Monday, April 21, 2014

How to get top quality market research?

by Mathieu Ollier

Nowadays, every OEM has a ‘Market Intelligence’ division to gather and analyze data. But, obtaining “intelligent” data about the market – data that isn’t flawed, sloppy, or incomprehensible – isn’t easy.

Let’s start at the beginning. The role of the Market Intelligence division is usually to gather and analyze data such as sales, market share, spare parts prices, terms and conditions, etc. Obviously, access to sound, high quality data is paramount. While most of us have relationships with trusted and reliable research partners in familiar countries, eventually we have to carry out market research in places that are more ‘exotic’, and where concepts like ‘quality’ and ‘time’ are (much) more fluid than we would like them to be.

Since many of our projects require gathering data from outside sources, we have experience dealing with market researchers around the globe. We have had to deal with the whole spectrum of researchers, from ‘great’ to ‘awful’. In this article, we’ll focus on the ‘awful’ and discuss how to avoid massive train wrecks and get top quality market research.

Simply put, market researchers are usually better at executing than they are at thinking. That means you must do most of the thinking before the research begins. Shifting course while moving at full speed risks that train wreck. Think of a kindergartner crossing the street; you wouldn’t let him do it without supervision. No, you tell the child what to do, then you take his hand, look left, then right, then left again, and walk carefully, following the crosswalk markings. Now, how does this metaphor translate to the real world? Let’s see:
  • Research is a commodity. Few differences separate two market research agencies doing the same work. Granted, a company may have specific capabilities, but they are usually upstream (e.g. cross-referencing) or downstream (e.g. data validation), and not pertinent to the research itself. So, if you receive price offers for your research that are extremely different, think carefully. It means that one of the companies is not going to do what you want (a different methodology), or that it is cutting corners to appear attractive, or that it has never done this type of work before and does not have enough experience to determine the actual cost, or maybe that it plans on doing something illegal like not paying taxes... None of these scenarios is attractive; together they mean that someone may be taking you for a ride.
  • Market research companies have a different definition of ‘high quality’. As we have mentioned before, some companies focus on speedy execution, instead of looking up from the steering wheel in order to avoid oncoming traffic. Consequently, you can’t be suspicious enough. Until you know that a company is reliable, assume that everything they do is wrong and double-check all that you receive from them.
  • Do not let the researcher decide the format of the data they will return to you. While you know exactly how you want to use the research output, the researcher does not. He has no idea and no real incentive to put it into a format that will be easy-to-use and convenient for you. Make sure to provide a template, and to brief your research partner on how to use it. Ideally, you would do this during a formal kick-off, along with the explanation of your expectations, a reminder of the research timing, as well as the expected methodology. If you use different providers for different countries, chances are that the same team within your organization will use the data. Having the data in the same format will make their lives a lot easier. They’ll be able to focus on value-added tasks like analysis, not reformatting long Excel files.
  • Plan a soft launch rather than a full-steam-ahead launch. Nothing should prevent the researcher from carrying out a soft launch, (that is, research for only a small sample of the agreed scope), and provide you with that data. Look at it, check that it makes sense, and that there are no major flaws in the process you defined. If the sample looks good, you can give your researcher the go-ahead to get the rest of the data.
  • Ask for data extracts / work-in-progress files. Researchers are notoriously late. I always suspect that they don’t start when they say they do, but procrastinate for three weeks, like a high school student with a term paper. (I know: I have trust issues myself ... working on it). Asking for scheduled research updates and work-in-progress files will reduce your stress level. If they can’t provide the update to you three times in a row? Something is very wrong. Time to put on the brakes and figure out what’s happening.
  • There is no such thing as ‘we’ll do it later’. If a piece of the data is missing or is recorded incorrectly, the research agency may promise to fix it later. Don’t buy that; it most likely won’t. And when all is said and done, and nobody remembers why that data was not included in the research, guess who’ll look bad? Instead, insist on immediate corrections.
  • Data validation is a key step of the process. Researchers usually assume that they’re off the hook the moment they give you the data. Wrong! Until you are confident in the quality of what you received, the researchers should be responsible for it. Ideally, data validation should also happen on their end, but experience tells us that their “data validation” is not very thorough. There are always wrinkles (e.g. missing zeroes, typos, referencing errors, etc.) in the data you first receive. Make sure to have an explicit, written agreement about data validation responsibility, what validations rules will be applied to check its quality, as well as who will have to bear its cost. Save time to also perform it on your end, and force the researcher to re-collect or confirm the data points that look questionable. If a company refuses to do so, you are getting bad customer service. Nobody likes bad customer service.
Bottom Line: Everybody talks about ‘big data’, seemingly without worrying about the quality of that data. Of course, ‘big data’ typically refers to data sets much larger than what we discussed here, but we all know that without top-notch input, every analysis is meaningless. Even worse, it could lead you to take actions based on flawed or biased evidence and cost you a lot of money in the long run, which is the opposite of what high-quality research should allow you to do: make sound, logical, data-driven decisions that will increase your efficiency and strengthen your market position. The growth of some markets in foreign countries means that we have to go out of our comfort zone and create business relationships with local partners. While the learning curve to gain experience is steep, you can avoid the basic mistakes we just described. It also means that it is worth cultivating relationships with vendors that you know are reliable, timely, cost-effective, and with a proven track record within your organization. Then you can focus on what really brings value to your company.

Monday, April 14, 2014

2014 NASB – Spring Meeting Recap and Looking Ahead

We recently looked at how the North America Service Benchmark (NASB) data has evolved over the last five years. But the data is only half the story. NASB member OEMs meet twice a year for an interactive discussion of two core service-related topics that the participants choose. At our most recent Spring Meeting in Phoenix last month, “interactive” was an understatement. Watching participants exchange information, filling their notebooks with ideas for what they want to do next – that’s the greatest possible joy for a facilitator at one of these sessions.

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 they set the agenda for two face-to-face meetings a year.

The March meeting was all about how to manage Service Capacity – the tools, the metrics, how and which data we collect (and should collect), and how we can change dealer behavior. Some insights included:
  • OEMs agree that there is a need to accurately measure and forecast service capacity.
    • If you’re not getting down to the dealer level, you are missing pockets of under-capacity.
  • Customer retention is driven by service capacity.
    • Lack of service capacity can drive customers to the aftermarket prematurely.
    • There’s almost a need to get down to the individual customer level.
  • It can be difficult to persuade dealers to invest.
    • Business cases and forecasts tailored to specific dealers are critical to getting buy-in for investment.
    • Incentive plans can be effective, but beware of dependence.
  • Smaller OEMs and luxury brands can be impacted by service capacity constraints very quickly.
Some best practices include:
  • Higher frequency data collection captures variation in service capacity.
  • OEMs have experienced success with engaging their service field forces.
  • Web-based tools are the future.
We also talked in-depth about Express Service as a tool OEMs and dealers can use to manage service capacity and retain customers. Some insights included:
  • The “expressable” market is likely to stay constant in the near term. Most OEMs either have an Express Service program in place or are planning to launch one in the near future to compete with the IAM.
  • Since the last time we discussed this topic, most OEMs got more sophisticated around their reporting structures and are also able to report many success stories: Express Service dealers are outperforming Non-Express Service dealers on most dimensions that are being tracked.
  • Challenges are mostly related to sustainment and training – multiple OEMs have started tackling these issues.
  • Other highlights included OEM case studies on Express Service Reporting Dashboard and Sustainment Initiatives, Express Service staffing models of the future, and initiatives to improve service capacity.
If you did not attend the meeting, you might want to ask yourself some questions that were key discussion points for attendees:
  • Do you regularly share service capacity data with your dealers?
  • Have you created business cases for service capacity investment for all dealers?
  • How do you use your dealer operating standards to reinforce service capacity requirements?
  • Are you incorporating retention and other operational data at a dealer level to allow for capacity forecasting at differentiated retention levels?
  • What initiatives do you have in place to engage your Express Service Dealers?
  • How are you handling the career expectations of your Express Service team members? Link to Technician Survey Results
Needless to say, a single day never seems to be enough.

So what’s next? At the fall meeting, we will be discussing Second Owner Retention and we’ll come up with industry standards for Express Service Metrics. We are already looking forward to another great, in-depth discussion!

On a related note, we are excited to announce a Focus Day on the Connected Dealership and Service Lane Technology, which will address key topics such as telematics, service scheduling, RO write-up, service marketing, parts planning, and integrated service lane technologies which have been top-of-mind for OEMs, dealers, and 3rd party technology providers. In 2012, Carlisle conducted a consumer-facing technology roundtable at NASB. Last year, we took a deep dive into the topic and published the Market Assessment of Extended Service Technologies Report [LINK]. Our goal for the focus day will be to update and expand on this report:
Bottom Line: NASB’s mission is to promote continuous improvement in Service Operations. Our participants live and breathe this mission, and continuously push themselves to serve their customers and dealers even better. If you’d like to learn more about our upcoming meetings or Focus Days, please contact Karin Kliger at or 978.318.0500 ext. 103.

Friday, April 4, 2014

Service Retention in the Age of Telematics

By Eliza Johnson
As most of us are aware, service retention is one of our top challenges. To put it simply, we need to keep customers coming back to the dealer. Unfortunately, customers have reason to turn to the aftermarket; they say that they trust independents to charge them fairly.

But once those customers enter the aftermarket, they typically don’t come back. It’s a service black hole. And it only gets tougher as vehicles age; consumers are less likely to return to the dealer as they fall out of warranty and their vehicles get older.

How to win back these customers? That’s a subject for another blog, but the best way to break this cycle is to retain customers in the first place. We have to keep new vehicle owners at the dealership.

With advances in telematics, a lot of our new vehicles are becoming “connected”. This means that, increasingly, the vehicle owns the relationship with the customer; it talks to the customer and provides the information and feedback. Often, these systems provide diagnostic information, system status, and even the ability to schedule appointments.

Without a doubt, these changes will impact how a customer makes his or her service decisions. The customer can get more information from the vehicle than from a dealer, and since the customer trusts the “smart” car, maybe he feels he no longer “needs” the dealer.

That’s why, as the car becomes increasingly connected with the customer, it is critical for OEMs and dealers to stay connected to that customer, too. The advances in telematics systems provide an advantage. OEMs have access to the customer through the vehicle and access to more and more data, but there is a lot at stake and we have to get it right.

While there is power in the back end of the systems, let’s not forget the system's’ effectiveness is largely dictated by whether or not customers use them. We need to encourage customers to share vehicle and service information; once that communication channel is open, dealers can use it to communicate with owners, market services, and schedule maintenance. But how?

We’ve done a lot of research, including some recent focus groups and here’s what we know:
  1. Drivers trust their cars and telematics reports, often more than they trust their dealer. However, reports without digestible details and specific numbers are useless, such as the “Check Engine” light.
  2. Owners become skeptical of their car's messages when they think that they are being given limited information or channeled to an incomplete set of vendors or shops.
  3. Customer preferences on service scheduling are still scattered across multiple channels, including in-vehicle, but all want it to be quick and easy.
  4. Customers expect their service provider to know their vehicle history and status, and to provide them with customized service offerings.
  5. Customers want access to their RO and service history.
  6. Customizable privacy settings must be available to mitigate customer feelings of intrusiveness.
  7. Customers are willing to pay for valuable services, but currently do not place value on their vehicle systems beyond infotainment (e.g. XM and internet radio, concierge services, etc.).
Dealer salespeople need to understand and explain the value of telematics systems, and embed them into the new maintenance and service process.

Bottom Line: As we launch into the age of the connected car, we must pay attention to what customers are thinking, feeling, and saying about their connected car. Without customer buy-in, the potential of telematics systems is very limited. If customers don’t trust telematics, they won’t use it. We must help the customer understand the value of vehicle connectivity throughout all aspects of services and repairs: vehicle health monitoring, diagnostics, shop locating and scheduling, and maintaining service records. This connected strategy must be carried throughout the entire value chain; it can’t be piecemeal. So, what do we do, short term and long term?
  1. In-vehicle: In the short term, we need to connect the vehicle and the customer, and implement technology that the customer can use: diagnostics, appointment scheduling, and ongoing vehicle health monitoring.
  2. At the dealership: Next, we need to connect the dealer and the customer/vehicle. This includes CRM programs, automatic vehicle detection, and personalized service offerings.
  3. At the OEM: Long term, we must continue to be perceptive of customer usage and sentiments in order to design system interfaces that drive connectivity. The ultimate goal is to improve OEM strategy and supply chain performance, including using in-vehicle data for predictive analysis, parts deployment, and tailored service.
  4. Currently, no OEM has a holistic connected solution that spans the entire service cycle, and this is the golden ticket for leveraging telematics toward maximum retention.