How Dealers are Making Customers Happier These Days: Are You One of Them?
Net savvy shoppers making trips to the dealership almost pleasurable
Soon comes the dreaded, "What can I do to put you in this car...today?" It's a dance of trepidation that car buyers have long detested. What makes it all so daunting is that car salespeople do the negotiation every day. Consumers know they are better than they ever will be at it, as the typical car buyer only goes to the dealership once every four or five years.
But there is good news if you haven't been to a new-car showroom in a while: That high-pressure, unpleasant experience is becoming more the exception than the norm, except in dealerships where the calendar hasn't been flipped to the 21st Century. In fact, customers are increasingly satisfied and happy after visiting a dealership and buying a car, according to the most recent survey by J.D. Power and Associates.
Who are the best at keeping customers happy?
Lexus ranks highest in customer satisfaction with dealer service among luxury brands for a second consecutive year, achieving an overall CSI score of 846 out of a possible 1000 points. Rounding out the top four nameplates in the premium segment are Jaguar (837); Cadillac (830); and Acura (828). Among luxury brands, Volvo and Porsche achieve the greatest improvements from 2010.
Among the "mass-market" brands, MINI ranks highest with a score of 805 and improves by 19 points from 2010. MINI performs particularly well in the vehicle pick-up and service quality factors. Also among the top 10 brands in the mass market segment are GMC (803); Buick (799); Chevrolet (792); Kia (784); Hyundai and smart, in a tie (783 each); Volkswagen (779); Ford (773); and Honda (765). Of mass market brands, Mazda and Suzuki achieve the greatest improvements from 2010.
Good news for consumers: satisfaction is likely to improve further. Why?
Automakers are investing more in training dealership personnel. Many dealerships handling U.S. brands are being shuttered, reducing the kind of "Ford dealer versus Ford dealer in the same city" competition that has long driven dealers to exert every high pressure and upselling tactic in the book. And consumers are so savvy about shopping on the Internet that they have almost all of the information ahead of time. They often have already negotiated the final price by e-mail, so the visit to the dealer is designed to close or end negotiation, not start it.
There is no mistaking an overall trend of happier car buyers and owners, said Jon Osborn, J.D. Power's research director. Adjusting for changes in the way Power actually computes the survey results 2007 to 2011, each year has been better than the previous one, he said. "Over time, dealers are providing much higher levels of customer satisfaction than they have in the past."
How are they doing it? Coffee bars. Free wireless Internet service. Online booking of appointments. Increasing the number of service bays and establishing longer hours to accommodate customers; some service departments staying open into the evening and on Saturdays. When it comes to selling the car in the first place? More communication online where the customer is more comfortable.
The goal is simple for dealers: As a customer switches on the ignition after a service appointment, they don't want him or her to worry about whether a repair was done correctly. And dealers want your experience to be comfortable, convenient and even upscale. They wouldn't mind it if you confused your time at the dealership with a visit to a spa or café.
In asking consumers about the process of buying a car, J.D.Power looks at consumers' attitudes toward their negotiations, their salesperson, the delivery process, and the dealership facility. Fully one-third of the score relates to the process of working out the actual deal. The questions in the study that relate to service weighs the quality of repair work completed more than other factors, such as the service adviser, the facility, or vehicle pick-up.
Osborn said improvements have been made across all dealership operations. "There isn't one area that has been improving drastically more than others. It's a little bit of everything."
Customers may find that the negotiations over price these day are going more smoothly than in the past. Car owners should also be seeing a trend of getting their cars in for service on the day that they call. And they should see much less "upselling" in the sales or service departments.
Upselling and having customers complain can seriously damage the service scores of a dealer, and cause them problems with the vehicle manufacturer, which often rewards dealership staff and salespeople for high satisfaction ratings with swag such as trips to Las Vegas or Florida, or even cash.
Power says satisfaction scores soar from 642 out of 1000 points to 780 points if customers feel they have not have been pressured to buy more maintenance or repairs than they think they need.
Fewer dealers selling Motor City metal
Since General Motors and Chrysler went through Chapter 11 Bankruptcy in 2009, much has been reported about the companies using its bankruptcy protection to close dealerships the companies felt were under-performing or superfluous. Without that protection, dealers, even poorly performing ones, were hard to get rid of because of tough franchise laws state by state. Both companies had thousands more dealers than they needed today given their market share. The excess is a legacy from when Detroit held North of 60% of the U.S. auto market. Today, it is closer to 45%.
But as the number of dealerships is falling, service is improving. Weaker, older dealerships have closed, concentrating more business with the healthier ones. "The retail networks have improved over the years as the auto companies have cut some of the poorer performing dealers in both sales and customer satisfaction,"says Power's Osborne. Says Erin Kerrigan, senior vice president at Autostar, a real estate finance firm serving the auto retail market, "When businesses are run well and making money, they tend to serve their customers better."
It's working. With fewer dealerships overall, dealer profits in general are up 38 to 129 percent so far this year, according to Urban Science, an automotive retail consulting firm. It hasn't hurt that the demand for vehicles has picked up, too. On average, dealers are already selling more cars per store – an average of 656 in 2010 compared to 564 in 2009.
The reductions in dealers selling Detroit brands are putting those dealers on a par with their foreign-brand counterparts "which had been selling two to three times as many vehicles," said Randy Berlin, a global director at Urban Science.
With their dealerships on a better financial footing, Detroit-brand dealers have more money to invest in nicer stores, and can reward their sales-force for keeping customers happy rather than churning sales and service bills to keep up, Berlin said.
Lounges with plush sofas and cappuccino bars are sometimes part of the recipe.
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