Monday, December 16, 2013

Retain and Conquer Through Packages

Service retention and customer conquest are top of mind for OEMs and dealers. There’s a good reason why – the aftermarket consistently siphons customers away from dealers once the vehicle warranty or complimentary maintenance period is over. Oftentimes even earlier.

One major driver here is cost. The 2013 Carlisle Consumer Sentiment Survey shows that not only is the aftermarket much better than dealers at providing a reasonable charge for parts and labor, but, more importantly, it is also better at informing customers of the total service cost up front. New vehicle owners’ first service interactions with the dealer typically occur while the vehicle is under warranty or a maintenance plan and the cost of service is obscured

However, once customers begin to pay for service out of their own pockets, they are hit with sticker shock upon receiving their first service quote. No wonder they soon gravitate toward the aftermarket.

Service packages are one way to combat this issue. Packages, or service menu items, have an out-the-door price, including both parts and labor, for a specific service event (e.g., front brake pad replacement) or several service events (e.g., oil change and tire rotation). Service packages are an inherent part of aftermarket business models. Walk into any Jiffy Lube or Midas, or check out the Pep Boys or NTB websites – package prices are displayed for all to see. Sure, these packages often include fine print such as “some vehicles ineligible” or “pricing as low as”, but for the most part, they are used to draw customers into the shop and provide a straightforward menu of options. Customers like the transparency, and even if the final RO turns out to be more expensive than it would have been at the dealer (i.e., because of upselling, vehicle ineligibility, etc.), the customers will never know because they won’t have given the dealer a chance.

OEMs can borrow from this aftermarket strategy to help win back and defend their business. With the proper design, pricing, and marketing, packages can achieve the following:
  1. Transparent pricing
  2. Consistent pricing
Both objectives can increase customer satisfaction. How? Pricing transparency leads to higher levels of customer trust. Customers can shop services and draw apples-to-apples comparisons between dealer offerings and those of the aftermarket. If packages are created correctly, their prices should be consistent within the dealer. Theoretically, every dealer employee should know the package prices and be able to quote them instantly (or after a quick reference). This saves time for the customer, and avoids a situation many OEMs complain of – employees at the same dealer quoting different prices for the same service.

Some progressive dealers already package price their service offerings on their own. However, this is often a daunting process, especially if it has to be done manually. So what can OEMs do? Help dealers design, price, and market packages.

First, many OEMs provide dealers with aftermarket mystery shop data to help them establish competitive price points for their services. More advanced OEMs also provide dealers with tools to help them create and quote packages, especially for factory scheduled and other competitive maintenance services such as oil changes, filter replacements, and brake services. These tools allow a dealer to look up a customer’s vehicle (by VIN or by selecting vehicle specs) and view all the services that should be performed at that time (or even previously declined services), the associated parts and labor units, and the dealer’s pricing. The dealer can then generate a service menu, review it with the customer, and create a final quote by selecting the services the customer has chosen.

Once a dealer has a set menu of package prices, service marketing can be much more efficient and targeted to directly compete with aftermarket service offerings.

Bottom Line: OEMs should take a page out of the aftermarket playbook to win back and retain their service customers. OEMs can help dealers bundle their most competitive services into packages, including both parts and labor, and charge a single out-the-door price. Dealers will be more transparent and consistent in their service pricing, and that will mean more satisfied customers.

Friday, December 6, 2013

2014 Syndicated CSS Gets Into The Heads Of Your Customers

Each year Carlisle deploys more than ten syndicated, OEM-backed surveys, covering 35+ markets on six continents. These surveys touch virtually every link of the “service chain”, including parts managers, service managers, technicians, and service advisors, to name a few. The rationale for these surveys is simple: if our dealers have the support they need, and their employees are happy, then they can focus on making the customer happy. But until recently, there was still a missing link – the last and arguably most important link – the customer. Sure, the industry has CSI scores, which measure what is going on in the dealer channel (30% or so of the total service market), but we all know the reality of those scores. The CSI link is completely broken – myopic, boring, gamed … useless.

Carlisle & Company set out to fix this broken link by launching our “Consumer Sentiment Survey” (CSS) in 2010. With over 2,000 customers across multiple brands, the CSS tells us what is going on in the industry. Here are a few highlights from three years of surveys:
  • The Digital Service Customer is a reality: internet-savvy, prone to switching , and vocal about what went wrong with that last brake job. A brave new world – brace yourself!
  • Dealer strengths are not aligned with customer values: the aftermarket consistently nails the things that matter most to customers, whereas dealers perform, or are perceived to perform, quite poorly.
  • The proliferation of cheap “white box” parts lured the repair business from dealers to IRFs, but that trend may be over. It’s a fair bet that the poor quality of those parts and the high quality of OEM “Genuine” parts is shifting business back to dealers. The key is to retain those switchers; that means the ball is in your court.
Someone I once worked with told me, “Variability is good – you can learn from variability”. Use this analogy to view the results of the Consumer Sentiment Survey. We now know what’s in the heads of vehicle owners/customers, at least on the industry level. But what’s in YOUR owners’ heads? And how does that differ (variability!) from what’s in the heads of those who own other brands? You don’t know, do you?

Clearly, variability matters. Consider the example below from our 2013 survey, which shows how dealer-loyal customers (the ones that remain in the dealer channel) view dealer strengths and weaknesses. As you might expect, loyal customers really think their dealers are doing a good job in what matters to them most. Lots of green without much variability. So, nothing to learn and nothing to worry about, right? All is good in OEM-dealer land.

But what if the red and green were reversed for YOUR brand? Wouldn’t YOU be worried?

Consequently, in 2014, we will take this survey to the next level by syndicating it and drilling down to the individual brand level. You ask, “How will this survey be different from what I’m getting today?” Well … where to start:
  1. No gaming: We will use online panels of uninfluenced respondents to gauge real satisfaction. No “Please-contact-me-(before-you-tell-my-OEM)-if-you-cannot-rate-your-service-experience-a “completely-satisfied” here!
  2. No myopia: The survey will include not only dealer respondents, but also non-dealer customers. After all, doesn’t it matter how our competition is doing?
  3. No boredom: Yes, we will keep a core of the survey intact every year – tracking does make sense. But every year we will include new “hot” topics: telematics, service lane technology, electronic manuals. The world does not stand still – neither should we in our effort to learn about it.
  4. No “no say”: As with all our other surveys, the participating OEMs will design the survey and will have the final say on which questions we will ask the customer. Don’t YOU know best what you want to know?
  5. No hassle: The survey process will follow the proven and efficient path of our syndicated dealer surveys.
We plan to launch our first syndicated Consumer Sentiment Survey in early February 2014 and will start the recruiting process in the very near future. No excuses – this is too important to ignore! For more information contact David Carlisle, Thomas Neumann, or Chad Walker.