Sunday, March 30, 2014

Two Strategies to Improve Customer Convenience: Be Faster and Be Easier

By Brian Crounse
Two events got me thinking about customer retention and mobile service this week. The first occurred when I dropped our home printer while trying to clear a paper jam.

I went to Staples and bought a new printer, brought it home, and set it up. I ended up on the HP website to configure the scan-to-email function, and that’s where HP pitched its Instant Ink Replacement Service to me. The basic idea is this: when your ink gets low, the printer phones home to HP, which ships new ink cartridges to you. You can sign up for one of three levels, based on the number of pages you typically print. HP bills you monthly at a lower rate than you would pay to purchase new cartridges.

For me, the benefit here is convenience. I don't like schlepping to Staples on a Sunday night when the ink gets low, while trying to finish a school project with the kids. I also don't like paying full price for OEM ink, but I also don't trust aftermarket ink, and won’t risk it to save a few dollars. Having the OEM ink arrive ahead of time at a discount, and paying for it in smaller increments is attractive to me. Plus, the final cost of HP’s program (3-6 cents per page, depending on your printing volume) is competitive. So, I signed up, and have received the first batch of ink.

Can you see the parallels to car repair yet? The potential benefit of integrating telematics into the vehicle maintenance/ repair part of our business? I really wish that our vehicle telematics systems enabled a level of service comparable to HP’s. Wouldn't it be nice to have a day or two of lead-time? That way the dealer could get the right parts in order to complete a repair in record time.

The other event: I recently discovered the another local mobile maintenance/repair service, Driveway Doctors. Now, I like visiting my dealer, Acton Toyota of Littleton, as much as one could; they have Wi-Fi, a cool solar installation, a cafeteria where they give you free breakfast, and decent work areas. But, as much as I like the home fries (they may be the best dealership home fries in the country), I'd still rather not have to drive to the dealership if I can avoid it. This is where mobile service would come in. Sure, a mobile van can't perform every repair, but it can do enough scheduled maintenance and light repair to make the numbers work, especially when there’s an opportunity to do a vehicle inspection.

After the inconvenience, the next most troubling aspect of vehicle maintenance is the surprise repair. Even a service advisor’s smoothest approach doesn't soften the "Did-you-know-you-need-a-$2,000- exhaust-repair?" moment. You know the feeling – thoughts race though your head, "How can I free up the cash? How long do I have to rent a car? Am I going to make my 10 a.m. call?"

Here's the hidden genius of mobile scheduled maintenance: dealers can't force the issue of surprise repairs, because a mobile van can't do the big, expensive repairs on your site. I know how much dealer service managers dread seeing a car leave the shop without every needed repair performed, but it’s often the trauma of the surprise repair that drives the customer away permanently. With mobile service, the most that the mechanic can do for a complex repair is give the customer a warning about the problem, a quote for the job, and an offer to set up an appointment. This gives the customer time to get over the surprise, feel grateful for the warning, and be relieved by the scheduled appointment.

I know that mobile service hasn't really taken off. A west coast company I liked in 2012, Your Mechanic, was supposed to be the Uber of car repair; yet, it hasn't moved that fast. Mobile service does have traction in niche markets such as glass repair, which has the advantage of being well defined in terms of parts and work, with no need to get beneath the vehicle. But I do wonder why mobile maintenance isn't more widespread. The economics can be challenging, but there's a real opportunity for improved customer loyalty.

Bottom Line: There are obvious perils to sample size=1 market research. I realize that not all customers are like me. But thoughtful n=1 research can still yield some insights.

In the near term, I'd really like it if my dealer would give me the option of mobile maintenance and light repair. Sell me a mobile service contract when I buy the car. I know I'll pay a premium (repair trucks and travel time aren't free, and the F&I guys need their cut), but the convenience of mobile service is obvious and would be valuable to me. I am a member of the “set it and forget it” customer segment. Plus, I like the fact that it would limit the mechanic’s options for up-selling. In the longer term, I'd like to sign up for a service in which my car tells my dealer when to fix my brakes, or replace my battery, or fix my sliding door, with me as the gatekeeper. If telematics could accurately diagnose more problems, mobile service might be able to perform more repairs. This is something – the connected car – that's been talked about a lot, but only a few leading manufacturers are beginning to implement it. Watch this space for more.

Friday, March 21, 2014

Work Assignment Methods & Truck Technician Retention

by Mike Chen

With the current shortage of technicians facing the truck industry, dealerships need to be more focused than ever on retaining their existing pool of qualified technicians. While there are many factors that impact retention rates, one element that should not be overlooked is a technician’s perception of workplace processes.

In 2013, Carlisle & Company conducted the inaugural Heavy Truck Technician Survey, which provided us the opportunity to dive into the issue of retention. One surprising insight that came out of our research was the importance of how work is assigned at dealerships. The survey results showed that technicians who perceive their dealerships’ work assignment methods as “fair” were 27% more likely to stay with their respective dealerships.

Upon investigating the issue, we found that most truck dealerships use one of the following two methods to assign work:
  1. Work assignment by specialty
  2. Work assignment to next available technician
Technicians surveyed were 8% more likely to find “assignment by specialty” to be fair vs. “assignment to the next available tech”. Many provided comments to give us context on their perspective:
  • “Technicians with improper training are assigned to jobs.”
  • “Jobs are often assigned to under-qualified technicians.”
  • “Give the work to the tech that is qualified to do the work.”
When we look even closer, we see that after technicians have five years of experience they become twice as likely to perceive “assignment to the next available tech” as an unfair assignment method.

Further down the line, technicians with more than 15 years of experience are three times more likely to perceive this work assignment method as unfair.

What does this mean for dealers? It means that by choosing to assign work to the next available technician, dealerships are increasing the risk that their more experienced technicians will leave. Dealerships don’t need to make technician experience-level or training the sole consideration when assigning work, but they should try to recognize a tech’s specialty and give preference to those who are the most appropriately skilled for the job.

In order to simultaneously 1) recognize experienced technicians, and 2) give younger technicians a chance at developing a specialty, dealerships could institute mentorship/shadow programs. Many technicians surveyed either requested such programs or commented that such programs were working well at their dealerships:
  • “Oftentimes jobs will be handed to a tech that does not have the skill level to handle it. They should be given to an experienced tech to shadow them and give advice.”
  • "Our system could be improved with experienced team members teaching substantial and complex repairs to less experienced team members”
  • “As a whole I believe we function very well. Mentoring of young techs is done on complex tasks as work load allows.”
  • “Everyone I work with is very willing to teach & explain their strong areas to others”
Bottom Line: Work assignment methods have an impact on a technician’s satisfaction level and their likelihood to stay with a dealership. If dealers want to avoid the time and cost involved in replacing experience technicians, they need to account for technician specialties when assigning work. Establishing a mentorship program in which experienced techs can mentor younger techs would be an effective way to accomplish this task, while giving opportunities to younger technicians who want to develop a specialty.

Friday, March 14, 2014

2014 NASB Trends – Looking Back to See How Far We’ve Come

By Charlotte Williamson

The North America Service Benchmark (NASB) got its start back in 2008 when 11 automotive brands (with only two luxury brands) met for a one-day conference in Dallas. Today, NASB has grown to 17 automotive brands, with seven luxury brands, and two face-to-face meetings a year. With the Spring NASB Meeting (on Service Capacity Management and Express Service) coming up fast, we thought we’d review the last five years of data.

The main objective we set for this benchmarking back in 2008 was to provide action-oriented metrics and insights into leading industry practices, in order for companies to use the data to learn and improve. As 2008 was in the middle of a large and steep decline in industry sales, brought upon by the “great recession”, we basically started benchmarking this data at the bottom, in a very challenging marketplace, and have been digging ourselves out ever since.

So how are we doing? The news, we’re happy to announce, is great. Our research found that several key metrics have improved substantially for OEMs that participated in all five years (in aggregate), since 2010 NASB.
  • The percent of 1 to 7 year old units-in-operation (UIO) with at least one customer pay visit increased 27%.
  • The percent of 1 to 20 year old units-in-operation (UIO) with at least one customer pay visit increased 49%.
  • The customer pay sales per 1 to 7 year old UIO increased 21%, despite a 5% decrease in sales per 1 to 7 year old retained UIO.
  • Sales per repair order are steady.
  • Most brands saw increases in customer pay and warranty customer satisfaction.
  • Almost all brands saw a significant decrease in the internal measurement of the percent of vehicles that were not fixed right the first time.

Coming out of the recession, we have fewer vehicles on the road in the core 1 to 7 year range, but have reduced our dealer bodies and adjusted service capacity to accommodate them. Customers are more satisfied and our quality of work is increasing. Vehicle sales are quickly approaching 16 million again and, at least at a national aggregate level, it appears our dealers have the capacity to accommodate them.

Bottom Line: Nationwide, we seem to be doing fine on capacity. But what about individual markets and brands? We know customers don’t like to travel for service if they can avoid it. Do we have the right capacity in the right places? What about our sales growth objectives? Can we meet the service needs of our new customers? How will the current trend in vehicle sales affect our ability to take care of these customers? We’ll explore these questions and more at the Spring meeting session on Service Capacity Management.