Car Dealers are focussing more on Customer Satisfaction
Submitted by Steve Phillips
I think it’s commendable that some companies are placing more focus on customer satisfaction, but geting a good result and staying on top of the game are two very different things.
Customer Satisfaction is a USP and is being urbanised from the top. This will, I’m sure, flow down through the hierarchy having a positive impact on all the staff and, therefore, the customers, great!!!
So why I am perplexed by this??? Value for money is the problem, why, why, why do companies continue to increase their labour rates? It’s all very nice walking into a wonderful business environment and seeing those lavishly purpose-built gin palaces decorating our countryside, but at what cost???
It’s all very apparent the Motor industry’s return on sales is being squeezed because of the manufacturers’ massive egos, sitting in their ivory towers striving to achieve market share, causing distressed sales at a reduced dealer margin. So what’s the answer? Easy, put up the labour rate!
Surely the senior managers must realise that this is short term profitability and long term disaster!!! They must be extremely naive if they feel customers will continue to pay for the lack of sales profitability??
Come on guys; take your head out of the sand and face up to reality, its fantastic having a burly culture to improve customer service but at what price??? A reduction in your service retail parc, diminishing lead-times and a fantastic helping hand for the independents. Customers are far more educated now with reference to warranty repairs, we all know that you don’t have to have your car serviced by a franchise dealer now, thanks to Block Exemption.
The internet has had an incredible effect on the industry; don’t under estimate the consumer’s knowledge.
I have to acclaim Honda UK who has invested in training for all their management teams right across the UK dealer network, why? The biggest opportunity is running the business properly, understanding the importance of how money works.
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How many managers understand the workings of the balance sheet?
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Cashflow is king and all Managers should know how to control it
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Are you achieving a plausible return on your investment?
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Do you have too much of your money tied up in current assets?
The impact this can have on profitability is astounding. Most people are fairly okay with profit and loss but profit is really just an accounting figure; it’s turning profit into cash that the trick. I hope Honda’s investment will benefit their results for all to see.
Well trained managers will alleviate the stress on the business and as a consequence take the pressure off ever increasing labour rates, better customer retention and guess what, Value for Money.
If Customer Satisfaction is the current flavour of the month, I suggest that Managers are taught about money and how business works. This way they can improve profitability by better efficiencies rather than charging their customers more money and trying to justify it.
Please leave a comment, surely this subject is worth some debate?
Regards,
Steve Phillips
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I agree Steve that a wider understanding of the cash, asset, profit model/relationship is a very powerful piece of learning. Sweating your assets and managing profitability is key as is understanding your customer experiences.
Customer satisfaction however is the wrong target to aim for as it only assesses a customer’s rating of a particular transaction. What dealers and manufacturers should be assessing is not just a snap shot of the customer’s experience but more a ‘movie’ of that experience. In other words less about satisfaction and more about loyalty toward the dealer built up over time. Of course the two are linked but there’s ample evidence now that strongly indicates that measuring satisfaction levels is not all its cracked up to be. We now know that satisfaction is a poor indicator of loyalty. In the US for example in the automotive sector it has been found that between 60 % to 80% of defecting customers said they were satisfied to very satisfied just prior to defection! So why measure satisfaction when it doesn’t help us with loyalty?
Work by Bain & Company and Satmetrix in the US has led to a new and more relevant measurement for businesses. Heralded as the ‘number one measurement’ that all businesses should monitor and act upon, it’s called the Net Promoter Score (or Value) and is based upon a simple question..the question in fact to ask customers, and it is this: “How likely would you be to recommend us to a friend or colleague?” Respondents are asked to rate their response between 0 and 10 where 0 = Extremely Unlikely, 5 = Neutral and 10 = Extremely Likely.
By subtracting the % of people that scored between 0-6 (your Detractors) from the % that scored between 9-10 (you Promoters), you can calculate your Net Promoter Score or NPS. What Bain & Co have established is that there is a link between NPS and customer loyalty and therefore business growth and profitability.
Measuring your NPS will in time I believe become an industry standard, not satisfaction levels. There’s plenty of reference to this work on the web for those that are interested or send me an email and I’ll forward to you some more details.
When you then ask a second question such as “What’s the one thing we could have done to improve your customer experience?” you gain an insight into what’s important to the customer. Acting upon this will then help to drive up future NP scores.
Mark,
you make some very interesting comment here, especially, “Customer satisfaction however is the wrong target to aim for as it only assesses a customer’s rating of a particular transaction.”
However, whether people agree or disagree with your thoughts, one thing is for sure…as long a dealers are measured and rewarded on Customer Satisfaction it will continue to be “the target”.
Regards,
Jeff