Tuesday, January 20, 2009

The Do & Don’t List: Recessionary Swiss Steak for Service Retention

Many Baby Boomers have eaten Depression-era food made by parents who tasted tough times. Swiss Steak was one such item on the menu. Basically, it is the absolute cheapest cut of beef (very close to shoe leather) hammered to tenderness, served in a rich cream-like sauce, and cooked forever in a pressure cooker. Cheap & delicious. It worked.

Last week Jay Cremins wrote about service retention from a dealer’s perspective. This week we’re going to talk about what to do in this crummy economy. We need a little Swiss Steak thinking in service retention. What’s cheap, delicious, and works? Here’s our short list.
  1. Change the satisfaction surveys – You can’t manage what you do not measure, and gamed satisfaction surveys mostly measure how good dealers are at out-foxing satisfaction scores and factory incentive plans (and factory disincentive plans).

    • Start with what you really want to measure. Does the customer intend to return to the dealer for service? Why or why not? Does the customer recommend the dealer for service? Why or why not? If we want to influence loyalty, shouldn’t we be investigating loyalty rather than satisfaction?

    • Correct for dealer gaming. This is simple. The survey (or surveyor) should state that the survey results will remain private and not be shared with the dealer. The first question on the survey should ask if anybody at the dealership mentioned how important the survey was to them. If more than 20% of the surveys for a dealer come back with the first question checked “yes”, then drop all CSI support to the dealer in question. We call this a truth quarantine – if you want the truth about what John Q. Customer thinks, you need to quarantine him from the dealer.

    • Reconsider whether your considerable investments in splashy concocted CSI surveys are worth it. They are very expensive and support a phony foundation for satisfaction measurement, management, and improvement. This is completely logical. If Toyota can consistently be mid-pack in CSI performance and still be the richest car company in the market, with enviable service retention rates, then it calls into question the validity of the big name-brand surveys.

  2. Bust the price myth – Jay said to do this at every opportunity. The idea here is mostly to buy some extra ink and electrons to get the right message out.

    • Customer education. Provide a downloadable PDF file on your internet site that makes a compelling case for this with facts and figures.

    • More customer education. Have a separate “button” on your web site that takes customers on a facts and figures educational tour … its OK if the media goes here too.

    • Even more customer education. Include Barbasol-billboard type service retention customer communications on all customer service communications.

    • Dealer education. Provide “How to Bust the Price Myth” dealer education videos on your dealer website and incorporate in all factory-dealer assemblies (ubiquitous, like the safety-first videos and slides).

    • Did we say “education?” Include educational marketing materials about pre-paid maintenance plans, with price comparisons of local competition for new and used vehicles.

    • Got Milk? Conduct national cross-OE, OE-sponsored campaign to promote the dealer channel: times are tough; have your vehicle serviced by the people who built it … and save some money! (Why should only the PepBoys of this world have the economic advantage of marketing to all brands?)

  3. Call in the cavalry – Jay also mentioned to call in the cavalry to work with your best dealers on improving service retention.

    • Forget symmetry! Consider asymmetrical dealer-to-field staff assignments, and asymmetrical curriculum-to-dealer assignments (for example, put more reps on the metro and high volume dealers to get the most bang for the buck). This also means assigning your best reps to your best dealers – put good money after good rather than good after bad.

    • Laser-beamed training. This means re-focusing outside dealer trainers to spend more hours with high-potential dealers.

    • Give them the right weapons. Arm the field force with data about dealer service retention performance (annual customer pay “CP” sales per UIO, at the minimum CP sales per visit) compared to relevant regional benchmarks. Use cheap IT to do this rather than line the pockets of your integration firms (by the way, why do they call them “integrators?” – mostly they seem to be experts at integrating bank accounts – yours flowing to theirs).

    • Identify your warriors. Identify and focus on the dealers that are willing to change and fight the battle.

    • Showcase your heroes. Use dealers that have changed successfully to convey the message to others.

    • Commitment is key. This means showing dealers that the programs are here to stay, with great factory field support, and benefits to the dealership bottom line. Based on our field experience, we’ve found that dealers generally think that factory programs are temporary. Dealers see factory “change agents” once or twice, hear nothing about it from the field, and think the program is over. You need a strong focus on continuous contact to mitigate that aspect of their enrolling in the program.

  4. Show me the money! – Somebody needs to run the numbers and show dealers what a lost customer means to their profitability and cash flow. Develop a model that shows dealers the revenue and profit implications of moving back-end service from great-to-good satisfaction.

    • Show and tell. Put the interactive model on your dealer web site; equip your field organization with this tool; put it on each dealer’s performance review.

    • Push cheap eats. Focus dealers on the cheapest top things that customers think dealers should do for them. Have them understand that they should step up to the plate on their own, and that it is a good financial investment.

    • Show them the money! Send dealers monthly e-mails on what one more point of service retention would mean to their bottom line.

    • Show them the waste! Statistically analyze service reminder effectiveness and focus spending on what works best. Stop doing things that don’t make quick money for your dealers.

  5. Just say NO! – Stop spending money on things that have the smallest paybacks.

    • Put a shiv into the slick. Defer the slick appointment scheduling systems and processes to a boom time economy. Just say no to slick web-IT that better connects you to customers who are still the victim of service advisor high 5’s.

    • Tell ‘em to see you later. Send Holiday cards to trainers and consultants who advise you to re-organize dealer service departments and personalize customer contact with service advisors who are Guinness Book of Record job-hoppers. The cards should say to stop by in 2012.

    • Leave loaners for later. Don’t cave on dealer demands for loaner car subsidies. Wait until your PE ratios become the envy of Wall Street for this.

    • Swim with the crowd. Stick with industry standard parts & labor warranties.

    • Postpone premium. Remember that “premium” as a label is now out – customers interpret this to mean extra cost.

    • Say so long to service brand costs. Don’t spend money trying to build a service brand – the vehicle itself carries the quality message.

    • Satellites are for TV, not service. Satellite service locations? Just say NO!

  6. OK, now count up what you saved and invest it in Telematics – Telematics connects the car to the equivalent of a fetal heart monitor.

    • Safety first! Remember safety sells the concept.

    • Show me the problem. Email the diagnostics report on a regular basis to owners.

    • Cheap is good; free is better. Make it free or very cheap.

    • Make it work for used. Keep the telematics transmitter on, or turn it back on at minimal (or no) cost for buyers of used vehicles.

    • Put owners in team-control with their dealers. Design telematics features that enable the vehicle owner to reduce operating costs (fuel, oil, maintenance) in concert with their dealer.

    • Increase resale values. Start to work with auctions and secondary markets to qualify and grade used vehicles based on OEM telematics-driven reports of usage and maintenance.

    • Be there for collision. Air bag deployments could trigger an OE-controlled collision value chain that could benefit owners, dealers, insurance companies, and OEMs.

  7. One last thing – OK, if you have any money left, use it to support dealer Service Advisor retention. It is critical that dealers retain and attract the best people for the pointy end of the spear.

    • Invest in Advisor training. Eddie Lee, the VW dealer mentioned in last week’s blog, says “a lot of our high service loyalty rate has to do with the writer ... people who know how to be nice and how to sell without being pushy.”

    • Redirect rewards and recognition programs from dealer boondoggles to Advisor’s pockets. This will allow the best current Advisors to make a living during the downturn and, as importantly, attract the best athletes to the service drive. Larry Peranski, a former dealer and current 20 Group consultant at ConSept Corporation (lperanski@conseptllc.com), says “having the best athletes out in the service drive is a common thread to service loyalty success stories. The best salespeople need to be out in the drive generating the big money rather than up in the showroom generating ‘mini-deals’.”

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