Friday, July 17, 2015

Why Old People Are Good For Us – Carlisle Scrapbook
by David P. Carlisle

The 2016 Customer Sentiment Survey** looked at Net Promoter Scores (NPS)1 across a bunch of different criteria. We found out something that we pretty much knew already – older dealer service customers are more bullish than younger dealer service customers on their brands and their dealers. Millennials (18-34 years old in the chart) have a NPS brand score of 36.9% and NPS dealer score of 24.4%. Boomer NPS scores are nearly twice as high. See, old people are good for us.

We really need those old people, because when we look at Net Promoter Scores by type of service, we see a pretty sharp falloff when service customers only go to dealers for “repairs.”

I think it is logical to conclude that since boomers, who are older than millennials, are stronger “promoters” of their brands and their dealers, they will hate their dealer less after they go for repairs.

This is important, because dealers have been losing out to the aftermarket for years on non-warranty customer-pay maintenance and scheduled service work. What’s left in the “tube of toothpaste” is tough-to-do, expensive, repair work.
Timeout: Given that 1) boomers tend to have a more favorable opinion of dealers and brands, and 2) maintenance visits result in higher dealer/brand NPS scores than repair visits, one might be inclined to think that boomers simply have a higher tendency than millennials to use the dealer for maintenance. However, our data suggests that there is no difference between age groups regarding the proportion of dealer visits for maintenance vs. repair work.
Bottom line: We are losing our millennials. Dealer service can be corrosive to a customer relationship, especially with young customers. All of our plans won’t change this … maybe some of the reason for plan failure is that they are typically developed by older boomers who have brilliant insights concerning what they can really accomplish inside their company and with their dealers. That’s why everybody loves Elon Musk and Tesla. He takes giant steps.

NPS’s for service customers covered by a pre-paid maintenance plan show that they are stronger “promoters” of their dealership and their brand. This makes sense, because the pre-paid maintenance plan foots the bill for the work done and nicely sidesteps the service customer’s top problem with dealer service … that it costs too much. Here’s a baby step for you. OK, it might not be a baby step, but pre-paid maintenance is pretty much all upside. Push it. This is certainly less corrosive than the status quo.

Might be worth a try. Well, do you feel lucky?

** The Customer Sentiment Survey (CSS) has been around since 2007; its objective is to better understand service customer needs and opinions. From 2007-2014, the survey was predominately cross-industry in its focus. In 2015 the survey started deep drills on brands. The CSS is not a beauty contest survey; its primary purpose is to better understand service customers so that OEMs can better give them what they want and need. Further information is available by contacting Thomas Neumann at Carlisle & Company

1Net Promoter Score is a customer loyalty metric developed by (and a registered trademark of) Fred Reichheld, Bain & Company, and Satmetrix

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