Fixed Ops Journal - October 2022 - F6

FIXED OPS JOURNAL
OTHER VOICES
CREATE ADVOCATES
Focus on the customer experience and the numbers will follow
O
MIKE VOGEL
GUEST COLUMNIST
ver the past three decades
I have witnessed
how " hitting the numbers "
is the main priority
of many dealerships
rather than the customer experience.
Before
anyone bites my head off
- yes, the numbers are important.
But should they be your sole focus? I
say no and here's why.
Effective labor rate: By focusing
on achieving a high eff ective labor
rate, we chase off those pesky low
ELR oil changes, tire sales and
maintenance because " Oh my god,
there goes my ELR! " Th e only thing
eff ective with this strategy is how
well you'll alienate your customers.
Of course that's not good, yet this is how things have gone in the industry
for decades now.
Gross profi t percentage: Like ELR, by focusing on achieving a high
gross profi t percentage, you chase customers away from doing regular
maintenance and tires, both key to retention, since they are both low
ELR and low GPP. While holding a reasonable GPP is achievable, we
now see stores trying to hold 80 percent-plus GPP. Why? Th ere are only
two ways to achieve high GPP - very high labor charge or very low
technician rate of pay.
Shouldn't the goal be to drive as many repeat and referral customers
to our stores every day to produce as many hours as possible? By focusing
on ELR and GPP, we accomplish just the opposite - we create customer
and technician defection.
Customer satisfaction index: Dealerships put lots of time and energy
on customer surveys to achieve high scores for bonuses and awards.
So how has that been working out? It's actually done the opposite for
customer retention, which continues to decrease because many dealerships
are focused on chasing the scores instead of building a customer
experience.
Once warranties expire, dealerships give away 70 percent of the customers
they've sold vehicles to. Should they, or any business, for that
matter, be OK with that? Absolutely not.
In the meantime, mass merchandisers, quick service shops and independents
continue to increase their presence by " taking away " consumers
because of the poor customer experience that dealerships provide
and the numbers games they play.
Th rough the years dealerships have built beautiful facilities, provided
loaner vehicles and off ered free car washes, Starbucks coff ee and other
perks. Yet customers are defecting at alarming rates, and what's baffl ing
PAGE 6 OCTOBER 2022
is the lack of focus on the core reasons for this.
Are you creating a high percentage of " customer advocates " ? If you're
not or you're unsure, what makes you think all these new special services
you off er will make a diff erence for long-term success?
By putting the customer experience fi rst, dealerships could not only
be achieving better retention but, more importantly, creating more advocates.
Here
is a list of what I believe are the top reasons customers defect:
1. Poor sales-to-service handoff .
2. Customer doesn't feel welcome every visit. Consistency sets expectations.
3.
Not enough eff ort building long-term relationships.
4. Too busy thinking about dealership's needs, not the customer's
needs.
5. Not earning a customer's trust, not knowing what's important to
them.
6. High employee turnover impacts customer's comfort level.
7. Ineff ective job showing value based on customer's perception of
what dealership off ers and does for them.
Until a dealership is willing to prioritize all of these areas and can capably
and consistently perform these practices, it won't be able to retain
the number of customers it should.
On the fl ip side, if a dealership puts in the eff ort, the numbers will follow,
with increased customer retention and advocates. Remember, customer
retention leads to increased repair order counts, hours produced,
new-car sales, gross profi t and net profi t.
So stop chasing the numbers and focus on retaining your customers.
Provide a great customer experience and the numbers will follow.
Mike Vogel is president of Automotive Service Manager Coaching.
Fixed Ops Journal - October 2022

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