ANALYSIS

Auto Manufacturers Set the Standard for Competing on Time

For many companies, there is an uncomfortable truth that even with CRM systems in place, one big gaping hole comes up again and again in customer experience: it’s the nagging issue of saving customers time.

Does your CRM system really respect your customer’s time, rather than your sales person’s time? Probably not, and that relates to one of the reasons Japanese, Korean and other foreign auto manufacturers are reporting record results while the U.S.’ Ford talks of potentially divesting Jaguar, and other auto manufacturers continue to struggle for survival.

Satisfaction Patterns

What’s fascinating about the studies J.D. Power does on auto customer satisfaction is that a pattern emerges of time urgency on the part of various demographic groups as it relates to service usage and retention of customers. J.D. Power calls this the Service Usage and Retention Study (SURS), and it quantifies the impact of timeliness of response on the all-important Customer Satisfaction Index (CSI) and Service Satisfaction Index (SSI).

These are two of the most important measures of performance in the auto industry and J.D. Power has successfully showed their correlation to sales performance. Fifty-one percent of any manufacturer’s SURS score is based on time-dependent attributes of performance. What is striking is that many auto manufacturers, even the successful ones, are not building their CRM strategies to capitalize on the time urgency their customers feel.

Make Contact Already

The results of the J.D. Power SURS analysis show that 69 percent of post baby-boomers (55+ in age) are OK with service personnel in dealerships taking 5 minutes or more to acknowledge and try to help them, while only 64 percent of baby boomers are. Yet the telling sign from the study is that only 59 percent of Gen-X age consumers feel the same way.

What these results show is that the way time is perceived by customers varies quite a bit from segment to segment. For the post-boomers, many of whom are retired, time is a non-issue. Yet for the Gen X’ers, where instant gratification is expected, and the world, for the most part, has been in an “always on” state since they were born, instant or very quick response is imperative.

The key take-away from all of this is that urgency has already turned into a lifestyle variable, and it goes hand-in-hand with the psychographic profile of younger consumers. For baby boomers, the world looks like it’s moving faster, but for Gen-X’ers and younger people, the pace is normal and expected. CRM as a strategy needs to reflect the fact that the perception of time itself varies significantly between customer bases.

Lessons Learned

There are several other key lessons learned from auto manufacturers and their approach to managing the time expectations of customers, and the resulting impact on their all-important CSI and SSI scores. These scores are used by many auto manufacturers in designing incentive programs for dealers, for example.

If you ever want to get the attention of a car salesperson, talk about how you plan to give them a glowing CSI if you get the deal you want. Here are some specific points that have made a huge difference for the Japanese and Korean auto manufacturers in their dealer channels:

  • Re-define maintenance, repair and overhaul (MRO) processes with your customers’ time in mind first. The uplift in SSI (the Service metric) is on average over 12 points for those manufacturers who take the time to analyze how they can get to their customers quickly when they first drive in. In addition, quickly acknowledge them and their problems. Toyota’s dominance in customer loyalty and their impressive sales performance in July is in large part attributable to their creating processes at the dealer level for streamlining this first customer interaction. Even with the explosive growth of Toyota sales and the obvious need to scale this process, Toyota is further ahead than many manufacturers on this critical area: respecting customers’ time is one of the company’s core strengths.
  • Service appointments can be confirmed through e-mail and telephone calls. One of the biggest reasons auto manufacturers are seeing a mass defection from their dealerships to service stations, independent mechanics and independent body shops is that on average, 31 percent of their customers have been so frustrated by broken service appointments and promises at dealerships that they refuse to go back. Lexus excels in this area and does get it when it comes to time. It has customer systems in place that track the times committed to customers in terms of when work will be completed, and rate themselves regularly on their on-time commitment performance.
  • Fix it again Tony, but please call. Another fascinating aspect related to respecting customers’ time is that many problems, even if the car is fixed incorrectly the first time, can be seriously mitigated by having the dealer simply make a telephone call. In fact, the industry is progressing very quickly in terms of fixing cars right the first time when they are in for repairs. From 72 percent in 2001 to 86 percent in 2006, dealers are fixing cars right more often. Ironically, however, only the minority of them call — and that can make a huge difference in both their CSI and SSI scores. So the key lesson learned: call your customers even if you know you screwed up. You may retain a customer as a result.
  • Respect time and gain margin. Not surprisingly, with the lack of focus on customers’ time in dealerships when it comes to repairs, and the lack of follow-through, it’s no wonder independent service providers in the auto industry are doing so well.

The bottom line is that when any business respects the time of its customers, it may be tapping into a core requirement of an unknown segment of customers. Yet, more importantly, when CRM systems are aligned to measure how responsive and mindful of your customers’ time your sales reps, channel partners, dealers, distributors and service organization are, you suddenly align with what matters most to everyone these days: using time as efficiently as possible.


Louis Columbus, a CRM Buyer columnist, is a former senior analyst with AMR Research. He has worked with enterprise clients on defining solutions to their channel management, order management and service lifecycle management strategies. Mr. Columbus also teaches graduate-level international business and marketing courses at Webster-Loyola Marymount University and University of California, Irvine. He is the author of fifteen books on technology and two books on analyst relations. His book, Getting Results from your Analyst Relations Strategies, can be downloaded for free.


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