Why Service Customers are Leaving
...and what you can do about it
Current economic market conditions are creating dynamic shifts in the automotive service industry, which have led to consumers keeping their vehicles longer. This trend does not translate into more traffic to the dealership service department.
Consumers feeling the economic pinch are taking their business to independents and national light repair chains. These firms are becoming more aggressive in their pursuit of what has traditionally been a dealers' service customer. Recently published data from NDP research illustrates where new car service department customers turned to when their dealership closed due to recent point reductions by General Motors and Chrysler.
Only 51% of those previous dealership service customers continued servicing their vehicles at another new car dealership. Of the remaining 49%, a full 24% moved their service business to an independent auto service center, while 12% remain undecided at the time of the survey.
To better understand this, DriverSide.com conducted research to learn more about consumers' perceptions of dealership service departments, national light repair centers (like Pep Boys, Precision Tune and independently owned local service providers).
We were amazed to learn that most consumers felt they would get higher quality of work from their local independent mechanic than at a new car dealership service department or light repair center-even if price were not a factor.
In addition to fighting consumer perception, dealerships are increasingly feeling pressure from national light repair chains that are successfully pursuing the dealer service customer with aggressive marketing campaigns and incentives. More challenging is that 66% of consumers feel that new car dealerships will overcharge them for service work.
The final battleground for the service customer is being fought on the social media front. Ratings and reviews of vehicle service providers are rapidly gaining scale and influence. 86% of consumers read online business reviews before making purchase decisions and 90% say they trust these reviews (Kudzu.com survey of 600 users, December 2008). A staggering 74% of consumers report that they choose companies and brands based on what others say online about their customer service experience (Society for New Communications Research, May 2008). The good news is that dealers can look at this as an opportunity. Given that consumers expect to be overcharged, dealers that are competitive and highly transparent in pricing will be rewarded by positive reviews from consumers who are compelled to tell others about their unexpected experience. Vehicle service providers will begin to see that their online reputation will either drive their business or erode it.
All of these dynamics mean dealers must change the way they manage their customer base and acquire new customers. Service marketing and prospect acquisition must evolve beyond simple oil change window sticker reminders and CRM system mailers that are not highly specific to the actual service history of the vehicle.
Customer communications must be highly relevant to the customer and their specific vehicle needs. Dealers will benefit from helping their customers understand the tangible advantages of using a dealership service department, like parts quality, technician certification and access to specialized tools and the latest OEM technical advisories. When you combine this information with additional tips and tools that are helpful to the customer, you create relevancy and break through the clutter.
The way that dealerships grow their service customer base must evolve. Advances in technologies that leverage disparate database mining, consumer profiling, multi-variant testing and incentive optimization are combining with new media marketing techniques to produce impressive results in the areas of service marketing and prospect conquest.
Social media must be leveraged, specifically managing and growing the online service department's reputation. New services covering the task of 'Reputation Management' are available to help retailers embrace social media and do so in a fully automated way that does not burden daily operations.
Forward thinking dealers who combine service customer retention, new media marketing and social media to stand out from the crowd will not only gain competitive advantage, but also market share.
This article is a summary of research and service marketing information that is available in a new white paper titled: Service Marketing: New Solutions for New Challenges. Study highlights will be delivered in an upcoming webinar. All participants will receive the free white paper.
...and what you can do about it
Current economic market conditions are creating dynamic shifts in the automotive service industry, which have led to consumers keeping their vehicles longer. This trend does not translate into more traffic to the dealership service department.
Consumers feeling the economic pinch are taking their business to independents and national light repair chains. These firms are becoming more aggressive in their pursuit of what has traditionally been a dealers' service customer. Recently published data from NDP research illustrates where new car service department customers turned to when their dealership closed due to recent point reductions by General Motors and Chrysler.
Only 51% of those previous dealership service customers continued servicing their vehicles at another new car dealership. Of the remaining 49%, a full 24% moved their service business to an independent auto service center, while 12% remain undecided at the time of the survey.
To better understand this, DriverSide.com conducted research to learn more about consumers' perceptions of dealership service departments, national light repair centers (like Pep Boys, Precision Tune and independently owned local service providers).
We were amazed to learn that most consumers felt they would get higher quality of work from their local independent mechanic than at a new car dealership service department or light repair center-even if price were not a factor.
In addition to fighting consumer perception, dealerships are increasingly feeling pressure from national light repair chains that are successfully pursuing the dealer service customer with aggressive marketing campaigns and incentives. More challenging is that 66% of consumers feel that new car dealerships will overcharge them for service work.
The final battleground for the service customer is being fought on the social media front. Ratings and reviews of vehicle service providers are rapidly gaining scale and influence. 86% of consumers read online business reviews before making purchase decisions and 90% say they trust these reviews (Kudzu.com survey of 600 users, December 2008). A staggering 74% of consumers report that they choose companies and brands based on what others say online about their customer service experience (Society for New Communications Research, May 2008). The good news is that dealers can look at this as an opportunity. Given that consumers expect to be overcharged, dealers that are competitive and highly transparent in pricing will be rewarded by positive reviews from consumers who are compelled to tell others about their unexpected experience. Vehicle service providers will begin to see that their online reputation will either drive their business or erode it.
All of these dynamics mean dealers must change the way they manage their customer base and acquire new customers. Service marketing and prospect acquisition must evolve beyond simple oil change window sticker reminders and CRM system mailers that are not highly specific to the actual service history of the vehicle.
Customer communications must be highly relevant to the customer and their specific vehicle needs. Dealers will benefit from helping their customers understand the tangible advantages of using a dealership service department, like parts quality, technician certification and access to specialized tools and the latest OEM technical advisories. When you combine this information with additional tips and tools that are helpful to the customer, you create relevancy and break through the clutter.
The way that dealerships grow their service customer base must evolve. Advances in technologies that leverage disparate database mining, consumer profiling, multi-variant testing and incentive optimization are combining with new media marketing techniques to produce impressive results in the areas of service marketing and prospect conquest.
Social media must be leveraged, specifically managing and growing the online service department's reputation. New services covering the task of 'Reputation Management' are available to help retailers embrace social media and do so in a fully automated way that does not burden daily operations.
Forward thinking dealers who combine service customer retention, new media marketing and social media to stand out from the crowd will not only gain competitive advantage, but also market share.
This article is a summary of research and service marketing information that is available in a new white paper titled: Service Marketing: New Solutions for New Challenges. Study highlights will be delivered in an upcoming webinar. All participants will receive the free white paper.
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