Audi service secrets: Fast fixes and goodwill repairs

Audi has recorded 96 straight monthly U.S. sales increases beginning in November 2009, the longest string of success in the market.

What has gone right for Audi? Lots of things, of course, but Peter Donnellan has his own explanation: customer service.

The last time Audi reported a monthly sales decline, it ranked No. 12 in J.D. Power and Associates' annual Customer Service Index Study, far behind most other premium brands. In the previous year, 2008, Audi ranked 19th.

But for the last four years, Audi has battled Lexus and Mercedes-Benz for the top spot in the survey, which measures the satisfaction of owners and lessees of 1- to 5-year-old vehicles with their service at dealerships for maintenance and repair work.

For Donnellan, Audi of America's senior vice president of aftersales, customer service is the secret sauce of the brand's success. He says the brand's long road to the customer service summit is a result of the factory learning to invest and to trust its dealers.

A decade ago, Audi "had a lot of things it needed to work on," Donnellan said. "In 2008, Audi started with product quality, and then it addressed dealer service."

Donnellan joined Audi in March 2011 with a mandate to improve the brand's lagging customer service score. His first step was to listen to customers, dealers and his fellow executives — and to take notes.

"I did an autopsy on any customer [service] situation that came in for the first two years," he said. "I would go through and find out what caused the customer to reach out to me at my level for help, and what did we need to do to change what had gone wrong?"

What Donnellan found were things that, in retrospect, look silly for a company that sought to focus on improving customer service.

"We weren't doing overnight parts delivery, and we had a problem with fix it right the first time," he said. "They were related issues. When I came in, we were actually incentivizing dealers not to order parts overnight. As a result, a technician wouldn't be able to finish the repair on the same visit. He'd have to tell the customer to reschedule for after the part would arrive.

"I went to our vice president of parts and he changed over to overnight delivery, where if you order a part by 2 p.m. it would arrive by 6 a.m. the next day. That was a biggie."

But it wasn't as big as what Donnellan and his team did next — turning their customer goodwill program upside down. Goodwill repairs are those done outside of a factory warranty that are paid for by the factory.

"We were spending very little [goodwill] money; we had budgets for the dealers for their customer goodwill that were as low as $245 for the month," Donnellan said. Worse yet, to approve a goodwill repair, a service adviser had to get permission from the factory, causing a delay.

"Now we have a self-authorization program, and we don't make the customer work for it. We let the service manager make the decision" on whether to spend the factory's money, he said.

Taking a lesson from the J.D. Power surveys, Donnellan said he learned that "a quick decision [on a goodwill repair] is always better for customer service, and it's always cheaper. So now, we always put the decision-making power down to the service manager, and it works out great."

The change in the factory goodwill program had risks. Opening the factory's wallet and giving decision-making ability to service advisers who are paid at least in part on commission made for some sleepless nights early on, Donnellan said. It also required a guarantee for the dealers.

"We rolled the program out nationwide in 2012, and we had to prove ourselves to the dealers," he said.

Audi eliminated dealer goodwill budgets and let the program float on its own. Initially, goodwill spending doubled, but over time, it settled to a stable level, and on a per-vehicle identification number basis, it has dropped, Donnellan said.

He also had to guarantee that the factory wouldn't leave a dealer hanging out to dry with a claim.

"We'll never take a claim back; if a service manager takes a goodwill claim, we'll still pay the claim, but if we determine it was incorrect, we'll say to them, 'Never do that again.'"

Joe Rood, Audi of America's director of service operations, said dealer buy-in has been key.

"We can have the best ideas in the world, but we have to rely on dealerships to take the ball and run with it," Rood said. "My objective is retention — that customers come back if they have had an authentically positive customer experience. A lot of times, it's not even about money. It's about treating customers fairly and greeting them with a smile."

David Rosenberg, CEO of Prime Motor Group in Westwood, Mass., and chairman of the Audi National Dealer Council, said the ability to immediately address a customer concern can turn a bad situation into a good one.

"Whenever you empower people to make a decision for a customer, it's always a positive thing," he said. "If you're in a restaurant and you have a problem with your meal, you don't want to wait 20 minutes to find out if the kitchen is going to respond. When you can take care of a customer's problem quickly, you turn someone with a complaint into an advocate."

While Audi's efforts have shown results, the journey isn't over.

"Some things we're still working on after six years. For us, it's service follow-up. It's getting the service consultant to call the customer or the [business development center] to call and check how everything went," Donnellan said. "If we stay within the top 3 [on the annual J.D. Power survey], we're all happy because it shows we're consistent. But I'd be lying if I said I didn't want No. 1 every year."

Donnellan said that while not all brands can afford to focus so laserlike on being tops in customer service, they probably should.

"My personal philosophy is I view CSI as an insurance policy to keep that customer in the family. Sometimes it pays off and they buy another car from us."