Chrysler: Five Star out, cash in
Dealer Standards features moving goals and mystery shoppers
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While dealers appreciate the potential revenue, some are grumbling about the new program, called Dealer Standards, which began last fall. They say Chrysler has been raising the bar to achieve the highest payout and is burdening some dealers with time-consuming mystery shoppers.
"Five Star will be phased out," says Chrysler spokesman Ralph Kisiel. "Many of the elements of the Five Star program are being kept in the Dealer Standards program."
The Five Star program, which began in 1997, did not award cash. Dealers received perks, including special signs and Internet sales leads, not available to non-Five Star dealers.
Don Lee, president of Lee Auto Mall, which operates Chrysler-Dodge-Jeep stores in Auburn and Westbrook, Maine, says the new program "covers a lot more of the basics than the Five Star program. This is much more detailed and ultimately will get the dealers running their businesses better."
The Five Star program was administered by Chrysler's regional business centers. By contrast, the audits for Dealer Standards are done by the North American arm of SGS Group, a Swiss company that specializes in measurements and testing.
Chrysler says using a third-party auditor will improve the customer shopping experience.
SGS has audited Fiat dealers since 2005. Other clients include BMW AG, Toyota Motor Corp. and Volkswagen AG. Sergio Marchionne, CEO of Chrysler and Fiat, sits on the board of SGS.
SGS uses survey techniques, including mystery shoppers who visit and call stores. Another firm, Morpace Inc., of suburban Detroit, surveys dealership facilities.
Chrysler dealers have greeted Dealer Standards with a mix of enthusiasm and trepidation. The largest dealers -- those that sell 1,800 vehicles or more annually -- stand to earn lots of money -- either $200,000 a quarter for meeting the "gold" standard or $120,000 for the less-demanding silver standard.
Dealers are graded on points they earn for a variety of categories such as how well employees handle telephone inquiries and follow-ups, how well capitalized the dealership is, how the dealership looks, and whether it is in compliance with Chrysler's latest facility requirements.
Since the program began, Chrysler has been ramping up the point totals dealers must score to earn cash.
To hit gold in the third quarter, a dealer must score 900 points out of a possible 1,000, up from 720 in the second quarter. But the company added categories in which dealers can pick up points, such as installing new brand kiosks in their showrooms.
"The gold standard for this month will be bronze in the third quarter," says one dealer, who declined to be identified.
Another dealer says he is concerned that Chrysler is raising the points standard so rapidly that some dealers might give up on the program if they think they can't attain the points. The program is optional.
Teething problems
Dealer Standards has had some teething problems. Speaking to dealers, Peter Grady, Chrysler's head of network development, has described the launch of the program by saying: "We were building a plane while it was in flight."
Chuck Eddy, owner of Bob and Chuck Eddy Chrysler-Dodge-Jeep in Austintown, Ohio, says: "It's very detailed, and there's a lot to it. ... Setting up standards will make our stores better."
But Eddy says his employees can get frustrated dealing with mystery shoppers: "How much time does the mystery shopper take up and tie up a commissioned person when they're trying to make a paycheck?"
Scott Hogle, manager of an online auto dealer information exchange called dealershipforum.com, says Dealer Standards has elicited many comments.
"It's a good program to the extent the dealers need the money, and Chrysler paid the money fast," says Hogle, a former manager in Chrysler's West Business Center. But Chrysler still has not fixed a couple of things, he says.
"There still isn't an appeal mechanism," and some dealers have been "massively oversampled" by mystery shoppers, Hogle says.
"If it happens one or two times, it's OK; but if it gets to 40 times, it's an annoyance. Dealers know 100 percent of the time when they're being mystery shopped."
In a memo sent to dealers in the second quarter, Chrysler's Grady told dealers that starting in the third quarter, Chrysler would provide them with greater detail on the findings of the mystery shoppers "so you will be able to make necessary process improvements."
Maine Chrysler dealer Lee likes mystery shoppers: "We hired mystery shoppers for years because it helps us understand where we can treat customers better."
Playing games
Lee likes the Dealer Standards program, but he's wary of how the company will manage it because the company has "played with programs for years," sometimes confusing dealers.
One of those programs was Five Star. Dealers who lost their Five Star status also lost factory-generated Internet sales leads, which made it harder for dealers to meet the company's standards, Lee says.
Lee says some "distrust" still lingers between Chrysler and dealers because of the way the company manipulated the rules in the past.
"Chrysler got themselves into this position of dealers being skeptical and distrustful of them. They played with the budget and the numbers. I am absolutely skeptical about what the future might bring for Dealer Standards. Right now I feel good because it's working for us."
It helps that Lee Auto Mall is two for two -- gold for the first and second quarters.
You can reach Bradford Wernle at bwernle@crain.com.
