Let’s address the question first; they’ve been defecting to the Independent Service Provider for decades, and not much has changed!
In 2011 SAAR came in at 12.8 million units. Projections have SAAR for 2012 at 14 million units. That equates to another 1.2 million units in 2012 or another 100K units per month. If you break that down over 17,500 franchises that equates to less than 6 more new units per month. Are those 6 more units per month going to make your 2012? Probably not, I’ll leave pre-owned out of the equation for now. Even taking pre-owned into consideration, the impact is marginal when taking new car margins and stiff competition on pre-owned into consideration.
The time has come for every dealer to look at their fixed operations. The first thing every dealer and every fixed operations director needs to address is CUSTOMER RETENTION. Customer Retention is your life-blood. Customer Retention through fixed operations drives your future sales.
I recently conducted a seminar on “How to build customer trust in your service department”; I was asked a lot of questions regarding various metrics within fixed operations. These questions focused upon effective labor rate, dollars per repair order, hours per repair order, etc. Even though these metrics have their place, some more useful than others, at the end of the day, if we don’t address Customer Retention first, then none of the metrics are going to matter. The less focus you place on Customer Retention, the more focus you have to place on the metrics which will continue to drive your customers away.
Why have your customers defected to the Independent Service Provider, and why do they continue to? According to survey data, your customers are defecting due to;
2) Lack of communication between the repair facility and their customer
3) Lack of understanding on behalf of the customer as to what specifically is being recommended for repair
Consumers have ranked the car repair industry as one of the least trusted business categories in the United Sates. It’s ranked in the bottom 1% of all service providers. (Better Business Bureau)
A lack of communication can make even a positive experience bad. It’s imperative that your service consultants who interact with your customers every day communicate effectively, efficiently, and expeditiously. Don’t provide your customer the opportunity to provide the dealership with a negative review. Do you know that 80% of customers will change their mind about a business based upon a negative online review? (Cone Inc.)
Do yourself a favor and Google your dealership. There’s a very good chance that you’re going to find negative reviews regarding your dealership and your fixed operations on Google and Yelp. Google and Yelp traditionally are the most frequented sites for consumers looking to make a purchase decision or determining where they want to conduct business. Regardless of the reason(s) for the negative review, prospective customers visiting Google or Yelp only see the negative review and in most cases, particularly with Gen Y and Gen X customers, they’re basing their decisions upon those reviews!
Consumers have a difficult time understanding a verbally conveyed repair recommendation. Consider a call that happens every day in service departments across the country regarding the replacement of a serpentine belt. Most consumers have no idea what a serpentine belt is, its functionality, its location, and more importantly why it needs to be replaced. This is a difficult call for your service consultants, and one that results in consumers saying “no” to a recommended repair when they should really be saying “yes”. This is also the reason why 40-60% of your additional recommended services are met with a “no” response from your customers. We are visual beings. Visually demonstrate to your customers why a recommended repair is necessary.
Your customers don’t trust your repair recommendations, they don’t understand the repair recommendation, and we’ve done a poor job at communicating effectively and expeditiously.
Once you learn how to address the primary reasons cited above as to why customers continue to defect to the Independent Service Provider, the sooner you can address Customer Retention.
Customer defection is a real challenge. Customer Retention is relatively easy to address if you have the right systems in place. Service centers throughout the country have online scheduling, service menu systems, multi point inspection processes, etc., yet we continue to see customer defection. Although each of these systems has their place and is essential in conducting business today, there’s work to be done.
Dealers and fixed operation directors must listen to what your customers have been telling you. Trust, communication, explanation, transparency, and validation are the keys to Customer Retention.