Auto Service World
Feature   September 1, 2006   by Andrew Ross

Market Tracker: The Bottom Line on Customer Satisfaction

J.D. Power survey reveals aftermarket turning back dealership advances

Recent Canadian customer satisfaction numbers on vehicle service reveal more than just who is doing a top job; they also reveal why. They have also shown that the aftermarket is starting to win the dealer competition war.

For the record, the J.D. Power and Associates 2006 Canadian Customer Commitment Index Study found that Western Canada’s Fountain Tire ranks highest in overall customer satisfaction amongst automotive service provider brands.

Fountain Tire improved by a dozen positions to lead the rankings with an index score of 876 points on a 1,000-point scale. It did so by posting improvements across all aspects of the service experience, particularly in after-service attention to customers.

The aftermarket did pretty well all around, with previously top-ranked Autopro outlets coming in at 873 points, and last year’s top dog, Petro-Canada Certigard, logging a score of 869.

“All of our stores have taken our customer experience standards course,” says Nelson Tonn, Fountain Tire’s director of marketing. “Our standards focus on three areas: how we look, how we sound, and how we act. We train on these three things, then we measure how our stores are doing, and we reward our stores for their performance.

“It is really that process that we follow to ensure a superior customer experience.”

He says that it’s not a static process; it is continually being reviewed and refined. And all 140 stores, from those in urban centres to the outlet in Whitehorse, are held to the same standards.

“We really worked on it as a management team; this is a core value of Fountain Tire. It is something that is rich within our history.”

Essentially, the company took its own best practices, put them into a formal process, and rolled them out to the whole chain. There were standards previously, but they weren’t as comprehensive or as regimented. “We really solidified the plan in the last couple of years.”

According to Rohan Lobo, senior manager of automotive research at J.D. Power and Associates in Toronto, Ont., that is a common factor among all top-rated service organizations.

“[At the independents,] the attention to the customer is a little more stringent. The companies that have improved have a program in place. That explains Fountain Tire’s gains.”

He contrasts this with the mass merchandisers’ business model, which does not translate into high customer satisfaction ratings. A formal process for delivering customer satisfaction is key to results.

“We find that this is the way to go. Certigard, which won last year, has a very regimented process.” That process involves standards of communication, service, and follow-up. “Once you cover all those aspects, high customer satisfaction falls out of that.

“Essentially if you look at the satisfaction rating, the branded independents are all at the top end. Typically in the study, attention to the customer is playing out there. Dealerships tend to be at the middle of the pack and the end of the pack,” adds Lobo.

It should be noted that the rankings are very tight among the leading players. The leading dealership network, fourth-ranked BMW, was only 10 points lower than Fountain. And the top 12, a group which includes five tire chains and three dealer networks, are only separated by 25 points, a less than 3% variance.

Curiously, all trailed the combined “Independent Repair Shops” score of 880. However, the researcher doesn’t include this category in the rankings, as it is a service channel, not a branded provider.

The study, now in its ninth year, measures the service satisfaction and loyalty of owners of 2- to 12-year-old vehicles. Overall satisfaction and loyalty with the service provider is determined by examining five key factors: appointment/ check-in, service advisor, work quality, after-service, and customer orientation.

“Tire stores have always had very good relationships with their customers, and this is the third time a tire facility has been the top-ranked service provider in the study,” says Lobo.

“While Fountain Tire’s relationships with customers often begin with a tire purchase, in many cases, it eventually becomes the facility the customer goes to for all service activity. In fact, customers report that more than 60% of the service activity performed at Fountain Tire has been non-tire work.”

Customer satisfaction has improved for the industry as a whole by eight index points–the largest recorded increase since the study was redesigned in 2003. The service station channel shows the strongest improvement, increasing 17 points from 2005, followed by tire specialists with an 11-point gain.

The study finds, too, that after five consecutive years of losing market share to dealerships, aftermarket service providers have stabilized their share of service occasions. Over this time period, dealerships have steadily increased their share of the service market, hitting a high point in 2005 at 45%, up from 40% in 2002. In 2006, dealerships lost one percentage point of service share to aftermarket brands, creating a 44%/56% split in share between dealers and aftermarket providers. This loss was confined to vehicles that were 2 to 3 and 8 to 12 years old, with dealerships being able to defend their share among vehicles in the 4- to 7-year-old bracket. Each percentage point of share translates into almost $90 million in service revenue annually for dealerships in Canada.

“I believe it is very significant, and for this reason: we tied it back to the vehicles on the road. The peak selling years were 1999 to 2003. The sales numbers of those years were very high. Those sales created a vehicle car park that has slowly moved through the warranty period. Under warranty the owners tend to go back to the dealership. Now that the bulk is going down the age pipeline and out of warranty, they are coming under the influence of the aftermarket attraction.” It is that which is feeding the reclaiming of ground by the aftermarket.

“In a sense the wins [by] the dealership were helped by the fact that these vehicles were under warranty. That’s not the only reason–some dealerships have put programs in place [to improve customer service]–but the fact remains that the advance has stabilized. Any future gains will be really hard-won.” Those dealer networks that were just riding high on the tide of recent vehicle sales will have a hard go in the future.

“The other thing we noticed is that the aftermarket has gained dollar share as well as service occasions. They got back a proportional share of dollars as well. So, it’s not just that they’re getting oil changes.”

While it is nice to be liked by your customers, business owners will recognize it as a means to an end. It appears that bottom line benefits do flow from a customer focus.

“It’s often difficult to say that it is just because of this one thing, but our business has been improving over the last couple of years,” says Tonn. “Whether it can be attributed to solely this, probably not. But we know it helps.”

One additional factor that helps keep the process moving forward at Fountain Tire is the quality of the store management; most managers are partners in the stores and have, as a result, a vested interest in ensuring the success of the operation.

It is, agrees Tonn, a question of continuing to improve.

“We have a lot of formidable competitors, which is great. It keeps us on top of our game. Ultimately the customers benefit, which is what matters most.”

Lobo says that customer satisfaction and share are closely linked due to the impact of repeat business. Those organizations that keep customers satisfied see more of them coming back, which results in bottom line financial opportunities.

“Satisfaction ties very closely to repeat business,” says Lobo. “One feeds into the other.”