typically remember their experience based on how the visit ends, so this portion is crucial. Too often, it is rushed or even overlooked. Service Advisors should have the ability to offer small concessions to customers who have had a negative experience - a discount on today’s service, coupons for upcoming service, or even a free snack or beverage in the waiting area. Taking a few extra minutes at the end to establish a connection and relationship with the customer is crucial. On the other hand, ignoring the customer’s frustration or failing to provide these small, but effective, consolations may result in the loss of a loyal customer.
Our research about the growing popularity of chains shows that customers care more and more about speed and convenience. To compete with companies that cater to customers who want speedy service, dealers need to get smarter, not just about decreasing wait times, but also about improving the waiting experience.

Bottom line: We’ve seen how service retention numbers drop precipitously as customers pass the warranty threshold. As new cars require even fewer maintenance services, it’s ever more important to retain those customers who do come to dealers. One of the best ways to improve customer experience and perception, and thus retain customers, is to tackle the waiting game. If you can’t cut down wait times without comprising quality, improving the customer’s experience during that wait just might be enough to keep them coming back.

Thursday, July 3, 2014

Don’t Judge A Book by Its Cover

Think of a component on an automobile that is necessary throughout the vehicle’s life, yet gets used only when something goes wrong. What if I told you that this component is part of every vehicle that rolls off an assembly line—yet, sometimes, mysteriously, it goes completely missing? That every OEM takes a different approach to this component’s design, and that, in fact, sometimes its design is influenced less by the engineering group than the legal team, or the marketing department? Obviously, this is an unusual and important component, and you’d think that, as an industry, we wouldn’t stand for such a scattershot design process! But we do every time we print an owner’s manual. With this in mind, Carlisle recently investigated the world of owner’s manuals through surveys, benchmarks, and independent research.

Owners’ manuals are not just government mandated components that must be included with new vehicles. Drivers actually use them, and they use them for years! As part of our survey, Carlisle found that manual usage may drop over time, but even when a vehicle is ten years old, drivers still use their manual nearly twice a year:

You might say, “Well, duh, that’s no surprise. Of course, drivers use the manuals over a vehicle’s lifetime. They’ll obviously have questions about their vehicles, and what other options do they have?” Actually, there are quite a few ways drivers can find information today, especially when it’s at our fingertips in seconds through the internet. Yet, drivers still prefer to use their manuals first:

You might think: “Well, if drivers actually use their manuals, I guess we should care what’s in them, right? So, what did Carlisle learn about that?” That’s a good question, with many answers. Some manuals are based on graphics; some on words. Some have lots of warnings; some have barely any. Some are in black and white, some have color. It turns out that each OEM conveys information to drivers in a different way.

“So, everyone makes these differently! But who is everyone…?” Everyone is, literally, everyone! Most OEMs don’t have a single group that makes an owner’s manual; many different parts of the organization influence the content. When asked, “How much influence does each of the following groups have over owner’s manual content”, this is how ten OEMs responded:

“Ok, I get it, but does any of this really matter?” Yes! Drivers of different brands don’t view their owner’s manuals equally; drivers from some brands report being more satisfied with their owner’s manual than others. Almost half of all drivers from some brands are very satisfied with their owner’s manual, while less than a quarter of drivers from some other brands feel the same way:

Bottom Line: An owner’s manual is much more than a book in the glove box. It serves as the most common first point of contact between an OEM and a driver who is having a problem. Do not make it an afterthought or overlook it entirely. With a little focus and attention to the content and design, the owner’s manual can distinguish your brand in the driver’s eye.

Friday, June 27, 2014

Make ‘em, Sell ‘em, and Fix ‘em

Last week, at the 2014 Telematics Detroit conference, I witnessed leading experts, OEMs, and vendors discuss the future of vehicle telematics. It was an impressive conference, but I left with the feeling that we’re missing the point. As an industry, our number one priority is to produce quality products that bring joy to our customers, our dealers, and to us - the OEMs. Soichiro Honda famously referred to this as “The Three Joys”. Telematics should enable "The Three Joys"; however, buzzwords such as the “Internet of Things” (IoT) and the “Mobile Revolution” have led the industry to focus telematics efforts on in-vehicle infotainment and supporting the customer’s digital lifestyle. Are these truly the most impactful customer delighters?

Ahh. Heck, what does Honda know anyway?

Maybe a lot.

The consumer electronics industry – not the automobile industry – has already cracked this nut. Ultimately, our in-car “connected” experience is going to be dictated by the same technology that powers our mobile devices. Philip M. Abram, Chief Infotainment Officer at GM, sums it up this way: “It’s inevitable, I believe, that people will want their digital lives brought into the car. Right now, that’s being defined by smartphones. As automakers, we have to accommodate that.”

In fact, a recent survey from Gartner found that 58% of vehicle owners agreed that “automakers should just let companies like Apple, Google, or Samsung design and manage their in-vehicle technology offerings instead of developing their own systems.” Of course, this must be a collaborative effort between the auto industry and the consumer electronics giants. So, what’s the best way to employ telematics and the connection it provides to achieve Soichiro’s “Three Joys”?

Let’s take a step back for a moment. At the simplest level, what does our industry do? We build cars. We sell cars. We fix cars. So, rather than designing the next car to function like a Samsung Galaxy S5 phone, maybe we should concentrate on using telematics to help us … build better cars, sell more cars, and fix cars more effectively.

Building Better Cars – The vehicles we manufacture are impressive engineering statements; they are reliable and robust. This is the result of years of R&D followed by intensive testing and data collection. Unfortunately, unexpected failures occur when the product enters the real world, due to driver error, poor maintenance and, yes, even design mishaps. However, a telematics data connection could turn every unit in operation into a live, real-world test rig to log and record data. In fact, the vehicle’s ECU already monitors numerous onboard vehicle sensors.

Imagine if data from vehicles in the U.S. were logged and pushed to the cloud regularly. Engineers could monitor real fuel efficiency, stress cycles, usage behavior, and failure rates as opposed to those predicted in a test environment. Further, the sample size would be enormous, due to large owner populations.

Selling More Cars – One can argue that infotainment and full connectivity will sell more cars. That may be true in the short term; however, people are already accustomed to such features in their day-to-day lives. We have Nest, LIFX, and even Egg Minder (a smart egg carton that lets you know how many eggs you have and how old each one is). Our smartphones fill all of our “digital lifestyle” needs with applications that are intuitive and backed by millions of dollars of development. In the future, this will not be a differentiator, especially as consumer electronics companies get more involved. What does matter most to a customer for a new car purchase? According to the NADA 2013 Survey, it’s Quality, Dependability, and Fuel Economy. In other words, building better cars will sell more cars.

Fix Cars More Effectively – Service departments generate the majority of profits for dealers, so how can we use telematics to fix cars more effectively? The answer is both simple and sophisticated. Instead of infotainment, telematics should be employed to send a massive amount of vehicle data to the cloud. OEMs already have access to repair order data across their dealer networks. Marrying these two data sets would create a very effective predictive analytics tool.

Just think: Op codes and repair order data could be mapped to driver usage and sensor readings. The OEM could use that data to identify trends that precede, say, an O2 sensor failure or the need for a brake job. When a vehicle is scheduled for service, the tech/dealership could check the database and learn that the vehicle has an 82% chance of an O2 failure, based on the historical trends for that model. This also ties into selling more cars. The 2014 Consumer Sentiment Survey indicates that customers who are “Very Satisfied” with their service experience are 21% more likely to repurchase a vehicle from that brand than customers who are just “Satisfied”.

The bandwidth requirements for such data flows are minimal and could easily be offered for free by an OEM (whereas multimedia, such as Pandora, requires significantly more bandwidth). The major hurdle will be enabling such data flows on a large number of vehicles. The path of least resistance is to place telematics systems in new vehicles. For existing vehicles, dealers could deploy Sim Card- enabled tools that fit into the existing OBD-II port.

Bottom Line: As an industry, we’ve become infatuated with the “Mobile Revolution” and the “Internet of Things”. We have taken a myopic view of telematics’ capabilities, focusing on how to entertain the customer. Instead, we should target our efforts at what really drives our customers’ purchasing behavior – high quality cars and high quality service. Our industry needs to stick to what it does best, and not try to design apps that predict our music preferences or suggest new blogs to read.

Sunday, June 22, 2014

How to Get the Most from Your Dealer Satisfaction Survey

So, you solicit your dealers once a year to ask for their feedback on how well you’re doing to support their needs. That’s a good first start; not every OEM takes even this first step. However, you’re starting to find that your dealers are losing interest, or maybe your scores aren’t improving, or you’re starting to question how well you’re leveraging the survey results. Don’t worry; you’re not the only one in this predicament.

At our 2014 NAPB, Carlisle facilitated a panel discussion with some OEMs that are among the best-in-class (BIC) at managing their survey processes. How do we know they’re best-in-class? For starters, they are all making dramatic, long-term improvements in their satisfaction scores from dealers. Examples from two of these OEMs are below:

Another measure of BIC is dealer response rate, as dealers will not continue taking the survey in large numbers if they feel they are wasting their time. Our BIC OEMs are all achieving rates in the 80%-100%.

So, what are these OEMs doing? They are taking four simple steps:
  1. Pre-Survey: Remind Dealers What You Did Over The Previous Year
    While you may have been working like a dog over the past year to implement improvements that respond to last year’s survey results, your dealers aren’t always aware of this. Remind them what they said last year, and what you’ve been doing in response to what they said.
  2. Survey Launch: Set 100% Response Rate Expectation
    The beauty of internet surveys is that you don’t just mail surveys and wait for results. The survey administrator can constantly track response rates, which allows you to target the non-responders. Send out 2-3 updates throughout the survey period to the non-responders. Involve your field force by sharing the response updates with them. One of our BIC OEMs tells us that, “100% response rate is the corporate expectation. All District Managers with 100% response rates are publically recognized.”
  3. Post-Survey: Dive Into The Results
    Simply looking at your overall result is just the tip of the iceberg. You got a 43% satisfaction score in Parts Delivery, a drop of 10 points from last year…What does that mean? Segment your scores. Did scores drop across the board, or just in certain regions…or just for dealers assigned to a certain carrier…or just for certain size dealers…or just for dealers with an above average amount of emergency (i.e., parcel) shipments, etc.?

    Read your dealer comments as well. The numbers only serve as a beacon, pointing out possible problem areas. The comments provide the detail necessary to identify and, ultimately, fix the actual problem. Do you want to really blow your dealers’ socks off? Call them to discuss their comments. Not only will you get a better understanding of what the real issues are, but you will send an extremely strong message that this survey is more than lip service. Your dealers will know that you really are committed to improving your performance.

    Most of the BIC OEMs conduct this analysis in conjunction with developing action plans. Process owners (e.g., warehouse operations, transportation, marketing, warranty, etc.) are assigned the task of analyzing their unique survey results, identifying the key issues, and developing action plans to address the highest priority issues. Without instituting an action plan process, the survey results can become nothing more than a fun read.
  4. Post Analysis: Communicate Results to Dealers
    Dealers want to know they didn’t waste their time taking the survey. Without this feedback loop, respondents will become frustrated and the response rate will take a nosedive. The format is not important—we’ve seen everything from emails and updates posted on the dealer portal to videos, brochures, and presentations at annual dealer meetings.

    What is important is the message, which should at the least contain:
    • Thank you for taking the survey
    • Overall results
    • Areas where you did well
    • Areas where you didn’t do well
    • If you’ve figured it out, how you plan to address the problem areas
Bottom line: If managed appropriately, these surveys can have a tremendous impact on dealer satisfaction and, ultimately, key metrics that drive the success of our own businesses (i.e., purchase loyalty, service retention, repurchase intent, etc.). Conversely, if we are just going through the motions so we can “check off” the customer service box, it can be a tremendous waste of time, energy, and resources.

As the facilitator of 10+ industry-syndicated dealer surveys, Carlisle feels responsible for helping all of our participating OEMs choose the right path. If you would like any help, suggestions, or just the chance to discuss your approach, feel free to give us a call.

Friday, June 13, 2014

Why I Will Go Back To My Dealer!

In past blogs we have discussed how the dealer ‘got it wrong’; this story is about how my dealer, and especially my Service Advisor, got it right.

First, a little background: From our 2014 Consumer Sentiment Survey we know that, aside from cost, the most important thing to the customer is their time. Customers want a convenient appointment and they want their car ready when it’s promised. Dealers are getting better at this, but what follows is an example of how to keep a customer happy even when something unexpected happens.

In need of an oil change, I made an appointment with my dealer for Saturday morning at 8:15 a.m. Perfect, I thought – first appointment of the day, so I’d be in and out. I arrived with about a half dozen other cars waiting in line to pull into the service area. I was greeted promptly by Scott who happily took my car and said they’d take care of the oil change. Off I went to the waiting area with my iPad and a coffee. About an hour later Scott walked by and said my car should be just about done. Great!

Well, a bit more time rolled on, and I realized that people who had come in after me were already getting their cars back. Now, I’m not so happy. At 10:00 a.m. I finally went to the service desk to get a status update, and another advisor looked up my car and said, “It’s just about done.” Scott was with another customer, but as soon as he finished he came over and apologized for the delay. He didn’t know why it was taking so long, and said the oil change was on him. Well, that was a first! I had lost almost two hours on a Saturday morning, but for free service it could be worth it.

So back to the waiting room I went, only to sit for another 20 minutes. Now that free oil change didn’t seem worth it! Scott finally came to say my car was ready. Free oil change for 2 ½ hours was not going to cut it. In my mind I was going to find a new dealer or start going to the Jiffy Lube up the street because this wasn’t worth my time.

As my car pulled up I was amazed to see that they had buffed out a large scrape that had been on my front bumper; something I’d wanted to fix for months, but didn’t have the money or the time to deal with. All that waiting was well worth having my car returned looking brand new! Scott apologized again. He acknowledged that the service time was unacceptable, and that while he couldn’t give me back my time, he wanted to make up for my long wait.

Bottom Line: We know customers want their vehicles ready when promised, but sometimes, no matter how well you plan, things still go wrong. In the end, it is not the situation, but how you handle it that can make a customer happy and want to return.

Sunday, June 8, 2014

Supplier Risk Management: Here Today… Gone Tomorrow?

It is an all-too-familiar reality: a key parts supplier has vanished overnight, and now you’re left with a curt email thanking you for your business—and chaos in your office. You’ve got to find an alternative solution to fulfill your dealers’ part orders. Sometimes a supplier’s demise is slow and obvious, but other times a lack of vigilance will cause you to miss the signals until it is too late.

This unfortunate situation hit me once while traveling in Africa. In a major metropolitan area, we were told to avoid exchanging money at banks because of usurious exchange rates. Instead, we were introduced to a man in a back alley… We’ll call him “Frederick”. We were told that Frederick was “always” there, and offered a favorable rate. For a few weeks, we went to Frederick for our all cash needs with no problems. I ran out of money one afternoon, as one does, and grabbed a wad of American bills to exchange with Frederick. I walked the few blocks from our living quarters and turned into the alley behind a convenience store.

No one was there.

I asked the store owner about Frederick, but he had no information. No one in my group knew what had happened to Frederick. Our link to cash had disappeared without a trace. For the remainder of the trip, we were overcharged and had to pinch every penny to get by.

Frederick’s disappearance meant a hefty added cost on our trip, not unlike the effect of a key supplier’s abrupt closure on you and your network. One way to reduce this risk is to monitor the business health of your suppliers.

Continuously checking on your key suppliers is like going to your dentist: if you do it every six months you’ll avoid a nasty surprise. In supplier risk management, proactive monitoring will help avoid major speed bumps in your supply chain. Some information worth gathering about your suppliers:
  • Regulatory and legal risks
    • Have lawsuits been recently filed against the supplier?
    • Are your suppliers following all pertinent government regulations?
    • Does recent legislative action in their state or country affect their ability to deliver product?
  • Secondary or tertiary supplier risk
    • Do multiple key suppliers in your business share common suppliers?
  • Share of business
    • How much of your supplier’s business do you provide?
    • Do they have another key customer whose business’ health could affect yours?
    • What share of your supplier’s business does automotive/heavy equipment parts supply make up?
  • Trends and Environment
    • What trends do you see in your supplier’s financial statements?
    • Is their state or county experiencing any hardships?
    • What is the market like for commodities used by your suppliers?
    • What other relevant market conditions specific to your supplier should you be aware of?
By periodically assessing these risks you can open up lines of communication with suppliers. You can identify opportunities to partner with a supplier to improve its health, or you can change your entire sourcing strategy. The goal is to avoid a sudden shortage of a critical part or material. Research your suppliers. You’ll give yourself the time you need to implement a safeguard. Assessing supplier risk factors will also save money and help keep your customers loyal.

Bottom Line: Avoid supply chain disruptions and the headaches that follow by tracking your suppliers’ health. Both you and your suppliers can benefit from using information to make your relationship transparent.