Friday, March 29, 2013

North America Automotive Parts Manager Survey: A Decade and Counting

Guess what year these major bad-news events took place:
  • A war in Afghanistan
  • An Enron scandal
  • A D.C. sniper
......But there was one bit of good news:
  • A Carlisle survey is born
Time certainly flies when you’re having fun – all of these events occurred in 2002! It doesn’t seem like 11 years since I sat in a meeting room in Center Line, MI, attending the first planning meeting for an industry-wide, syndicated North America Parts Manager Satisfaction Survey. Last fall’s 2012 survey marked Carlisle’s 11th consecutive year of delivering quality benchmark data on parts manager sentiment.

Over the years, this survey has grown and matured, guiding participating companies on how to deliver top-line dealer satisfaction. It has also spawned other successful surveys, including a Service Manager Survey, an Accessories Survey, a Heavy Equipment Parts Manager Survey and a Global Parts Manager Survey. As a “Happy Birthday” to our original survey, we’re taking an 11-year retrospective view of how far we’ve come.

We started with the concept of a survey ‘owned’ by the participating OEMs:
  • The participants set the content of the survey by mutual agreement.
  • The participants customize their survey with their unique language.
  • The participants benchmark freely with each other without fear of data misuse.
All of these concepts have remained steadfast. However, this doesn’t mean the survey hasn’t changed!

In addition to growing the survey and improving the process of data collection, the Steering Committee has adjusted topics and questions to keep up with the changing nature of the aftersales business:
  • We’ve added sections on wholesale support, retail inventory management, and other topics as the need arises.
  • We often add a one-time section to gather information on a specific topic, such as the nature of the dealer’s wholesale clients or how independent aftermarket suppliers perform relative to the OEM.
  • In 2012, the planning committee responded to steadily increasing scores and elected to report only the percentage of “Very Satisfied” dealers, rather than the previously reported percentage of “Very Satisfied” and “Somewhat Satisfied” dealers.
Of course, the greatest value in the Parts Manager Satisfaction Survey is the detail provided in OEM-level results and the ability to benchmark with other OEMs. However, there are some major lessons to learn from an industry-level view over 11 years of data. As the bulk of this data is top-two box, we are using it here for the purpose of our analysis.

  • By asking dealers what they want, you can improve their satisfaction, and doing so directly impacts your bottom line. Slowly but surely, we have seen industry-wide dealer satisfaction (and purchase loyalty) grow over time.
  • You can’t make all the people happy all the time. While satisfaction in most categories has risen over the 11-year life of the survey, some items haven’t budged, such as pricing policy satisfaction and satisfaction with order processing phone support.
  • In order to move “Overall Satisfaction”, OEMs have to respond to issues that are most important to dealers. This can vary somewhat between OEMs. At an industry level, there is still variation in the least important driver, but not in the most important drivers. Consistently, those drivers are “Parts Availability”, followed by “Order Processing Phone Support”.

Over the past 11 years, the Parts Manager Satisfaction Survey has helped participating organizations grow their business through a better understanding of their dealers’ requirements. We, at Carlisle, would like to thank all the participating OEMs for their support over these past 11 years, and we look forward to the next decade of collaborative effort to further enhance the value of all of our surveys.

* * * * *

The PMSS (Parts Manager Satisfaction Survey) is a comprehensive, online survey that covers all phases of OEM support to their parts managers. It addresses 18 topics, including parts availability, delivery, technical support, training, field support, catalogs, and parts marketing. The surveys contains over 100 questions focused primarily on satisfaction, but it also covers key areas such as dealer fill rates and priorities for improvement. Along with the quantitative feedback, the 11,000+ respondents provided almost 65,000 verbatim responses with specific, actionable feedback for their sponsoring OEMs. 2012 was our 11th year conducting this survey on behalf of the auto industry. This year’s participation was our largest ever, with respect to both respondents and participating OEMs. We received responses from over 11,000 parts managers, representing 17 U.S., 12 Canadian, and eight Mexican automotive OEMs. If you have any questions on this or any other Carlisle syndicated survey, please contact Harry Hollenberg at 978-318-0500 x-106 or hhollenberg@carlisle-co.com.

Thursday, March 21, 2013

Black Friday: Do promotions really work?

By Stephan Brackertz
Two-for-one margaritas at the bar, half price meals after 9 p.m., cash back rebates – sales promotions are all around us. We love them. Yet, those special deals can also mean waking up at 6 a.m. on Black Friday or calling customer service three times to get paid for that mail-in rebate. We hate them. The reality is that promotions are all around us…and they seem to be proliferating.

In the world of motor-vehicle aftersales, promotions usually take the form of campaigns. Two types of campaigns are common:

  • Sell-in (or push) campaigns: The typical parts campaign allows dealers to order a basket of spare parts at a reduced price during a defined period of time.
  • Sell-out (or pull) campaigns: The typical service campaign is a discount mailing to get customers back into the dealership for a seasonal check-up.
Lately, Carlisle has seen more clients requesting consulting projects on sales campaigns, which is a good reason to spotlight this subject. We start with three simple questions.

The first is, “Do campaigns actually work?” Carlisle’s market research and consulting experience show that campaigns actually do work. They can generate loyalty, as well as incremental sales. However, to succeed the campaign design must be smart.


The second question is, “What is a smart campaign design?” This requires a broad campaign strategy. If aftersales departments don’t understand what campaign strategy means, that proves they need one. Campaign strategy answers specific questions such as:

  • Are everyday low prices better than campaigns?
  • How does one avoid campaign fatigue?
  • How can discounts remain credible?
  • Is pulling-forward purchases bad?
  • How will campaigns be tied to other elements of the marketing mix?
  • What is the channel strategy for campaigns?
How do campaigns work in a world where dealers have RIM?
  • Can the supply chain support an unusual demand spike?
  • What legal aspects should be considered?
What does the future of campaigning look like?

The third question is, of course, “How do OEMs measure campaign success?”

Sales departments tell us that campaigns are successful if they create incremental sales. Finance departments want the profitability quantified. For example, sales teams often don’t know if a different campaign, or no campaign at all, would have been better than the sales campaign they’re running. OEM campaign measurement is often poor. Campaign effectiveness, however, can be measured. Here’s how:

  • Define a set of metrics to measure campaign effectiveness, such as incremental sales, pull-forward effect, margin impact, profit impact, etc.
  • Track the daily parts sales by part number over a long period of time (at least one year).
  • Split the timeline into defined windows: pre-campaign, campaign, pull-forward period and post-campaign period.
  • Calculate the performance metrics of part numbers using those time windows.
  • Interpret the data and determine the root causes of the results.
Carlisle has assessed many individual campaigns this way and helped OEMs generate value. In one instance, a cluster analysis reduced dozens of historical campaigns down to six typical campaign prototypes, each with unique characteristics. Two prototypes were actually destroying profit, two prototypes were profit neutral, and only two prototypes created incremental profit. The OEM deleted the four prototypes that didn’t make money.

That’s not all. Of the two successful prototypes, one campaign prototype delivered “good” results, while the other campaign prototype delivered “great” results. Carlisle isolated the factors that turned a good campaign into a great campaign. Based on these insights, the OEM implemented a ‘rule book’ to guide the organization in the rights and wrongs of campaign design. Local market managers can now use the rule book to produce more ‘great’ campaigns than ever before.

Bottom line: OEMs spend a lot of money on campaigns. Isn’t it time to manage the expenditure more rigorously? If you are curious to find out more about this subject, please contact us. We’ll invite you to discuss it over margaritas.

P.S. Increasingly, OEMs are providing tools to dealers to design and implement promotions within their local markets. But, are any OEMs providing tools to dealers that help them evaluate their promotions’ effectiveness? Are we helping them leverage our knowledge of successful prototypes?

Saturday, March 16, 2013

Diary of a Service Department Waiting Room

As part of the MyGuy research in summer 2012, I spent 12 days observing dealership service department waiting rooms. These dealers were chosen by their OEMs as the “best-of-the-best”. The following are true stories of the situations I saw and the conversations I overheard…

A customer sat down in the waiting room and made a phone call:

“It’ll cost $500 for the repair; the labor is $120, so it ended up at $400 for the little motor. We’ll get Anthony from down the street and see what he can do. And the guy is trying to pitch me on everything — that flush and this flush; it would cost me a grand to get out of here today. So I had them just do the oil change. They told me they already had 80 cars, the waiting room is full. I should be out of here within an hour since it’s just the oil change. And there’s nothing close to get something to eat, nothing within blocks.”
This conversation seemed like the example in an exercise where you have to read a story and then find and fix the customer service problems! Do you think this customer will be back? Or is Anthony from down the street going to get all of their future business?

What about loaner cars? The MyGuy research found that service departments that always or sometimes “transferred customers to alternative transportation in a reasonable amount of time” had an average of 8% higher market share than those that rarely or never did so. How long is a “reasonable amount of time” when you are trying to get to work in the morning? Five minutes? 15 minutes? Customers at one dealership, which uses a local car rental company, waited upwards of 45 minutes for their loaner cars. Reasonable? I don’t think so.

At another dealership, a customer needed a new wheel. She was in the waiting room with a young child, using the play area, when the service advisor came to talk to her:

Customer: What do you think on timing for the rim?

Service Advisor: Probably a week.

Customer: I don't really want to be driving on the spare for a week.

Service Advisor: Okay, let me get creative. How about a rental?

Customer: I drive a wagon. I need it to be big enough.

Service Advisor: Let me call them, would a minivan work?

Customer: I don't want anything gas guzzling.

Service Advisor: Okay, I'll call them and let you know.
A week? A week??? This OEM offers order types that would get the part there much quicker than a week, especially if it’s a critical situation. Even the next stock order should be able to get it there in a couple of days. Another customer in the waiting room was told that “we'll have the new part in three business days”. Why the disparity?

Luckily, it’s not all doom and gloom; there were plenty of happy customers too. At 12:30 pm at one dealership, a customer had just finished chatting with the service advisor about his completed work and was packing up his things to get his car. All of the other customers who had been waiting that morning had received their service and left. He began talking to me about how he was thrilled to have the work covered under his powertrain warranty, as it would have cost him $900 otherwise. He had purchased his car there and absolutely loved the dealership and the service department. Despite the five hours he spent in the waiting room, he was leaving happy.

At another dealership, I overheard the service advisor performing the active delivery process with a customer:

“Hi {name}, I want to go over your car quickly. The tire is all set, there was a hole. It cost $14 to patch the hole. I also recommend 2 new tires due to {reason}. We can get the ones we recommend, it would be $290 for the 2 new tires, installed and balanced. It also needs an alignment for $89. I will note this on the repair order; you should do it before wintertime.”

This service advisor clearly explained what was done and why, as well as what needed to be done next, without pressuring the customer to do it all today. Now the customer has the information needed to prepare for the next visit, and can trust that the advisor was doing exactly what his job title says – giving advice, not upselling or using scare tactics.

Bottom line: These dealerships were nominated as the best-of-the-best, but it’s easy to see that every service department has areas to improve, as well as areas where they excel. To all the service managers and dealer principals out there, try sitting in the waiting room during the morning rush. Listen to what is going on around you. Or have a friend mystery shop your service department and tell you how it went. You may be surprised at what you hear.

Friday, March 8, 2013

Moving from Inside-Out to Outside-In

Service departments are dominated by one central principle: “you have to sell to make money”. Employee compensation is often based on commissions or quotas to encourage up-selling. However, leading businesses are now shifting from traditional approaches to new ways of thinking – they’re changing from an “inside-out” approach to an “outside-in” approach. Inside-out thinking is the traditional method: “You take what we make.” The latest shift has been towards an outside-in mindset: “We want to understand your problems and solve them.”

No one does retail and service better than Apple. Walking into one of their stores is an experience in itself; they provide a fun atmosphere with interesting gadgets and friendly staff. Even customers waiting at the Genius Bar with shattered Macbooks and broken iPhones seem thrilled to be there. Computer repairs are no more enjoyable than car repairs. Yet, Genius Bar customers seem delighted, while auto service customers seem miserable.

Apple accomplishes this by using an outside-in approach. In 2011, internet bloggers got their hands on Apple training materials for new employees. Employee turnover is often high at Apple stores, yet Apple still invests heavily in hiring and training the right talent, because they understand that this drives their bottom line. The training manual revealed Apple’s attention to every single detail and its focus on the customer experience. Employees are trained not only on technical product knowledge, but also on customer psychology and even on how to avoid negatively toned vocabulary. However, the most revealing lesson is this: Apple trains employees to solve customer problems, not to sell them products. Selling products and servicing them are byproducts of the company’s true business: delighting the customer. In fact, Apple Stores don’t even have cash registers. They’ve removed all of the traditional retail and service reminders. As a result, customers love doing business with them.

I’m not going to waste keystrokes highlighting the need for the dealer service business to shift from an inside-out approach (customers buy what we make) to an outside-in approach, and the need to revamp training programs accordingly. Just consider this – your business is no longer just about making the upsell. Service customers no longer have to “take what you make”; there are too many other options. Instead, service departments must focus on delighting the customer by understanding and solving their individual problems. Don’t focus on the cabin filter upsell when your customer doesn’t need it and doesn’t want it. Focus on working with your customer to identify real needs and figure out how to meet them.

Bottom Line: Your dealers’ first priority should be to delight the customer – this will ultimately drive the bottom line.