Friday, August 29, 2014

The Connected Vehicle—How Will It Make Appointments ‘More Convenient’? by Annie Cui

The connected vehicle may not yet be a trending hashtag on Twitter, but more and more vehicle owners are catching on to the technology revolution.

In fact, according to our 2014 Consumer Sentiment Survey, 70% of the consumers who currently have in-vehicle telematics stated they would like a telematics system in their next vehicle.

In-vehicle telematics systems can warn owners of needed repairs, low tire pressure, and upcoming factory recommended maintenance, as well as send notifications to the owner’s smart phone device. Some telematics systems, such as GM’s OnStar and Hyundai’s BlueLink, even notify the owner’s preferred dealer of their customer’s upcoming recommended maintenance. The dealer will then call up the owner to help them schedule their needed appointment.

But what if we simplified that even more?

Telematics developers are working on further automating the scheduling process to achieve the easiest customer ownership experience. Soon, the telematics system will not only notify the owner that their vehicle needs a service, it will allow the customer to see and select available appointments at their preferred dealer, and then automatically send that dealership all crucial vehicle telematics data.

The telematics will integrate directly with the dealer’s appointment ledger and allow the consumer to simply click on a time that works for him or her on the in-vehicle screen or on their mobile device. Then, the dealer will automatically receive the appointment notification with the service and owner info, the vehicle health report, and the vehicle history. This technology will eliminate the time wasted when the owner has to search for their dealer’s contact info, call the dealer, explain the service needed, and then try to find an appointment time that works for both parties, which can take several minutes.

The idea is that the telematics system will establish an instant connection between the vehicle and the dealer, thereby making things more convenient for the customer. The vehicle and the dealership can work simultaneously to run technical diagnostics and identify vehicle issues before the customer arrives, making it possible to know what parts are needed ahead of time and improve inventory fill rates. When the customer arrives at the service lane, the dealer will have all the necessary parts ready. Dealers can also boost shop loading and capacity management as service advisors and technicians can better plan their time, thereby improving efficiency. Not only will this speed up the repair process and reduce customer wait time, this can also improve the accuracy of dealer service timing.

Our 2014 Consumer Sentiment survey shows that the 2nd and 3rd most important factors for a customer selecting a service outlet are 1) one that has “[their] vehicle available promptly at the time they estimated”, and 2) “sets appointment quickly at a convenient time.” Telematics technology will enable dealers to improve performance on both criteria, making it possible for them to give more accurate time estimates and allowing owners to schedule a service appointment at their desired time directly from the seat of their vehicle or the screen on their phone. How much easier does it get?

Telematics technology will not only increase the accuracy and convenience of appointment scheduling, but this will likely get more customers to come into the dealership in the first place. When the customer’s telematics screen or mobile device shows appointment availability, it will only display dealers. The screen might show a few local dealers and the owner’s preferred dealer, leaving the customer to choose. Customers that would normally service their vehicles at a chain or IRF could end up scheduling the appointment with recommended dealers that come up on the screen, just because of the added convenience the telematics technology provides.

The accessibility of appointment scheduling in the vehicle, through the telematics system, will make the owner’s life easier. The better the customer experience, the more likely it is that the customer will come back to the dealership for more. However, the added convenience from telematics scheduling is dependent on the customer maintaining his or her subscription to the telematics system.

Bottom Line: The fully connected car is going to revolutionize the interactions between vehicles, their owners, and the dealers. The added convenience of scheduling appointments through in-vehicle telematics will change customer perceptions and set higher expectations for the ease of vehicle services. Dealers have to get on board and keep up with these technology improvements, or they will get cooked.**

**The link is to “Been There Done That” on MyGuy. The blog is about the importance of understanding the benefits of technology and the risk of dealer complacency associated with having the minimal upgrade from their manual processes (mostly about service lane inspection).

Sunday, August 24, 2014

The Dissatisfied Dealer: Curmudgeon or Harbinger?by Charlene Hovatter

These are the ‘happy ones’ – the barometer of your company’s service ethic and responsiveness, and your key to growing revenue and profitability. For most of our participating OEMs, satisfied dealers are the majority, and increasing.

But what about the others . . . the few, the not proud, the disgruntled? What about the dealers who mark “Very Dissatisfied” or “Somewhat Dissatisfied” on their surveys? What do they tell us about our business, if
anything? Do these guys and gals just roll out of the bed on the wrong side the morning the survey appears in their inbox, or can they provide us with just as valuable insights into our business as the “many” that are satisfied? And how do we keep those many satisfied dealers from joining their brethren on the ‘dark side’?

Admittedly, there aren’t many of these dealers. . . so, why should we care about them?

Why Care About Dissatisfied Dealers?

If there are so few dissatisfied dealers, why should we care?

Well, first of all, there is quite a bit of variation among participating companies, so some should care more than others . . .

. . . And we know from experience that moving dealers “up the satisfaction ladder” impacts their purchase loyalty.

But, beyond overall satisfaction, companies can sometimes rapidly identify areas in need of immediate attention by examining dissatisfied dealers in the sub-categories. This isn’t always obvious based on only your ‘top-box’ score.

Can A Dissatisfied Dealer Become Satisfied?

So, how intractable are dissatisfied dealers? Is it worth the time to try to move them into the “Satisfied” bucket? Based on data from our 2012 and 2013 Automotive Parts Manager Surveys, these dealers are easier than average to move . . . and they have nowhere to go but up.

We found 4,616 dealers who participated in both the 2012 and 2013 Automotive Parts Manager Survey. To ensure that the same individual filled out the survey over the two years, we matched OEM + dealer code + respondent name.

Our analysis with this sample of 4,616 dealers reveals that while most “somewhat” or “very” satisfied dealers did not change their rating between 2012 and 2013, nearly all of the “somewhat” or “very” dissatisfied dealers did so.

Our surveys are designed around a 5-point scale, with 1 being “Very Dissatisfied” and 5 being “Very Satisfied”. On average, dealers with a “Very Dissatisfied” rating in 2012 moved up 1.7 points on the scale in 2013, while dealers with a “Somewhat Dissatisfied” rating in 2012 moved up 1.3 points in 2013. So, when these individuals change a rating, the magnitude trends toward moving up into the “Neutral” – “Very Satisfied” range. This suggests that dissatisfied dealers are not chronically dissatisfied, but rather reacting to specific, actionable situations, and that they are relatively easily ‘recaptured’ once their issues are resolved.

Bottom Line

For all of our surveys, in addition to the primary deliverable which focuses on “Very Satisfied” customers, we issue a “Total Distribution Report” which shows a complete breakdown of scores across the five satisfaction ratings for each survey question. This is one of our oft-forgotten deliverables. Some participating OEMs may not even know about it or distribute it internally. However, it provides unique and sometimes powerful insights into your survey results by allowing you to tailor your analysis to your specific needs. Spend some time with this report, looking at the percentage of your dealers who are dissatisfied in either “Overall Satisfaction” or specific topics. Then, leverage your raw data report to seek out these dealers and identify their particular issues. Sometimes it will be a systemic issue impacting a large number of dealers, or it could be a number of issues unique to individual dealers. Calling dissatisfied dealers to further discuss their issues is a highly effective method of increasing OEM satisfaction ratings. Taking steps to identify your most dissatisfied dealers and address their unique needs will move your organization toward greater customer engagement and profitability.


If you need assistance with this or other analysis related to your survey results, contact Harry Hollenberg at or 978-318-0500 X106.

Friday, August 15, 2014

Transportation Rates – Are You Getting A Good Deal?by Paul Gurizzian

Whether you are buying a new set of golf clubs for your weekend leisure or transportation services for your day job, you want a good deal. The question of whether or not you are getting a good deal on your transportation purchases can be difficult to answer on your own.

To help our motor vehicle service parts clients answer this question, we at Carlisle have built a transportation rates benchmark database for the U.S. market. This database includes, on a blind unattributed basis, the rates that auto and heavy equipment OEMs pay for truckload, parcel, and, more recently, dedicated delivery service (DDS). (For DDS, we calculate all-in costs per stop, costs per mile and costs per dealer, rather than rates, per se). For parcel, the rates are zone-specific, and for truckload the rates are for specific high-volume lanes. In short, the benchmark rates are highly relevant and comparable to help you determine if you are getting a good deal.

Well, what have we found? Enormous variability in rates! And, before you ask, the rates are not simply correlated with volume. That is, if you are a big OEM, do not take comfort that you have low rates. Conversely, if you are a small OEM, do not accept that your rates should be higher.

The graph below shows real world benchmark results for five motor vehicle OEMs buying truckload services from Tennessee to the Carolinas/Georgia. This data is normally expressed on a cost per mile basis, but to protect confidentiality in this blog, the Y-axis values are not shown. The key takeaway from this chart is that OEM 1 is paying nearly 90% more per mile than OEM 5. This disparity is similar to results we found in other benchmarked lanes.

Another example below, but this time for DDS, shows a similar disparity. Here, we see that OEM 1 is paying about 70% more than OEM 5 on both a per mile basis and a per stop basis for standalone DDS service. Once again, the Y-axis values are hidden here to protect confidentiality. Carlisle calculated these “rates” by dividing annual OEM standalone DDS spend by the relevant miles traveled and serviced dealer points. By the way, we see a similar disparity across OEMs for shared DDS and DDS-like, too.

So what could be contributing to this disparity in rates? Why are some OEMs laughing all the way to the bank, while others are crying in the poorhouse? There are a number of reasons; some structural, some operational, and some performance-driven. A starter list of drivers includes:
  • Negotiating savvy and strength
  • Purchasing process
  • Carrier contract terms
  • Supplemental services performed by carriers
  • Carrier performance requirements
  • DDS route design
  • In the case of DDS, delivery volume per dealer
Bottom Line: If you are responsible for buying transportation services or for the profit and loss of your aftersales business, the observations above are potentially very important. Let’s do some simple math to demonstrate this importance.

According to our North America Parts Benchmark data, the typical service parts OEM spends between 4 and 11 cents of each parts sales dollar on inbound and outbound transportation. The average here is 7 cents. Let’s say, conservatively, you are like OEM 3 or 4 in the first graph and are 15% higher than the low cost purchaser. In this situation, you may be leaving one point of pre-tax margin on the table, just in transportation rates. On a billion dollars of parts sales, this translates into $10 million in annual profit. Are you getting a good deal?

Friday, August 8, 2014

Metrics without Minds: Getting the Full Value Out of Our Metrics Investmentby Nate Chenenko

I was at Target yesterday, and the cashier happened to have his screen facing me. As the person ahead of me in line finished checking out, I saw that the cashier’s screen changed; it looked like this:

Because I have a healthy obsession with metrics and workplace incentives, I asked the cashier what it meant.

He said, “That means my last ten checkouts were all green”

I asked, “What do you have to do to get a green checkout?”

He replied, “I don’t know, I just know it’s based on how fast you check people out and if you’re fast then you get green, and if you’re not then you get red, so I know 90% of mine for the day have been green - so I’m doing ok.”

This is interesting for two reasons—one very good, and one very bad. Let’s start with the good reason:

The Good:
  • Target is showing metrics in a manner that makes them very obvious to the person who can actually work to change them. This cashier gets immediate and consistent feedback about his performance on every transaction. If he’s slow (red) on one transaction, he’s immediately alerted and can start thinking about how to improve. And even if he’s been 100% green all day, he still sees that fresh “G” pop up on the screen, encouraging him to continue the good work. And I’d bet that Target managers have some real-time monitoring that allows them to see if a cashier’s performance drops below a certain threshold so that the manager can intervene.
  • Furthermore, I like the use of red and green. We know these stoplight colors really work for operators in a variety of situations.
So Target’s technology implementation is good.

Now The Bad:
  • The employee I spoke to didn’t know what made a transaction red or green! He knew that his performance was being measured, but he didn’t know how. If he doesn’t know the goal (the characteristics of a transaction that make it “green”), how is he supposed to reach the goal?
    • Yes, it’s possible that this employee didn’t want to tell me the details, but I think that he was being honest when he said “I don’t know.”
  • This is a training issue, and proves that all the metrics, dashboards, and tools in the world won’t help if you don’t communicate with your employees.
Bottom Line:

We know the value of metrics. In fact, we’ve installed measurements in every facet of our business. But if we skip the training and employee relations (or don’t check to see that our training was effective), how much value do we miss out on? Let’s make sure we align management’s goals for a high quality, productive workplace with the employees’ need to understand exactly how to become high performers—then we’ll get the full value of everything we’ve spent on measurement and reporting tools.

Friday, August 1, 2014

The War on Inefficient, Low-Value Added, Boring and Enervating Drivingby Thomas Neumann

Riposte to “The War on Driving” by Ilia Gorelov

I need to preface this by stating that although I’m a telecommuter, I like driving; I like the open road and I like cars. I really do. My top three all-time drives include a multi-day pleasure cruise through the American Southwest in a convertible – open skies AND open roads; a night drive from Amsterdam to Northern Bavaria, where I arrived one hour earlier than the nav system predicted; and, lastly, a drive through the Alps in a supercharged coupe, when I set my personal land speed record of 155 miles an hour.

I should also mention that I’m German, and I know how good not having a speed limit feels. Trust me.

Here is what I don’t like: city driving, sitting in a traffic jam, commuting. Unfortunately, this is the reality for almost all people, almost all of the time.

I envy my colleague, Ilia Gorelov, because he can find enjoyment while traversing 18 miles in 30-45 minutes for his daily commute. Honestly, at that speed, about 30 miles per hour (and that’s on a good day), I could not enjoy driving a car. Ilia wrote that he likes the feeling of control he has when driving, thinking about the day and listening to the radio on his way to or from work in the privacy of his car. I just get annoyed with all the horrible drivers – myself, naturally, excluded. Driving is Ilia’s way to unplug and unwind, and maybe this is a good start for making the case for more autonomous vehicles:
  • The Distracted Driver – A Danger to Himself and Others: OK, I know I’m exaggerating here, but strictly and maybe a bit unfairly speaking, Ilia is a distracted driver, albeit a very, very mild case, compared to all those other multi-taskers behind the wheel. According to the U.S. Census Bureau, fatal crashes due to distracted driving (caused by such things as the use of cell phones behind the wheel, texting, and impossible-to-use infotainment systems) have increased from 10% of fatal crashes in 2005 to 16% in 2009, while the overall fatality rate has decreased from 1.5 deaths per 100 million vehicle miles traveled to 1.1 over the same period. The bottom line: vehicles have become safer, thanks to significant industry efforts, while drivers have become more dangerous. Let people do the talking, and vehicles the driving. Autonomous vehicles = no driver = no driver distraction.
  • The Open Road – A Costly Illusion: The statistics are widely known: per year, the average American loses 38 hours due to delays while commuting and wastes 19 gallons of fuel for a total “congestion cost” of $818 per year. On the national level, this adds up to $121 billion (Texas A&M
    Transportation Institute, Urban Mobility Report 2012). Sitting in your car in a traffic jam may make for good think time, but otherwise, unless you come up with a cure for cancer while sitting in a traffic jam, (national cost of $216.6 billion), it doesn’t make a whole lot of sense. Autonomous, networked, intelligent vehicles have the potential to reduce congestion and increase the time you can spend with your family. I’m amazed at the car commercials shot on mountainous, winding roads with no other vehicle in sight. When I crossed the Alps, there were lots of other vehicles around, their drivers presumably enjoying the mountain solitude with me.
  • The Feeling of Control – What Control???: Granted, the transition from safety-related “driving aids” to “losing control” to the autonomous car is gradual, but modern cars come with a host of features that make you wonder how much control the driver really has: anti-lock brakes take over
    the braking in an emergency; power steering makes turning the wheel a breeze when parking (unless you have a parking aid system already); cruise control regulates the speed and automatically disengages when other cars get too close; AC maintains a constant temperature; suspension settings adjust with speed; advanced gearboxes know which gear you are going to select next; crash avoidance systems stop your car if … well, if you are too distracted, tired, inattentive or otherwise preoccupied. We could go on, but the reality is that these days the most significant unaided driver input is starting the car and turning it off, and that we are approaching the point when technology is ready to take the driver’s place in a significant way.
So, I don’t agree with Ilia Gorelov that a “War on Driving” is going on. There is a “War on Inefficient, Low-Value Added, Boring and Enervating Driving” going on – and rightfully so.

I do agree with Ilia that the emergence of more autonomous vehicles will change the relationship between the driver – better yet, the passenger – and the vehicle. The more autonomous a vehicle becomes, the less important, by definition, the “driving experience” will become. Simultaneously, other vehicle attributes will become more important. In the future, maybe product differentiation won’t be based on “top speed” and “horsepower”, but, instead, on “average travel speed” and “computing power”. Creature comforts that you can truly enjoy because you don’t have to focus on driving may also become more important.

But this is a topic to explore in more depth in a future blog!