Benchmarking Other Auto Dealers Sometimes Becomes a ‘Trap’

“Dealers should be trying to attract customers with a Nordstrom-style experience, which better embodies the value proposition of dealers,” analyst Doug Van Sach says.

Steve Finlay, Senior Editor

March 16, 2018

3 Min Read
Van Sach oversaw AutoLoop study called ldquoMind the Servicesrdquo
Van Sach oversaw AutoLoop study called “Mind the Services.”

Auto dealers seeking to improve their business operations often benchmark themselves against other dealers. That’s fine, but it can fall short in today’s customer-experience world.

“It’s a trap some dealers fall into when they compare themselves with other dealers,” Doug Van Sach tells WardsAuto.

He is vice president-analytics and data services for AutoLoop. a marketing and customer-retention firm. He spearheaded a new study, Mind the Services, focusing on the types of experiences modern consumers demand from retailers.

Particularly when it comes to the service department, the study says dealers often focus too much on internal operations – such as improving shop efficiency and motivating service advisers to sell – as ways to improve customer retention.

Van Sach feels that’s misguided. “Instead of asking how they can become more efficient, dealers should be asking how they can improve the customer experience. View your service experience from an outsider’s perspective and adapt it to meet consumer expectations.”

The study centered mostly on dealership fixed operations and surveyed more than 1,000 auto consumers and 100 dealers. It also asked consumers to rate non-automotive retailers based on overall purchase experiences.

Amazon ranked No.1, followed by Nordstrom, a chain of upscale stores known for personalized service. “Dealers need to look at how non-auto retailers set the bar for customer experience,” Van Sach says.

Doing that may help shore up a dealership’s aftermarket and service operations that can face stiff competition from independent repair shops and car-care chains.

“Dealers should be trying to attract customers with a Nordstrom-style experience, which better embodies the value proposition of dealers.”

What can dealers specifically do?

One thing is to streamline and even eliminate the service department’s checkout process. It’s not enough to speed up the traditional process of paying a cashier for services rendered, Van Sach says. “Make the checkout process instantaneous. Give customers the opportunity to pay for repairs using their mobile devices.”       

Moreover, he recommends dealers set service prices competitively and transparently.

Surveyed consumers liked the idea of a price-match guarantee. But Van Sach concedes that could get tricky for dealers because they typically employ better-trained and higher-paid auto technicians than the repair shop down the street –

and accordingly charge more for service work.

That being the case, dealers should “back up having higher prices by noting they have better-trained associates and use OEM parts,” he says.

But he adds many independent garages charge more than dealers for repairs. “It’s sort of a myth that the independents charge less.”

As far as pricing transparency, “If consumers readily knew the dealer price for, say, an oil change, that would boost customer confidence.”

The study cites another way dealers can connect with consumers: by better merchandising products the stores sell beyond vehicles in the lot and showroom.

“A classic example is tires,” Van Sach says. “Consumers have confidence in finding a selection of brands and accompanying prices.”

Dealer websites typically don’t tout tires. But if dealers sell them, then their websites should make that obvious.

That’s not all, Van Sach says. “Dealers would be wise to focus more on growing their tire business in multiple ways, including digital advertising, merchandising and in store-processes.”

AutoLoop survey results indicate only 38% of dealer customers want to replace their tires at the dealership, even though they go there for other car maintenance and repairs.

Most consumers buy tires from major tire retailers, such as Goodyear and Firestone, as well as department stores and independent repair shops, the survey says.

“To address the competition, dealers should consider offering tire replacement and protection plans similar to those offered by the aftermarket retailers, including free tire rotations and small repairs,” Van Sach says.

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