In October 2008, Lehman brothers went broke and collapsed. This was the ignition point for the recession that started, in earnest, in 2009. The recession birthed the market for “cheap” – cheap fashion, cheap cars, cheap food…and cheap auto parts. Simple. A new market was born, but it needed sales, marketing, production, and distribution. It needed the internet. The internet had matured since its bubble burst in 2000. You want to sell some cheap parts?
- Get them from East Asia, no questions asked, and use the internet for all your supply-side planning, contact, and communication. You can figure out who to use and how to use them from consultants.
- Market them via the internet. Get a consultant to help you with search term optimization and pay folks to write hundreds of pages of hidden text to get on the first page of a Google search.
- Sell them, once they are on your site, with a broad array of choices from dirt cheap to ridiculous. Use consultants to make this part of your site sticky.
- Distribute them like Amazon – direct from one warehouse, using premium freight. Who cares about one/two/three-step distribution models and dealing with CARQUEST. Use a consultant to set this up.
Since 2010, the number of digital service customers has risen astronomically – from 32% of the surveyed population to 55%. So, it is safe to assume that most service customers use the internet for some form of research. They check things out. One of the things they check out is parts prices. So, when they go in for service, and get sticker shock, they ask why the parts cost so much. Worse yet, they ask the service shop to use cheap parts, like the ones they find so easily on the internet. This was confirmed by independent repair facility (IRF) folks at one of our recent focus groups.
The proliferation of cheap parts, indeed, is wrecking the independent aftermarket – the market model I showed a few weeks back (http://ccsparethoughts.blogspot.com/2012/05/right-to-repair-passes-massachusetts.html is valid.
But, the question that has been ringing in my mind for the past 18 months is, “Are all those programs the OEMs are using to increase service retention working?” I think not … with one exception. Most of the unexpected parts sales upside experienced by the OEMs during the past two years can be explained by: (1) longer initial vehicle retention that benefits dealer service, (2) harvesting of deferred maintenance stockpiled from the gloomy days of 2009, and (3) using 2009 as the new basis for year-over-year comparisons – which is like using road kill to gauge the beauty of a fluffy-tailed squirrel. Hmm. We are trying to get back to a 17MM sales year, and this will compress the new-vehicle ownership cycle. And, we’ve already wrung out most of the deferred maintenance. So, we are stuck with just the road kill to make us feel brilliant.
Digital Service Customers (“DSCs” who are now the majority of service customers - http://ccsparethoughts.blogspot.com/2012/03/evolution-of-dscs-2012-carlisle.html) generally go to dealers for warranty work, and go to their “My Guy” for customer-pay work. Rather than ask if any of those OEM programs are working, it makes more sense to examine the process, reflect, and see if anything has really changed.
- I figure out my vehicle needs service. This is the one, overwhelming, exception. Many brands now use telematics to diagnose problems and steer remedial action. OnStar is still the king of the hill here.
- I book service. If you don’t have telematics (OK, even if you have it), you call a dealer and talk to a service manager. Online scheduling, which is generally flawed, is not on the top-10 list of things service customers value.
- I go in for my appointment and talk to the service advisor. This is the industry’s black hole. Service advisors are trained by the service manager, and customer sensitivity training is not part of the curriculum. Nobody owns this fulcrum – if Ayn Rand were alive, she’d say that this Atlas has already shrugged.
- I never see the parts manager. Most of the OEM parts programs are focused on the parts manager, who pretty much never sees a service customer. I’m still trying to figure out how they can make much of a difference in customer service retention.
- The repair is completed and I get my paperwork from the service advisor (who I have no relationship with). OK, they do a good job, generally, because they have great well-trained technicians (who I never see) and use Genuine parts (that I don’t know what are). Hey, warranty work is free, but when I’m off warranty I go to “My Guy” who treats me like a valued customer and looks out for me.
- I get a survey asking me how satisfied I am. The service advisor already asked me if I was completely satisfied – first real eye contact we had. He asked for top scores and explained how important it was to him. So, I get the survey and give them “all 5s” because I think they will send the survey to that service advisor who stared at me and might kill my dog if I don’t give him “all 5s.”