Friday, January 28, 2011

“Old Dogs” Are Learning New Tricks

Jay Cremins

The big question we must ask ourselves is, “hey, is the internet important to our parts and service customers?” If you don’t think it is much of a factor, here is an interesting story.

I know a retired couple. These folks, in their 70’s, are domestic car people. They own a Ford F150, a Chevy Impala, and an Oldsmobile Delta 88. They aren’t “computer/internet” people. However, in the past year, they have become more literate with this new technology. Last year, they replaced their old 486 desktop (which sat mostly unused in the downstairs office) with a used Mac laptop that sits on the kitchen table. They now constantly “Google” things that come up in conversation, and their use of email has grown exponentially.

Recently, an interesting situation arose. The brakes on their 1999 Delta 88 started to squeal. Their usual consultant on such matters (me) was out of town, so they searched for “1999 Delta 88 brakes” online in order to get a sense of how much those brakes might cost. Of course, they found a page full of choices; what caught their eye was an unpaid result with the following words: factory, dealer, discount.



That link took them to a page that said, among other things,
“Our dealer offers the 1999 Oldsmobile Delta 88 Brake Disc at discount price. Buy the Delta 88 Brake Disc from the factory warehouse and save serious money and searching time. Our replacement Brake Disc is guaranteed to fit your 1999 Oldsmobile Delta 88 automobile as the OE genuine Oldsmobile Delta 88 Brake Disc. Deal with a reliable dealer and enjoy a major discount over the local Oldsmobile dealer!”
The page also had a toll free number. They called the toll free number and were hooked up with a local independent repair shop to do the work. They then dropped the car off for the repair.


A few hours later, the shop called to say that it was the rear brakes that required replacing, not the front brakes, so the price was re-quoted. The shop also mentioned that “all of these 1999 88’s have brake master cylinder problems,” so they should replace that too.

What happened next? Through more “Googling”, the couple found RepairPal and looked up the Olds to see if the brake master cylinder issue was common. Not finding the issue, they declined doing the master cylinder work. Still, the car was repaired and the husband was satisfied with the experience – “Well, they always try to sell you something you don’t really need. Now, I have a way to actually see if I really need it or not” – and said he would do it again.

Bottom Line: If we had to make up a story to illustrate what we see happening in automotive digital aftersales, we couldn’t have come up with a more relevant tale. To review:
  • A couple from a traditionally offline, dealer-loyal demographic…
  • Used Google to research an auto repair issue…
  • Got routed (via an organic search result) to an independent repair shop…
  • Used RepairPal to assess an attempted upsell…
  • And were happy with the experience.
If this story doesn’t keep you, the OEM aftersales executive, awake at night, read it again.

Jay Cremins, a principal at Carlisle & Company, specializes in dealer operations and OEM Field development. In addition to project work, Jay has presented featured workshops at a half-a-dozen NADA conventions, as well as international meetings on five continents.

Tuesday, January 18, 2011

What Would You Want to Happen Next?

If you are reading this, your business model is likely centered on driving owners of your brand’s vehicles/equipment to conduct their service business with your franchised dealerships. Over the past several months we have been using this blog to start a discussion of how those service customers are changing; evolving to what we have termed the Digital Service Customer or DSC. Much of this discussion has been around where and how these folks use the internet to research their service providers and how both OEs and dealers need to respond to these customers, who may be relatively small in number today, but will rapidly represent the majority of service customers.

This week we want to provide two vivid examples of how these Digital Service Customers, and in particular the way they use social media, can either devastate or enhance your brand reputation – depending largely on what you and your dealers “do next”.

With that in mind, consider the first of two real life situations regarding how to respond to customer complaints via social media. This actual example occurred, as this is written, yesterday. But it could be any day, any brand, anywhere.

Situation 1: The Customer Gets a Coordinated, Positive Response …

Chedderbob33 owns a certified Lexus. After a short ownership period, he discovers an issue with the driver’s side external mirror. He takes it to the dealership (his first visit) and the dealership service folks tell Chedderbob33 that he will have to pay for the repair. So, while he is waiting in the dealership’s service lounge, Chedderbob33 tweets to his circle of influence that “Lexus service is a rip off.”

This really is not about who is “right.” It really does not matter that:
  • The mirror issue is covered under the CPO warranty.
  • The dealership is wrong.
  • This is not really a “factory” problem.
What does matter is what will happen if this is not addressed appropriately. And what’s likely to happen?
  • Chedderbob33 is unlikely to return to this (or any other) Lexus dealership for Customer Pay service work.
  • People in Chedderbob33’s circle of influence are less likely to do so, as well.
  • Both Chedderbob33 and his circle of influence are less likely to purchase a Lexus in the future.
The fuse is lit ... the clock is ticking ... your pants are on fire ... barbarians are at the gates. What happens next?
  1. Ignorance is bliss – neither the dealership nor Lexus realize Chedderbob33 tweeted (very likely)
  2. Corporate bully - the dealership demands Chedderbob33 retract the disparaging comment (it happens – an Apple support firm just did this… “Apple support company sues customer for complaining”, CNET, January 2, 2011)
  3. Corporate hero - Lexus finds Chedderbob33’s tweet and tries to mitigate the situation (a few, but growing number of, firms do this … “Delta Monitors Twitter to Remedy Customer Complaints”, Business Week, August 16, 2010)
  4. Dealership hero – the dealership finds Chedderbob33’s tweet and tries to mitigate the situation (Longo Toyota, for example, uses social media to communicate with customers)


Cutting to the chase, what actually happened – in real time on January 11, 2011 – is that Chedderbob33 got the following response from Lexus.



How? Someone at Lexus is monitoring tweets (according to that tweet they’re using TweetDeck), by monitoring key words like Lexus, service, and dealership. Apologies to Barney Fife, they “nipped it in the bud.” Even better, they did it publicly so that Chedderbob33’s circle of influence was included in the conversation.



Did you notice the customer switched to Facebook? This means that an even larger circle of influence saw that conversation. Cool.

Bonus points? The Lexus dealership could link Chedderbob33’s and other customer positive comments directly to the dealership’s web or Facebook page. Why?
  1. Anyone visiting the dealership website receives a “real” positive impression – from actual customers. Who would you trust more? A dealership that says they’re “Number 1 in Satisfaction” or one that backs it up with actual reviews.
  2. Linking reviews raises the dealership’s position when customers search for it, through Search Engine Optimization. If Chedderbob33’s dealership did this, when customers search for “service” and “Lexus” they would find, high on Google page one, the dealership linked to Chedderbob33’s positive comments.
Bottom line: What saved Lexus in this case? The fact that they proactively monitor their online reputation in real time and have a planned process to respond appropriately.

Now let’s look at Situation 2 – note that this occurred several years ago, and Ford’s response would likely be different today, but it could still occur as outlined.

Situation 2: The Customer Gets a Response, But …

This situation starts the same way - a customer complains via a social media forum that the Ford dealership service advisor told him that he would have to pay for a repair that the customer thought was free.

Before either the dealership or Ford can provide a response, a Ford employee comes to the “rescue.”



Even giving that Ford employee the benefit of that doubt that he/she is trying to support the customer, is this really the reply you want representing the company? Rather than help mitigate the customer’s problem, the reply ignited a series of “Dealerships are terrible” rants and “We are not” counter-rants. The Ford employee’s “rescue” attempt was corrosive.

So the main problem here was that Ford let a “rogue” response fill the vacuum – rather than having a planned, strategic response. Think this couldn’t happen at your company? An effective social media policy guards against rescue attempts by employee volunteers and other corrosive behavior. Do you have one?

Bottom line: To master online reputation management, monitor your online reputation, create a response process, craft a corporate social media policy, and influence your dealers to do the same.

Friday, January 14, 2011

Collaboration – The Next (Supply Chain) Frontier?

Nine service parts organizations gathered recently to collaborate and find ways to leverage one another’s infrastructure to reduce costs and to improve service to dealers. This group met because each of them had expressed interest in collaboration, as well as a willingness to prepare for the collaboration session and an openness to "collective solutions." For some, this isn’t new. OEMs already have many delivery routes where they share the same truck. Historically, combining volumes has been the only way to provide premium delivery services to remote areas, where the number of stops to fill a truck (and the distance between them) makes it cost prohibitive. More recently, OEMs have discovered that the benefits are not limited to outlying areas.
Time out: This collaboration session was one of the many outcomes from recent changes we’ve made to our benchmarking approach. As we pull the 90-minute interactive sessions from the conference “event” and replace them will full-day Focus Day sessions (each dedicated to a single topic) we expect to see huge leaps in industry knowledge and a subsequent increase in the improvement actions taken by participants.
FedEx and UPS are two of the most efficiently operated companies I know. Yet, whenever I see a FedEx truck, a UPS truck, and a Postal van in close proximity of one another, I think, “Now there’s an opportunity to get more efficient.” Think about it – with virtually every street in America being traveled every business day by each companies’ vehicles, stopping intermittently along the way to make deliveries, those last few miles in the package delivery infrastructure are virtually redundant from one company to the next. How much money and fuel could be saved if only one truck went down the street and delivered packages for all 3 companies, and how much sooner would the packages arrive?

This same scenario exists in service parts. Whether they are automotive, heavy truck, agricultural, or construction equipment dealers, virtually every one of them is getting deliveries almost daily. In most cases (particularly for auto dealers), the deliveries are made on dedicated delivery vehicles. This means that the truck is dedicated to the delivery of a particular OEMs’ parts, following a set route and making deliveries at the same time every day. So, much like the FedEx/UPS example, we have the same redundancy between the likes of GM and Nissan dealers.

This reality hasn’t been lost on the managers of these service parts supply chains. In fact, that’s why a number of them called upon us to help them collaborate and find ways to do things more efficiently together, rather than independently. The fact is, even the most efficient supply chain is sub-optimal when considered in the context of other relevant supply chains (think FedEx and UPS).

While each company has its own particular network issues, it should be no surprise that many companies share the same list of challenges. The solutions to these may be found via collaboration. Specific regional collaboration opportunities include:
  • Pacific Northwest
  • Hawaii/Alaska
  • Plains/Dakotas
  • Larger, central/western cities – Denver, Salt Lake City, Kansas City, Albuquerque
  • Western Canada
The issue in these regions is that no single OEM has the volume or density of delivery points to justify either a warehouse or a dedicated delivery route. As a result, order-to-delivery times are often long and unpredictable. Through collaboration, combined volumes are likely to result in the critical mass necessary to achieve high levels of service at a reasonable cost.

Outbound transportation is where the greatest opportunities exist, primarily because of the sheer number of delivery points across the country, not to mention the ability to collaborate without having to tackle any systems-related issues. Nevertheless, there are other, yet untapped, opportunities. Inbound transportation can be very inefficient, even for large volume OEMs. Operating lean supply chains means small lot replenishments. So, even the biggest players are bringing goods into their supply chain via LTL carriers. Not only is LTL relatively slow and costly, but it is unpredictable. This means having to carry buffer stock to compensate for service variability (and the occasional damages, which are inevitable as small loads are transferred between trucks numerous times en route).

Exporting OEMs can find opportunities to work together, as combining outbound volumes may improve the velocity of their shipments. Today, an OEM can ship an export order within 48 hours, only to discover that it sat at the freight forwarder for 3 weeks waiting to fill a container destined for Kazakhstan.

With some OEMs reducing their supply chain footprints and others struggling to expand quickly enough, there are also opportunities to share physical space. Certain regions are particularly ripe for this, such as the upper northwest, where one company has 120,000 square feet of unused space and another is looking for just that much. IT infrastructure can easily be a show-stopper when collaboration involves warehouse operations. The key here is to share space, but not operations – think warehouse within a warehouse.

Bottom Line: At the end of the day, participants left the session with many specific ideas for action (none of which require million-dollar consulting budgets). This was rewarding, considering all the effort everyone put into the preparation.

To harness these opportunities, OEMs must first identify where they exist. Their recent meeting was very effective at getting this started. Based on the discussions, the ease of implementation, and the time required before benefits are achieved, the collaboration opportunity list should be prioritized as follows:
  1. Collaborate on outbound transportation
  2. Collaborate on warehouse space
  3. Collaborate on inbound transportation
Going forward, OEMs need to start their conversations by figuring how a collaboration arrangement may work and what the operating rules will be. Only then, should they try figure out what the potential savings and service improvements might be.

Friday, January 7, 2011

Dealers Need to Understand the Power of the Anonymous Voice – Negative Customer Reviews Will Kill Them

Social Media has empowered what was the silent majority where, now, being anonymous is a heck of a lot better than being silent. Those who wouldn’t dare speak up now have the opportunity to fence with their pens and be modern day Inigo Montoyas. They can accuse wrong-doers by scribbling “you killed my father; prepare to die!”

Let’s use a vivid example. These Yelp graphics were just clipped this week for Grava Chrysler – Jeep – Dodge in Medford, MA. There were 14 Yelp reviews posted and they all racked up to a 2 out of 5 star rating - dismally failing. Lindsey A. from Brighton gave Grava only one star – she joined Yelp with the sole purpose of eviscerating Grava. Looks like Grava had a long line for service one day and that they have a first-come-first-served non-appointment system, so she isn’t even commenting on the quality of the actual service. Well, Grava “you killed my father; prepare to die!”

Hmm. It might not be all that bad. I might have just pulled a bad review out of Yelp. No such luck. Google scavenges the web for everybody who’s reviewed Grava – they found 28 reviews from Edmunds, Yelp, Dealer Rater, and Google, and they’ve created a Zagat’s-like compendium of black marks against Grava.

I looked to RepairPal for Chrysler repair facilities in Medford hoping to see a different story. Much has changed on RepairPal since I last used it. They now have “featured listings” that show up in their estimator –these are paid-for spaces. They aren’t quite as visually distinct as paid ads on Google, which have a colored background and are labeled as “Ads”, but, you need another click to get a more complete listing of independent repair facilities. RepairPal has partnered with WorldPac to offer 10% discounts to WorldPac customers – these are mostly Independent Repair Facilities (IRFs). For those not paying a G-note, their visibility is limited to shoppers willing to click through to get a more complete listing of independent repair facilities.
Time Out: If you think you can strategically segregate your Internet B2B, B2C, social media, and sales & marketing strategies, well think again. They all come together with some of these third parties like RepairPal and AutoMD.
No Chrysler dealers show up in Medford, so we have no way of knowing how Grava stacks up against the competition on RepairPal. RepairPal now only gives rating stars for real ratings - they don’t automatically ding dealers as codified underachievers. However, some things haven’t changed – they still vividly suggest that dealers are high cost via their static price spread image.
Time Out: Repair Pal’s partnership with WorldPac (http://www.worldpac.com/repairpal) tells us a lot. Repair Pal’s following the money and is OEM-unfriendly. They use clever graphics to reinforce dealer reputations for being the high cost spread. So, dealers will lose service and parts business. Partnering with WorldPac threatens the OEMs parts business – Repair Pal’s “featured listing” winners that are born of this partnership will most likely choose non-genuine parts and will further erode OEM market share. It’s all about the money; not about quality, great service, safety, or satisfaction. It’s about who will pay $1,259 a year to show up on top.
So, Yelp tells me that Grava has some pretty unhappy customers; Google tells me that their customer dissatisfaction is malignant, and RepairPal tells me that Grava doesn’t exist (but if they did, they’d cost more) and steers me towards “featured listings”, without the option of the dealership.
Time Out: Around one-third of all our service customers currently are “digital service customers” who rely on the internet for provider research. They look to the web for these top three things: (1) where the service provider is located, (2) the operating hours, and (3) what others think of the service provided. In terms of the various types of advertising trusted by internet users, 78% trust “recommendations from consumers” and 61% trust “consumer opinions posted online.”

I think it is fair to say that Grava Chrysler-Jeep-Dodge has a problem.


But, it might not be a current customer service problem. Deborah C. from Arlington just gave Grava 4 stars in October. Maybe they improved from July (when Lindsay wrote her review) to October, although Deborah doesn’t tell us why she knocked off one star from her review. Judging from her other reviews (which certainly suggest that Deborah C. is a real person, not a review-bot) looks like she saves that 5th star for really good food.

Let’s switch brands and move upstream. Yahoo Autos posted some research based on the experience of a “Victoria Rumsey.” We do not know if she is a real person – Volkswagen could not find any RO documentation to support what was written in Yahoo, and I could not find the posted review. It is all about an unsubstantiated story about a woman who took her Jetta to a dealership where they had their trained staff look at the car and said it would cost in the $2,000 range. She went home and asked a friend to do the repairs. The parts cost less than $150. Yahoo took this story and wrote it up as “research” about how to avoid getting ripped off for auto repairs … excoriating the VW dealer in the process and expanding the context to cover all forms of gender discrimination.
Time Out: How many of us have a friend we’d trust to replace steering and suspension components on our car? How do we know this wasn’t an extremely labor-intensive repair? How do we know that the parts used were OE-quality? One of the many things that Vicky needed was brake pads for her 2000 Jetta. I just went to Auto Parts Warehouse on the web and found 64 different brake pads matches for a 2000 Jetta. The prices ranged from $20.03 to $217.96. My guess is that Vicky’s friend used the $20.03 pads, and that the dealer quoted a price that reflected genuine safety and quality.

It’s worse than that. The Yahoo crap research based on perhaps a fictional Vicky Rumsey got referenced all over the Internet, with some very prominent Facebook postings. Facebook is kind of a big deal.

Bottom Line: I think it is fair to say that the OEMs have a problem here. It is not just about Grava Chrysler-Jeep-Dodge, or a 2000 Jetta. It is not about Volkswagen. It is about a very new reality that is facing our industry. We will be talking about this at the March 8th Digital Summit. Email Jessica Shea (jshea@carlisle-co.com) to get more information on this.

Also, if you want to get these blogs in a separate pdf format, so you can actually see the exhibits, please email Ellen Jortberg ( ejortberg@carlisle-co.com )
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