(The following op-ed was published in the March 2013 edition of Fixed Ops magazine.)
Two Myths We Hear from Automotive Service Centers
Facing Tough Truths About Our Industry
Brad Simmons, CEO of ClearMechanic (www.clearmechanic.com)
I firmly believe the mantra, “the customer is always right.” In the case of ClearMechanic, our customers are dealership service centers and independent repair facilities. If owners of these businesses are not persuaded that our company solves a real problem, then we have failed.
But – yes, there is a “but” – while customers are always right in a fundamental sense (they are the ultimate judge of whether a product or service is valuable), they can get facts wrong. In my interactions with thousands of service centers over the years, I have heard two common myths asserted by even the savviest principals and managers.
Service Center Myth #1: “Consumers approve the majority of our additional service recommendations.”
Suppose a consumer visits a service center for scheduled maintenance, such as an oil change or 30,000 mile service. There are often additional service recommendations (“ASRs”) presented to the consumer following the vehicle inspection. We have all been in this situation as car owners and said “no” to certain recommendations, perceiving them as unnecessary upsells.
Defective Water Pumps Are Common Additional Service Recommendations
I hear from many fixed ops managers that their approval rate (or “close rate”) on ASRs is above 50%. Yet, we know this is rarely true for several reasons.
First, most industry experts say the average close rate for service centers is 30%.
Second, there tend to be wildly different estimates within each service center about their true close rate. A service advisor often says 50% or 60%, but technicians at the same store will say 20% or 30%. Meanwhile, the shop foreman has a different estimate from the first two, and the service manager is wondering why monthly profits aren’t through the roof if the 50% claim is accurate.
Finally, at ClearMechanic, we carefully study the percentage of ASRs approved by consumers. We have supported over $25 million of service recommendations and use that data to analyze the close rate on ASRs with and without ClearMechanic. Our analysis consistently shows an approval rate of 20% to 30% on ASRs when ClearMechanic is not used.
In sum, many service centers believe they successfully sell through the majority of additional service recommendations, but the reverse is actually true.
Service Center Myth #2: “Our customers trust us. Our CSI scores and web reviews are nearly perfect.”
Better Business Bureau complaints reveal that automotive service facilities are ranked in the bottom 1% of all service businesses. National surveys routinely show extreme distrust for dealers and repair shops. Yet, many service managers believe these complaints apply to “the other guy,” not them.
As proof, service managers may cite Customer Satisfaction Index (CSI) scores showing 90% satisfaction rates. Or they may point to website reviews collected by vendors like DemandForce or DealerRater demonstrating unanimous 5-star ratings.
This reminds me of a BBC News headline in 2002 about Iraq’s ‘democratic’ elections: “Saddam wins 100% of vote.” The report goes on to say: “There were 11,445,638 eligible voters - and every one of them voted for the president, according to Izzat Ibrahim, Vice-Chairman of Iraq's Revolutionary Command Council.”
Example of Dealer Reviews Using Third-Party Service: Nearly Perfect!
Same Dealer’s Reviews on Yelp.com: Surprisingly Mediocre
The point being, how we collect feedback from customers dictates what their feedback will be. Service personnel have learned to game CSI scores by telling customers they will lose their jobs with anything less than a perfect score. They often provide iPads to customers in the waiting lounge and gently encourage positive reviews over a hot cup of coffee (before the additional service recommendations are presented). Likewise, vendors who are paid to collect reviews will quickly lose service center clients if they publish a review saying, “Don’t go to this shop, can’t trust them!” Miraculously, those reviews are censored as “spam.”
If service centers want an unfiltered view of what customers think, they can look at Yelp and Google reviews and monitor conversations on Facebook and Twitter. These skew toward extremes, both positive and negative, but they are more objective than other platforms. And, if you still don’t believe the negative feedback, check the most objective metrics available: the approval rate on ASRs and the retention rate of first-time customers. Those figures don’t lie.
The Myths are Debunked, Now What?
Note the connecting themes in these two service center myths. They both make the service manager believe things are humming along. Once the myths are debunked, the manager is liberated from false optimism and can assess the underlying causes of low ASR approval rates and poor online reviews.
There is no silver bullet explanation here because numerous industry trends are at work, each affecting individual service centers differently. But, consider these five trends:
- the economy is fragile, making customers watch their wallets
- cars are built better and last longer, reducing required maintenance
- there has always been distrust of automotive repairs by consumers, but it has accelerated due to online review sites (Yelp) and social media (Facebook, Twitter)
- the Web and mobile devices are empowering customers to find alternative repair providers and competing estimates
- surveys show young, under-35 car owners and women car owners are particularly skeptical of automotive repairs
Each trend is a significant challenge for service centers and some are outside a service manager’s control. But some can be addressed when confronted head on. First, service centers can embrace technology and practices that build trust with customers. Second, service centers have no choice but to engage with online review sites and social media. Finally, service centers have to think about adjusting their marketing and processes to reflect the needs of younger, tech-savvy car owners. For example, younger customers are both more cynical and less knowledgeable about cars, which means they will rarely understand what a water pump does and are predisposed to reject that ASR. A focus on transparency during a shop’s inspection and sales process is an excellent antidote for this.
We Must Face Tough Truths
Let’s not forget that it’s incredibly tough for service centers to win over skeptical customers. The industry as a whole is not trusted, which hurts every hard-working, earnest technician out there. And, as one service manager told me, “We have an uphill battle. Our customers only visit us when something is broken. They pay a lot of money and we don’t give them anything new or shiny. It is tough to get high marks.”
Well said. But, the uphill battle does not get any easier when important truths are overlooked. Instead, myths about high ASR approval rates and unanimous customer satisfaction trivialize the hard work of service personnel and stifle progress.
Brad Simmons is the CEO of ClearMechanic, developer of “visual selling” solutions for the automotive repair industry. Visit www.clearmechanic.com for more information.