It’s time to replace a system that isn’t working and won’t work because of inherent flaws in the way it is designed and administered.
I am talking, of course, about the Customer Satisfaction Index (CSI) survey used by many automakers. It’s time to come up with something better and more equitable for dealerships. Here are reasons CSI surveys aren’t true measures of customer satisfaction:
- They’re too long. In today’s world, every minute is precious. People most likely to reply to long surveys are disgruntled customers. They skew scores. To get a substantial response rate, a survey should only ask a few questions and take no more than a few minutes to complete.
- Sales and service people game the system. Because manufacturers tie financial incentives to CSI, the focus becomes how to get good scores rather than how to deliver genuinely great customer service that will build loyalty. It’s like an education system focused on test scores. Instead of teaching our kids how to develop good study habits, they’re taught how to pass the test. It’s too tempting and financially rewarding for sales and service employees to “coach” customers on the importance of giving a “highly satisfied” rating when they receive the all-important survey.
- Customers game the system. Because of so many car-buying advice blogs out there, a lot of customers know how important the CSI survey is to the dealership. They use this information to negotiate a better deal, as in: “If you give me this, I'll give you an excellent survey rating.”
- If an automaker wants to add a point in a dealer’s market area or terminate a dealer, it cites low CSI scores to support its legal case and claim that the existing dealer inadequately serves the market. In these circumstances, millions of dollars are often at stake.
- Many new tech companies sell products with the carrot of enhancing CSI. I am not aware of any technology that can provide a genuinely great customer experience. Only people can provide that. Some dealership employees now try to appease the technology rather than the customer.
- Poor CSI scores focus attention in the wrong direction. Often, the salespeople and service advisers get in the most trouble when the CSI scores are low. Yet, the survey asks about things completely out of their control, such as how clean the restrooms are, or about a product feature designed by the manufacturer. If CSI scores get too low, sometimes pay levels get reduced. That most certainly reduces morale. The best customer-satisfaction levels are achieved by having happy employees, not angry, resentful ones.
For these reasons, CSI scores are not a true measure of customer satisfaction. Apparently, some manufacturers also are taking notice of the survey flaws. Hyundai and Chrysler have both eliminated big CSI payments for dealers. Chrysler also has eliminated penalties associated with lower CSI scores.
There is good reason for tracking and improving loyalty.
A Maritz Marketing study says the average dealership would earn $106,315 more in gross profit by improving the customer experience. J.D. Power’s 2013 CSI index study found a direct correlation between service satisfaction and loyalty.
Among “delighted” vehicle owners, 96% say they “definitely” will return to the point of purchase for service work and 59% say they definitely will purchase or lease their next vehicle from the same brand.
Better than CSI is the Net Promoter Score. It evaluates customer loyalty. It does not measure customer satisfaction per se. The ability to measure customer loyalty is a more effective methodology to determine the likelihood that the customer will buy again, talk up the company and resist market pressure to defect to a competitor.
So how do I find out what my NPS is, you ask? The methodology is based on the fundamental perspective that divides customers into three categories: promoters, passives and detractors. It asks one simple question: “How likely is it that you would recommend this company to a friend or colleague?” Customers respond on a 0-10 scale.
Promoters (9-10) are loyal enthusiasts who will keep buying. They give referrals, fueling growth.
Passives (score 7-8) are satisfied, but unenthusiastic. They’re vulnerable to competitive offerings.
Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word of mouth.
To calculate your company’s NPS, take the percentage of customers who are promoters, and subtract the percentage who are detractors.
For example, of 100 returned surveys, 50% scored you as a 9 or 10, 20% as an 8 or 7 and 30% 6 or below. In this situation your NPS would be 20 (50%- 30%).
Asking only one survey question increases response rates. There is no simpler survey than that. However you may want to expand it by asking one or two more.
For instance, if a customer scores you an 8, you might ask: “What do we need to do for you to score us a 10?” If a customer scores you a 6 or below, you may want to ask two or three questions as to what caused them to give you this score.
The survey can be sent right after the transaction, so if a detractor had a poor customer experience, the dealer can take immediate action. It’s also simple, so the focus can be on employees, process and customer service, not on “the score.”
Studies indicate companies that achieve long-term profitable growth have NPS scores twice as high as other companies.
Most businesses average an NPS of around 5-10, but extremely profitable companies, such as Apple and Harley Davidson, are in the 50-80 range. Companies with a negative NPS (more detractors than promoters) are more likely to suffer stagnant growth or go out of business.
I vote to strike CSI as the industry key performance indicator for customer satisfaction, and replace it with NPS. Does anyone second my motion?
Michael A. Esposito is president and CEO of Auto/Mate (www.automate.com),a provider of dealership- management systems. He is a former general manager of a multi-line franchised car dealership.