J.D. Power Customer Commitment Index Study

One of the consequences of vehicles being better designed and built is that one does not need to take them as often to the mechanic. Service intervals have been extended and replacement intervals for some parts and systems are now measured by the decade rather than by kilometres. The once traditional four times a year ritual of taking one’s vehicle in for an inspection and needed maintenance has been replaced by extended service intervals that only have the vehicle coming in twice a year, sometimes only once a year.

A consequence is that more service work is put into those visits than before, pushing up the cost on the invoice, and pushing down people’s satisfaction with the service visit. That is just one of findings in this year’s J.D. Power 2014 Canadian Customer Commitment Index (CCI) Study. The annual study measures the service behaviours, satisfaction and loyalty of Canadian’s whose vehicles are between four to 12 years old.

This year’s CCI study finds that the industry average did not move, remaining static year-over–year, said J.D. Ney, manager of the Canadian automotive practice at J.D Power during a conference call with select Canadian journalists. This year’s overall customer satisfaction index score ranking has the industry average at 830, similar to last year. NAPA AUTOPRO took the top spot this year as it had done last year. However, it only took that spot by a single point (861) ahead of Lexus Dealership service operations (860). Last year, NAPA tied for the top spot with the same Lexus Dealership operations (863).

These results are in keeping with the overall industry trend where dealership operations have put greater emphasis on their service operations and customer service as margins on new car sales continue to be squeezed. The battleground is now squarely on vehicles between four and seven years old, the time when many vehicles begin to come off warranty and more owners begin to look at aftermarket service operations as an alternative to dealership service operations.

J.D. Ney pointed out that in this four to seven year old vehicle age bracket, 61 per cent of Canadian vehicle owners continue their relationship with dealership operations, while 39 per cent move to an independent aftermarket service operation. While that statistic looks impressive, J.D. Ney said that when you look at the trend over several years, from 2009 to 2014, the picture is less so. Dealership operations have upped their game and are now taking away business from independents servicing vehicles between four and 12 years old. J.D. Ney said that in 2009, 59 per cent of vehicle service occasions were grabbed by independents with dealership operations nabbing the remaining 41 per cent. Fast forward to 2014 and the split is nearly 50/50.

“What we have seen is OE dealers really taking that battleground seriously and in the last few years we have seen them take some ground away from independents,” he continued.

He added that while the focus for many has been on underperformed vehicle maintenance and the impact those theoretical dollars have on the independents, the focus instead should be on the actual lost revenues to the aftermarket service industry that has happened since 2009. According to J.D. Ney, some $665 million actual dollars were lost to the aftermarket service industry as people took those dollars to dealership service operations.

The challenge for independents is how to get those dollars back. The difficulty is that with extended service intervals there is a move to pack more services into those visits. This increases the bill and causes many to recoil.

“This year we looked at how often Canadians bring their vehicles in for service and what that means for their overall satisfaction,” J.D. Ney said. “For those who bring their vehicles in once a year, they have a higher invoice and lower satisfaction. Those who bring their vehicles in twice a year have a lower invoice and a higher satisfaction.”

The paradox is that while that may make sense intuitively, the fact is that the annualized cost of maintaining a vehicle is actually higher with more frequent visits. So what does this mean for the aftermarket service industry?

“The average number of service visits is dropping and will continue to drop as manufacturers extend vehicle maintenance intervals,” J.D. Ney said. “Part of this is because vehicles are being better built and the use of long-life, synthetic oils. The opportunity now is for educating customers on the annualized cost of their maintenance. We have to begin acting as trusted advisors.”

This is where the service advisor comes in. While quality work is certainly one of the metrics Canadian vehicle owners place a high premium on, those same owners also place a high value on ‘soft skills.’ These include having the service advisor focused on the customer’s needs and putting the customer at ease, answering their questions and providing helpful and useful advice about their vehicle, and keeping the customer informed about the status of their vehicle. It is these skills and how effectively they are put into practice by service operations and their service writers that determine whether a customer will come back for additional service work in the future.

If on a scale from 1 to 10, the overall service satisfaction is rated an 8 or less, then the chances of getting that customer to come back drops dramatically. If one achieves a satisfaction rating of 9 or 10, then one has a greater chance of retaining that customer, J.D. Ney concluded.

“This is something that shops who are highly organized and recognized for excellent customer service have known for years,” said Chris Thorne, national director – banners with UAP inc./NAPA Canada. “For those who desire the designation of ‘service excellence,’ the role of the advisor is paramount to getting there. To be clear, there is a considerable difference between simply having a service advisor and having a great service advisor who engages with both the customer and the staff of the facility.

“Being highly organized with a commitment to process is a key trait for any service advisor; both in their ability to inform and advise clients on their vehicle’s needs and planning for them, but also to direct the effective flow of traffic within the bays. Top-quality service advisors not only make their clients feel at ease, but they are experts at using and scheduling resources including labour to maximize a shop’s productivity. A total quality process insures the customer’s vehicle is fixed right the first time and the shop makes the best use of their time.”

Thorne continued that being highly organized with a commitment to process is a key trait for any service advisor, both in their ability to inform and advise clients on their vehicle’s needs and planning for them, but also to direct the effective flow of traffic within the bays. “Top-quality service advisors not only make their clients feel at ease, but they are experts at using and scheduling resources, including labour to maximize a shop’s productivity.”

Thorne added another key area is the image the service facility projects both inside and out. Does it create an instant impression of professionalism of the organization and does it work to reinforce attention to detail and trust? “I’m sure most have been in the redesigned service departments of many OE’s. We have a considerable task ahead in matching aftermarket facilities to meet with today’s client expectations. Those who do take their business to a whole new level will see a measurable return for it.”

A J.D. Power Automotive Analyst Note for August 2014, released at the same time as the full CCI study, makes this point succinctly and should be quoted in full so there can be no mistake about how important the service writer and their ‘soft skills’ are to service operations:

Ensuring customers are well-informed of the work that took place by delivering clear explanations on pickup can increase the likelihood of return for paid service work in the future, as 90 per cent of customers who provide a rating of 10 say they “definitely will” return vs. only 67 per cent of those who provide a rating of 8 or 9.

Advisors with effective communication skills are able to reduce the number of service skeptics by the time the customer drives out of the service facility. Customers who rate the thoroughness of the explanation from their advisor 10 trust the necessity of suggested service work 43 per cent of the time, on average, vs. only 16 per cent of the time among those who provide a rating of 8 or lower. The stronger the trust in the work, the stronger the rapport with the advisor and ultimately the increased likelihood of additional service work being scheduled.