Thursday, September 2, 2010

Digital Devastation: How the OEMs and Dealers Are Being Disadvantaged By the Internet Hurt Locker

The big theme this year at the NASPC was “collaboration.” No area is riper for collaboration than the Digital frontier. The research for this blog stemmed from a recent family vehicle repair – it took me about 5 minutes. I would have done this for a more recent brake and rotor replacement on my Chevy Suburban, but RepairPal had no listing for my Chevy dealer (located about 2 miles away). The only Chevy dealer listed was 9 miles away, was un-reviewed, and had a 3-star rating. The un-rated independent shops all had over 4 stars. I find this to be disturbing. Hence “Digital Devastation.” All major players are showing up at the NASPC Digital Summit on October 15th. We will present a collaborative model for a digital presence that overcomes the digital “hurt locker” populated by planted social media postings, incompetent trade organization research postings, and “show me the money” third-party aggregators. My fear is that the OEMs will try to down the digital T-Rex with an ineffective flurry of pellets from a shotgun blast, rather than work together on a more effective rifle shot. So, be patient.

I had dinner with my daughter in NYC last month. She works for a large book publisher. She and her friends are very literary. So, during dessert Rebecca talks about one of her literary friends who recently quit her job working for a restaurant chain. Walked in and said, “I quit.” “Not so fast,” the story goes. The chain manager knew she could write like a wiz, so they negotiated a severance package that included 150 reviews of his places using, of course, different “voices” and idioms, so they’d be authentic. Rebecca was not talking about the crap one reads in social media, she was talking about interesting ways to make some money.

OK, it’s just a story. Hmm. Maybe not. I went to RepairPal and asked to find some shops close by that would service my Range Rover. The stars under the name of the service provider indicate how well regarded these stores are. I really loved these. Joe’s CITGO pegs the top chart with 5 stars and one review. There’s only one dealer on the page, Land Rover Metro West; it has no reviews and, curiously, 3.5 stars. All the others that have not been reviewed have 4.5 stars. Guess being a dealer gets you nicked by a point. Went to DealerRater and checked up on my Land Rover dealer – they gave it 4.9 out of 5. Hmmm.

Joe’s CITGO looked pretty nifty. So, I asked RepairPal for close-by service specialists for an old discontinued Chevy Geo. Joe nailed that one too. He’s 5-star rated on Land Rovers and Geos. His technician training costs must look like Harvard’s endowment. Hmm. That Joe!!!

Then I looked up the cost of front brakes and rotors, because we just had this done. RepairPal gave me back a range of prices (my cost was in the range) that visually indicated that the dealer was more expensive than the “independents.” Now, in my case, the independents – “Midas” – was more expensive than the dealer … they used “blizzard pricing” that includes a confusing array of parts, processes, options, and optics that confuses the crap out of you. The dealer just told me what he’d charge. The third-party web sites didn’t capture this very well. I thought the reason that Midas’s quote looked so good (sidewise & upside down) might be because of cheap labor rates. I looked up labor rates in Acton using AutoMD and found that the local Ford dealer was pretty much in-line with the independents. There were simply too many choices, so I looked elsewhere. Labor didn’t seem to be a big factor on that search.

I continued to think about that Midas brake job with blizzard pricing and wondered about the parts they used. I went to Edmunds.com, where smart car buyers start, and researched “aftermarket parts.” They advised me to “shop around, make sure you’re dealing with a good mechanic and request high-quality aftermarket parts.” Great advice to most folks who don’t know how to top off their wiper fluid (let alone figure out if someone’s a “good mechanic”) and who don’t know the difference between cheap bacon fat and butter (which resembles the difference between aftermarket parts and Genuine).

These are just a few easy examples of the “Digital Devastation” mounted against car dealers and OEMs. I didn’t have to work hard at it to come up with these examples, and I wasn’t selective in the process to help build my case. The internet is the next consumer “service” battlefield, and there seems to be only one army out there. Social media and third-party sites are foot soldiers and mercenaries of the independent service and parts providers.

Bottom Line: We need to do something about this. We will talk about this at the Digital Summit on October 15th. Carlisle & Company accumulates an annual treasure trove of information that supports our belief that dealers are actually pretty good choices to make for getting your car or truck serviced. For the past 20 years we’ve kept this information “in the family.” I think it is time for it to come out of the closet. We need to develop a robust AAIA-like web presence that has:
  • Sticky Content: Customers only return to websites that provide robust information that has high quality broad-based utility and provides simple, tangible value. It has to be at the top of the list of places-to-shop. It needs to be the portal to OEM owner centers, vehicle shopping sites, service parts information, recall notices, user manuals, service intervals … and much more.
  • Quality Information: Customers want easy access to information to make better choices. Why not give them that information? Why not rate service providers on the stuff that really counts: technician education and skills? Conveniences like loaner cars and rentals? Waiting rooms? Why not publish costs of common repairs and maintenance that show dealer and independent costs? Why not do this using statistically fair ground rules?
  • Customized/Savable Search Criteria: Let digital customers choose how they rate alternatives – hey, Netflix customizes its ratings. This could be done with a simple survey that new customers take. Have them make choices that change how each service alternative is rated. For example, do they want Genuine Parts or aftermarket? (Do they know the difference?) Is labor cost the most important thing, or is total cost? Do they require any convenience things … like waiting rooms, loaner cars, or shuttle service? These could be used to build rating profiles like “El Cheapo” to ”Treat me like my Mother.”
  • Research: Post our research that shows that dealers really are not more expensive in many repairs. Why not translate all that information that we, and the OEMs, collect into bite-sized chunks for digital service shoppers? The facts are friendly.
  • Education: Educate consumers about the choices they have and the information that they use. Joe’s CITGO isn’t an expert at either Land Rovers or Geos. RepairPal simply assumes he is. Why not explain what you get for higher labor rates – things like training and certification. Why not explain the advantages of “Genuine” parts?
  • Customer Reviews: The honest facts should be friendly. If customers want to review service outlets, then we need to make sure that these reviews are not bogus. Dealers should not be dinged by one star just because they are dealers.
  • Lead Aggregation: Accumulate Google search term requests for parts and service (“Capture”) and connect these requests to appropriate dealers (“Connect”) and help close the lead.
  • What “Genuine” Really Is: In language that people can understand, eliminate the confusion between what “Genuine” parts are vs. the aftermarket. No, Edmunds has it all wrong – reverse engineered aftermarkets parts are not better and should not be requested. We talked a little about this last week with collision parts, and we will continue this journey in subsequent blogs.
  • Lobby Information Support: AAIA is very aggressive at fighting everything that the OEMs try to do to protect the sanctity of “Genuine” and the circumstances regarding warranty coverage. Most recently, the AAIA lodged a formal complaint with the FTC against Honda’s stipulation that Genuine parts be used to preserve its warranty covenants. Honda is fighting that battle pretty much alone – and it is a battle front and center to most OEMs looking at higher quality products with more comprehensive warranties.
  • Field Support: We have tens of thousands of dealers out there that could be much more effective with social media and showing up in the top–ten of any search. We need to support this web presence with SEO/SEM/SMO (Search Engine Optimization/Search Engine Management/Social Media Optimization) consultants that could advise, train, and shepherd dealers to make them more effective in doing war on the Digital Frontier.
Please email us back your thoughts on this – I think it is a pretty big issue. Also, I’d like to hear back from you about your thoughts and actions concerning the right-to-repair legislations that are cropping up in Massachusetts and elsewhere. Thanks, David

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