J.D. Power and Associates Finds Maintenance Business Getting Tougher All The Time

The J.D. Power and Associates 2012 Canadian Customer Commitment Index Study was released on August 15. The survey pinpoints where and how automotive dealerships can secure and improve on customer loyalty, specifically with a view to having customers purchase their next vehicle from the same place.

Not too surprisingly, quality of service is a key determinant. Over the years, the survey has consistently found a strong link between customer satisfaction with dealership service and the decision to purchase the same make next time they’re looking for a new vehicle. Forty-two percent of customers who give their dealer service a rating of 10 (on a 10-point scale) say they “definitely will” purchase the same make the next time they shop for a new vehicle. In contrast, only seven per cent of customers who rate their service experience between a one and five say they’ll definitely purchase the same make.

Independent service operations performed very well in the overall survey rankings, which were given on a scale of 1,000, taking the top four positions. Independents have some significant market advantages over dealership service operations. Dealerships have to be prepared to offer the full range of service on the cars they sell, so they can’t specialize. As a result their service offering tends to be diffuse, without an especially strong skill set in any one particular area. As a result it can be more difficult for them to offer streamlined service and quicker in-and-out appointments, something that customers increasingly value.

Independents on the other hand tend naturally to specialize as a way of differentiating themselves in the market. They frequently offer a narrower range of services, but can deliver higher quality work within their chosen spectrum and so tend to secure repeat business more readily. As an example, respondents in the J.D. Power survey rated dealer-offered oil changes 28 points lower on a 1,000-point scale than oil changes obtained from specialists like Jiffy Lube, Mr. Lube and Great Canadian Oil Change, which came in at numbers 2, 3 and 4 respectively in the overall satisfaction numbers, behind overall leader NAPA Autopro. The top dealership operation, Subaru, came in at number five.

The most significant finding this year, according to Ryan Robinson, director of the Canadian Automotive Practice at J.D. Power and Associates, is that the number of service visits per year is continuing a declining trend, which places pressure on new and aftermarket vehicle dealers to educate the consumer about the importance of maintenance.

The study was conducted in January and February, and in June and July of this year, and polled owners of vehicles between four and 12 years old. Based on responses from more than 18,000 owners, the number of service visits declined to 2.7 this year, from 2.9 in 2011 — which itself was a decline from 3.2 visits in 2010. The average service event in 2011 had a price tag of $272, which has declined to $249 this year.

Time and money

The revenue implications for the vehicle maintenance market are huge, and the industry has taken note. But is it responding as it should? Robinson has some doubts.

“Some of the response to the declining number of visits has been to try and bundle some of the maintenance activities together,” he says. “But we’ve always said that aftermarket service facilities that focus on these kinds of services risk dissatisfying their customers.” That dissatisfaction stems from two factors: customers aren’t willing to compromise by longer times on a service visit, and they’re also dissatisfied any time they have to spend more money per visit.

If there was any lingering doubt that automotive service has become a “hearts and minds” business, it can be laid to rest. Robinson’s explanation for NAPA Autopro’s impressive rating in this year’s survey comes down to communication.

“What NAPA Autopro does really well is take advantage of all available touch points to deepen their relationship with the customer,” Robinson says. “They focus on educating the customer around the maintenance requirements, and it’s done from the perspective of arming the customer — giving them the information they need so they can make better decisions on how they want to maintain their vehicle.”

Many question whether quick lube operations should even be on a survey like this, Robinson says, because an oil change seems like a much harder thing to do poorly than the kinds of more complex service performed by independents and dealerships.

“Turn that on its head,” is his response. “If it’s true — and a lot of customers do have the perception that it’s very difficult to mess up an oil change — that’s a very high level of expectation going into the event. The fact that these quick lube operations are able to meet and exceed that expectation is actually very remarkable.”

Better at the basics

That point leads naturally into one of the more important conclusions of the survey. While it’s difficult for dealership service operations to develop the same kind of expertise as specialized independents within specific areas, they can improve their rating by improving quality of service and turnaround times within the standard bucket of more common operations.

“When you look at whether specific events happened during [the] service event or not, having the customer feel that you fixed things right the first time is quite important,” Robinson says. “We did some analysis that showed that if you do everything else perfectly during the service event, but the customer comes away with the perception that you didn’t fix the car right the first time, it doesn’t matter what else you do. Customer satisfaction is completely blown at that point.”

One of the top takeaways is the importance of educating the customer so that they come away feeling they’ve been given helpful advice. Time management is also critical. “Did you offer an appointment on the day that the customer wanted to get the vehicle fixed?” Robinson says. “You’re requiring them to juggle their daily schedule and the most successful service providers are able satisfy the expectation that you can minimize the impact to their daily lives.” Success here will depend on setting the customer expectation properly from the first contact they have with the service provider, explaining clearly what needs to be done and why doing the work correctly will take a specific time.

Time management is even more important when you consider the fact that the time and cost required to do diagnostics are continually increasing. The customer can have the perception that this phase of the service event is less valuable. They need to understand the cost of the labour involved and the rising costs of acquiring and maintaining the equipment to do diagnostics correctly, Robinson says.

It adds up to a pretty long list of capabilities that leading service providers, whether dealerships, large independents or quick-turnaround specialists, will have to stay on top of if they want to succeed. As Robinson puts it, “you really have to be firing on all cylinders to meet — let alone exceed — customer expectations on vehicle service these days.”