Thursday, January 31, 2013

Digital Accessories Customers

Hardly a blog goes by where we don’t reference Digital Service Customers or “DSCs”; we coined this term a couple of years ago when investigating how service customers use the internet.

But what about accessories customers? SEMA’s 2012 Segmentation Study highlighted heavy use of web-based research among these folks:

So what do Digital Accessories Customers (the acronym, of course, is “DACs”) mean for OEMs? Let’s consider the implications of each of the four types of online sources used by DACs:

Internet Searches (53%)

Internet searches are the most common way DACs look for information, and therefore represent the best way for OEMs to “capture” potential buyers and funnel them to brand sites.

OK, so what do DACs find when they go to Google?

We tried some unbranded search terms (i.e., “Truck Bed Extender”) first. In most cases, the OEM-centric result is two or even three pages deep. Hmm, when was the last time you clicked through two pages of Google results? This is no man’s land! OEMs fare slightly better in branded searches (i.e., “Ford Taurus Floor Mats”), but are still beat out by aftermarket competitors and even eBay in a few cases. Yikes.

Manufacturer’s Website or Catalog (30%) and Chain Parts Stores Websites (23%)

Well, DACs may not be coming to OEM pages via search engine results, but if and when they make their way to your websites, you need to do two things well. First, “connect” with customers – make them want to buy your accessories. Then “close” the sale by facilitating online ordering. One of the best ways to “connect” with consumers is through build-your-own functionality. Today’s consumers are accustomed to customizing everything online, whether it be a new pair of Nikes or the perfect engagement ring. Why should accessories be any different? Let customers digitally accessorize their vehicle, and by doing so, harness the excitement of product ownership. Aftermarket companies like Vogue Tyre do this well:

After deciding to purchase something, consumers expect a seamless checkout process to close the deal. Instant gratification is the name of the game. Here, companies like AutoZone are the benchmark, with easy product look-up, real time availability and pricing, and the option to pick-up in-store or have the product delivered. In general, OEMs lag the aftermarket in e-commerce functionality; their job is inherently more difficult as they have to facilitate the transaction between the end-customer and the dealer.

Auto Enthusiast Websites/Forums (21%)

This resource is still maturing, but represents a potential threat. Go online and check out some of the enthusiast forums; the dialogue often favors the aftermarket, particularly in discussions about performance parts. Forum contributors and moderators extol the style and performance of aftermarket parts, skewing readers’ perception of the term “aftermarket” in a broader parts & accessories context.

Bottom Line: Revisit your online presence for accessories – now. OEMs are already playing catch-up, and tomorrow, an even greater percentage of consumers will be DACs.

To Dos:
  • Invest in search engine optimization and marketing (SEO & SEM) for accessory-related searches. You need to be on the first page for unbranded searches, and at the very top of the page for branded searches.
  • Assess your “connect” and “close” capabilities for accessories. How does your site’s build-your-own functionality compare to those in the aftermarket? Your e-commerce capabilities?
  • Join the dialogue on enthusiast websites, which, right now, is relatively one-sided. As the OEM, you have the credibility and the unmatched product knowledge to combat misconceptions and redirect the conversation.

Thursday, January 24, 2013

The Best Place To Go For Heavy Equipment Service Is… Nowhere

Over the last few months, Carlisle & Company has been talking to Heavy Equipment end-customers, both farmers and construction equipment managers across the US and Canada, to learn how they make their service provider and parts sourcing decisions. The 2013 NAPB will offer deep dives into topics such as online parts sourcing trends, counter personnel impact, and parts availability trends and tools. Right now, the subject is mobile service – a key topic that stands out in the “What makes a great dealer?” category.

Why does it matter? Because time is money and convenience is king, especially during harvest season.

Put yourself in your customer’s boots: Try loading a 10-ton piece of broken equipment onto a trailer. You take it to the dealer, get one of those elusive same-day appointments, wait for the repair to be finished, and then load the equipment back onto the truck before heading home. No wonder customers consider this a hassle, especially when every minute that the equipment is not running is costing $$$.

But wait, there’s more. If the dealer offers mobile service, the trucks may be inadequately stocked, resulting, again, with the customer paying a penalty. Dealers charge travel time to come out and look at the problem, to go back to get the right parts, and return to make the repair… with a separate charge if the customer has an additional piece of equipment with a problem.

So what do customers do? They look for convenient alternatives. “I’d rather use an independent guy who can come anytime I need him.” “I have a guy come out and work right on the farm.” This guy becomes their go-to guy. And who do you call next time your equipment is down? Your guy. My guy.

Bottom Line: Great mobile service is not a “nice-to-have”. In fact, lack thereof is a “dissatisfier” that drives customers to other service providers – and probably not just for that one repair.

If you want to learn more about Carlisle & Company’s research on Heavy Equipment end-customers, contact Gene Metheny at or 314-324-4395.

Friday, January 18, 2013

Is Our Service Lane Helping Sell More of Our New Vehicles, Or Helping the Competition?

I was recently checking out a friend’s Facebook updates; he’s an engineer in Silicon Valley in his late 20’s (you know the type: smart guy, great salary, loves gadgets), and noticed the following post:
Audi dealer gave me a brand new S4 with 39 miles as my loaner. I love the shit out of this car. This was their plan…
I immediately took a screenshot and sent it to a fellow Carlisle consultant: “Look! Evidence of our research in the wild!

In a recent sales customer retention study we discovered that, for one OEM, the sixth biggest lift in retention came from "service loaner vehicles that are the same make". Dealers using this practice enjoyed a 6.5 percentage point sales retention increase over dealers who used other make loaners. This makes sense, right? Loan me a newer vehicle than the one I am driving and I might fall in love.

Look at this set of Facebook posts to see your customer's, and their friends', reaction to getting an Audi service loaner from the Audi store. Within hours, there were over 20 “likes” from friends. This stuff works.

So, do all dealers loan their own make to service customers? Nope. We found that for one brand, better than a third of their dealers loaned other makes rather than their own. Why? They said:
  • I just turned everything over to Enterprise and they don't run my make in their inventory.
  • Loaning my make is too expensive; so, I loan cheaper makes.
  • My "insert other brand here" store is struggling; so, I put those into my loaner fleet.
Bottom Line: Which of these reasons is good enough to justify throwing 6 to 7 points in sales retention overboard?

Friday, January 11, 2013

2013 Customer Sentiment Survey Is In – More “Good” Got “Great” … But, The Bad Got Uglier

Top-box satisfaction with the most recent dealer service experience increased by 6 percentage points. This sort of improvement is critical for keeping service customers in-channel (e.g., making sure customers stay, broadly, in the dealer channel). Unfortunately, chains picked up the most with top-box service satisfaction increasing from 42% in 2012 to 51% in 2013. It is easier for the chains to implement strategy because they do not have “independent” dealers.

Use of the internet as a resource for service research actually declined in 2013 as this resource matured. Furthermore, service provider "switching" declined from 30% in 2012 to 28% in 2013 switching service providers – either in-channel or to an alternative channel). Digital Service Customers had already found their sources of information and were more prone to stick with them.

Why? The most probable explanation, which fits with other survey results, is the economy moving ever further away from the 2009 recession where disposable income was very tight. More service customers found “their guy” and stuck with him or her, and were less concerned with finding the “best deal”. Use of the dealer channel for the most recent service or maintenance repair was up in 2013, reflecting (1) dissatisfaction primarily with independent repair facilities, (2) crappy white-box parts flooding the independent channel, and (3) “compassionate waterboarding”. The switching charts tell the story about the migration from the independents. “Compassionate waterboarding” reflects a situation where bad dealer service practices have become less-bad, for a host of reasons.

So, for most dealer customers things got better. Only 24% of dealer customers switched providers. But, when they switched, an increasing number went outside the dealer channel for maintenance or repair; 21% stayed in channel in 2013 vs. 27% in 2012. So, when things got bad, they got worse. Using the Internet as a resource to make service provider “switching” decisions exacerbated the problem – 9% fewer Internet-driven switchers stayed in channel in 2013 vs. 2012. What’s going on? The migration out of the dealer channel is dominated by middle-income customers (earning less that $100K a year) and females. 17% fewer of female dealer switchers stayed in-channel.

In terms of fulfilling customer values, dealer scores for the top ten values improved. So, we made some headway in the past 12 months. But, maybe, not enough. Not enough to keep our most fragile customers from looking elsewhere.

Bottom Line: When “Great” is represented by a top-box satisfaction score of 56%, we need to worry about the not-so-great 44%. When our service customers leave, they have an increasing propensity to leave the channel altogether. And, if they are middle-income or female, they lead this exodus. There’s a lot of them out there.

Friday, January 4, 2013

We Have Launched … Why In The World Did We Do This?

David P. Carlisle
MyGuy is all about the service experience and dealer service retention; it is why supply chain folks exist.

OK, this is the Part II of our 12/13/2012 blog ( that helps explain the “why” … why we, Carlisle & Company, need to focus on the transaction itself, and not just the processes supporting it (i.e., supply chain, sales, marketing, T&Cs, etc. … all that stuff we do).

As expected, just before Christmas I received a notification from GM asking me to rate my Soup Nazi dealer experience. I told the truth and said that it was OK to send the survey to my dealer – I had already made up my mind not to go there anymore. I said that I had not received a trusting experience and would not recommend anybody go there.

Well, a week later at 7 a.m., Steve, my very sensible Chevy dealer service manager, called me at home. He said he woke up at 5 a.m., went online, and was devastated to find my service survey … he knew me to be a long-time faithful customer. He was genuinely distressed and contrite as he asked me what had happened. I told him the story I related in the Soup Nazi blog.

Our conversation reminded me of a time when my 70-year-old mother asked me what I did for a living. I told her I was a consultant. She replied, “No, really, I mean, really, what do you do?” We never connected that day. I never connected with my Chevy service manager either.
The service advisor told me he was charging $95 to check the “check engine light” code. I told this to Steve and said I could buy a device for $24 to do this with my cell phone. He explained the rationale behind the $95 charge. It made no sense to me. We did not connect.

I told Steve that the service advisor called me and said my air filter was dirty and that he could replace it for $140. I told him that I bought an ACDelco replacement filter on the web for $38.59. Steve said his price for the filter was $75. I told Steve that his parts department was double netting the price and selling them to service for $75, and that service was nearly double-netting. We simply did not connect on this.

In my Soup Nazi blog I listed 10 things that went wrong during this service experience. I mentioned a few more to Steve, but we just never “connected.” I really appreciated our talk. Steve is a good guy, but he was just doing business as usual. That’s not enough in today’s market.

Immediately after my Soup Nazi service experience I was pretty ticked off. No longer. I am merely sad. I’m probably going to look for someone else to do my Chevy non-warranty work.

How do you fix this?

After all of these years, I think we all agree that this is an extraordinarily complicated problem to solve within the OEM-Dealer relationship.
Everybody thinks dealers are the high-priced spread. This comes out very strongly in our surveys and is a major issue with service customers. Dealers are typically set up as multiple profit centers: sales, (used car), (F&I), service, and parts. Armed with free Internet facts, customers negotiate aggressively, resulting in gutted new car margins. So, dealers make little on the actual sale of the vehicle, but more than make up for it in F&I and used car. Sales, used car, and F&I work together to net reasonable and competitive margins.

Why can’t parts and service figure out how to work together? Dealer parts departments can double-net price fast-moving filters when they “sell” them to service located 35 feet away. Then service has to make a profit. At the end of this profit daisy chain, we have pissed-off customers who feel that the dealer is ripping them off. Look at the chart. This is very important to them.

The fix is actually very simple. Dealer service departments need to understand that they will be successful only if they are competitive in the eyes of the customer – the same lesson learned by the front-of-the-store decades ago. They must come to this awareness completely and must own it. The factories can’t help. They are too prescriptive and focused on mass conversions, not patient self revelations.

So, here’s the plan:
  • The MyGuy website is up, running, and completely free.
  • It speaks directly to Service Managers and Service Advisors, not down to them.
  • It will leverage everything we have researched and what we know in this space – this is considerable.
  • Although it targets only service operations, it is a shotgun blast that anybody in the service arena can use. Chains and IRFs, too. I’m OK with this.
  • It explains what customers want, what to do, what the expected outcomes will be, and couples all this with quantitative research and best practices.
  • It will use a lot of short videos – of customers, of non-dealer operators, and of best-practice dealers.
  • It will be updated weekly.
  • The only thing for sale on the MyGuy website will be MyGuy certification … and we aren’t pushing this very hard. Certification is like a church – you have to believe in God before you buy a cathedral.
I will be spending most of my time on MyGuy – it will be fun for me and it will enable me to make a difference. I have the patience of Job on this.

Visit now to learn more.