Tuesday, August 20, 2013

Global Parts Manager Survey – The Disappearing Satisfaction Gap

Our Global Parts Manager Survey has continued its expansion. What started in 2008 as a survey of the “EU G5” – France, Germany, Italy, Spain, UK, now spans the globe. In 2012, 21,500 respondents across 16 brands in 26 countries submitted close to 89,000 text responses. In September/ October of 2013, the survey will expand again, to cover 35 countries.

We mentioned in a previous blog (“Together we are smarter”) that the questionnaire fit most markets like a glove, which means the parts business is becoming global; the same tools, processes and technology solutions are being used everywhere. RIM is being deployed in Brazil, same-day delivery piloted in China, and wholesale programs contemplated in Russia. If the tools, processes, and technology solutions are the same, then it makes sense to manage this business globally, using common metrics and tools, such as the survey.

But still, one may ask, “What’s the point – ‘global’ sounds good, but does it really matter?” We believe it does. For proof, look at the survey results. The chart below shows “overall satisfaction” scores in 2011 for four brands – both luxury and non-luxury – that are represented within two market categories: an “Emerging Asian Market” (Red) and a “Mature European Market” (Blue). All brands are using the survey to improve their parts business, exchange information, and share best practices.

What do we see? In all four cases, parts manager satisfaction in Europe is higher than in Asia. And in most cases the gaps are very large: 10, 30, 35 points! It is fair to say that in 2011 the European parts managers were quite a bit happier with their OEM than their counterparts in Asia.

Fast forward to 2012 - what do we see now? A very different picture! For Brand A, satisfaction is HIGHER in Asia than in Europe by 3 points. For Brand B, the gap has almost closed, while it has drastically shrunk for C and D. Yes, it is still there, but the “happiness” gap is closing – fast!

Let’s put the two charts together and look at the data from yet another perspective. A couple of things are noteworthy:
  • All brands in both the Asian and European markets have improved overall satisfaction between 2011 and 2012.
  • Even the European market has improved consistently, despite a difficult economic climate and an already high satisfaction level. This indicates that there are pockets of performance, and satisfaction gains, left to uncover in even a well-run OEM parts business.
  • However, the key finding is that the “satisfaction gap” between the Emerging and Mature Market is shrinking, with the Asian markets improving faster than the European markets; in 2011, the gap between the brand averages was 21 points; in 2012 it was 10 points!

So, why does this matter and, again, why does a “global view” of part manager satisfaction matter? There is a variety of reasons:
  • In emerging markets, dealer purchase loyalty is often high. In part, that’s because OEMs may (not yet) face the sophisticated and ubiquitous competition they are facing in mature markets. This is likely going to change and probably is already changing. In addition, dealer parts purchase loyalty is written into dealer agreements in some emerging markets. This may also change, if, for instance, European legislation over the past decade or so that expressly prohibits such stipulations is any indication. So, overall it’s fair to assume that there will be more competition for the parts manager’s business, and this is when satisfaction with the OEM does matter; higher satisfaction drives higher purchase loyalty, as we have seen time and again in our surveys in North America and Europe. The survey surfaces low satisfaction and, thus, purchase loyalty vulnerability today in comparison to more mature markets and helps to address these issues and prepare for a more competitive future.
  • The parts business is a key link in the “service chain”; no part, no service or repair! We often see that happier parts managers can offer their service department higher off-the-shelf fill, arguably because their OEM offers better support. This is good for the parts manager, but it ultimately benefits the vehicle owner, who will also face an increasing array of choices for servicing and repairing his vehicle. And as vehicles become older and older in emerging markets, high off-the-shelf fill will be an important factor in keeping owners in the dealer channel.
Bottom line: In emerging markets, it is important to lay the foundation for a robust, competitive OEM/ dealer parts and service business NOW through a “world class” (not “emerging markets”) parts operation. We are looking forward to a successful 2013 survey ... and to a gap that has shrunken even further!

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