Commentary

Customer Experience Is Final Say In Dealer Revenue

Good times for automobile manufacturers might be a mixed blessing for their dealers. Car companies saw, and are still seeing, blistering sales. But that also means tight supply, and supply is like blood pressure. It’s nice if it’s a little low, but deadly if it’s too low. Industry average is about 62 days. Last fall, some of the hot-selling crossovers were at 24 days and the average for crossovers wasn’t too much higher than that.

Well, dealers still have to drive engagement, not to mention revenue. Service is where that happens, and that equation hasn’t changed: good times or bad, the margin is made in service. And when owners come in for regularly scheduled maintenance and various repairs and upgrades, dealers reap the benefits of a virtuous circle: service makes money and drives loyalty, and loyalty drives repeat sales and more service. But, what drives that service business is a great experience.

Jim Roche, SVP of marketing and managed services at dealership services firm Xtime, points out that owner loyalty is at about 50%; one out of two people don’t buy from you again. What is the role of service retention in that. “All studies show that if you are not servicing at dealership on regular basis, service retention is cut in half, and that lack informs loyalty,” he says.

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And the experience an owner has with the dealership over time is far more important than it has ever been because of customer expectations defined by engagement with other brands. “We did surveys of dealership managers and principals around what is more important to today’s consumer, the repair and or the experience. And overwhelmingly it was at the experience, which is a sea change from how they might have viewed it 10 or 20 years ago.”

Parent company Cox Media did a consumer auto buying study last year that found that over 50% of people would pay pay more if you provide them a preferred experience. “What the consumer wants is, if you scrape away the other stuff, is value, convenience and trust,” says Roche. He adds that trust, for example, is about consistency of message. “I don’t want to be told on the website that an oil change is $30, on the phone that it’s $50, and when I mail it in, $25. Trust has to flow across the entire transaction.”

He offers an example outside the realm of cars: Domino’s pizza’s sales and delivery platform that combines real-time information with the ordering process. “If you click on your emailed coupon you are taken to a website presenting you with ways to configure your pizza — a million variations. You pay, and now you are told when it’s in the oven, when it’s in the delivery vehicle, and how many minutes until you get it; all this for a $10 pizza. It’s a really engaging experience that is consistent in look, feel and presentation.”

Contrast that with how more than a few dealerships probably still operate: you get something in the mail, then go to the dealership where you are greeted with a person with a clipboard asking you who you are, and why you’re there. “Contrast that with getting a digital link allowing you to schedule an appointment, showing up to someone greeting you with an iPad, who knows why you’re there,” he says. “The contrast between those two is night and day, and that goes back to quality of ownership that drives service retention and ultimately drives repurchase,” says Roche.

3 comments about "Customer Experience Is Final Say In Dealer Revenue".
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  1. Paula Lynn from Who Else Unlimited, February 2, 2016 at 11:33 a.m.

    Between "you get something in the mail" and going to the dealership is a phone call to set an appointment when you are asked what you need. The rest can all go swimmingly until they "find" something else and it cost 3 times more than anticipated. The first part is still very easy; the second not so much. And then your appointment is not necessarily appointed no matter how it is made. Come on. We've all experienced it.

  2. Neil Mahoney from Mahoney/Marketing, February 2, 2016 at 12:27 p.m.

    Several years ago I bought a Mercury from a dealer who has several outlets across the US.  The day after it was serviced, I called to say the transmission fluid was low and causing slippage.  The Service Manager confirmed that I had just had the car serviced and transmission fluid was part of the process.

    Despite that, he told me "company policy" dictated that the dealership charge $90.00 just to open the hood.  Do you think I would ever buy a car from them??  Neil Mahoney

  3. Miller Finch from Miller Finch Media, February 3, 2016 at 2:44 a.m.

    The whole system of buying a car from a dealer is an absolute nightmare and I will never buy from a dealer again. It is an hours-long cat-and-mouse stressful experience, making what is already anxiety producing (spending thousands of dollars) much worse. Or maybe it's not the spending of the money, but knowing that dealing with the salesperson and the manager and the finance guy and whoever else they bring along to pressure you is the cause of the stress. You've got to have nerves of steel to deal with this crap. Nope. Never again.  And because of those crappy purchasing experiences, I will never step foot into a dealership to buy a car again. 

    Relief to this high pressure bull for me was found in Carmax. In and out in 2 hours. Very pleasant indeed! They have the numbers, no nonsense of 4 other people involved, and your deal is done. This was in 2004. I would not hesitate to go back to them, but I found a new delightful car buying experience: Carvana.com! 

    Carvana was an experience as you'd get at high tea at the Ritz! Super courteous, helpful, great cars, pricing, and financing, and you can do your research for what you want in the comfort of your home. No endless prowling of car yards.  They deliver your car to you on a flatbed truck to your home with 2 wonderful young women at the helm (no dirty jeanned butt-crack type), you sign their iPad and you are done. Carvana was such an excellent customer experience that not only did I buy a car from them, but my daughter and her beau did as well. They picked up their cars at the Carvana location garage in Atlanta.  

    That's what car buying should be! 

    And how I learned about Carvana.com? A commercial on Hulu (I've been a cord cutter for years). A lovely, enjoyable commercial with the yellow blowing streamer guy. No loud screaming typical car commercial (what is up with those ear shattering horrors anyway?)  An ad on Hulu is also where I learned about Esurance too.  So yep. Saw the ads, investigated, and made the purchase online of both the car and the insurance for it. 

    BTW, I did bring my Toyota to the local dealer for an oil change (it takes some new type of oil), and the service area was quite nice - beige couches and bucket chairs, coffee, kid stuff, reading material (women's mags and Time), and a TV (unfortunately on Fox news). I enjoyed it because it was nice, but also because I hadn't gone through a purchasing nightmare as in years past.  So yes, they did get the memo about the customer experience in the service area. Now if only car dealerships could get the rest of their experience upgraded into a much more pleasant one. 


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